AM Best has affirmed the financial strength rating of A+ (Superior) and the long-term issuer credit ratings of “aa-” (Superior) of Bermudian-based Arch Reinsurance Ltd and its strategic affiliates.

Concurrently, the ratings agency has affirmed the Long-Term ICRs of “a-” (Excellent) and the long-term issue credit ratings of island-based Arch Capital Group Ltd, the ultimate holding company, as well as Delaware-based Arch Capital Group (US) Inc and Arch Capital Finance LLC.

The outlook of these credit ratings is stable.

The ratings of Arch reflect the group’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management.

Arch’s ratings are based on its historically strong operating performance, as well as its balance sheet strength assessment of strongest, as measured by Best’s capital adequacy ratio, and strong management team.

AM Best said: “Arch performed favourably 2023, with the group producing record high earnings. Arch also has maintained its strong risk-adjusted capital position, which contemplates a significant stressed ultimate loss, as calculated according to AM Best’s ‘Evaluating Mortgage Insurance’ criteria procedure.

“AM Best utilised a conservative stress scenario for Arch’s mortgage insurance book of business when calculating stress-tested risk-adjusted capitalisation. AM Best also recognises that the mortgage insurance business relies heavily on financial models that can vary from actual results.”

The agency said the stable outlooks reflect AM Best’s expectations that the group’s strongest level of balance sheet strength will continue to be supported by strong and stable operating performance, favourable reserve development, diverse business profile and well-defined ERM programme.