A.M. Best Affirms the Ratings of Park Assurance Company

  A.M. Best Affirms the Ratings of Park Assurance Company

Business Wire

OLDWICK, N.J. -- September 26, 2013

A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and
issuer credit rating of “a” of Park Assurance Company (Park) (Burlington, VT).
The outlook for both ratings is stable.

The ratings of Park reflect its 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 & Co. [NYSE: JPM], a leading global financial
services group.

Partially offsetting these positive rating factors are Park’s large gross
underwriting exposures as it offers very high insurance limits and insures
some properties with substantial insured values. Park is very dependent on
reinsurance in order to offer its various property programs and high limits.

Park provides JPMorgan Chase & Co. 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 (pursuant to the Hatherley novation and
transfer agreement). As such, these coverages are key components of JPMorgan
Chase & Co.'s risk management strategy, and Park benefits from the group's
significant financial resources.

JPMorgan Chase & Co. 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. It only uses well-rated reinsurers, and its 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 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 program offers significant protection
from terrorism losses, the net impact on Park could still be burdensome,
considering the high coverage limits offered. Nevertheless, A.M. Best
recognizes the low probability of such extreme events and the support
available to Park as part of JPMorgan Chase & Co.

A.M. Best views Park’s management and corporate strategy as strengthening the
ratings, given the conservative underwriting, operational goals and
transparency. A.M. Best views the company's enterprise risk management
practices as strong given their impact on conservative risk culture, defined
risk controls and optimization of Park’s capital and surplus. Other factors
considered in the rating process include, but are not limited to, the
diversification in line of business and geography, as well as the company's
panel of well-capitalized and highly rated reinsurers. The support and
commitment of the parent and the captive's mission have been considered as
positive factors.

A.M. Best expects Park’s future operating performance to be stable but strong,
and the stable earnings profile should further support the company to control
its growth and business writing consistent with its capital and surplus
position.

Park’s ratings and outlook are not expected to be upgraded within the next
12-24 months as its operating performance and capital position already have
been considered in the ratings process. A.M. Best could downgrade Park’s
ratings and/or revise the outlook if its Best's Capital Adequacy Ratio (BCAR)
score declines, operating performance and risk profile deteriorate, insured
losses deplete capital, significant changes and turnover occur in its
management team and/or risk management controls and tolerances, or its
parent's ratings deteriorate.

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.

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Best’s Credit Rating Methodology can be found at
www.ambest.com/ratings/methodology.

A.M. Best Company is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.

       Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contact:

A.M. Best Co.
Fred Eslami
Senior Financial Analyst
(908) 439-2200, ext. 5406
fred.eslami@ambest.com
or
Steven Chirico, CPA
Assistant Vice President
(908) 439-2200, ext. 5087
steven.chirico@ambest.com
or
Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378
rachelle.morrow@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com