A.M. Best ratings actions slow in market turmoil

Upgrades of U.S. property and casualty insurers by A.M. Best Co. barely outpaced downgrades in 2008, following two years in which the numbers tilted heavily in a positive direction.
In its special report, Ratings Actions Slow Down as Turmoil Grips P&C Industry, A.M. Best notes that downgrades of property and casualty insurers totalled 57 in 2008 — up from 43 in 2007, but still down sharply from the 97 recorded in 2004.
Upgrades totalled 59, returning to levels seen in 2004 and 2005 following a sharp spike to 128 in 2006 and 87 in 2007.
Upgrades in commercial lines outpaced downgrades 33 to 32, while personal line carriers saw 25 upgrades and 24 downgrades. Reinsurers saw one upgrade and one downgrade, the report says.
“The U.S. property/casualty industry’s 2008 operating results were marked by ongoing soft market conditions, above-average catastrophe losses, higher underwriting losses in the mortgage and financial guaranty segments, continued turmoil in the credit markets and extreme volatility in equity markets,” the report says.
“As a result, A.M. Best expects the U.S. property/casualty industry’s net income — driven by a combination of deteriorating underwriting and investment results — to show a plunge of nearly 80% to [US]$14 billion in 2008.”