US P/C Insurers See Fewer Ratings Downgrades in H1 2026 on Improved Performance

The US property/casualty insurance segment saw substantially fewer ratings downgrades with more ratings upgrades in the first half of 2026 — mostly related to either poor or improved operating performance, according to AM Best.

There were about half as many downgrades in the first half of 2026 — or 3.8% of total rating actions, compared to 6.1% in the same period last year, said the ratings agency in a report titled “Substantially Fewer Downgrades for US P/C Insurers in First Half of 2026.”

Upgrades increased to 8.2% of total rating actions in the first half of 2026, compared to 5.5% in H1 2025, the report continued.

Operating performance drove a high proportion of both upgrades and downgrades, said AM Best, noting that the majority of 2026 downgrades occurred on commercial casualty and commercial auto carriers, reflecting the ongoing challenges in these lines.

“Over half of downgrades were driven by poor operating performance, as some insurers have struggled to keep losses under control. Deteriorated balance sheet metrics drove a further 27.3% of downgrades driven by adverse reserve development,” the report explained. “The remaining downgrades were driven by changes to multiple blocks, both of which included balance sheet strength.” (See related chart below.)

At the same time, AM Best said improvements in operating performance drove about one-third of upgrades. These drivers include sizable rate increases (which have been earned through the balance sheet), maintaining underwriting discipline, and improved investment returns (despite equity market volatility).

While carriers across the industry continue to experience the impact of inflation and rising reinsurance costs, AM Best noted that US P/C insurers have benefited so far from a “relatively benign” year for claims.

“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, AM Best, in comments accompanying the report.

“Commercial lines carriers have reported solid results despite having to contend with social inflation. Results were boosted by higher yields and overall investment performance,” the AM Best report said.

Other highlights from the report include:

• AM Best maintained a stable outlook for the US personal lines segment in December 2025, citing improved underwriting performance due to an aggressive push for rate adequacy, in conjunction with rising investment yields, moderating trends in reinsurance pricing and availability, and improving catastrophe risk management practices.
• The US commercial lines segment is the largest and accounted for the most stable outlooks, said the ratings agency, noting that as of June 30, 2026, 82.3% of commercial writers had a stable outlook. Positive outlooks declined by one rating unit, negative outlooks increased by 0.6%, and “under reviews rose by 0.8%.
• AM Best maintains a stable outlook for the commercial lines segment, citing strong underwriting performance, improved investment returns, sustained pricing strength, and disciplined risk management.

Topics USA Carriers Property Casualty