US Property-Casualty Rating Actions Increased Slightly in First Half

The number of upgrades and downgrades of US property and casualty (P&C) insurers' credit ratings experienced a modest increase during the first half of 2021 versus the same period a year ago, according to A.M. Best.

The special report from Best, U.S. Property/Casualty Rating Activity Steady in First Half of 2021, found that P&C insurer rating actions increased during the first half of 2021 to 347 from 332 during the first half of 2020.

Upgrades increased to 7.5 percent of all rating actions during this year's first half from 5.1 percent during last year's first 6 months, according to the rating agency, while 4.3 percent of all rating actions were downgrades, an increase from 3.3 percent during the same period a year earlier.

Nearly 80 percent of rating actions during the first half affirmed P&C insurers' existing ratings, consistent with most years, Best said.

Best said it assigned 21 ratings in the first half of this year, 1 more than the 20 assigned during the first half of 2020. Of those, 17 were in the commercial lines segment and 4 in personal lines.

The commercial lines segment saw 10 upgrades and 9 downgrades during this year's first 6 months, Best said, up from the first half of 2020 when there were 4 upgrades and 5 downgrades. Best noted that commercial lines insurers experienced increased catastrophe losses in 2020, including losses from western wildfires, hurricanes in the Southeast, and the Midwest derecho.

Most of the challenges facing the US P&C industry are not new, according to the report, though insurers have been resilient in facing those challenges. 

"Uncertainties surrounding new COVID variants and heightened inflation could put unforeseen pressure on the P-C insurers," a Best statement said. "If the cost of materials rises again and catastrophe losses are elevated in the second half of 2021, it could lead to significantly higher loss payments for insurers."

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