According to rating agency AM Best, last year credit rating upgrades in the U.S. property & casualty (P&C) insurance segment bounced back to pre-pandemic levels, increasing to 7.7% of all rating actions compared with 5.3% in 2020.
The report noted that rating actions for P&C carriers decreased slightly, to 704 in 2021 from 721 in 2020. In 2021, the number of upgrades increased to 54, significantly up from 38 in 2020.
Affirmations, downgrades, assigned and under review ratings, all decreased slightly compared with the prior year.
According to the rating agency, many companies strengthened their balance sheets and improved operating results, while navigating the ongoing COVID-19 pandemic, heightened inflation and elevated loss costs.
Rating affirmations accounting for the bulk of rating actions in 2021, at 80.3%.
The report also highlighted that personal lines insurers in 2021 experienced 32 rating upgrades and 11 downgrades, both favourable compared with 2020, when there were 20 upgrades and 14 downgrades.
Amid inflation and elevated catastrophe losses, the commercial lines segment saw a slight year-over-year increase in rating upgrades to 21 in 2021, as well as an uptick in downgrades to 13.
The number of P/C companies’ ratings placed under review dropped to its lowest number in five years at 25, and a year-over-decrease from 33 in 2020; and
AM Best assigned 36 ratings in 2021, or 5.1% of total rating actions, on par with the 38 assigned in 2020 (5.3%). Of the assigned ratings, 27 were in the commercial lines segment, eight in personal lines and one in reinsurance.
