A.M. Best has affirmed the financial strength rating of “A (Excellent)” and issuer credit rating of "a" of Park Assurance Company, the single parent captive of JPMorgan Chase & Co.
The ratings of Park reflect its excellent risk-adjusted capitalisation, operating performance, liquidity position, sophisticated risk management strategy and practices, conservative investment strategy, and its management team's extended experience in the industry.
Partially offsetting these positive rating factors is Park's large gross underwriting exposures as it offers very high insurance limits and insures some properties with substantial insured values.
Park is very dependent on reinsurance in order to offer its various property programmes and high limits.
The captive provides JPMorgan with global property coverages, including coverages against terrorism losses and, effective as of 8 July 2011, deductible reimbursement policies covering workers' compensation, auto liability and general liability (pursuant to the Hatherley novation and transfer agreement).
As such, these coverages are key components of JPMorgan's risk management strategy, and Park benefits from the group's significant financial resources. JPMorgan also benefits from the group's extensive risk mitigation and safety programmes.
As Park reinsures a large portion of its global property programme, its exposure to underwriting losses is minimal, barring significant losses from terrorism. It only uses well-rated reinsurers, and its surplus base is more than adequate to support its asset and credit risk exposures.
However, as Park offers very high limits, its resulting gross underwriting exposures on its largest properties are also “very high”, according to A.M. Best.
Park is also dependent on the protection afforded by the Terrorism Risk Insurance Program Reauthorization Act of 2007 (TRIPRA).
While TRIPRA offers significant protection from terrorism losses, the net impact on Park could still be “burdensome”, considering the high coverage limits offered.
Nevertheless, A.M. Best has acknowledged the low probability of such extreme events and the support available to Park as part of JPMorgan.
