Best Special Report: Lowering Credit Ratings, Under Review in U.S. Life / Health Insurance Industry Rising in H1 2021

Credit Report

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OLDWICK, New Jersey – (COMMERCIAL THREAD) – The number of credit rating downgrades and revisions for the US Life / Health sector (L / H) as a percentage of total rating stocks increased moderately in the first half of 2021, compared to first semester of the previous year,

the Best’s special report, titled “Mixed Life / Health Rating Activity for H1 2021,” indicates that rating actions increased in H1 2021, with 159 for L / H carriers, up from 140 during the same period in 2020. amounted to 4.4% of rating shares, compared to 2.9% over the same period of the previous year. The scores under review were also elevated in the first half of 2021, dropping from 4.3% to 9.4% in the first half of 2020. The majority of the scores under review were due to uncertainties related to merger and development activities. ‘acquisition. Rating upgrades and assigned ratings were in line with the previous year, while assertions (78%) continue to be the most common rating action.

Here are other highlights from the report:

  • In the first half of 2021, there were four rating upgrades and no downgrades in the healthcare segment. In comparison, there have been four uplifts and two downgrades for the first half of 2020. These rating activities have reflected generally favorable earnings in recent years, bolstered by the COVID-19 pandemic, with insurers reporting higher profits. higher than expected in 2020, leading to higher absolute and risk-adjusted funding levels; and

  • During the first half of 2021, there were seven rating upgrades and seven rating downgrades in the life / annuity segment, compared to eight upgrades and two downgrades for the first half of 2020. Life / annuity insurers continue to face challenges. challenges related to COVID in 2021., with high mortality, extreme fluctuations in equity markets, a low interest rate environment and tightening spreads.

Most of the challenges facing the US L / H industry are not new, according to the report. So far, in the second half of 2021, interest rates remain low and the Federal Reserve has reported only two interest rate hikes by the end of 2023. The low interest rate environment will continue to put pressure on life / annuity insurers operating in spread business as changes in longer term interest rate assumptions will impact reserves and prices. The health sector’s 2021 financial results will depend on how the many uncertainties are resolved, as the COVID-19 pandemic, economic recovery and the policies of a new administration will have the biggest impact on the industry.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=311844.

AM Best is a global credit rating agency, news publisher, and data analytics provider specializing in the insurance industry. Based in the United States, the company operates in more than 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information visit www.ambest.com.

Copyright © 2021 by AM Best Rating Services, Inc. and / or its affiliates. ALL RIGHTS RESERVED.

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