Prime Insurance Company Rating Downgrade: What You Need to Know

AM Best has adjusted the ratings for Prime Insurance Company, downgrading its Financial Strength Rating from an A (Excellent) to an A- (Excellent) and Long-Term Issuer Credit Rating from "a" (Excellent) to "a-" (Excellent). These ratings are currently under review with a potential for negative implications. This revision underscores the importance of regulatory compliance requirements and raises questions about AI-driven prior authorization delays.

The evaluation of Prime's balance sheet highlights strong financial strength combined with adequate operating performance and sound enterprise risk management practices. However, concerns have emerged over Prime's loss reserve adequacy and declining risk-adjusted capitalization, which have led to a weaker balance sheet assessment. Notably, in 2024, Prime reported adverse reserve development of $111 million, or 31% of the previous year's reserves, affecting the loss ratio by 40 points.

Prime Insurance Company specializes in the commercial auto liability sector, a challenging market due to increasing loss costs and social inflation. Despite these challenges, Prime has achieved growth in the excess and surplus lines sector through strategic pricing and tailored underwriting terms. The rating change emphasizes the need to reassess Prime’s accident-year results, aligning more closely with industry standards and regulatory compliance. AM Best's ongoing review will continue until the release of Prime's fourth-quarter 2025 financial statements and risk management evaluations.

For further insights and disclosures, AM Best's website offers comprehensive resources on regulatory standards and industry trends. AM Best is a leading global credit rating agency in the insurance sector, with operations across more than 100 countries, ensuring regulatory compliance and maintaining a strong presence in major global markets.