Best Reports Slight Decrease in US Property-Casualty Rating Upgrades

The US property-casualty insurance industry experienced a decrease in credit rating upgrades and a modest increase in downgrades during the first half of 2022, according to A.M. Best.

There also was an increase in rating affirmations during the period, Best said, underscoring insurers' resilience in the face of escalating losses.

Affirmations accounted for 80 percent of rating actions during the first 6 months of this year, according to the Best's special report, "U.S. Property/Casualty Rating Actions Mixed as Insurers Face Pressure From Loss Trends." Rating downgrades of US property-casualty insurers increased to 5.2 percent in this year's first half from 4.3 percent during the same period last year, while upgrades decreased to 5.5 percent from 7.5 percent during the first half of 2021.

The rating agency said it assigned 22 ratings during the first half of this year, up from 21 during last year's first half. Of those assigned ratings, 17 were for commercial lines insurers.

In the commercial lines insurance segment, 10 ratings were upgraded and 7 downgraded during this year's first 6 months, compared to 10 upgrades and 9 downgrades during the first half of 2021.

Best said its outlooks for the US property-casualty insurers it rates remained basically flat year-over-year, with 85.3 percent having a stable outlook, up slightly from 84.3 percent at year-end 2021. Positive outlooks declined slightly, the rating agency said, to 5.1 percent from 5.7 percent.

Best said it expects uncertainty about COVID-19, increasing loss activity due to an uptick in frequency and severity trends, and elevated catastrophe activity will pressure the US property-casualty insurance industry in 2022.