11.08.2016, 18:16
P/C Industry Sees Favorable Rating Activity in First-Half 2016
OREANDA-NEWS. The U.S. property/casualty (P/C) industry’s rating activity over the first half of 2016 turned favorable as upgrades and positive outlooks outpaced downgrades and negative outlooks, a reversal from the same prior-year period, according to a new A.M. Best special report.
The Best’s Special Report, titled, “P/C Industry Sees Favorable Rating Activity in First Half of 2016, Reversing Negative Prior-Year Trend,” states that the turn-around reflected favorable operating performance with moderate net premium written growth, profitable underwriting results and positive net income. Other factors that were behind the favorable rating activity include increased pricing sophistication, greater emphasis on tighter underwriting standards, changes in organizational structure due to increased parental support and increased merger and acquisition activity.
Issuer credit rating (ICR) upgrades moderately outpaced ICR downgrades in the first half of 2016 (27 versus 21), with all rating changes basically split between personal and commercial lines. This marked a notable change from the same period in 2015, when both P/C industry segments recorded more downgrades than upgrades (36 versus 23). In the reinsurance segment, there were no rating changes during the first half of 2016 or the first half of 2015, reflecting the strength of capital in that segment. In addition, rating affirmations remained the most common rating action at 81.3%, reflecting the overall stability of the U.S. P/C industry.
Although the commercial and personal lines segments each have stable outlooks on approximately 77% of its ratings, the percentage of negative outlooks continues to outpace the percentage of positive outlooks in each segment. In the commercial lines segment, 11.2% of its rating units had a negative outlook versus 6.7% on the positive side, and in the personal line segment, the split was 11.5% to 7.6%. The report also summarizes rating activity among the top 10 largest rating units/companies in the two major segments.
The Best’s Special Report, titled, “P/C Industry Sees Favorable Rating Activity in First Half of 2016, Reversing Negative Prior-Year Trend,” states that the turn-around reflected favorable operating performance with moderate net premium written growth, profitable underwriting results and positive net income. Other factors that were behind the favorable rating activity include increased pricing sophistication, greater emphasis on tighter underwriting standards, changes in organizational structure due to increased parental support and increased merger and acquisition activity.
Issuer credit rating (ICR) upgrades moderately outpaced ICR downgrades in the first half of 2016 (27 versus 21), with all rating changes basically split between personal and commercial lines. This marked a notable change from the same period in 2015, when both P/C industry segments recorded more downgrades than upgrades (36 versus 23). In the reinsurance segment, there were no rating changes during the first half of 2016 or the first half of 2015, reflecting the strength of capital in that segment. In addition, rating affirmations remained the most common rating action at 81.3%, reflecting the overall stability of the U.S. P/C industry.
Although the commercial and personal lines segments each have stable outlooks on approximately 77% of its ratings, the percentage of negative outlooks continues to outpace the percentage of positive outlooks in each segment. In the commercial lines segment, 11.2% of its rating units had a negative outlook versus 6.7% on the positive side, and in the personal line segment, the split was 11.5% to 7.6%. The report also summarizes rating activity among the top 10 largest rating units/companies in the two major segments.
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