Partially offsetting these positive rating attributes are the current soft market conditions through which Arch, as well as all industry participants, must navigate.
For Arch, factors that could result in negative rating pressure include unfavorable operating profitability trends, outsized catastrophe or investment losses relative to peers, significant adverse loss reserve development and/or a material decline in risk-adjusted capital. However, factors that could lead to a positive outlook or further rating upgrades would be the continuation of long-term, consistently strong operating profitability relative to its peers and maintenance of strong risk-adjusted capital levels.
The FSR of A+ (Superior) and the ICRs of “aa-” have been affirmed for Arch Reinsurance Ltd. and its following affiliates:
- Arch Reinsurance Company
- Arch Insurance Company
- Arch Specialty Insurance Company
- Arch Excess & Surplus Insurance Company
- Arch Insurance Company (Europe) Ltd
The following debt ratings have been affirmed:Arch Capital Group Ltd— -- “a-” on $300 million 7.35% senior unsecured notes, due 2034 -- “bbb” on $325 million 6.75% non-cumulative preferred shares, Series C The following indicative ratings have been affirmed for debt securities available under the existing shelf registration: Arch Capital Group Ltd— -- “a-” on senior debt -- “bbb+” on subordinated debt -- “bbb” on preferred stock Arch Capital Group (U.S.) Inc. (guaranteed by Arch Capital Group Ltd) — -- “a-” on senior debt -- “bbb+” on subordinated debt -- “bbb” on preferred stock 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. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; and “Rating Members of Insurance Groups.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. Founded in 1899, 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.