AM Best Affirms Credit Ratings Of Arch Capital

March 18, 2023

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 agency said, “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 2021, Arch continued to perform favorably and improved upon its 2020 performance, which was impacted by COVID-19. Arch also has maintained its 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.”

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