AM Best upgraded its ratings on Arch Capital Group and its subsidiaries, citing the company’s strong operating performance and track record of delivering superior underwriting performance and investment returns even in soft markets.
Notably, AM Best upgraded the Long Term Issuer Credit Rating (Long Term ICR) to “aa” (Senior) from “aa-” (Senior) and affirmed the Financial Strength Rating (FSR) of Arch Reinsurance Ltd. (Arch) (Bermuda) and its strategic subsidiaries at A+ (Senior).
The outlook for the long-term ICR has been revised to stable from positive, while the outlook for the FSR is also stable.
Meanwhile, AM Best upgraded the long-term ICR of its ultimate holding companies Arch Capital Group Ltd. (Arch Capital) (Bermuda) to “a” (excellent) from “a-” (excellent); Arch Capital Group (US) Inc (Delaware); and Arch Capital Finance LLC (Delaware).
In addition, AM Best upgraded the long-term issue credit rating (Long-Term IR) of Arch’s debt issuance. The outlook on these credit ratings has been revised to stable from positive.
AM Best said Arch’s ratings reflected its balance sheet strength (which the agency assessed as strongest), sound business profile and appropriate enterprise risk management.
The upgrade also reflects Arch’s operating performance, which has “consistently outperformed” most of its less volatile peers, the agency added.
AM Best further highlighted Arch’s unique diversification, which is underpinned by a substantial mortgage insurance business as well as reinsurance and insurance businesses.
Together, the three segments reportedly deliver diverse, durable profit and revenue streams, delivering consistently strong operating performance supported by superior risk selection.
AM Best continued: “The latest evidence of the group’s earnings diversification, risk management culture and effectiveness of risk selection has been demonstrated through the first quarter of 2025, when the group continued to deliver positive underwriting results in the wake of the California wildfires, outperforming its peers.
“While rates, terms and conditions in the reinsurance market are favorable, particularly in the period following the January 1, 2023 renewal season, Arch has a long, proven track record of producing superior underwriting performance and investment returns, even in years of soft market conditions. The group has continued to differentiate itself from its peers during the recent hard market cycle.”