Best’s Special Report: US Property/Casualty Rating Affirmations Rose in 2025 While Upgrades Outnumbered Downgrades

OLDWICK, N.J.--(BUSINESS WIRE)--For the first time in several years, rating upgrades outnumbered downgrades for the U.S. property/casualty (P/C) industry in 2025, driven by the performance within the commercial insurance segment, according to a new report from AM Best.

The Best’s Special Report, titled, “US P/C Rating Affirmations Rose in 2025 While Upgrades Outnumbered Downgrades,” notes that rating affirmations were the most common rating action taken across all segments in 2025, increasing to 83.9% of activity, compared with 77.7% in 2024. Half as many ratings were placed under review last year compared to 2024, due to a decline in merger & acquisition activity and less impact from catastrophes.

Carriers across the P/C industry continue to experience the impact of inflation and rising reinsurance costs. Personal lines writers, especially homeowners’ insurers, have also had to contend with catastrophe losses, which, while less than 2024, were still high. “Adding to this burden were more severe secondary perils, along with higher reinsurance costs and attachment points,” said Helen Andersen, industry analyst, AM Best.

According to the report, commercial lines carriers have been well-positioned to navigate economic and social inflation, by consistently reporting solid underwriting performance and reserve development, as well as positive pricing momentum and underwriting discipline.

Among the report’s other highlights:

• Rating downgrades declined to 4% of all rating actions in 2025, compared to approximately 6% in 2024. Upgrades also decreased marginally, by about a percentage point.
• The majority of the 2025 downgrades were on carriers in the homeowners or personal auto segments, reflecting heightened catastrophe losses, more frequent, severe secondary perils, as well as higher reinsurance costs and retentions.
• The most common driver of P/C ratings upgrades was improved operating performance, which accounted for 40% of upgrades. Improved operating performance in these upgrades can be attributed to sizable rate increases that have earned through, maintaining underwriting discipline, and (although volatile at times) improved equity markets.
• A third of the rating downgrades were due to poor operating performance, as outsized losses due to weather and inflation caused volatility in results over the past few years.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=363222.

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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