AM Best

Best’s Special Report: Best’s Impairment Rate and Rating Transition Study — 1977 to 2022


Emmanuel Modu
Managing Director,
Insurance-Linked Securities
+1 908 882 2128

Wai Tang
Senior Director,
Insurance-Linked Securities
+1 908 882 2388
Christopher Sharkey
Associate Director, Public Relations
+1 908 882 2310

Al Slavin
Senior Public Relations Specialist
+1 908 882 2318


OLDWICK - NOVEMBER 03, 2023 08:01 AM (EDT)
AM Best’s latest special report on the long-term impairment rates of U.S.-domiciled insurance companies states that no insurers were added to the list of net impairments in 2022, meaning no companies were rated by AM Best at the time of impairment, consistent with last year’s zero net impairments. There were two insurers added to gross impairments in 2022, down from 10 carriers identified in the previous year.

The Best’s Special Report, titled, “Best’s Impairment Rate and Rating Transition Study — 1977 to 2022,” marks AM Best’s 20th study and is aimed at estimating the risk of impairment of U.S. insurers. The analysis covers 45 one-year periods from Dec. 31, 1977, to Dec. 31, 2022, and includes U.S. insurers that had at least one Best’s Financial Strength Rating (FSR) or one corresponding Long-Term Issuer Credit Rating (ICR) during the study period. AM Best designates an insurer as a financially impaired company (FIC) upon the public placement of the company, via public court order or other international equivalent, into conservation, rehabilitation and/or insolvent liquidation.

Categories of impairment discussed in the report include:

  • Net impairments, which refers to insurers that became impaired and had an FSR at the time of impairment; and

  • Gross impairments, which encompass the broadest definition of impairment for FICs and refers to insurers that became impaired and had a Best’s FSR or ICR at some point during the study period but not necessarily at the time of impairment. With gross impairments, an insurer can become impaired years after the insurer has ceased participating in AM Best’s interactive ratings process.

The two 2022 gross impairments were property/casualty companies. One company, domiciled in Florida and last rated by AM Best in 2004, became impaired due to hurricane-related losses, high claims litigation and suspected roof replacement fraud. The other, a Louisiana-domiciled company, last rated by AM Best in 2011, became impaired following losses from hurricanes Ida, Laura, Delta and Zeta. The report notes that the increase in frequency and severity of catastrophe events, especially secondary perils, clearly has pressured more insurers in recent years. Since the start of 2021, 18 companies became impaired due to natural catastrophes; 14 were domiciled in Florida or Louisiana. None were rated by AM Best at the time of impairment, with 11 companies never rated by AM Best.

To access a copy of this report, please visit .

This is an updated report, released originally in May 2023.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising 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.