Best’s Special Report: U.S. Property/Casualty Rating Upgrades Increase in 2021 as Insurers Adjust to Pandemic

OLDWICK, N.J.--(BUSINESS WIRE)--Credit Rating upgrades in the U.S. property/casualty (P/C) insurance segment bounced back to pre-pandemic levels in 2021, increasing to 7.7% of all rating actions compared with 5.3% in 2020, according to a new AM Best special report.

The Best’s Special Report, titled, “P/C Rating Upgrades Increase for 2021 as Insurers Adjust to Pandemic,” notes that rating actions for P/C carriers decreased slightly, to 704 in 2021 from 721 in 2020. In 2021, the number of upgrades increased to 54, significantly up from 38 in 2020. Affirmations, downgrades, assigned and under review ratings, all decreased slightly compared with the prior year. Many companies strengthened their balance sheets and improved operating results, while navigating the ongoing COVID-19 pandemic, heightened inflation and elevated loss costs. Rating affirmations accounting for the bulk of rating actions in 2021, at 80.3%.

Other highlights from the report include:

• Personal lines insurers in 2021 experienced 32 rating upgrades and 11 downgrades, both favorable compared with 2020, when there were 20 upgrades and 14 downgrades;
• Amid inflation and elevated catastrophe losses, the commercial lines segment saw a slight year-over-year increase in rating upgrades to 21 in 2021, as well as an uptick in downgrades to 13;
• The number of P/C companies’ ratings placed under review dropped to its lowest number in five years at 25, and a year-over-decrease from 33 in 2020; and
• AM Best assigned 36 ratings in 2021, or 5.1% of total rating actions, on par with the 38 assigned in 2020 (5.3%). Of the assigned ratings, 27 were in the commercial lines segment, eight in personal lines and one in reinsurance.

Uncertainties surrounding heightened inflation and elevated loss costs could put unforeseen pressure on P/C insurers. Longer-term impacts of the COVID-19 pandemic are likely to influence the segment going forward. AM Best will continue to monitor the evolving P/C segment and take any necessary actions if warranted.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=317519.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.