Arch Capital Affiliates' Ratings Affirmed by A. M. Best
A. M. Best reiterated the issuer credit ratings (ICR) of “a-” of Arch Capital Group Ltd.’s ACGL. Concurrently, the rating agency reiterated the financial strength rating (FSR) of A+ (Superior) and the ICR of “aa-” of Arch Reinsurance Ltd. – a subsidiary of Arch Capital – and its strategic affiliates. Additionally, A. M. Best upped the ICR to “a-” from “bbb+” of another affiliate – Arch Capital Group (US) Inc. The outlook for all the ratings remains stable.
The ratings reflect the company’s favorable operating performance, solid capitalization, efficient enterprise risk management and experienced management team.
Arch Capital has a very strong underwriting culture and focuses on maintaining the same. This enables it to enter and exit specific lines of business per market conditions. Additionally, the company writes an extensive range of property/casualty insurance and reinsurance globally, with emphasis on specialty lines. Moreover, Arch Capital remains focused on diversifying its portfolio via its growing mortgage insurance operating platform.
In addition to these positives, the company has been reporting solid operating results since its formation. Moreover, Arch Capital’s financial results have been steady and satisfactory, with lower levels of volatility than its peers. These, along with the insurer’s conservative reserving philosophy, help it to exhibit a strong balance sheet.
However, the current soft market conditions partially offset these positives.
Rating affirmations from credit rating agencies play an important role in retaining investor confidence in the stock as well as maintaining its creditworthiness in the market. The Zacks Rank #3 (Hold) stock is likely to witness an upgrade if it is able to continue its long term, solid operating profitability along with sturdy risk-adjusted capital levels. Nevertheless, unfavorable operating profitability trends, greater catastrophe or investment losses than peers, considerable adverse loss reserve development or erosion in risk-adjusted capital can result in a negative rating action for the company.
Some better-ranked players from the property and casualty insurance sector are First American Financial Corporation FAF, Hallmark Financial Services Inc. HALL and Selective Insurance Group Inc. SIGI. All these stocks sport a Zacks rank #1 (Strong Buy).
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FIRST AMER FINL (FAF): Free Stock Analysis Report
HALLMARK FINL (HALL): Free Stock Analysis Report
ARCH CAP GP LTD (ACGL): Free Stock Analysis Report
SELECT INS GRP (SIGI): Free Stock Analysis Report
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