A.M. Best Affirms Ratings of Arch Reinsurance Ltd. and Its Operating Affiliates
24 Janvier 2013 - 6:00PM
Business Wire
A.M. Best Co. has affirmed the financial strength rating
(FSR) of A+ (Superior) and the issuer credit ratings (ICR) of “aa-”
of Arch Reinsurance Ltd. (Arch) (Bermuda) and its strategic
affiliates. A.M. Best also has assigned an FSR of A+ (Superior) and
an ICR of “aa-” to Arch Insurance Canada Ltd. (Canada),
which was converted from a branch company to an operating
subsidiary in late 2012.
Concurrently, A.M. Best has affirmed the ICR of “bbb+” of
Arch Capital Group (US) Inc. (Delaware), as well as the ICR
of “a-” and all debt ratings of the ultimate holding company,
Arch Capital Group Ltd (Bermuda) [NASDAQ: ACGL]. The outlook
for all ratings is stable. (See below for a detailed listing of the
companies and ratings.)
The affirmations reflect Arch’s continued superior operating
performance amidst challenging market conditions, consistently
excellent capitalization and demonstrated enterprise risk
management. Arch maintains a very strong underwriting culture and
focuses on actively managing the cycle by being adaptive to varied
market conditions. As industry investment yields continue to be at
record lows, underwriting profitability is vital. The company is
capable of writing a broad range of property/casualty insurance and
reinsurance on a worldwide basis and focuses on specialty
lines.
Overall operating results have been strong since Arch’s
inception and certain metrics have exceeded most peers in the
sector. Typically, Arch has had a smaller share of major industry
losses, as was the case in 2011 when numerous global catastrophes
struck. Recently, with Hurricane Sandy inflicting approximately $25
billion of insured losses, Arch’s current loss estimates are in
line with its expected market share and very manageable. As a
result, Arch has historically reported stable and consistent
financial results with lower levels of volatility than many of its
peers. Furthermore, Arch has a prudent investment portfolio and
conservative reserving philosophy, which helps maintain a strong
balance sheet.
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.
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