Arch Capital Group Ltd (Arch Capital) provides insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly owned subsidiaries.
While the company is positioned to provide a full range of property, casualty and mortgage insurance and reinsurance lines, the company focuses on writing specialty lines of insurance and reinsurance.
On August 1, 2024, the company expanded its U.S. insurance middle market presence with the acquisition of Allianz’s U.S. Middle Market Property...
Arch Capital Group Ltd (Arch Capital) provides insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly owned subsidiaries.
While the company is positioned to provide a full range of property, casualty and mortgage insurance and reinsurance lines, the company focuses on writing specialty lines of insurance and reinsurance.
On August 1, 2024, the company expanded its U.S. insurance middle market presence with the acquisition of Allianz’s U.S. Middle Market Property and Casualty insurance business and U.S. Entertainment Property and Casualty insurance business, representing an important part of the company’s growth strategy in the U.S.
The company’s property facultative reinsurance underwriting operations write business in the U.S., Canada and Europe. In 2021, Arch Re Bermuda completed the acquisition of Somerset Bridge Group Limited, Southern Rock Holdings Limited and affiliates (‘Somerset Group’). The acquisition included Somerset Group’s motor insurance managing general agent, distribution capabilities through direct and aggregator channels, affiliated insurer and fully integrated claims operation.
The company’s mortgage operations include the U.S. and international mortgage insurance and reinsurance operations, as well as participation in government sponsored enterprise (‘GSE’) credit risk-sharing transactions. The U.S. mortgage platform was established in 2014 and expanded greatly in 2016 through the acquisition of United Guaranty Corporation (‘UGC’). The company’s U.S. primary mortgage operations provide mortgage insurance products and services to the U.S. market. These operations include providers, which are approved as eligible mortgage insurers by Federal National Mortgage Association (‘Fannie Mae’) and Federal Home Loan Mortgage Corporation (‘Freddie Mac’), each a GSE. The mortgage operations also include participation in GSE credit risk-sharing transactions and direct mortgage insurance to the U.S. mortgage lenders with respect to mortgages that lenders intend to retain in portfolio or include in non-agency securitizations along with mortgage insurance and reinsurance on a global basis. The majority of the company’s European business is written through the company’s Ireland-based carrier, Arch Insurance (EU), which was authorized in 2011 to provide mortgage insurance products and services to the European and the U.K. markets. In 2019, Arch LMI Pty Ltd. (‘Arch LMI’) was authorized by the Australian Prudential Regulation Authority (‘APRA’) to write lenders’ mortgage insurance (‘LMI’) on a direct basis in Australia. The company expanded its presence in Australia in August 2021 by acquiring Westpac Lenders Mortgage Insurance Limited, another APRA approved writer of lenders mortgage insurance, which has since been renamed Arch Lenders Mortgage Indemnity Ltd. (‘Arch Indemnity’). In December 2022, the company converted Arch LMI into a services company for its Australian LMI operations and the company relinquished its APRA authorization.
In 2014, the company acquired approximately 11% of Somers Holdings Ltd. (formerly Watford Holdings Ltd.). Somers Holdings Ltd. is the parent of Somers Re Ltd. (formerly Watford Re Ltd.), a multi-line Bermuda (re)insurance company (together with Somers Holdings Ltd., ‘Somers’). In the 2020 fourth quarter, Arch Capital, Somers, and Greysbridge Ltd., a wholly-owned subsidiary of Arch Capital, entered into an Agreement and Plan of Merger (as amended, the ‘Merger Agreement’). Arch Capital assigned its rights under the Merger Agreement to Greysbridge Holdings Ltd. (‘Greysbridge’). The merger and the related Greysbridge equity financing closed on July 1, 2021. Somers is wholly owned by Greysbridge, and Greysbridge is owned 40% by Arch, and the balance is owned by certain funds managed by Kelso & Company (‘Kelso’) and certain funds managed by Warburg Pincus LLC (‘Warburg’). Under the terms of the Greysbridge shareholder agreement, beginning January 1, 2024, Arch Capital has a call right (but not the obligation) and Warburg and Kelso each have a put right (but not the obligation) to buy/sell a certain amount of each of Warburg and Kelso’s initial shares annually at the current year end tangible book value per share of Greysbridge. In 2024, Warburg and Kelso both delivered a put option notice to sell a certain amount of their initial shares. The transaction, which will involve third-party purchasers of such shares, is expected to close in the 2025 calendar year, subject to any required regulatory approvals and other closing conditions. In 2017, Arch and certain co-investors acquired approximately 25% of Premia Holdings Ltd. Premia Holdings Ltd. is the parent of Premia Reinsurance Ltd., a multi-line Bermuda reinsurance company (together with Premia Holdings Ltd., ‘Premia’). In 2021, the company completed the share purchase agreement with Natixis, a French financial services firm, to purchase 29.5% of the common equity of Coface SA (‘Coface’), a France-based leader in the global trade credit insurance market.
