Press Release - MARCH 06, 2019
Best’s Special Report: U.S. Property/Casualty Rating Downgrades Rise Markedly in 2018
FOR IMMEDIATE RELEASE
OLDWICK - MARCH 06, 2019
However, according to the Best’s Special Report, titled, “U.S. Property/Casualty Rating Downgrades Rise Markedly in 2018,” positive Long-Term Issuer Credit Rating (Long-Term ICR) actions also increased in 2018, reflecting individual company trends of positive operating performance over several years, steady growth in risk-adjusted capitalization and acquisition/affiliation with higher-rated companies and groups. Despite a significant amount of catastrophe activity in 2018 following the historic 2017 events, most companies effectively managed this exposure through favorable risk management efforts and robust reinsurance programs.
The number of Long-Term ICR upgrades, as a percentage of all rating actions on U.S. P/C carriers, remained flat year over year at 8.5% in 2018, although the number of rating units with rating upgrades increased. The number of Long-Term ICR downgrades increased to 5.7% compared with 2.8% in 2017 of total actions on rating units. AM Best took action in 2018 on the Long-Term ICRs of 757 rating units, which describes either an individual insurer or a consolidation of companies and is the financial basis on which AM Best performs its credit rating evaluations. The overwhelming majority of the 2018 U.S. P/C rating actions were affirmations (78%).
The following are some other highlights from the report:
Overall, AM Best views the U.S. P/C industry’s ratings as stable despite the increased number of rating downgrades, and that the industry as a whole maintains sufficient overall risk-adjusted capitalization relative to its existing ratings. However, individual companies continue to face significant challenges, including operating pressure from the reduced benefit from prior-year reserve releases, the effect of weather-related events on property carriers concentrated in a single state and an increase in competitive market conditions caused by sophisticated pricing algorithms and expanding distribution channels.
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=283335 .
AM Best is a global rating agency and information provider with a unique focus on the insurance industry.