Moody?s Investors Service has assigned a Baa3 rating to $100 million of preferred shares issued by Arch Capital Group. The outlook is stable.

The offering constitutes a drawdown from Arch Capital?s existing $650 million universal shelf registration rated by Moodys in July 2005. Net proceeds will be used for general corporate purposes.

The latest rating is based on Arch Capital?s ?established operating platform and good spread of risk in international reinsurance and insurance through subsidiaries located in Bermuda, the United States and the United Kingdom, its strong capitalisation and balance sheet unencumbered by legacy exposures and its moderate financial leverage,? Moody?s said.

The ratings agency also listed efficient operations, a conservative investment profile and strong liquidity at the holding company as Arch?s other strengths.

However tempering the strengths are the company?s ?limited operating history in the highly cyclical speciality insurance and reinsurance sectors, the underwriting volatility and pricing uncertainty inherent in the company?s lines of business?.

Arch?s business includes catastrophe-exposed property and aviation risks and casualty-based exposures. Rapid premium growth in recent years can lead to attendant risks, Moody?s said.

At the current rating, Moody?s said that Arch will continue to maintain a moderate adjusted financial leverage profile and that premium growth over the intermediate term will remain in line with its peers.

?Operating leverage will remain below 1.5 times, dividend capacity coverage of interest and preferred dividends will remain 1.5 times, dividend capacity coverage of interest and preferred dividends will remain in excess of three times, and that annual net, after tax catastrophe losses will not exceed ten percent of equity.?