"Fortunately, more than a decade of profits helped some companies build up the capital they'll need to avoid insolvency despite the massive 9/11 claims," said Martin D. Weiss, chairman of Weiss Ratings, Inc. "But other companies are likely to be more severely impacted by the tragedy, especially those in the business of writing workers' comp insurance."

Indeed, workers' comp could become the industry's most vulnerable line of business, according to Weiss. The rating agency said that although the long-term effects of Sept. 11 might not be known for years, insurers with 50 percent or more of their business in workers' comp recorded a $1.7 billion loss for the first nine months of 2001, compared to a $161 million loss for the same period in 2000.

"Workers' comp insurance was already a weak line of business for the industry even before the attacks,'' continued Mr. Weiss. "Now, large, anticipated losses, including those from emotional trauma and stress claims over the coming months and years, will deal the industry a tough blow. As a result, policyholders can expect future rate increases, restrictions on claims, and even some insolvencies.''

Among the 2,159 p-c insurers reviewed by Weiss using third quarter 2001 data, only nine were upgraded, while eighty-four were downgraded. Weiss listed as "notable upgrades":

? Builders Insurance Company, from "E" to "C."

? Kentucky Employers Mutual Insurance Company, from "D" to "C."

? Medmarc Mutual Insurance Company, from "C-plus" to "B-minus."

Its "notable downgrades" were given as:

? Erie Insurance Exchange, from "A" to "B-plus."

? State Farm Fire & Casualty Company, from "A-minus" to "B-plus."

? State Farm Mutual Auto Insurance Company, from "A-plus" to "A."

The Weiss Safety Ratings are based on an analysis of a company's risk-adjusted capital, reserve adequacy, profitability, liquidity and stability. The stability category combines a series of factors, including asset growth, premium growth, strength of affiliate companies, and risk diversification.

Weiss describes itself as the only major rating agency that receives no compensation from the companies it rates.

Weiss also listed and rated companies experiencing the largest losses for the first nine months of 2001, as follows:

? State Farm Fire and Casualty Company, $1.155.3 billion loss, "B-plus."

? General Reinsurance Corp., $1.098.2 billion loss, "B."

? State Farm Mutual Auto Insurance Company, $1,076.9 billion loss, "A."

? Continental Casualty Company, $986.9 million loss, "C."

? American Reinsurance Company, $688.8 million loss, "C."

? State Farm Lloyds, Inc., Texas, $570.5 million loss, "B."

? Firemans Fund Insurance Company, $435.0 million loss, "C-plus."

? Farmers Insurance Exchange, $357.6 million loss, "C-plus."

? Erie Insurance Exchange, $317.3 million loss, "B-plus."

? Swiss Reinsurance America Corp., $286.6 million loss, "C."

? OneBeacon Insurance Company, $279.4 million loss, "C-plus."

? Allianz Insurance Company, $223.3 million loss, "B-minus."