In 2001, Best said it estimated the property-casualty industry would ultimately pay out a total of $121 billion in asbestos and environment losses. It then estimated that $53 billion of that total was unfunded.

Best said that more insurers need to strengthen their reserves. The firm said in its opinion, combined with data released by the National Association of Insurance Commissioners, that the p-c industry, "principally commercial insurers, and to a lesser extent professional reinsurers," reserves remains underfunded by 40 percent.

It said losses have "surged" from a three-year average of $1.7 billion from 1998 to 2000, to $4 billion in 2001. An additional $8 billion in asbestos losses occurred in 2002. It said it expects to see sizeable charges to take place during 2003.

Best said some of the root causes for this surge in claims include:

? The spread of litigation to peripheral defendants.

? The collapse of payment plans to settle claims.

? The packaging of plaintiff cases to leverage against defendants and their insurers.

? A rise in the number of asbestos practices among plaintiff attorneys.

It said some companies are subject to downward rating pressure due to the uncertainty of their exposure in relation to surplus and future earnings. Best added that the ability of these companies to come to terms with their asbestos and environment exposures because of the current economic climate, diminished investment opportunities, and weakness in non-A&E reserves remains questionable.