NU On-Line News Service, Oct. 10, 11:45 a.m. – More than 18% of insurance companies, HMOs, banks, thrifts, and brokerage firms, or a total of 2,634 institutions, show weaknesses that make them vulnerable in a recession, according to a study of major financial industries by Weiss Ratings, Inc., Palm Beach Gardens, Fla.
“After a decade of nearly nonstop earnings growth, most companies have accumulated a large enough capital cushion to insulate themselves against bad times,” says Martin D. Weiss, chairman of Weiss Ratings. “However, there are still many companies with inadequate capital positions, low earnings, risky investments or other problems that could make them vulnerable to failure in tough times.”
Life and health insurance represents one of the most potentially troublesome industries, says Weiss, noting that 297 firms out of 1,146, or about 26%, show problems. In the first quarter of 2001, the industry suffered a profit plunge of $3.8 billion, or 53%, Weiss notes.
Among property and casualty insurers, 546 out of 2,327, of 23.5%, show financial problems. HMOs showed the most cause for concern, with 192 out of 469, or almost 41%, rated poorly, says Weiss.