SEPTEMBER 28, 2020 01:12 PM (EDT)
Best’s Special Report: Credit Rating Changes at First-Half 2020 Mixed as U.S. P/C Insurers Manage Challenging Mark
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FOR IMMEDIATE RELEASE
OLDWICK - SEPTEMBER 28, 2020 01:12 PM (EDT)
Credit rating activity for the U.S. property/casualty (P/C) industry in the first half of 2020 was mixed, with upgrades modestly outnumbering downgrades, according to a new AM Best report.
A new Best’s Special Report, titled, “Mid-Year Rating Changes Mixed as U.S. Property/Casualty Insurers Manage Challenging Market Dynamics,” states that the percentage of upgrades for AM Best-rated U.S. P/C carriers’ Issuer Credit Ratings through mid-year 2020 were down modestly, to 5.1% of rating actions, compared with 6.2% in first-half 2019. Approximately 25% of the 17 upgrades in the study period were due to affiliations or mergers. Downgrades decreased to 3.3% of total actions, down from 7.1% in the first half of 2019. Affirmations were the most common rating action, at 81.3%, reflecting the overall stability of the U.S. P/C industry.
Rating upgrades were driven by increases in risk-adjusted capitalization, strong results relative to operating performance and the appropriateness of companies’ enterprise risk management (ERM). COVID-19-related lockdowns have forced many companies to work remotely and most companies have operated effectively in the remote environment.
Other report highlights include:
The U.S. P/C industry continues to face challenges, including elevated non-weather related water losses, catastrophic weather activity; uncertainty regarding the long-term effects of COVID-19; and system implementations.
AM Best maintains a stable market segment outlook on the personal lines segment of the P/C industry and the global reinsurance industry, and a negative outlook on the commercial lines segment, reflecting the macroeconomic fallout from COVID-19.
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=301568 .
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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.