2020 AM Best Annual Report Highlights

About the report

Produced through the cooperation of AM Best and the Foundation, AM Best's 2020 Special Report, U.S. Surplus Lines - Segment Review is one of our most important tools in promoting and illustrating the industry’s strength and stability. 

The report provides AM Best’s perspective on the state of the market and the relative positions of carriers in the market, and it examines the surplus lines sector’s financial condition and ratings distribution, market trends, regulatory and legislative developments, distribution issues, and impairment trends. The report also includes the results of AM Best’s survey of surplus lines insurers measuring the proportion of surplus lines premium derived from various distribution channels. AM Best’s survey results indicated the largest distributors of surplus lines products continue to be wholesale agents and brokers without binding authority.

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2020 Report Highlights

  • Growth of 12.8% in surplus lines direct premium written in 2019, with surplus lines premium of $56.3 billion, setting a new record.
  • Domestic company growth of 14.7%, the highest since 2003.
  • No financial impairments in the surplus lines segment, in contrast to 13 admitted property/casualty company impairments in 2019. Since 2013, AM Best has reported just one surplus lines company impairment, in contrast to the admitted property/casualty industry’s 252 financial impairments.
  • Domestic professional surplus lines insurers continue to maintain a higher proportion of secure ratings than the overall property/casualty industry. Through midyear 2020, 100% of surplus lines companies maintained secure AM Best ratings compared to 96.9% for the total property/casualty industry, with surplus lines carriers having much higher proportions in the Exceptional, Superior and Excellent rating categories.
  • In the retrospective on page three of the report, AM Best continues to note that, despite numerous economic, regulatory, legislative and market challenges, surplus lines insurers’ market share has more than doubled in size over the last 20 years, from 3.6% of total property/casualty direct premiums written in 2000 to 7.8% at the end of 2019. We are also pleased to see that surplus lines as a percentage of commercial lines direct written premium grew from 7.1% to 16.2% over the same time period.
  • Section II of the report measures the surplus segment’s financial performance, noting favorable performance in relation to the broader P&C industry over the longer term.