MARCH 10, 2021 08:19 AM (EST)
Best’s Special Report: Improved Trends in US P/C Rating Affirmations, Downgrades Reflect Industry’s Stability Amid Pandemic
|Adib Nassery |
Senior Financial Analyst
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Manager, Public Relations
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FOR IMMEDIATE RELEASE
OLDWICK - MARCH 10, 2021 08:19 AM (EST)
The number of Credit Rating downgrades in the U.S. property/casualty (P/C) industry fell by more than half the number seen in the previous year, with affirmations also rising despite more-frequent disasters and pandemic spread, according to a new AM Best special report.
The Best’s Special Report, titled, “P/C Rating Affirmations Continue to Dominate Despite COVID-19 Pandemic,” notes that upgrades decreased by 25% from the prior year; however, affirmations and upgrades accounted for nearly 87% of all rating actions, reflecting the P/C industry’s persistently strong capitalization, growing pricing sophistication and enhancements in risk management, resulting in positive operating results. Rating downgrades fell by 53% in 2020, owing to strong risk-adjusted capitalization levels despite frequent severe weather-related events, profitable underwriting performance in the private passenger automobile segment, underwriting actions benefiting the homeowners segment, a generally favorable pricing environment, lower loss frequency trends and expense efficiencies due to the COVID-19 pandemic.
Despite the positive rating activity, some individual companies continue to face significant headwinds, including the ongoing economic impact from COVID-19; operating pressure from the reduced benefit of prior year reserve releases; increased weather-related events on property carriers concentrated in a single state; and increased severity affecting numerous lines of business. Although significant uncertainty about the long-term economic impact of COVID-19 on the P/C industry remains, at this point, it has not had a material impact on ratings.
Other highlights from the report include:
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=306582 .
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.