U.S. P/C Insurer Downgrades Fall Sharply as Rating Upgrades Increase
There were substantially fewer rating downgrades for U.S. P/C and more upgrades in the first half of 2026, according to a new AM Best report. Overall, issuer Credit Rating downgrades among U.S. property/casualty insurers were nearly half as many in the first six months of 2026 as compared to the same period last year. More encouragingly, the report also noted that the number of rating upgrades also increased by a third.
Rating Affirmations Account for 81.5% of Actions
The Best’s Special Report entitled, “Substantially Fewer Downgrades for U.S. Property/Casualty Insurers in First Half 2026,” found that rating affirmations remained the most common action, accounting for 81.5% of P/C insurer rating actions during the first half of the year. The overall number of rating actions declined from 326 in the first half of 2025 to 292 in the first half of 2026.
“Given the rate increases earning through in the overall P/C segment, personal lines writers are better positioned to navigate these conditions than they have been for the past few years,” said Helen Andersen, industry analyst at AM Best.
According to the report, carriers across the industry continue to feel the effects of inflation and rising reinsurance costs. So far in 2026, however, P/C insurers have benefited from relatively benign conditions in terms of the impact of major weather events.
Commercial Lines Results
Commercial lines carriers have reported solid results despite continuing to contend with social inflation. Results also benefited from higher yields and overall investment performance.
“Still, some lines—in particular, commercial auto and commercial casualty—face significant challenges,” Andersen said.
Operating Performance Drives Most Downgrades
Among the report’s other findings:
- The majority of 2026 downgrades involved commercial casualty and commercial auto carriers, reflecting ongoing challenges in those lines.
- More than half of the downgrades were driven by poor operating performance, as some insurers struggled to keep losses under control. Deteriorating balance sheet metrics accounted for another 27.3% of downgrades, driven by adverse reserve development.
- Changes in operating performance were the most common driver of P/C rating upgrades, accounting for approximately one-third of upgrades. Improved balance sheet strength and changes in rating units resulting from structural changes within an organization each accounted for 20.8% of upgrades.
Readers interested in purchasing a copy of this special report can access it here: http://www3.ambest.com/bestweek/purchase.asp?record_code=369203.
