A.M. Best Comments on Credit Ratings of Arch Capital Group Ltd. and Its Subsidiaries Following the Closing of United Guaranty Corporation

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has commented that the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” of Arch Reinsurance Ltd (Hamilton, Bermuda) [Nasdaq: ACGL] and its strategic affiliates remain unchanged following the announcement that Arch Capital Group Ltd. (ACGL) (Hamilton, Bermuda) completed its acquisition of United Guaranty Corporation from American International Group, Inc. at year-end 2016. The Credit Ratings (ratings) remain under review with developing implications. Additionally, the Long-Term ICRs of “a-” and the Long-Term Issue Credit Ratings (Long-Term IR) of ACGL and Arch Capital Group (US) Inc. (Delaware) remain under review with developing implications. (See below for a detailed listing of the companies and ratings).

A.M. Best recognizes that this acquisition significantly expands ACGL’s mortgage insurance business, and changes the risk profile and financial leverage of the organization going forward. A.M. Best continues to be in discussion with management with respect to the integration, strategic plans and the enterprise risk management approach as it regards this material acquisition. A.M. Best anticipates resolve of the under review status once it completes its analysis, which is expected within the first quarter of 2017.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” remain under review with developing implications for Arch Reinsurance Ltd and its following affiliates:

• Arch Reinsurance Company

• Arch Insurance Company
• Arch Specialty Insurance Company
• Arch Excess & Surplus Insurance Company
• Arch Indemnity Insurance Company
• Arch Insurance Canada Ltd.
• Arch Insurance Company (Europe) Limited

The following Long-Term IRs remain under review with developing implications:

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 Long-Term IRs remain under review with developing implications for debt securities available under the existing shelf registration:

Arch Capital Group Ltd.—

-- “a-” on senior unsecured debt
-- “bbb+” on subordinated debt
-- “bbb” on preferred stock

Arch Capital Group (US) Inc. (guaranteed by Arch Capital Group Ltd.)—

-- “a-” on senior unsecured debt
-- “bbb+” on subordinated debt
-- “bbb” on preferred stock

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.

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Source: A.M. Best