Arch Reinsurance Ltd. Announces Strategic Support Measures for Its Gulf Re Joint Venture

HAMILTON, Bermuda - Saturday, November 29th 2014 [ME NewsWire]

(BUSINESS WIRE) -- Arch Reinsurance Ltd. (Arch) announced today a number of strategic initiatives to provide additional support to Gulf Reinsurance Ltd. (Gulf Re), a specialty reinsurer based in the Dubai International Financial Centre (DIFC) founded jointly by Arch and Gulf Investment Corporation (GIC) in 2008. Arch has agreed in principle to acquire complete ownership of Gulf Re, subject to approval by the Dubai Financial Services Authority. To further support Gulf Re’s business in advance of the January 1 renewal season, Arch is also entering into an uncapped 90% whole account quota share retrocession arrangement of Gulf Re’s net liabilities and a loss portfolio transfer of all of Gulf Re’s existing business, effective as of October 1, 2014. With these new agreements being implemented, Arch will cancel its existing stop loss agreement with Gulf Re.

Gulf Re will continue to benefit from the relationships of GIC, which will continue to have representation on the Board of Directors of Gulf Re as well as an ongoing economic interest in the results of Gulf Re.

With the new strategic initiatives in place, we believe that Gulf Re is strongly positioned for opportunities in the marketplace. Gulf Re benefits from the substantial experience of its management team based in Dubai, which is led by Christian Vogel. Additionally, Gulf Re continues to be exceptionally well capitalized. At year-end 2013, Gulf Re’s score under A.M. Best’s Capital Adequacy Ratio (BCAR) was well above A.M. Best’s capital requirements for its highest rating of A++. We also estimate that, after taking into account the projected full year underwriting results for Gulf Re during 2014 and without including the benefit of the new quota share and loss portfolio transfer from Arch, our forecasted BCAR score at year end 2014 for Gulf Re remains significantly above the required capital level for an A++ rating from A.M. Best.

About Arch Reinsurance Ltd.

Arch Reinsurance Ltd. is a member of Arch Capital Group Ltd., a Bermuda-based company that provides insurance and reinsurance on a worldwide basis through its wholly owned subsidiaries. For more information, visit www.archcapgroup.com.

Cautionary Note Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward−looking statements. This release or any other written or oral statements made by or on behalf of Arch Capital Group Ltd. and its subsidiaries may include forward−looking statements, which reflect our current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward−looking statements.

Forward−looking statements can generally be identified by the use of forward−looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or their negative or variations or similar terminology. Forward−looking statements involve our current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: adverse general economic and market conditions; increased competition; pricing and policy term trends; fluctuations in the actions of rating agencies and our ability to maintain and improve our ratings; investment performance; the loss of key personnel; the adequacy of our loss reserves, severity and/or frequency of losses, greater than expected loss ratios and adverse development on claim and/or claim expense liabilities; greater frequency or severity of unpredictable natural and man-made catastrophic events; the impact of acts of terrorism and acts of war; changes in regulations and/or tax laws in the United States or elsewhere; our ability to successfully integrate, establish and maintain operating procedures as well as integrate the businesses we have acquired or may acquire into the existing operations; changes in accounting principles or policies; material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements; availability and cost to us of reinsurance to manage our gross and net exposures; the failure of others to meet their obligations to us; and other factors identified in our filings with the U.S. Securities and Exchange Commission.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein or elsewhere. All subsequent written and oral forward−looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. We undertake no obligation to publicly update or revise any forward−looking statement, whether as a result of new information, future events or otherwise.

Contacts

Arch Capital Group Ltd.

Mark D. Lyons,

441-278-9250