Property and Casualty Insurer Ratings Steady in Downgrades, Slightly Up in Upgrades

Issuer credit rating upgrades for US property and casualty insurers rose slightly to 18 in the first half of 2025, compared to the same period in 2024, while downgrades remained unchanged at 20, according to a new AM Best special report.

The report, titled "US Property/Casualty: Similar Numbers of Upgrades and Downgrades in First Half 2025," found that rating affirmations continued to dominate activity, accounting for 80 percent of all actions taken.

AM Best attributed ongoing industry pressures to rising inflation and increased reinsurance costs. Helen Andersen, industry analyst at AM Best, said, "In recent years, personal lines writers, especially homeowners insurers, have also had to contend with high catastrophe losses and more severe secondary perils, with higher reinsurance costs and attachment points adding to the burden."

Commercial lines insurers demonstrated relative stability and improvement. In the first half of 2025, 13 commercial segment ratings were upgraded, compared to 10 during the same period in 2024. Downgrades in that segment remained level at seven. Solid underwriting performance, reserve development, pricing momentum, and underwriting discipline were cited as supporting factors.

Initial ratings also rose slightly, with 17 assigned in the first 6 months of 2025, up from 15 a year earlier. These new ratings represented 5.2 percent of all rating actions, with most issued in the commercial lines segment.

The bulk of downgrades in 2025 occurred in the homeowners and personal property segments. AM Best linked these actions to elevated catastrophe losses, frequent and severe secondary perils, and increased reinsurance costs and retentions. Approximately 30 percent of the downgrades were tied to poor operating performance, with inflation and severe weather contributing to earnings volatility.

Copyright © 2025 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.