A.M. Best issues negative outlook for D&O segment

A.M. Best Co. Monday issued a negative outlook for the directors and officers liability insurance segment, as growing capacity in the sector has led to lower pricing.

The Oldwick, New Jersey-based credit rating agency said premiums for D&O coverage have decreased nearly 20% since peaking at $14.9 billion in 2021 and are on track to be at the lowest level in nine years. It estimates premiums this year will reach $12 billion.

Supply has outpaced demand in the D&O market in recent years as a result of fewer initial public offerings and more companies entering the market without carrying legacy claims. Additionally, more insurers are expanding their coverage into the D&O market, A.M. Best said.