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FOR IMMEDIATE RELEASE
OLDWICK - FEBRUARY 14, 2018 10:02 AM (EST)
The number of Long-Term Issuer Credit Rating (Long-Term ICR) upgrades for the U.S. life/health industry outpaced downgrades in 2017, a turnaround from the previous two years when downgrades eclipsed upgrades, according to a new A.M. Best report.
The Best’s Special Report, titled, “Life/Health Sector Rating Upgrades Outpace Downgrades in 2017,” states that the change in direction was primarily driven by improving levels of risk-adjusted capitalization, particularly among life/annuity (L/A) carriers, owing partly to benign credit market conditions and favorable equity markets, which buoyed earnings.
Likewise, health insurers reported improved risk-adjusted capitalization, due to better operating results in the individual health care exchange business and, to a lesser extent, overall slower premium growth. Improved operating results were driven partly by consecutive years of high rate increases and a narrowing of provider networks.
A.M. Best reported 31 upgrades and 15 downgrades for life/health carriers in 2017, compared with 16 upgrades and 23 downgrades in 2016. Overall, A.M. Best took action on the Long-Term ICRs of 380 rating units, which describes either an individual insurer or a consolidation of companies and is the financial basis on which A.M. Best performs its Credit Rating (rating) evaluations. The vast majority of rating actions in 2017 were affirmations (77%).
The following are some other highlights from the report.
A.M. Best will continue to keep a close eye on the U.S. life/health sector’s earnings, premium trends and risk-adjusted capital levels, as well as hold discussions with management regarding their plans for 2019.
To access a copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=270544 .
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.