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, based in Colchester, Vermont.
The outlook of these credit ratings is stable.
The ratings reflect Park’s balance sheet strength, which A.M. Best categorises as strongest, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
Park’s strongest risk-adjusted capital position reflects its conservative loss reserving practices and favourable development trends, along with its conservative investment portfolio and strong liquidity measures.
A.M. Best explains: “Park is well-capitalised through retained earnings, as the captive has reported consistently favorable pure loss ratios in combination with its low-cost underwriting expense structure to produce favorable operating earnings year after year that have outperformed the commercial property composite by a wide margin.”
The ratings also reflect Park’s “sophisticated” risk management strategy and practices, experienced management team and its integral role as a single-parent captive of JPMorgan Chase, which is a subsidiary of JPMorgan Chase & Co, a global financial services group.
However, A.M. Best adds that 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, according to the rating firm, are the tempered surplus growth as a result of capital returned to its parent in the form of periodic stockholder dividends and its large underwriting risk appetite on a gross basis.
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 afforded by the Terrorism Risk Insurance Program Reauthorization Act of 2019, are also offsetting factors.
Park provides JPMorgan Chase with global property coverages, including terrorism, as well as bankers blanket bond, and prior to 2017, general liability coverage. These coverages are key components of JPMorgan Chase’s risk management strategy, and Park benefits from the explicit support of the group’s significant financial resources and extensive professional resources.
