Press Release - JUNE 06, 2019
AM Best Downgrades Issuer Credit Rating of New York Schools Insurance Reciprocal
FOR IMMEDIATE RELEASE
OLDWICK - JUNE 06, 2019
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.
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