7.5% of U.S. Insurers Report Inadequate Progress in Premier Y2K Readiness Survey.

PALM BEACH GARDENS, Fla.--(BUSINESS WIRE)--Sept. 22, 1998--In response to a recent survey of insurers, 7.5% reported inadequate progress in the race to fix the "Year 2000 Computer Bug," according to Weiss Ratings, Inc., which today issued the first ratings that address industry preparedness.

Of the 5,096 insurers surveyed by Weiss, 1,137 (or 22%) responded. Among these, 49 companies (4.3%) received "Below Average" Y2K grades, reflecting inadequate progress in their computer system preparations for the changeover to the year 2000.

An additional 36 companies, or 3.2% of the respondents, received "Low" marks for admittedly slow progress toward resolving the threat of Y2K-related problems.

"Below-average or low progress among 7.5% of the companies that voluntarily participated in our survey should be a wake-up call for the insurance industry," said Martin Weiss, Ph.D., chairman of Weiss Ratings. "It raises serious questions not only about these companies but also regarding those that chose not to participate in the survey. I believe it may be indicative of widespread complacency in the industry."

On the other end of the spectrum, 143 insurers (12.6%) reported "High" progress in their Y2K preparations. The balance (80.0%) indicated a level of progress that Weiss deemed Average," reflecting apparently adequate preparations at this time.

However, Weiss cautions that these evaluations are based exclusively on unverified, voluntary responses by the companies themselves.

Both consumers and regulators have expressed growing concerns that ill-prepared insurance companies may be unable to properly process policyholder claims and data after January 1, 2000.

In order to help quell these concerns and protect consumers from doing business with ill-prepared companies, Weiss is urging state regulators to require disclosure by insurers regarding their Y2K readiness.

In the absence of this disclosure, the Weiss Y2K Ratings are currently the only evaluations available to consumers.

At the same time, he advises consumers and analysts to judge the Y2K ratings in the context of a company's overall financial strength. "An insurer with abundant capital resources is better equipped to remedy its Y2K problems today and cope with any consequences after the year 2000.In contrast, an insurer with apparent deficiencies in both its Y2K progress and its financial stability may be at serious risk," Weiss added.

Insurers reporting a "Low" level of progress in addressing their

Y2K problems include: -- State Farm Mutual Automobile Insurance Co. (IL) -- Keyport Life Insurance (RI) -- Universal Underwriters Insurance Co. (MO)

Among insurers reporting a "High" level of progress are: -- Variable Annuity Life Insurance Co. (TX) -- Western and Southern Life Insurance Co. (OH) -- Erie Insurance Exchange (PA)

In its Y2K survey, Weiss asked each company to report the estimated percentage of systems which were Y2K compliant on June 30, 1998, as well as the percentage expected to be compliant at key dates in the future.

The survey also included a series of questions to help Weiss analysts validate these estimates. Each survey response was signed by the company's Year 2000 Project Manager or a responsible financial officer.

The insurance industry Y2K survey will be repeated periodically in the coming 15 months, and Weiss Y2K Ratings on banks and S&Ls will be issued by Weiss in October.

For $15 per company, consumers may acquire both a Weiss Y2K Rating and a Weiss Safety Rating on an insurance company by calling 1-800-289-9222.

If a Y2K Rating is not available, consumers will receive a Weiss Safety Rating, plus specific information on how to contact the Year 2000 project manager or financial officer at their insurance company.

The Weiss Y2K Ratings for Insurance Companies ($149) is also available. It lists both Weiss Y2K Ratings and Weiss Safety Ratings for all 1,137 insurers, along with details on each company's Y2K progress.

Insurers that did not respond to the Weiss survey are also included, with their Weiss Safety Rating plus a phone number to contact the appropriate company official for further information regarding Y2K readiness.

Weiss is the only major rating agency that receives no compensation from the companies it rates. Revenues are derived strictly from sales of its products to consumers and businesses. For more information, visit the Weiss Ratings web site at www.weissratings.com.

Note to editors: National and state-specific listings of highest and lowest-rated large insurers available.