A.M. Best Downgrades Ratings of New York Municipal Insurance Reciprocal

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has downgraded the financial strength rating to A- (Excellent) from A (Excellent) and the issuer credit rating (ICR) to “a-” from “a” of New York Municipal Insurance Reciprocal (NYMIR) (headquartered in Albany, NY). The outlook for both ratings has been revised to negative from stable.

The ratings downgrade primarily reflects NYMIR’s continued weak operating performance, including higher than expected underwriting and operating losses. This is mainly due to NYMIR’s premium growth for the past five years and increased loss activity during 2014. The premium growth also has resulted in an increased IBNR load, the more recent claim activity and potential adverse development.

The company’s negative operating performance was driven by underwriting losses and adverse development from the law enforcement, public official, and auto liability coverage lines in 2014. Additional negative rating factors include the company’s elevated expense structure related to that recent growth and geographic concentration in the state of New York.

Partially offsetting these negative rating factors is NYMIR’s long-standing market presence, conservative investment risk profile and high policyholder retention. NYMIR enjoys a strong market niche derived from sponsorships received from three statewide municipal associations. NYMIR benefits from its status as a tax-exempt, not-for-profit reciprocal.

The negative outlook reflects A.M. Best’s expectation of continued underwriting losses through 2015 and challenges the company faces to improve results given competitive market conditions. As a result, weak earnings may result in a continued decline in risk-adjusted capitalization in the near term. Management is reacting to recent results with measures designed to address these recent challenges.

Negative pressure on the ratings will persist if risk-adjusted capitalization continues to deteriorate or if operating performance begins to decline. Any future positive action will require improvement in risk-adjusted capitalization and favorable reserve development while maintaining favorable operating performance.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

• Risk Management and the Rating Process for Insurance Companies
• Alternative Risk Transfer
• Catastrophe Analysis in A.M. Best Ratings
• The Treatment of Terrorism Risk in the Rating Evaluation
• Understanding BCAR for Property/Casualty Insurers

This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150604006277/en/

A.M. Best Company, Inc.
Marien C. Villegas, 908-439-2200, ext. 5222
Financial Analyst
[email protected]
or
Robert DeRose, 908-439-2200, ext. 5453
Vice President
[email protected]
or
Christopher Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
[email protected]
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Company, Inc.

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