Best Assigns Arch (Europe) ‘A-‘; ‘a-‘ Ratings

August 25, 2004

A.M. Best Co. announced that it has assigned a financial strength rating of “A-” (Excellent) to U.K.-based Arch Insurance Company (Europe) Ltd. (Arch Europe) and an issuer credit rating of “a-.” Both ratings have a stable outlook.

A.M. Best Co. announced that it has assigned a financial strength rating of “A-” (Excellent) to U.K.-based Arch Insurance Company (Europe) Ltd. (Arch Europe) and an issuer credit rating of “a-.” Both ratings have a stable outlook.

Best said the ratings reflect the company’s strategic role to its parent, the Bermuda-based Arch Capital Group Ltd., and its excellent capital base on a stand-alone basis. It noted that an offsetting factor is “Arch Europe’s limited business profile.”

Best also indicated that “the excellent risk-adjusted capitalisation of Arch Europe results from the high level of its start-up capital relative to anticipated premium income for the following three years. The capital position on a risk adjusted basis is likely to remain excellent given the planned growth in net premiums to GBP 40 million (USD 72.6 million) by year-end 2006.”

Best added that in its opinion “the company is strategically important to Arch Group. Arch Europe was formed primarily to enable its parent to gain access to the London market. Decision-making processes and operations are carried out at a group level and shared amongst subsidiaries, showing a strong degree of integration. Areas such as reserves and reinsurance cover are monitored by the parent. Arch Europe also has a 60 percent quota share arrangement with Arch Group’s main operating subsidiary, Arch Reinsurance Ltd. The company has a limited business profile as a new entrant in the London market with limited presence.”

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