AM Best Maintains Stable Outlook on US Commercial Lines Segment

AM Best has affirmed its stable outlook for the US commercial lines insurance segment, citing strong underwriting and operating performance across most lines despite persistent challenges in certain areas. The decision reflects sustained risk-adjusted pricing strength and improved investment returns that support profitability, particularly for longer-tailed casualty lines.

Reserve levels remain adequate and stable, although some casualty segments continue to show adverse development. Ongoing risks include elevated casualty claims tied to social inflation, high property claims costs, and increased geopolitical and policy uncertainty, such as tariffs affecting inflation and supply chains.

"The stable outlook on this commercial segment reflects our expectation that the US commercial lines segment will remain profitable in aggregate and will be resilient in the face of near- and longer-term challenges," Alan Murray, director at AM Best, said.

Through the first three quarters of 2025, US commercial lines insurers reported favorable underwriting and operating results, with composite combined ratios in the mid-90 percent range. AM Best expects most insurers in the segment to maintain sound risk-adjusted capitalization.

The stable outlook also considers the major underlying commercial sub-segments—such as commercial property, workers compensation, surety, and medical professional liability—all of which carry stable outlooks. However, negative outlooks persist for certain sub-segments, including general liability, commercial auto, and directors and officers liability.

The report highlights that admitted insurers remain cautious in both property and liability markets, prompting many insureds to shift to the excess and surplus market. This segment continues to benefit from strong deal flow and new market entrants.

"Commercial insurers are leveraging technology and innovative products, including artificial intelligence, to enhance underwriting and pricing decisions," Carlos Wong-Fupuy, senior director at AM Best, said. "At the same time, a more direct focus on loss control and claims management is resulting in lower claims frequency and severity."

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