AM Best Affirms Credit Ratings of Arch Capital Group Ltd. and Its Subsidiaries

Rhea-AI Summary

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of 'aa-' (Superior) for Arch Reinsurance Ltd. and its affiliates. Arch Capital Group Ltd. (NASDAQ: ACGL) also received affirmed ratings with stable outlooks. The ratings reflect Arch's strongest balance sheet strength, strong operating performance, and favorable business profile. The stable outlook indicates expectations of continued robust balance sheet strength and stable operations.

Positive

• Affirmed FSR of A+ (Superior) for Arch Reinsurance and affiliates.
• Affirmed Long-Term ICRs of 'aa-' (Superior) for Arch Capital Group.
• Strong operating performance despite COVID-19 impacts.
• Stable outlook reflects strong balance sheet and operating performance.

Negative

• None.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” (Superior) of Arch Reinsurance Ltd. (Arch) (Bermuda) and its strategic affiliates. Concurrently, AM Best has affirmed the Long-Term ICRs of “a-” (Excellent) and the Long-Term Issue Credit Ratings (Long-Term IRs) of Arch Capital Group Ltd. (Arch Capital) (Bermuda) [NASDAQ: ACGL], the ultimate holding company; Arch Capital Group (US) Inc (Delaware); and Arch Capital Finance LLC (Delaware). (See below for a detailed listing of the companies and ratings.) The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect the group’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The ratings are based on Arch’s historically strong operating performance, as well as its balance sheet strength, as measured by Best’s Capital Adequacy Ratio (BCAR), and strong management team. In 2020, Arch continued to perform favorably on most operating metrics despite the impact of COVID-19. Arch also has maintained a strong risk-adjusted capital position, which contemplates a significant Stressed Ultimate Loss, as calculated according to AM Best’s “Evaluating Mortgage Insurance” criteria procedure. AM Best utilized a conservative stress scenario for Arch’s mortgage insurance book of business when calculating stress-tested risk-adjusted capitalization. AM Best also recognizes that the mortgage insurance business relies heavily on financial models that can vary from actual results.

The stable outlooks reflect AM Best’s expectations that the group’s strongest level of balance sheet strength will continue to be supported by strong and stable operating performance, favorable reserve development, diverse business profile and well-defined ERM program.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) have been affirmed with stable outlooks for Arch Reinsurance Ltd. and its following affiliates:

• Arch Reinsurance Company
• Arch Insurance Company
• Arch Specialty Insurance Company
• Arch Property Casualty Insurance Company
• Arch Indemnity Insurance Company
• Arch Insurance Canada Ltd.
• Alwyn Insurance Company Limited
• Arch Insurance (UK) Limited

The following Long-Term IRs have been affirmed with stable outlooks:

Arch Capital Group Ltd.—
-- “a-” (Good) on $300 million 7.35% senior unsecured notes, due 2034
-- “bbb” (Good) on $450 million 5.25% non-cumulative preferred shares, Series E
-- “bbb” (Good) on $330 million 5.45% non-cumulative preferred shares, Series F

Arch Capital Group (US) Inc (guaranteed by Arch Capital Group Ltd.)—
-- “a-” (Excellent) on $500 million 5.144% senior unsecured notes, due 2043

Arch Capital Finance LLC (guaranteed by Arch Capital Group Ltd.)—
-- “a-” (Excellent) on $500 million 4.011% senior unsecured notes, due 2026
-- “a-” (Excellent) on $450 million 5.031% senior unsecured notes, due 2046

The following indicative Long-Term IRs under the existing shelf registration have been affirmed with stable outlooks:

Arch Capital Group Ltd.—
-- “a-” (Excellent) on senior unsecured debt
-- “bbb+” (Good) on subordinated debt
-- “bbb” (Good) on preferred stock

Arch Capital Group (US) Inc (guaranteed by Arch Capital Group Ltd.)—
-- “a-” (Excellent) on senior unsecured debt
-- “bbb+” (Good) on subordinated debt
-- “bbb” (Good) on preferred stock

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 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.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211210005552/en/

Clare Finnegan

Senior Financial Analyst

+1 908 439 2200, ext. 5165

clare.finnegan@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Steven Chirico, CPA

Director

+1 908 439 2200, ext. 5087

steven.chirico@ambest.com

Jim Peavy

Director, Communications

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Source: AM Best

FAQ

What ratings did AM Best affirm for Arch Capital Group (NASDAQ: ACGL)?

AM Best affirmed the Financial Strength Rating (FSR) of A+ (Superior) and Long-Term Issuer Credit Ratings of 'aa-' (Superior) for Arch Capital Group.

What is the outlook for Arch Capital Group's ratings?

The outlook for Arch Capital Group's ratings is stable.

How did Arch Capital perform during COVID-19 according to the report?

Arch Capital continued to perform favorably on most operating metrics despite the impact of COVID-19.

What is AM Best's assessment of Arch Capital's balance sheet strength?

AM Best assesses Arch Capital's balance sheet strength as the strongest.

What business aspects contribute to Arch Capital's credit ratings?

The credit ratings reflect Arch's strong operating performance, favorable reserve development, diverse business profile, and effective enterprise risk management.