A.M. Best: US Property-Casualty Rating Actions Mixed in First Half

A special report from A.M. Best finds that credit rating activity for US property-casualty insurers was mixed in the first half of 2020, with upgrades slightly outnumbering downgrades.

According to the report, the percentage of upgrades for US property-casualty insurers rated by Best were down modestly during the first 6 months of 2020, to 5.1 percent of all of Best's rating actions, compared with 6.2 percent in the first half of 2019.

Approximately 25 percent of the 17 upgrades during the period were due to affiliations or mergers, the rating agency said.

Downgrades decreased to 3.3 percent of all rating actions during the first 6 months, Best said, down from 7.1 percent in the first half of 2019.

The most common rating action in the universe of US property-casualty insurers Best rates were affirmations, at 81.3 percent, "reflecting the overall stability of the US property-casualty industry," the rating agency said in a statement.

Best noted that rating upgrades were driven by increases in risk-adjusted capitalization, strong results relative to operating performance, and the appropriateness of companies' enterprise risk management. The rating agency found that while COVID-19-related lockdowns forced many companies to work remotely, most have operated effectively in a remote working environment.

Best said that the number of ratings placed under review in the first half of the year increased to 16 from 9 during the same period in 2019. Of the 16 ratings under review, 50 percent had negative implications, up from 33 percent during the first 6 months of last year.

A.M. Best currently maintains a stable market segment outlook on the personal lines segment of the property-casualty industry and the global reinsurance industry, and a negative outlook on the commercial lines segment, reflecting macroeconomic fallout from the COVID-19 pandemic.