A.M. Best delivered positive news to two Bermuda insurancegroups: upgrading Arch Reinsurance to "A" today, and affirmingRenaissanceRe's "A" financial strength ratings yesterday.

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Explaining today's action on Arch Reinsurance Ltd. andaffiliates--taking their financial strength ratings up a notch from"A-minus"--the Oldwick, N.J.-based rating agency said the upgradereflects Arch's excellent capitalization, strong operatingperformance since its inception and robust risk management.

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Best noted that Arch achieved a 95.8 combined ratio in 2005 inspite of net catastrophe losses totaling $330 million for theyear.

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Best also pointed to Arch's diversified insurance andreinsurance businesses, which allow the group to respond tochanging market cycles, and the group's financial flexibility toaccess equity and debt markets in support of the rating change.

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In today's action, Best also upgraded to "a" from "a-minus" theissuer credit ratings of Arch Reinsurance Ltd. and its reinsuredaffiliates, and upgraded the ICR to "triple-b-minus" from"double-b-plus" for Arch Capital Group Inc. Debt ratings for ArchCapital Group Limited were raised to "triple-b" from"triple-b-minus," Best said.

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Yesterday, Best affirmed the "A" financial strength rating ofRenaissance Reinsurance Ltd., while upgrading various issuer creditand debt ratings for the holding company, RenaissanceRe Holdings.In addition, Best assigned a "triple-b-minus" rating to preferredshares issued by RenRe today.

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Best said the ratings for RenRe and its operating companiesreflect continued strong capitalization and a historical record ofexceptional underwriting and risk management in spite of takingover $1 billion in losses from 2004 and 2005 hurricanes.

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The rating agency said it also considered the stability ofRenRe's management since the turnover experienced in November 2005after the Securities and Exchange Commission sent Wells Notices toRenRe executives indicating that the agency intended to recommend acivil enforcement action be brought against them related to companyaccounting practices.

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