AM Best’s latest special report on the long-term impairment rates of U.S.-domiciled insurance companies states that no insurers rated by AM Best became impaired in 2023.
The Best’s Special Report, titled, “Best’s Impairment Rate and Rating Transition Study — 1977 to 2023,” marks AM Best’s 21st study on the long-term impairment rates of rated U.S.-domiciled insurance companies. The analysis covers 46 one-year periods from Dec. 31, 1977, to Dec. 31, 2023, and the term impairments refers to insurers that became impaired and had a Best’s Financial Strength Rating or Long-Term Issuer Credit Rating at the time of impairment. AM Best designates an insurer as a financially impaired company upon the public placement of the company, via public court order or other international equivalent, into conservation, rehabilitation and/or insolvent liquidation.
The report notes that the increase in frequency and severity of catastrophe events, especially secondary perils, clearly has pressured more insurers in recent years. Since the start of 2021, 20 companies became impaired due to natural catastrophes; 14 were domiciled in Florida or Louisiana. Additionally, none of these 20 companies were rated by AM Best at the time of impairment; more than half were never rated by AM Best.
AM Best notes that several changes have been made with this year’s report compared with previous ones, including the elimination of gross impairments, which included impairments that occurred after ratings withdrawals.
To access a copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=347700.
To view a related Best’s Commentary, titled, “Impairments of AM Best-Rated Insurers Have Declined Since 2001,” released in conjunction with this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=347699.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
Copyright © 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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