OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Park Assurance Company (Park) (Burlington, VT). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Park’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
The ratings acknowledge Park’s sophisticated risk management strategy, conservative investment portfolio, experienced management team, and integral role as a single-parent captive of JPMorgan Chase Holdings, LLC, which is a subsidiary of JPMorgan Chase & Co. (JPMorgan Chase) [NYSE: JPM], a leading global financial services group. Park provides JPMorgan Chase with coverage related to its global property program, including terrorism exposure, and, prior to 2017, its general liability risks that remain a key component of the bank’s overall risk management strategy. The captive in turn benefits from the explicit support of JPMorgan Chase’s significant financial and extensive professional resources.
Park is well-capitalized through retained earnings and maintains a comprehensive reinsurance program with highly rated reinsures to mitigate its exposure to oversized losses on substantially valued insured locations. Park has reported consistently favorable pure loss ratios in combination with its low-cost expense structure to produce favorable operating earnings year-over-year. Despite the level of capitalization, the captive is reliant on the protection afforded by the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA), and while the TRIPRA program offers significant protection from terrorism losses, the net impact on Park could still be burdensome. Nevertheless, A.M. Best recognizes the low probability of such extreme events and the support available to Park as a single-parent captive of JPMorgan Chase.
Negative rating action could occur in the event of the non-renewal of TRIPRA, although it is mitigated as Park has the ability to terminate all terrorism-related contracts if the Act is not renewed. Negative rating action could occur due to a significant decline in risk-adjusted capitalization from a sustained deterioration in earnings. Negative ration action also could occur due to financial issues causing downward pressure on the parent company’s credit profile.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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