Arch Capital Holdings Ltd. has received a boost from ratings agency Fitch, which cited its strong underwriting and financial performance and its diversity in different reinsurance markets.

Fitch raised Arch?s credit rating to A- from BBB+ and its rating on Arch?s $300 million of senior unsecured notes due 2034 to BBB+ from BBB. Fitch also raised its insurer financial strength (IFS) rating on Arch Reinsurance Ltd. (Arch Re) to ?A? from ?A-?. The ratings outlook is stable.

?Fitch?s decision to upgrade Arch?s ratings reflects the company?s consistently strong underwriting profitability and financial performance relative to peers,? the agency said.

?The upgrade also reflects Fitch?s heightened comfort with Arch?s casualty lines reserve adequacy and its effectiveness in maintaining underwriting discipline under various market conditions.?

Fitch noted that Arch?s average combined ratio from 2002 through the first nine months of 2006 was roughly six points lower than the average combined ratio of a peer group of companies that Fitch tracks.

During the 2002-September 2006 period, Arch also generated less volatile underwriting results than many of its peers as evidenced by combined ratios that ranged from a high of 95.8 percent in 2005 to a low of 86.3 percent through the first nine months of 2006, Fitch said.

?In contrast, the range of combined ratios reported by many of Arch?s peers was much wider with several reporting combined ratios well in excess of 100 percent in hurricane plagued 2005,? it added.

Fitch said Arch?s strong long-term relative financial performance was partially due to the diversity of the company?s diverse premium base, which consists of specialty property and casualty lines equally divided between primary and reinsurance premiums, which offset its exposure to any one segment of the market.