AM Best affirms the Financial Strength Rating of ‘A’ (Excellent) and the Long-Term Issuer Credit Rating of ‘a’ (Excellent) of Park Assurance Company (Park). The outlook of these credit ratings is ‘stable’. Based in Colchester, Vermont, Park serves as a single-parent captive for JPMorgan Chase Holdings LLC, a subsidiary of JPMorgan Chase & Co. The ratings reflect the balance sheet strength of the captive, which AM Best assesses as ‘very strong’, as well as its strong operating performance, limited business profile, and appropriate enterprise risk management. The ‘strongest’ level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), reflects conservative loss reserving practices and favourable development trends, alongside a conservative investment portfolio and strong liquidity measures. Park is well-capitalised through retained earnings, as the captive reports consistently favourable pure loss ratios in combination with a low-cost underwriting expense structure. These factors produce favourable operating earnings that have outperformed the commercial property composite by a wide margin. The ratings further reflect the sophisticated risk management strategy of Park and its integral role within the JPMorgan Chase group. However, AM Best considers the business profile of the captive to be limited due to product concentration risk, as it offers limited lines of coverage on a net basis. The captive provides JPMorgan Chase with global property coverages, including terrorism, cyber, and banker’s blanket bond. Management utilises extensive reinsurance to mitigate exposure to oversized losses on substantially valued insured locations. While this provides protection, AM Best notes the potential credit risk associated with this reliance on reinsurance and the protection afforded by the Terrorism Risk Insurance Programme Reauthorisation Act.
