Weiss said failures of health maintenance organizations declined 10 percent in 2002, with nine failed HMOs compared to 10 in 2001.

Among the largest failed insurance companies in 2002 noted by Weiss were: London Pacific Life & Annuity Co. with assets of $2.1 billion; Legion Insurance Co., $1.3 billion; Villanova Insurance Co., $152.5 million; Paula Insurance Company, $128.4 million and American Growers Insurance Co. $114.9 million

Melissa Gannon, vice president of Weiss Ratings, Inc., said the past year's insurance company failures were fueled by a weak economy and risky bond investments. "Fortunately, other mitigating factors, like stricter underwriting standards and increasing rates, reduced the severity of those problems," she said.

Weiss tallied 11 banks that failed in 2002, compared with four banks that failed in 2001. The firm said risky lending and corporate fraud were the primary drivers behind the increase in bank failures as aggressive lending practices from the '90s boom took a toll.

"Banks got caught up in a lending frenzy, just like the stock market frenzy, in the late 1990s," said Ms. Gannon. "Loans that probably would not have been made in saner times have been deteriorating ever since, some due to the excessive risk and some due to the downturn in the economy, which has affected the borrowers."

Among the failed institutions were: Hamilton Bank NA, Miami; Nextbank NA,Phoenix, Ariz; Connecticut Bank of Commerce, Stamford. Conn.; Oakwood Deposit Bank Co., Oakwood, Ohio and Bank of Alamo, Alamo, Tenn.

Ms. Gannon commented that "during the past three years, both businesses and consumers have faced the challenges of a sputtering economy." She added that "it has been particularly difficult for fundamentally weak companies, which can only hang on for so long."

To avoid financially weak companies, Weiss Ratings recommended that consumers and businesses monitor the financial health of their HMO, insurance company, or bank using safety ratings with a solid track record for accuracy.

The Weiss ratings are based on an analysis of a company's capital, profitability, quality of investments, liquidity, and stability.

Weiss issues safety ratings on more than 15,000 financial institutions, including life and health insurers, HMOs, Blue Cross Blue Shield plans, property and casualty insurers, banks, and brokers. Weiss also issues investment ratings on more than 11,000 mutual funds and 9,000 common stocks.

Weiss Ratings is the only major rating agency that receives no compensation from the companies it rates.