AM Best: P&C Rating Upgrades Outnumber Downgrades

• By: Will Jones
• March 18, 2026

For the first time since 2021, rating upgrades outnumbered downgrades for the U.S. property & casualty industry in 2025, according to a new report from AM Best.

AM Best, a global credit rating agency specializing in the insurance industry, said that the shift was driven by the performance within the commercial insurance segment, noting that rating affirmations were the most common rating action taken across all segments in 2025, increasing to 83.9% of activity, compared with 77.7% in 2024.

Meanwhile, half as many ratings were placed under review last year compared to 2024. This was due in part to a decline in merger & acquisition activity and to less impact from catastrophes, according to the report.

In the face of this chaotic time for the industry, insurance carrier ratings provide valuable insights into the financial strength, stability and reputation of insurers and help you when recommending coverage options to your clients.

The majority of the 2025 downgrades were on carriers in the homeowners or personal auto segments, reflecting inflation, heightened catastrophe losses, more frequent, severe secondary perils, and higher reinsurance costs and retentions.

Rating downgrades declined to 4% of all rating actions in 2025, compared to approximately 6% in 2024. Upgrades also decreased marginally.

The most common driver of p&c rating upgrades was improved operating performance, accounting for 40% of upgrades. Comparatively, a third of the rating downgrades were due to poor operating performance.

After a peak in underwriting profitability in 2025, the U.S. p&c insurance industry is expected to enter a softening market in 2026, “as rising competition, easing premium rates and the impact of persistent inflation on claims push up the combined ratio,” according to Swiss Re’s U.S. P&C Outlook.

While premium growth decelerated to 4% in the third quarter of 2025 from 9% at prior year-to-date, the industry delivered a combined ratio of 89% in 2025, the lowest quarterly result since at least 2001, the SwissRe report said.

In a separate report, AM Best reported that rating affirmations in the U.S. life-health segment accounted for the large majority of overall rating actions, totaling 81.3%.

The health segment experienced seven upgrades and 10 downgrades in 2025, compared to five upgrades and seven downgrades in 2024, while the life and annuity segment experienced eight upgrades and 11 downgrades, a significant improvement from 2024’s six upgrades and 20 downgrades.

Will Jones is IA editor-in-chief.