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.

Contacts

Vicky Riggs
Senior Financial Analyst
+1 908
439 2200, ext. 5039
vicky.riggs@ambest.com

Daniel Ryan
Senior Director
+1 908 439 2200,
ext. 5325
daniel.ryan@ambest.com

Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644
james.peavy@ambest.com