U.S. p&c industry sees favourable rating activity in 2016 H1: A.M. Best

businessman in suit pushing button five rating stars

Property and casualty insurers in the United States have witnessed favourable rating activity in the first half of 2016 compared to a negative prior-year trend, notes a new special report from A.M. Best.

Reversing what was seen in 2015 H1, the U.S. p&c industry’s “rating activity over the first half of 2016 turned favourable as upgrades and positive outlooks outpaced downgrades and negative outlooks,” notes a statement issued this week by A.M. Best.

Issuer credit rating (ICR) upgrades amounted to 27 while ICR numbered 21 for 2016 H1, “with all rating changes basically split between personal and commercial lines.”

In the first half of 2015, both p&c industry segments recorded more downgrades than upgrades, namely 36 and 23, respectively.

For the reinsurance segment, there were no rating changes during either the first half of 2016 or 2015, “reflecting the strength of capital in that segment,” it adds.

Overall, “the turn-around reflected favourable operating performance with moderate net premium written growth, profitable underwriting results and positive net income,” states the report.

Other contributing factors to the favourable activity, A.M. Best notes, “include increased pricing sophistication, greater emphasis on tighter underwriting standards, changes in organizational structure due to increased parental support and increased merger and acquisition activity.”

For 2016, affirmations remained the most common rating action at 81.3%, “reflecting the overall stability of the U.S. P/C industry,” the statement adds.

“Although the commercial and personal lines segments each have stable outlooks on approximately 77% of its ratings, the percentage of negative outlooks continues to outpace the percentage of positive outlooks in each segment,” A.M. Best cautions.

“In the commercial lines segment, 11.2% of its rating units had a negative outlook versus 6.7% on the positive side, and in the personal line segment, the split was 11.5% to 7.6%,” the statement adds.

Canadian Underwriter