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Best’s Special Report: Credit Rating Upgrades in US Life/Health Insurance Segment Slightly Outpace Downgrades in 2023

Issuer Credit Rating (rating) upgrades in the U.S. life/health insurance segments declined to 18 in 2023 from 26 in the previous year, while the number of initial ratings, ratings placed under review and downgrades increased, according to a new AM Best special report.

The Best’s Special Report, titled, “US Life/Health Upgrades Slightly Outpace Downgrades in 2023,” notes that balance sheet strength drove most upgrades and downgrades, emphasizing the importance of adequate risk-adjusted capital. Inflation also hampered profitability across both segments. Rating downgrades ticked up in 2023 to 17 from 15 in 2022, while affirmations accounted for the bulk of rating actions at 80%.

Other highlights from the report include:

  • AM Best assigned 13 initial ratings to life/health carriers in 2023, or 4% of total rating actions. In 2022, 11 ratings were assigned to life/health insurers.
  • In the health insurance segment, eight ratings were upgraded in 2023 compared with 11 in 2022, and nine were downgraded in 2023, one more than the eight recorded in 2022. Downgrades in the health segment were driven by declines in risk-adjusted capital attributable to higher-than-expected operating losses, a challenging investment market, and unfavorable trends in admitted assets.
  • Ten ratings were upgraded in 2023 and eight were downgraded in the life/annuity segment, versus 15 upgrades and seven downgrades in 2022. Factors prompting downgrades include competitive pressures, capital strain stemming from captive use, and unfavorable business run-off results.
  • Ratings on life/annuity carriers were placed under review 14 times during 2023, most with developing or negative implications. The high number of under reviews was due to the robust transaction activity continuing in the industry. Five health carriers were placed under review in 2023, all with either developing or negative implications.
  • Negative outlooks rose dramatically to 9% at year-end 2023 from 5.3% at year-end 2022, with most occurring in the life/annuity segment due to declining capitalization due to mortality experience, heightened execution risk on business initiatives, and new business strain.

To access the full copy of this special report, please visit

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

Copyright © 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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