Credit: Nastudio/Adobe Stock
U.S. commercial lines are still rated as “stable,” according to AM Best, though performance among different business lines has varied widely this year.
AM Best maintained its stable rating for the commercial segment due to strong aggregate performance. The credit rating agency said factors like strong underwriting performance, operating ratios in the low-to-mid 80% range and returns on capital of about 10% for the first part of 2025 contributed to its decision.
“The stable outlook on this commercial segment reflects our expectation that the U.S. commercial lines segment will remain profitable in aggregate and will be resilient in the face of near- and longer-term challenges,” said Alan Murray, director at AM Best, in a statement.
But while some commercial lines are doing well, others are floundering.
On the successful side of the sector, workers’ compensation has maintained a combined ratio of close to 90% for the last five years, thanks in part to lower claims frequency. And while catastrophe losses have hit personal lines hard, commercial property has been less affected. Commercial property had a combined ratio of 88% in 2024, and rates declined in the first half of 2025 due to increased capacity and a softer reinsurance market.
General liability and commercial auto haven’t fared as well lately. General liability had a combined ratio of 120% in 2024. And commercial auto rate increases in recent years haven’t been enough to alleviate a consistent combined ratio of more than 100%.
Nuclear verdicts and social inflation have contributed to sector’s struggles, with most large verdicts coming from product liability, intellectual property and motor vehicle cases. Commercial auto is dealing with verdict inflation as well as higher repair costs, shortages of experienced drivers and increasing distracted driving issues.
Image credit: Nastudio/Adobe Stock
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