Arch Capital Group Ltd. and its operating subsidiaries yesterday received a ratings upgrade from a second ratings agency as Bermuda reinsurers continue to reap the benefits of the benign 2006 hurricane season.

A.M. Best Co. has upgraded the financial strength rating to A from A- and the issuer credit ratings to "a" from "a-" of Arch Reinsurance Ltd. and its reinsured affiliates. A.M. Best also upgraded the ICR to "bbb-" from "bb+" of Arch Capital Group (U.S.) Inc. Concurrently, A.M. Best has upgraded the ICR to "bbb" from "bbb-" and all related debt ratings of Arch Capital Group Limited (Bermuda) The outlook for all ratings is stable.

Best also upgraded the financial strength rating of Arch Insurance Company (Europe) Ltd. to A from A-.

The upgrades come one week after ratings agency Fitch announced a similar upgrade.

"These rating upgrades reflect Arch's excellent capitalisation, strong operating performance since its inception and robust risk management system," Best said. "The company's proven risk management capability has enabled recent and historical operating performance to be among the leaders in the Bermuda market as evidenced by a 2005 combined ratio of 95.8%, despite net catastrophe losses totaling approximately $330 million for the year.

"Partially offsetting these strengths will be Arch's ability to maintain its underwriting discipline and competitive position within its chosen markets given the additional capital that has entered the industry through new company formations, sidecars and strong 2006 earnings. "