AM Best Downgrades Issuer Credit Rating of New York Schools Insurance Reciprocal

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” from “a+” and affirmed the Financial Strength Rating (FSR) of A (Excellent) of New York Schools Insurance Reciprocal (NYSIR) (Uniondale, NY). The outlook of these Credit Ratings (ratings) has been revised to negative from stable.

The ratings reflect NYSIR’s balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

The downgrade of the Long-Term ICR reflects the new and emerging challenges associated with the company’s single-state orientation in New York and a customer profile that has become the target of a recent change in state law that broadens the statute of limitations on child sex abuse claims.

As a leading insurer of public schools in New York since 1989, NYSIR’s business profile likely makes it subject to potential claims and litigation arising from New York’s Child Victims Act of 2019. As a consequence, AM Best has revised its assessment of NYSIR’s business profile to limited from neutral. Conversely, NYSIR still benefits from its leading market position, strong subscriber retention, the strong support of its membership and deep roots in New York’s public education environment. This action also considers the potential further impact to NYSIR’s operating results.

In January 2019, the New York State Legislature passed the Child Victims Act, increasing the statute of limitations by allowing child sex abuse survivors to sue their abusers until the age of 55 in civil cases, and bring felony criminal charges until the age of 28. There also is a one-year window in the legislation that allows victims of all ages and time scales to come forward.

The negative outlooks reflect some of the prospective challenges related to this change in law, as well as AM Best’s concern over the company’s declining operating performance in recent years, after a prolonged period of better than average results when compared to industry averages. Despite these challenges, NYSIR’s operating performance continues to be viewed as strong; however, it is uncertain whether a strong operating performance is sustainable; hence the negative outlook.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Vicky Riggs

Senior Financial Analyst

+1 908 439 2200, ext. 5039

[email protected]

Daniel Ryan

Senior Director

+1 908 439 2200, ext. 5325

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Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

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Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

[email protected]

Source: AM Best