AM Best Report: Rise in Ratings for Life/Annuity and Health Insurers in H1 2026

A recent AM Best report has unveiled a notable rise in rating upgrades for U.S. life/annuity and health insurers in the first half of 2026 compared to the same timeframe in 2025, marking a positive momentum shift, especially in the life/annuity sector.

The report titled “More Upgrades, Fewer Downgrades for L/H Insurers in First Half 2026,” underscores significant growth driven by annuity sales and strong capitalization. This growth reflects a robust financial outlook for life insurance companies, supported by surplus expansion and favorable risk-based capital. Helen Andersen, an industry analyst at AM Best, highlighted life/annuity insurers' resilience, attributing it to effective asset/liability management and strategic protective measures. Despite these positive developments, certain insurers remain dependent on reinsurance for capital management, utilizing both domestic and offshore solutions.

Health insurers also maintained solid capital positions, leveraging favorable investment incomes to offset ongoing margin pressures from rising claims costs. However, achieving a sustainable balance will likely require several pricing cycles as insurers implement strategic initiatives to address these challenges. Notably, the life insurance sector reported five upgrades against three downgrades, presenting an improvement over 2025. The rating improvements partly stem from enhanced operational performance and stronger enterprise risk management, with one-third of rating increases linked to these factors.

Key Highlights from the AM Best Report

• The life insurance sector experienced five upgrades and three downgrades in H1 2026.
• A third of the rating increases were due to better operating performance, with another third owing to enhanced risk management practices.
• Despite these developments, 82.3% of ratings actions were affirmations, similar to the previous year's trend.

In summary, while the landscape for life/annuity and health insurers shows promising improvements, ongoing reliance on strategies like reinsurance emphasizes the complex balancing act required for sustained growth. For a detailed view of these findings, the complete report is accessible on AM Best’s website.