A.M. Best Revises Outlooks to Stable for Arch Reinsurance Ltd. and Its Subsidiaries
The ratings reflect Arch’s balance sheet strength, which
Arch has strived to seek opportunities for return over the past several years with its entry into the mortgage insurance business serving as a recent example of this flexibility. Arch has demonstrated an ability to execute its business plan prudently, but remain nimble enough to take advantage of opportunities.
Partially offsetting these positive rating factors are the significant increase in financial leverage as Arch issued senior unsecured notes and preferred shares at the end of 2016, the proceeds of which helped fund the purchase of
Arch's ratings may be downgraded, or the outlook may revert to negative if the operating performance of the group decays substantially, if financial leverage measures significantly increase, or if risk-adjusted capitalization declines precipitously. It should be noted that Arch’s operating performance for the natural catastrophe ridden year of 2017, which was also the first full calendar year of United Guaranty mortgage insurance contribution, was significantly better than nearly all of the comparison companies as measured by underwriting performance and return on equity.
Lastly, Arch’s ratings outlooks were revised to stable in part due to the successful management changes in which the CEO and CFO were replaced by strong, long-tenured Arch executives. Arch was able to avail itself of the company’s deep talent pool for these transitions, which occurred during 2018. Also, Arch has been able to retain significant executives from United Guaranty, all of whom have been fully integrated into Arch’s operations.
The FSR of A+ (Superior) and the Long-Term ICRs of "aa-" have been affirmed with the outlooks revised to stable from negative for
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Arch Reinsurance Company -
Arch Insurance Company -
Arch Specialty Insurance Company -
Arch Excess & Surplus Insurance Company -
Arch Indemnity Insurance Company -
Arch Insurance Canada Ltd. -
Alwyn Insurance Company Ltd. -
Arch Insurance Company (Europe) Limited
The following Long-Term IRs have been affirmed with the outlooks revised to stable from negative:
-- "a-" on
-- "bbb" on
-- “bbb” on
-- "a-" on
-- "a-" on
-- "a-" on
The following indicative Long-Term IRs under the existing shelf registration have been affirmed with the outlooks revised to stable from negative:
-- "a-" on senior unsecured debt
-- "bbb+" on subordinated debt
-- "bbb" on preferred stock
-- "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. For information on the proper media use of Best’s Credit Ratings and
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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