Rating change activity in the U.S. life/health segment was noticeably lower in the first half of 2025, with downgrades also decreasing compared with the same prior-year period, according to a new AM Best special report.

The Best’s Special Report, titled, “Fewer L/H Rating Changes in First Half 2025,” notes that U.S. life/annuity insurers continue to benefit from another year of favorable interest rates, which drove premium growth in 2024 to a new high. “Life companies remain well-capitalized, with increasing surplus growth over the past few years,” said Helen Andersen, industry analyst, AM Best.

Health carriers also remain well-capitalized and have reported favorable net investment income. However, the continuation of higher medical utilization trends and heightened legislative and regulatory concerns have pressured margins within the health insurance industry. According to the report, smaller, less diversified carriers without a strong parent to provide capital support are expected to struggle more in the face of industry headwinds.

Among the report’s other highlights:

• Affirmations in the L/H segment accounted for the large majority of overall rating actions, totaling 82.3%.
• The health segment saw two upgrades and one downgrade in the first half of 2025, which were two fewer downgrades than the same prior year period. The 2025 downgrade was driven by a deterioration in the balance sheet strength assessment.
• The life segment experienced three upgrades and four downgrades, with the same number of upgrades and four fewer downgrades than in the first half of the previous year. Three of the four downgrades were driven by a diminished business profile.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=359549.

A video discussion of this report also is available at http://www.ambest.com/v.asp?v=ambpcactivity1125&AltSrc=182.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing 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.

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