Best's Special Report: Credit Rating Upgrades Exceed Downgrades for U.S. Life/Health Insurers in 2022; Under Review Ratings Fall
Credit Rating (rating) upgrades and downgrades remained relatively flat in 2022 in the U.S. life/health insurance industry as compared with the previous year, with a slight increase in upgrades, However, according to a new AM Best special report, the number of ratings under review dropped significantly,
The Best's Special Report, titled, "Rating Actions Decline, Upgrades Exceed Downgrades for L/H Insurers in 2022" states that the life/annuity and health segments combined saw a total of 26 upgrades and 15 downgrades, compared with 29 and 16, respectively, in the previous year. Nearly 75% of downgrades resulted primarily from declines in capitalization, which impacted insurers' balance sheet strength assessments.
"High levels of risk-adjusted capitalization, strong liquidity profiles and strong sales in the annuity segment have benefited L/A insurers. However, rising interest rates put balance sheets and risk management practices to the test throughout 2022," said Helen Andersen, industry analyst, AM Best. "Despite the challenges the COVID-19 pandemic created the past three years for health insurers, the majority continue to report favorable earnings. COVID is still affecting claims, but the overall impact has become less severe."
According to the report, the number of ratings under review was about half that of 2021 due to several acquisitions in 2021 that closed or previously acquired entities became better integrated into their parent organiztions, such that the rating no longer needed to remain under review.
Other highlights from the report include:
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=329778.
A video discussion of this report, along with ratings trends in the property/casualty segment, is available at http://www.ambest.com/v.asp?v=ambratingtrends323.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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