29 September 2014Actuarial & underwriting

JPMorgan captive affirmed by AM Best

Park Assurance Company, the single parent captive of JPMorgan Chase & Co, has had its financial strength rating of ‘A’ (excellent) affirmed by AM Best.

The rating agency also affirmed Park’s ‘a’ issuer credit rating.

Park provides JPMorgan with global property coverages, including coverages against terrorism losses, and effective as of July 8, 2011, deductible reimbursement policies covering workers’ compensation, auto liability and general liability.

AM Best said that Park’s large gross underwriting exposures are partially offsetting the positive rating factors as it offers very high insurance limits and insures some properties with substantial insured values.

The rating agency added that Park is very dependent on reinsurance to offer its various property programmes and high limits.

“As Park reinsures a large portion of its global property program, 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,” said AM Best.

“However, as Park offers very high limits, its resulting gross underwriting exposures on its largest properties are also very high. Its dependence on reinsurance is therefore substantial, creating considerable credit risk in the event of exceptionally large losses.

“In addition, it is dependent on the protection afforded by the Terrorism Risk Insurance Program Reauthorization Act of 2007 (TRIPRA). While the TRIPRA programme offers significant protection from terrorism losses, the net impact on Park could still be burdensome, considering the high coverage limits offered. Nevertheless, AM Best recognises the low probability of such extreme events and the support available to Park as part of JPMorgan Chase & Co.”