US L/H industry sees higher number of credit rating upgrades in H1 2022

Written by Adam Cadle

30/08/2022

The US life/health insurance industry saw a higher number of credit rating upgrades in H1 2022 compared with the same prior-year period, with improved capitalisation levels a driving force, AM Best has said.

Rating downgrades decreased in this period mainly due to the removal of a ratings lift owning to a decline in the strategic importance to the parent due to mergers and acquisitions. In the life/annuity segment, 10 ratings were upgraded and three were downgraded in H1 2022, compared with seven upgrades and seven downgrades in H1 2021. The percentage of L/H ratings placed under review declined in H1 2022, to 6.7% from 9.4%. Ratings on six L/A carriers and four health carriers were placed under review during H1 2022, due mostly to M&A.

AM Best’s outlook for the US L/A and health market segments is stable. According to AM Best, and given the pressures of the low interest environment over the last decade, higher interest rates will be welcomed by the L/A insurers – provided the increase is gradual. The majority of US health insurers have strong levels of risk adjusted capitalisation and good liquidity sufficient to withstand COVID-19 uncertainties ahead.

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