ITEM 1.01 Entry into a Material Definitive Agreement.
On June 30, 2020, Arch Capital Group Ltd. (the “Issuer”), completed the public offering of $1,000,000,000 aggregate principal amount of its 3.635% senior notes due 2050 (the “Notes”). The Notes have been registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the Issuer’s universal shelf registration statement on Form S-3 (File No. 333-221344), as supplemented by the prospectus supplement dated June 23, 2017, previously filed with the Securities and Exchange Commission under the Securities Act.
The Notes were issued pursuant to an indenture (the “Base Indenture”), dated as of May 4, 2004, by and between the Issuer and The Bank of New York Mellon (the “Trustee”), as successor trustee to JPMorgan Chase Bank, as supplemented by a Second Supplemental Indenture, dated as of June 30, 2020, by and between the Issuer and the Trustee (the “Second Supplemental Indenture”, together with the Base Indenture, the “Indenture”). The Notes are senior unsecured obligations of the Issuer and rank equally with the other unsecured and unsubordinated indebtedness of the Issuer.
The Issuer will pay interest on the Notes semi-annually in arrears on June 30 and December 30, beginning on December 30, 2020, to holders of record on the preceding June 15 or December 15, as the case may be. Interest will be calculated on the basis of a 360-day year of twelve 30-day months.
Unless previously redeemed, the Notes will mature on June 30, 2050, subject to deferral if the Issuer is not, at the time of such maturity, in compliance with certain regulatory capital requirements of applicable insurance supervisory laws then in effect. Other than in the case of redemption as a result of certain tax events (which such redemption will be permitted at the Issuer’s option at any time during the life of the Notes in whole and not in part at redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest thereon to, but excluding, the redemption date), the Notes may be redeemed at the Issuer’s option at any time and from time to time prior to December 30, 2049, in whole or in part, at a redemption price equal to the “make-whole” redemption price, plus accrued and unpaid interest thereon to, but excluding, the redemption date. In addition, the Notes may be redeemed at the Issuer’s option at any time and from time to time on or after December 30, 2049, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest thereon to, but excluding, the redemption date. The Notes are subject to certain covenants, including limitations on the ability of the Issuer and certain designated subsidiaries, with exceptions, to incur liens on the stock of certain designated subsidiaries, or dispose of capital stock of certain designated subsidiaries.
The Indenture contains customary terms that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Notes then outstanding may declare the principal of the Notes and any accrued and unpaid interest through the date of such declaration immediately due and payable. In the case of certain events of bankruptcy or insolvency relating to the Issuer, the principal amount of the Notes, together with any accrued and unpaid interest through the occurrence of such event, shall be immediately due and payable.
Copies of the Base Indenture and the Second Supplemental Indenture (including the form of Notes) are attached hereto as Exhibits 4.1 and 4.2 respectively, and are incorporated herein by reference. The description of the Indenture and the Notes in this report are summaries and are qualified in their entirety by the terms of the Indenture and the form of Note.