AM Best: Sharp Decrease in Downgrades for U.S. P&C Carriers

• By: AnneMarie McPherson Spears
• November 11, 2026

The property & casualty market continues to stabilize with the first half of 2026 bringing far fewer downgrades for U.S. property & casualty insurers than the same period last year, AM Best said in a recent report. There were about half as many downgrades in the first half of 2026 compared to the first half of 2025 while upgrades increased to 8.2% of total rating actions, up from 5.5%.

Overall, the number of total rating actions declined to 292 in the first half of 2026, down from 326 in the first half of 2025. In both periods, 80% of rating actions were affirmations, which is when a company’s rating stays the same. AM Best also assigned only 8 initial ratings—assigned to the first review of a company’s financials—in the first half of 2026, compared to 17 in 2025.

The most common contributor to P&C ratings upgrades was improvements to operating performance, driving about a third of upgrades. Improved balance sheet strength and structural changes, such as an acquisition or increased integration, were other impactful factors.

While carriers continue to face inflation and rising loss costs, the rightsizing of rates over the past couple of years has better equipped personal lines insurers to handle the challenging economic conditions, AM Best notes. Additionally, commercial lines carriers weathered the impacts of social inflation to report solid results thanks to higher yields and overall investment performance.

However, commercial auto and commercial casualty “face significant challenges,” the report said, noting that downgrades were concentrated in those lines.

More than half of downgrades were caused by poor operating performance, with some carriers struggling to keep losses under control. Adverse reserve development was another common factor, with deteriorating balance sheet metrics leading to a quarter of those downgrades.

AM Best maintains its stable outlook for both personal lines and commercial lines. Personal lines stability is thanks to “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 report said.

For commercial lines, “strong underwriting performance, improved investment returns, sustained pricing strength and disciplined risk management” maintained the overall stable outlook.

On a carrier level, the number of stable outlooks held at about 80% from the end of 2025 to the middle of 2026. Positive outlooks fell from 7.4% to 6.8% and negative outlooks remained at 11%.

In personal lines, stable outlooks increased from 70.6% at the end of 2025 to 75% in mid-2026, while positive, negative and under review outlooks dropped. With commercial lines, 82.3% of commercial carriers had a stable outlook in mid-2026, with positive decreasing slightly and negative and under review increasing slightly.

AnneMarie McPherson Spears is IA news editor.