Bermuda-based Arch Insurance Group has reached an agreement to buy the renewal rights to Kemper Insurance Companies' surety business, Kemper announced yesterday.

The agreement includes contract and specialty surety products written through Kemper's Surety division, including Lou Jones & Associates.

"This transaction continues Kemper's efforts to become primarily a standard commercial lines insurance provider," said David B. Mathis, Kemper chairman and CEO. As a result of the transaction, some of Kemper Surety's staff and certain assets used in the business will also be transferred to Arch, a subsidiary of Arch Capital Holdings Ltd., which was formed in the wake of the 2001 September 11 terrorist attacks.

This is the latest set of "renewal rights" that Arch has bought. In January, Arch Insurance bought the renewal rights for marine "blue water" insurance of ocean-going ships from CNA Insurance and earlier this month, it formed a joint venture with Golden Eagle Ocean Group to provide insurance products for the global insurance industry.

Arch has also introduced new excess liability capacity and new directors and officers (D&O) liability capacity for individual directors of companies.

Arch Capital, which announced net income of $43.5 million for the fourth quarter and $58.9 million for 2002 earlier this week, saw its shares close up 2.96 percent or 86 cents at $29.91 yesterday.