AM Best has upgraded the long-term issuer credit ratings of Arch Reinsurance Ltd and its strategic affiliates, citing strong balance-sheet strength, consistent operating performance and diversified earnings.

The ratings agency lifted Arch Reinsurance’s long-term issuer credit ratings to “aa” (superior) from “aa-”, while affirming its A+ (superior) financial strength rating. The outlook on the long-term issuer ratings was revised to stable from positive, with the financial strength outlook remaining stable.

At the same time, AM Best upgraded the long-term issuer credit ratings of Arch Capital Group Ltd, the Bermudian-based parent company, and two American holding entities to “a” (excellent) from “a-”, with outlooks also revised to stable.

AM Best said the upgrades reflect Arch’s “strongest” balance-sheet assessment, supported by very strong operating performance, a favourable business profile and appropriate enterprise risk management. The agency noted that Arch has consistently outperformed most peers with lower earnings volatility.

A key strength named by AM Best is Arch’s diversified platform, which combines mortgage insurance alongside reinsurance and insurance operations. The three segments provide multiple profit and revenue streams and have contributed to steady results over time, supported by superior risk selection.

AM Best pointed to this diversification and underwriting discipline in the first quarter of 2025, when Arch posted positive underwriting results that outperformed its peers following the California wildfires.

While reinsurance market conditions have been favourable in recent years, AM Best said Arch has a long track record of strong underwriting and investment returns even during softer market cycles.

The agency also cited Arch’s strong risk-adjusted capital position, as measured by Best’s capital adequacy ratio, and strong management team.