OLDWICK, N.J.--(BUSINESS WIRE)--Aug 22, 2018--The U.S. life/health industry’s Credit Rating activity in the first half of 2018 saw upgrades outpace downgrades by a wider margin than in the first half of 2017, according to a new A.M. Best report. However, the number of ratings placed under review more than doubled the amount over the prior-year period.

The Best’s Special Report, titled, “Upgrades Outpace Downgrades for U.S. Life/Health in First Half 2018,” states that the year-over-year change in Long-Term Issuer Credit Rating development was driven primarily by improved levels of risk-adjusted capitalization for health and life/annuity carriers.

Health insurers reported better operating results for the Patient Protection and Affordable Care Act individual exchange business, and to a lesser extent, overall slower premium revenue growth. Improved operating results were driven partly by both consecutive years of high rate increases and a narrowing of provider networks. Life/annuity carriers reported improved levels of risk-adjusted capitalization, owing partly to benign credit market conditions and generally favorable equity markets, which buoyed earnings. However, a prolonged low interest rate environment and a lack of organic growth continue to pressure earnings.

A.M. Best upgraded 18 ratings and downgraded eight from among life/annuity and health carriers in the first half of 2018, compared with 15 upgrades and 13 downgrades in the first half of 2017. Upgrades were almost evenly divided between the two segments, while the life/annuity segment reported slightly more downgrades than the health segment. In the first half of 2017, more ratings were upgraded in the life/annuity segment than in the health segment, while downgrades were evenly divided between the two segments.

In the first-half of 2018, 25 life/health rating units were placed under review, compared with 11 in the first-half of 2017, mainly reflecting elevated merger and acquisition activity. Affirmations remained the most common rating action for the life/health industry at 76%, consistent with most years.

A.M. Best maintains its negative market segment outlook on the life/annuity industry segment and has a stable outlook on the health segment. A.M. Best believes that, despite expectations of modest premium growth for the remainder of 2018 in the life/annuity segment, many insurers will continue to struggle with the complexities of managing the heavy regulatory environment, while attempting to make the necessary distribution enhancements to gain market share. Additionally, A.M. Best will continue to monitor health insurer earnings, premium growth trends and risk-adjusted capital, as well as closely follow any legislative developments that could impact health insurers.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=277120.

A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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CONTACT: A.M. Best

Brian Virostek

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+1 908 439 2200, ext. 5531

brian.virostek@ambest.com

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Michael Adams

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+1 908 439 2200, ext. 5133

michael.adams@ambest.com

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Jim Peavy

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KEYWORD: UNITED STATES EUROPE NORTH AMERICA NEW JERSEY

INDUSTRY KEYWORD: PROFESSIONAL SERVICES BANKING FINANCE INSURANCE

SOURCE: A.M. Best

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PUB: 08/22/2018 10:42 AM/DISC: 08/22/2018 10:42 AM

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