Number of Newly Impaired US Insurers Grew in 2021: A.M. Best

The number of US-domiciled insurers rated by A.M. Best that became impaired increased to nine in 2021 from two in 2020, according to the rating agency.

The information is from the 19th annual update on the long-term impairment rates of US-domiciled insurers rated by A.M. Best and was reported in a Best's Special Report, "Best's Impairment Rate and Rating Transition Study—1977 to 2021." The study relies on the rating agency's ratings and observations of financially impaired companies and reflects Best's definition of "impairment" at the time.

According to Best, of the nine insurers that became impaired in 2021, four were affiliated with one another and became insolvent partly due to emerging asbestos and environmental claims. Two others were affected by hurricanes and severe convective storms in Louisiana, Florida, and Texas. Two were auto insurance companies with both product and geographic concentrations as well as high risk profiles.

The final company that became impaired in 2021 was a small, new company that was placed into liquidation after the state commissioner deemed that any further insurance transactions would be hazardous to its policyholders, Best said.

Best said that overall, both the US property-casualty and life-health industries had good years in 2021. While the property-casualty industry faced increased loss costs, elevated catastrophe activity, and pricing challenges during the year, most property-casualty companies were able to limit their losses and generate surplus growth with solid risk-adjusted capitalization and disciplined underwriting and pricing.

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