In compiling its statistics, S&P defines a company placed under regulatory supervision because of financial stress as a failure.

For both the p-c sector and the insurance industry as a whole, the number of failures declined from the number reported by S&P in 2000.

Property-casualty failures dropped 23 percent, to 24 in 2001 from 31 failures in 2000. For the insurance industry overall, failures fell 37.5 percent, to 35 in 2001 from 56 in 2000.

According to historical information presented in the S&P report, p-c failures outpaced the other sectors in nine out of 11 years studied by the rating firm.

The 31 p-c failures in 2000 made the 2000 year failure total the third highest for p-c companies in the 11-year timeframe. Higher p-c failure totals were reported in 1991, when there were 40 p-c insurance company failures, and in 1992, when there were nearly 50, according to the report.

S&P also reported that Sept. 11 and Enron had little direct impact on insurer solvency in 2001.

The report notes that 20 insurers and reinsurers had 80 percent of the total loss exposure from 9/11, adding that none of the companies were rated below the "A" category and that none has exposure large enough to threaten solvency.

In addition, S&P said that Enron's collapse did not directly contribute to any insurance failure in 2001.

The report notes that all the insurance companies that failed in 2001, which were also rated by S&P, carried financial strength ratings of "double-B" or lower before regulators took control of them. Under S&P's rating system, ratings of "triple-B" or better are considered "secure" ratings, while those below "triple-B" are considered "vulnerable."

S&P reports that of the 1,317 p-c companies in its ratings universe, 219 companies, or 17 percent of those ratings, are not in a financially secure category. While the percentage of vulnerable ratings is the same as it was in the 2000 report (when S&P reported 225 of 1,300 ratings as vulnerable), the pace of downgrades picked up considerably in 2001.

According to the report, S&P lowered 209 financial strength ratings in 2001 and raised only six. In 2000, by contrast, the rating actions had only tipped slightly in favor of downgrades, with 148 downgrades versus 118 upgrades.

Among the downgrades announced by S&P in 2001, seven took companies out of the financially secure range, and only one upgrade pushed a p-c insurer to the secure range.

Tallying up failures for the other insurance industry sectors, S&P reported that 11 health insurers and health maintenance organizations contributed to 35 insurance industry failures in 2001. In 2000, the health sector contributed 16 failures to the overall total.

In 2001, no life or title insurers failed, and the outlook for the life sector is stable, according to S&P.