AM Best Affirms Credit Ratings of Park Assurance Company

Key Terms

financial strength rating financial

A financial strength rating is an assessment of an organization's overall financial health, indicating how well it can meet its financial commitments. Think of it as a report card that shows whether a company or institution is financially stable and capable of withstanding economic challenges. This rating helps investors gauge the level of risk involved in engaging with or investing in that organization.

long-term issuer credit rating financial

A long-term issuer credit rating is an independent assessment of an organization’s ability to repay its debts over several years, like a report card that summarizes how likely it is to meet loan and bond obligations beyond the short term. Investors use it to judge risk and expected returns: higher ratings usually mean lower borrowing costs and safer bond investments, while lower ratings signal greater default risk, similar to choosing whether to lend money to a careful neighbor or a risky one.

risk-adjusted capitalization financial

Risk-adjusted capitalization is a measure that shows how much financial strength a company has, taking into account the potential risks it faces. It adjusts the total value of a company's capital to reflect the likelihood of losses, helping investors understand how well the company can withstand financial setbacks. Think of it as measuring a building’s strength not just by its size, but also by how well it can handle strong winds or earthquakes.

reinsurance financial

Reinsurance is when insurance companies buy insurance for themselves to protect against very big losses. It’s like a car owner getting extra coverage from another company so that if there's a serious accident, the financial hit isn’t all on one company. This helps insurance companies stay stable and able to pay out when disasters happen.

terrorism risk insurance program reauthorization act regulatory

A terrorism risk insurance program reauthorization act renews a government-backed safety net that helps insurance companies pay large claims after certified acts of terrorism. Think of it as the government acting like a co-signer or safety net for insurers, which keeps terrorism coverage available and limits sudden spikes in premiums. That matters to investors because it reduces the chance of severe losses or market disruption for insurers, property owners, lenders and businesses that rely on affordable, predictable coverage.

captive financial

A captive is a company created by a parent firm to perform a specific function—often insurance, lending or other services—primarily for the parent and its affiliates rather than the general public. It matters to investors because captives move revenue, costs and risk inside a corporate group, which can improve efficiency or concentrate exposure; like an in‑house department acting as a private supplier, a captive can change cash flows and the visible strength of the parent’s balance sheet.

single-parent captive financial

A single-parent captive is an insurance company created and wholly owned by one business to insure that business’s own risks, similar to setting up an in-house insurer instead of buying coverage from an external company. For investors, it matters because a captive can lower insurance costs, stabilize claims handling and shift risk and capital on the parent’s balance sheet, which affects cash flow, reported liabilities and the company’s financial resilience.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Park Assurance Company (Park) (Colchester, VT). The outlook of these Credit Ratings (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 capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), reflects its conservative loss reserving practices and favorable development trends, along with its conservative investment portfolio and strong liquidity measures. Park is well-capitalized 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, 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 LLC, which is a subsidiary of JPMorgan Chase & Co. (JPMorgan Chase) [NYSE: JPM], a leading global financial services group. 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 is the potential credit risk associated with Park’s extensive use of reinsurance, which management utilizes 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. 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.

AM 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 AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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Fred Eslami

Associate Director

+1 908 882 1759

fred.eslami@ambest.com

Sharon Marks

Director

+1 908 882 2092

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Christopher Sharkey

Associate Director, Public Relations

+1 908 882 2310

christopher.sharkey@ambest.com

Al Slavin

Senior Public Relations Specialist

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al.slavin@ambest.com

Source: AM Best