A.M. Best Ups Arch Rating To 'A'; Affirms Ren Re

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

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

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

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

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

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

Best said the ratings for RenRe and its operating companies reflect continued strong capitalization and a historical record of exceptional underwriting and risk management in spite of taking over $1 billion in losses from 2004 and 2005 hurricanes.

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