AM Best Revises Outlooks to Stable for New York Schools Insurance Reciprocal

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

The Credit Ratings (ratings) reflect NYSIR’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

NYSIR’s outlooks have been revised to stable from negative as a result of the reciprocal’s immaterial financial impact expected from the New York Child Victims Act of 2019 (Child Victims Act) and operating performance stabilizing as a result of management actions, including coverage changes, rate increases, and non-renewal of underperforming districts. In addition, NYSIR has entered into an adverse development cover treaty, signed a new management contract with Wright Risk Management (WRM), among other initiatives, which AM Best expects to keep NYSIR’s operating performance in the adequate range.

The affirmation of the Long-Term ICR reflects the change in NYSIR’s business profile assessment to neutral from limited. NYSIR was faced with the potential challenges of the Child Victims Act, which expired in August 2021, and resulted in minimal impact to the reciprocal’s financial results. NYSIR continues to be the leading insurer of public schools in New York benefiting from its leading market position, strong subscriber retention, exclusive partnerships with statewide education associations, and strong support by its schools communities. NYSIR benefits from its product diversification and its 33-year partnership with WRM, which performs many of the reciprocal’s processes. Although the reciprocal provides multiple lines of coverage, partially offsetting positive attributes are the reciprocal’s mono-state concentration in New York and concentration in the school segment, which may create further headwinds for the reciprocal.

NYSIR’s operating performance assessment has been changed to adequate from strong. Despite stabilizing in recent years, the reciprocal has experienced some deterioration and volatility in results over the most recent five-year period, which has led to the change in NYSIR’s operating performance assessment. Overall, results have been impacted by several property catastrophe losses and large liability losses, as well as prudent reserving for the uncertainties surrounding outstanding Child Victims Act claims, social inflation, and increasing loss costs in New York. NYSIR’s overall earnings have been bolstered by investment gains on its conservative investment portfolio, which is expected to continue to support the reciprocal’s adequate operating performance and member-driven objectives over the long term.

AM Best assesses NYSIR’s ERM program as appropriate. NYSIR’s ERM program is designed specifically for schools and the challenges its members may face. Management continues to respond proactively to changes in regulatory, judicial and legislative challenges in New York. AM Best expects the reciprocal’s risk management program to continue to support the reciprocal’s business profile and operating performance.

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 Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Anthony Molinaro
Senior Financial Analyst

+1 908 439 2200, ext. 5608

anthony.molinaro@ambest.com

Christopher Sharkey
Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Vicky Riggs
Associate Director

+1 908 439 2200, ext. 5039

vicky.riggs@ambest.com

Jeff Mango
Managing Director,

Strategy Communications

+1 908 439 2200, ext. 5204

jeffrey.mango@ambest.com

Source: AM Best