S&P Raises Arch’s Ratings To A-Plus
On Thursday (July 29) Standard & Poor’s raised its financial-strength rating of Bermuda-based Arch Capital Group Ltd.’s insurance and reinsurance companies to A+ from A.
“The upgrade of Bermuda-based reinsurance holding company Arch Capital and its operating insurance and reinsurance subsidiaries reflects the group’s strong management and well conceived corporate strategy,” explained credit analyst John Iten.
Explaining the stable outlook, S&P said it expects that Arch will “continue to post strong operating results, as measured by return on revenue (excluding capital gains and losses), which will likely be better than the average of its peer group over the next two to three years. We anticipate that the ROR will exceed 15 percent for 2010 and 2011.
“The ratings could come under pressure if the company’s underwriting performance lags that of its peers (assuming normalized catastrophe losses and excluding the benefits of reserve releases), if earnings volatility increases over a multi-year period, if there is a major change in the risk profile of Arch’s investment portfolio or business mix, or if the company reports major adverse reserve development stemming from the company’s casualty loss reserves. We do not expect to raise our ratings on Arch in the next two years.”
S&P also raised Arch’s counterparty credit rating to A-minus from BBB-plus. The New York-based rating agency said it does not anticipate raising its ratings on Arch during the next two years.
