AM Best has affirmed the financial strength rating of ‘A’ (Excellent) and the long-term issuer credit rating (long term ICR) of “a” (Excellent) for Park Assurance Company (Park), the Vermont captive owned by JPMorgan Chase Holdings.
The ratings outlook is stable and AM Best said they reflect Park’s balance sheet strength, which it assessed as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
Park provides JPMorgan Chase with global property coverages, including terrorism, cyber and bankers blanket bond policies.
These coverages are key components of JPMorgan Chase’s risk management strategy, and Park benefits from the explicit support of the group’s financial and professional resources.
Park’s strongest level of risk-adjusted capitalisation reflects its conservative loss reserving practices and favourable development trends, along with its conservative investment portfolio and strong liquidity measures.
The captive is well-capitalised through retained earnings, reporting consistently favourable pure loss ratios as well as a low-cost underwriting expense structure to produce favourable operating earnings year after year.
The ratings reflect Park’s sophisticated risk management strategy and practices, experienced management team and its integral role as a single-parent captive of JPMorgan Chase Holdings.
However, AM Best said Park’s business profile is considered limited due to its product concentration risk, offering limited lines of coverage on a net basis.
Partially offsetting these factors are the potential credit risk associated with Park’s extensive use of reinsurance, which management utilises to mitigate its exposure to oversized losses on substantially valued insured locations, as well as its reliance on the protection of the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA).