Downgrades

U.S. Life/Health Credit Rating Upgrades Outnumber Downgrades in First-Half 2020

The U.S. life/health industry saw more credit rating upgrades than downgrades in first-half 2020, driven primarily by improved levels of risk-adjusted capitalization. However, according to a new AM Best special report, negative rating actions could increase in the second half of the year as the COVID-19 pandemic negatively impacts companies’ sales, operations, operating performance and investments.

The Best’s Special Report, titled, “Life/Health Upgrades Outnumber Downgrades in First-Half 2020,” states that AM Best upgraded the Long-Term Issuer Credit Ratings of 12 rating units and downgraded four among life/annuity (L/A) and health carriers in the first half of 2020, compared with 15 upgrades and four downgrades in the first half of 2019. Upgrades were more concentrated in the L/A segment, which reported eight upgrades. Nearly 80% of rating actions in first-half of 2020 were affirmations, consistent with most years.

Positive rating developments for L/A/ carriers was mostly due to increased strategic

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3 Health Care ETFs Where Components Are Enduring Downgrades

After setting scintillating paces earlier this thanks to the race to develop a coronavirus vaccine, some health care exchange-traded funds are languishing.



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What Happened: It could be a case of election year jitters, frustrations over the vaccine timeline or both, but plenty of health care ETFs, particularly those emphasizing biotechnology and pharmaceuticals equities, are retreating.

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Wall Street isn’t taking the declines sitting down. In fact, a spate of recent downgrades by sell-side analysts are adding fuel to the fire.

“The area where analysts do seem to be worried–somewhat surprisingly given the race for a COVID vaccine–is on shares of Health Care stocks, particularly in the Biotech industry, according to the ETF Research Center (ETFRC).

Why It’s Important: ETFRC notes that of the 10 ETFs most afflicted by declines in sell-side ratings, six are health care funds, one of which is the Invesco

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