A.M. Best Co. says 2012 U.S. P&C company financial impairments fell more in-line with historical trends after a sharp increase the year before.

In a recent special report, the Oldwick, N.J.-based ratings agency says last year's 21 impairments were below the average count of 25.8, and well below the 34 reported in 2011.

Best designates a carrier “impaired” when an insurance department takes regulatory action because the carrier faces financial issues placing it at risk of fulfilling its duties to pay claims.

The report notes that many of the impaired carriers in 2012 had weakened over the past three or four years “and were victims of several factors, including soft market conditions, high underwriting losses and poor management decisions.”

The prolonged effects of the economic downturn pushed the majority of the companies over the edge in 2012. Only one company, a writer of auto insurance, was impaired directly as a result of catastrophe losses. Auto writers made up the largest number of impairments at six, accounting for 30 percent of 2012's total.

Attention to risk management, plus the strength of P&C insurers' capitalization and redundant reserves, has “combined to soften the effects of the weak economy and the high catastrophe losses in 2011 and 2012,” Best says. However, the ratings agency cautions that as insurers absorb losses and draw down on capital and reserves, their operating results have suffered, making them more vulnerable to financial shock from catastrophe losses.

So far in 2013, there have been four impairments—three workers' compensation carriers and one auto carrier.

See the list below for information on 2012 & 2013 impairments by company.

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