Best’s Special Report: More Upgrades, Fewer Downgrades for U.S. Life/Health Insurers in 2025

OLDWICK, N.J.--(BUSINESS WIRE)--Rating change activity in the U.S. life/health segment declined overall in 2025, with downgrades for Long-Term Issuer Credit Ratings also decreasing slightly to 6.4% of the segment's rating actions, compared with the same prior-year period, according to a new AM Best report.

The Best’s Special Report, titled, “Rating Affirmations and Upgrades Rise in 2025, Downgrades Drop for US Life/Health Insurers,” notes that U.S. life/annuity insurers have benefited from record high premiums for the past few years, driven by strong annuity sales. Increases in surplus growth have also left L/A writers well-capitalized. “The primary drivers of surplus growth have included consistent profitability, prudent reinsurance activity and favorable yields,” said Helen Andersen, industry analyst, AM Best.

Health carriers have also remained well-capitalized and reported favorable net investment income. But the continuation of higher medical cost trends and heightened legislative and regulatory concerns have pressured margins within the health insurance industry. This has been driven by the continuation of higher medical trends for Medicare Advantage, rate and acuity mismatch for Managed Medicaid, and increased utilization and cost trends in commercial business.

Among the report’s other highlights:

• Rating affirmations in the L/H segment accounted for the large majority of overall rating actions, totaling 81.3%.
• The health segment experienced seven upgrades and 10 downgrades in 2025, compared to five upgrades and seven downgrades in 2024.
• The life/annuity segment experienced eight upgrades and 11 downgrades, a significant improvement from 2024’s six upgrades and 20 downgrades.
• Approximately half of upgrades were driven by improved balance sheet strength or operating performance. Furthermore, 20% of upgrades were driven by a structural change leading to a change in rating unit.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=363204.

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.

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