In 2025, rating upgrades outnumbered downgrades for the US P&C industry for the first time in several years, driven by the commercial lines segment, according to AM Best’s recent report.
AM Best noted that both upgrades and downgrades declined in 2025, while affirmations rose by nearly 10% year over year, reflecting an overall sense of stability in the P&C segment.
Downgrades fell to 4.1% of all AM Best rating actions for the year, totalling 30, compared to about 5.9% in 2024, which saw 43 downgrades. Upgrades also decreased slightly to 4.7% of rating actions with 35, compared to 5.8% with 42 upgrades the previous year.
AM Best reported that operating performance drove a high proportion of both upgrades and downgrades. Personal lines carriers accounted for most downgrades, while commercial carriers made up the majority of upgrades.
Affirmations were the most common rating action across all segments, increasing to 83.9% in 2025 at 619 from 77.7% in 2024 at 566.
Half as many ratings were placed Under Review compared to 2024, falling to 23 from 44, due to reduced M&A activity and fewer impacts from catastrophes.
AM Best assigned 31 initial ratings in 2025, accounting for 4.2% of rating actions, compared to 33 last year, with the majority in the commercial lines segment.
The total number of rating actions increased from 728 in 2024 to 738 in 2025.
“Carriers across the industry continue to experience the impact of inflation and rising reinsurance costs. Personal lines writers, especially homeowners’ insurers, have also had to contend with catastrophe losses, which, while less than 2024, were still high, and more severe secondary perils, with higher reinsurance costs and attachment points adding to the burden. Meanwhile, commercial lines carriers have been well positioned to navigate headwinds such as economic and social inflation by consistently reporting solid underwriting performance and reserve development, as well as positive pricing momentum and underwriting discipline,” said AM Best.
