AM Best, the credit rating agency, has reported a stronger balance of rating actions among US life/annuity and health insurers during the first half of 2026, with upgrades outnumbering downgrades by two to one compared with the same period a year earlier.
In its latest Best’s Special Report, More Upgrades, Fewer Downgrades for L/H Insurers in First Half 2026, AM Best said the US L/A sector has continued to benefit from growth in recent years, supported in part by sustained annuity sales. The rating agency said life insurers have generally maintained strong capital positions, with surplus levels increasing over recent years alongside favourable risk-based capitalisation.
AM Best found that most of the upgrades during the period were awarded to life insurers, whereas companies focused on annuities accounted for the majority of downgrades.
“Life/annuity insurers have been able to offset some recent increases in policy surrender activity with robust asset/liability matching and surrender charge protections,” commented Helen Andersen, Industry Analyst, AM Best. “However, some US L/A insurers continue to depend on reinsurance for capital management, particularly offshore reinsurance.”
The rating agency said the use of reinsurance remains a consideration for some US L/A insurers as they manage their capital positions. At the same time, AM Best noted that the broader sector has continued to demonstrate resilience through solid capitalisation and growth in surplus.
Within the health insurance segment, AM Best said insurers have also maintained generally strong capital positions and benefited from favourable net investment income. However, the agency identified continued pressure on margins as utilisation rates and claims expenses increase across the sector.
AM Best said health insurers are taking steps to address these pressures and improve operating performance. The agency noted that the effectiveness of these measures may not be fully reflected immediately, as insurers could require several pricing cycles to respond to higher utilisation and claims costs.
During the first six months of 2026, the life segment recorded five rating upgrades and three downgrades, according to AM Best. This represented an improvement on the first half of 2025, when there were two fewer upgrades and one additional downgrade.
AM Best attributed the rating actions to a range of factors affecting individual insurers. Improvements in operating performance accounted for approximately one-third of upgrades across the life/health segment, while improvements in enterprise risk management contributed to a further one-third of upgrades.
Despite the increase in upgrades, rating affirmations continued to represent the majority of actions during the period. AM Best reported that affirmations accounted for 82.3% of all rating actions through the first half of 2026.
The number of ratings placed Under Review was also unchanged compared with the first half of 2025, according to AM Best, indicating that the overall level of ratings under consideration remained consistent year on year.
