A.M. Best Affirms Credit Ratings of Park Assurance Company
November 20 2017 - 2:29PM
Business Wire
A.M. Best has affirmed Financial Strength Rating of A
(Excellent) and the Long-Term Issuer Credit Rating of “a” of
Park Assurance Company (Park) (Burlington, VT). The outlook
of these Credit Ratings (ratings) is stable.
The ratings reflect Park’s excellent risk-adjusted
capitalization, operating performance, liquidity position,
sophisticated risk management strategy and practices, conservative
investment strategy, its management team’s extended experience in
the industry and its role as a single-parent captive of JPMorgan
Chase Holdings LLC, which is a subsidiary of JPMorgan Chase
& Co. (JPMorgan Chase) [NYSE:JPM], a leading global
financial services group.
Partially offsetting these positive rating factors are Park’s
large gross underwriting risk appetite and the potential credit
risk associated with its extensive use of reinsurance, which
management utilizes to mitigate these one-off risks. As a
single-parent captive, Park provides JPMorgan Chase with very high
insurance limits and insures some properties with substantial
insured values.
Park provides JPMorgan Chase with global property coverages,
including terrorism, as well as bankers blanket bond and
professional liability. These coverages are key components of
JPMorgan Chase’s risk management strategy, and Park benefits from
the group’s significant financial resources.
Park also benefits from the group’s extensive risk mitigation
and safety programs. As Park reinsures a large portion of its
global property program, its exposure to underwriting losses is
minimal, barring significant losses from terrorism. Management only
uses well-rated reinsurers, and Park’s surplus base is more than
adequate to support its asset and credit risk exposures. However,
as Park offers very high limits, its resulting gross underwriting
exposures on its largest properties are high relative to surplus.
Its dependence on reinsurance is therefore substantial, creating
considerable credit risk in the event of exceptionally large
losses. In addition, Park remains dependent on the protection
afforded by the Terrorism Risk Insurance Program Reauthorization
Act of 2015 (TRIPRA), and while the TRIPRA program offers
significant protection from terrorism losses, the net impact on
Park still could be burdensome. Nevertheless, A.M. Best recognizes
the low probability of such extreme events and the support
available to Park by JPMorgan Chase.
A.M. Best views Park’s enterprise risk management practices as
strong given its close alignment with its parent and the positive
impact JPMorgan Chase has on Park’s corporate risk culture and its
ability to measure, manage and mitigate risk in a prudent and
optimal manner. Other factors considered in the rating process
include, but are not limited to, the diversification in Park’s
lines of business and geography and the explicit and implied
support and commitment of JPMorgan Chase.
Key rating factors that could lead to negative rating actions
include material losses outside of management expectations, a
significant and sustained decline in Park’s risk-adjusted
capitalization, operating performance results that do not meet A.M.
Best’s expectations or a material shift in its risk profile that
could potentially undermine the stability of its ratings. Financial
issues resulting in rating pressure on the parent or deterioration
of the parent’s credit profile could impact Park’s ratings. In the
longer term, the non-renewal of TRIPRA, set to expire at year-end
2020, also could add negative rating pressure; however, Park has
the ability to terminate its terrorism contracts if the act is not
renewed, thereby mitigating this potential negative pressure.
A.M. Best remains the leading rating agency of alternative risk
transfer entities, with more than 200 such vehicles rated in the
United States and throughout the world. For current Best’s Credit
Ratings and independent data on the captive and alternative risk
transfer insurance market, please visit www.ambest.com/captive.
This press release relates to Credit Ratings that have been
published on A.M. Best’s website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please see A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings. For information on the proper media use of Best’s
Credit Ratings and A.M. Best press releases, please view
Guide for Media - Proper Use of Best’s Credit Ratings and A.M.
Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20171120006023/en/
A.M. BestFred Eslami, +1 908 439 2200, ext.
5406Senior Financial
Analystfred.eslami@ambest.comorGary A. Davis, +1 908
439 2200, ext.
5665Directorgary.davis@ambest.comorChristopher
Sharkey, +1 908 439 2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy,
+1 908 439 2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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