Rating Agency Notes Strong Underwriting and Overall Operating Performance in its Decision
OLDWICK – DECEMBER 03, 2025 08:09 AM (EST)
AM Best is maintaining its market segment outlook on the U.S. commercial lines segment at stable, reflecting its strong underwriting and overall operating performance, despite variations among specific lines of business.
Sustained strength in risk-adjusted pricing, combined with improved investment returns that have bolstered operating profitability in support of longer-tailed casualty lines are additional factors contributing to AM Best’s stable outlook. The report also cites adequate and stable reserve levels, even though certain casualty lines of business continue to develop adversely.
There are near term concerns that could prove problematic, including elevated casualty claims that reflect the multi-year impact of social inflation, and relatively high property claims costs. Another significant headwind is the elevated geopolitical risks and near-term policy uncertainty, including the impact of tariffs, which create uncertainty around inflation and supply chains.
“The stable outlook on this commercial segment reflects our expectation that the U.S. commercial lines segment will remain profitable in aggregate and will be resilient in the face of near- and longer-term challenges,” said Alan Murray, director, AM Best.
U.S. commercial lines insurers overall reported favorable underwriting and operating results through the first three quarters of 2025, as evidenced by composite combined ratios remaining in the mid-90-percent range.
AM Best expects that the majority of the segment’s carriers will maintain sound risk-adjusted capitalization levels. The stable outlook also reflects the dynamics and respective stable outlooks within the major underlying commercial sub-segments, including commercial property, workers’ compensation, surety, medical professional liability, among others. However, AM Best does have negative outlooks on sub-segments within this space, which include the general liability, commercial auto and directors & officers business lines.
According to the report, admitted carriers are maintaining caution in both the property and liability lines, leading significant numbers of commercial insureds to seek coverage in the excess & surplus market, which continues to benefit from favorable deal flow, given significant new entrants.
“Commercial insurers are leveraging technology and innovative products, including artificial intelligence, to enhance underwriting and pricing decisions,” said Carlos Wong-Fupuy, senior director, AM Best. “At the same time, a more direct focus on loss control and claims management is resulting in lower claims frequency and severity.”
To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=360459.
A video discussion of this report is available at http://www.ambest.com/v.asp?v=ambcommerciallines1225&AltSrc=182.
To view all Best’s Market Segment Outlooks, please visit http://www.ambest.com/ratings/RatingOutlook.asp.
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.
