AM Best affirms ratings of Park Assurance
AM Best has affirmed the financial strength rating of A and the long-term issuer credit rating of “a” of Park Assurance Company, which registered in Colchester, Vermont. The outlook of these ratings is stable.
The ratings reflect Park’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
Park’s strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), reflects its conservative loss reserving practices and favourable development trends, along with its conservative investment portfolio and strong liquidity measures. Park is well-capitalised through retained earnings, as the captive has reported consistently favourable pure loss ratios in combination with its low-cost underwriting expense structure to produce favourable operating earnings year after year, which have outperformed the commercial property composite by a wide margin. The ratings further 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, which is a subsidiary of JPMorgan Chase & Co. However, AM Best considers Park’s business profile to be limited due to its product concentration risk, offering limited lines of coverage on a net basis.
Partially offsetting these factors, AM Best said, 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 afforded by the Terrorism Risk Insurance Program Reauthorisation Act. Park provides JPMorgan Chase with global property coverages, including terrorism, cyber and banker’s blanket bond. 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
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