AM Best has affirmed the Financial Strength Rating of A+ (Superior) for The Allstate Corporation (NYSE: ALL) and its core subsidiaries, citing very strong balance sheet strength and robust operating performance.

The agency also upgraded the Long-Term Issuer Credit Rating of Castle Key Group members to "bb+" (Fair) from "bb" (Fair), reflecting significant growth in risk-adjusted capitalization.

Allstate Group Ratings Affirmed

AM Best maintained the A+ (Superior) Financial Strength Rating and "aa-" (Superior) Long-Term Issuer Credit Rating for members of the Allstate Insurance Group. The outlook for these ratings remains stable.

The affirmation reflects Allstate’s favorable market position in private passenger auto and homeowners’ insurance, supported by extensive distribution capabilities. Despite economic challenges and catastrophe pressures in 2022 and 2023, the company’s profit improvement plan—including rate increases and enhanced underwriting standards—has materially improved margins through 2025 and into the first half of 2026.

Key financial metrics supporting the rating include:

• Statutory surplus growth: 26% in 2025, marking the second consecutive year of double-digit growth.
• Financial leverage: Unadjusted leverage stood at 23.3% and adjusted leverage at 15.6% as of June 2026.
• Interest coverage: Exceeded 25 times as of year-end 2025.

AM Best noted that Allcorp maintains strong financial flexibility through access to capital markets. The Best Capital Adequacy Ratio (BCAR) improved materially to a very strong level by year-end 2025.

Subsidiary and Segment Updates

The agency affirmed ratings for several other entities within the group, all with stable outlooks unless specified:

• ASMI Auto Group: FSR of A- (Excellent) and Long-Term ICR of "a-" (Excellent). Ratings reflect very strong balance sheet strength and support from ultimate parent Allcorp.
• First Colonial Insurance Company: FSR of A (Excellent) and Long-Term ICR of "a" (Excellent).
• National Health Insurance Company: FSR of A (Excellent) and Long-Term ICR of "a+" (Excellent). Balance sheet strength assessed as strongest.
• National General Insurance Ltd.: FSR of A (Excellent) and Long-Term ICR of "a" (Excellent).

Allstate New Jersey Outlook Revised

AM Best revised the outlooks for Allstate New Jersey Insurance Group members from negative to stable. The FSR of A- (Excellent) and Long-Term ICR of "a-" (Excellent) were affirmed. This change recognizes material earnings improvement over the past two years and strengthened risk-adjusted capitalization via rate increases and tighter control over new business in high-exposure areas.

Castle Key Upgrade

Castle Key Group members received an upgrade in their Long-Term ICR to "bb+" (Fair) from "bb" (Fair). The FSR of B (Fair) was affirmed, with its outlook revised to positive from stable.

The upgrade reflects a significant improvement in risk-adjusted capitalization, measured by BCAR, which reached a strongest level in 2025 compared to adequate and weak levels in prior years. AM Best expects earnings at Castle Key to remain positive for the next two years, driven by improved underwriting and operating profitability.

What the Numbers Show

The divergence between Allstate’s statutory surplus growth of 26% in 2025 and its adjusted financial leverage of 15.6% as of June 2026 indicates that capital generation is outpacing debt accumulation. This dynamic supports the agency’s assessment of "very strong" balance sheet strength despite the sector-wide pressure from catastrophe events noted in recent years.

Argus Research analyst Kevin Heal downgraded Allstate Corporation (NYSE: ALL) from Buy to Hold. The rating change reflects a revised outlook for the insurer.

Analyst Action

The downgrade marks a shift in Argus Research’s stance on the company. No specific financial metrics or price targets were disclosed in the brief filing.

What the Numbers Show

The absence of accompanying quantitative data limits immediate analysis of the catalyst behind the rating change. Investors should monitor subsequent filings for detailed rationale.