Park Assurance has had its financial strength rating of A (Excellent) and its long-term issuer credit rating of “a” affirmed by A.M. Best.
The outlook of the Burlington-based captive’s ratings is stable.
Park is the single-parent captive of JPMorgan Chase Holdings, which is a subsidiary of JPMorgan Chase and Co.
The ratings are reflective of Park’s balance sheet strength, categorised as “strongest”, in addition to its strong operating performance, limited business profile, and appropriate enterprise risk management.
Additionally, A.M. Best acknowledges the captive’s sophisticated risk management strategy, conservative investment portfolio, experience management team, and integral role in JPMorgan Chase’s risk management.
Park provides JPMorgan Chase with coverage related to its global property programme, including terrorism exposure, and prior to 2017, its general liability risks that remain a vital component of the bank’s overall risk management strategy.
In turn, the captive benefits from the explicit support of JPMorgan Chase’s significant financial and extensive professional resources.
Park is well-capitalised through retained earnings and sustains a comprehensive reinsurance programme with highly rated reinsurers to mitigate exposure to oversized losses on substantially valued insured locations.
Consistently, the captive has reported favourable pure loss ratios in combination with its low-cost expense structure to produce positive operating earnings year-over-year.
Park is reliant on the protection provided by the Terrorism Risk Insurance Programme Reauthorisation Act of 2015 (TRIPRA), and while the programme offers significant protection from terrorism losses, the net impact on the captive could still be onerous.
The low probability of such extreme events and the support available to Park as a single-parent captive of JPMorgan Chase are recognised by A.M. Best.
The captive’s ratings could drop in the event that TRIPRA is not renewed, however, the negative impact of this is mitigated as Park has the ability to terminate all terrorism-related contracts should that occur.
Additionally, negative rating action could be caused by a significant decline in risk-adjusted capitalisation from a sustained deterioration in earnings or financial issues causing downward pressure on the parent company’s credit profile.
