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 Parks 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 Parks 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 banks overall risk management strategy. The captive in turn benefits from the explicit support of JPMorgan Chases 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 companys credit profile.
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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 Bests Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
This press release relates to Credit Ratings that have been published on A.M. Bests 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 A.M. Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Bests Credit Ratings. For information on the proper media use of Bests Credit Ratings and A.M. Best press releases, please view Guide for Media – Proper Use of Bests Credit Ratings and A.M. Best Rating Action Press Releases.
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