Segments
The company operates through three underwriting segments: Insurance, Reinsurance, and Mortgage.
Insurance segment
This segment’s operations are conducted in Bermuda, the U.S, the U.K., Europe, Canada, and Australia. The company’s insurance operations in Bermuda are conducted through Arch Insurance (Bermuda), a division of Arch Re Bermuda, and Alternative Re Limited.
In the U.S., the company's insurance group’s principal insurance subsidiaries are Arch Insurance Company, (Arch Insurance), Arch Specialty Insurance Company, (Arch Specialty), Arch Indemnity Insurance Company, (Arch Indemnity Insurance), and Arch Property Casualty Insurance Company, (Arch P&C). Arch Insurance is an admitted insurer in 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, and Guam. Arch Specialty is an approved excess and surplus lines insurer in 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, and is an authorized insurer in one state. Arch Indemnity Insurance is an admitted insurer in 50 states and the District of Columbia. Arch P&C, which is not writing business, is an admitted insurer in 47 states and the District of Columbia and is filing applications for admission in all remaining states where it is not yet admitted. In 2024, the company acquired Watford Insurance Company, (WIC), from Somers. WIC is an admitted insurer in all 50 states and the District of Columbia. The company's insurance group also operates McNeil & Company, Inc., a specialized risk manager and program administrator acquired in 2018, which is based in Cortland, New York. The headquarters for the company's insurance group’s U.S. support operations, excluding underwriting units, are in Jersey City, New Jersey. The insurance group has offices throughout the U.S., including five regional offices located in Alpharetta, Georgia; Chicago, Illinois; New York, New York; San Francisco, California; Dallas, Texas, and additional branch offices.
On August 1, 2024, the company completed the acquisition of Allianz’s U.S. Middle Market Property & Casualty Insurance and U.S. Entertainment Property and Casualty Insurance Business, (MCE Acquisition). This business is written by Fireman’s Fund Insurance Company, an affiliate of Allianz, and its subsidiaries, (collectively the Business Entities), in each case relating to relevant policies with accident years 2016 and onwards, (collectively the Business), as well as certain assets of Allianz and its affiliates related to the Business. In connection with the acquisition of the Business, the company also entered into certain reinsurance agreements relating to the Business and the Business Entities, as well as other agreements providing for administration and other services for the Business Entities by the company for the applicable policies being reinsured following the closing.
The company’s insurance operations in Canada are conducted through Arch Insurance Canada Ltd. (Arch Insurance Canada), a Canada domestic company which is authorized in all Canadian provinces and territories. Arch Insurance Canada is headquartered in Toronto, Ontario.
Arch Insurance (EU), based in Dublin, Ireland, received authorization from the Central Bank of Ireland (CBI) to expand its authorized classes of business as part of the company’s plan to address the U.K.’s departure from the European Union (Brexit). At the end of 2020, Arch Insurance (U.K.) received court approval in the U.K. to transfer its legacy book of business written in the European Economic Area (EEA) to Arch Insurance (EU) under Part VII of the U.K. Financial Services and Markets Act 2000. From January 2021, all of the insurance business in the European Union (EU) previously written by Arch Insurance (U.K.) is now written through Arch Insurance (EU). Arch Insurance (EU) has branches in Italy, France, Spain and the U.K.
The company conducts insurance operations on several platforms in the U.K., including Arch Insurance (U.K.) and its Lloyd’s syndicates: Arch Syndicate 2012 (Arch Syndicate 2012) and Arch Syndicate 1955 (Arch Syndicate 1955 and, together with Arch Syndicate 2012, its Lloyd’s Syndicates). Arch Managing Agency Limited (AMAL) is the managing agent of the company’s Lloyd’s Syndicates. These operations provide the company access to Lloyd’s extensive distribution network and worldwide licenses. AMAL also acts as managing agent for third party members of Arch Syndicate 1955. Arch Underwriting at Lloyd’s (Australia) Pty Ltd, based in Sydney, Australia, is a Lloyd’s services company which underwrites exclusively for the company’s Lloyd’s Syndicates. Collectively, the U.K. insurance operations are referred to as Arch U.K. Arch U.K. conducts its operations from London and other locations in the U.K. On May 1, 2024, the company completed the sale of Castel Underwriting Agencies Limited, a managing general agency in the U.K. that it acquired as part of the Barbican acquisition.
Strategy
The company’s insurance group’s strategy is to operate in lines of business in which underwriting expertise can make a meaningful difference in operating results. The insurance group focuses on talent-intensive rather than labor-intensive business and seeks to operate profitably (on both a gross and net basis) across all of its product lines. The key elements of the company’s strategy are to capitalize on profitable underwriting opportunities; centralize responsibility for underwriting; maintain disciplined underwriting standards using the company's experience and strategic analytics to drive decisions; focus on providing superior claims management; promote and utilize an efficient distribution system; grow strategic partnerships, acquire or build strategic businesses in niche areas or lines of business; and create or acquire scalable and diversified underwriting platforms that can flex depending on the underwriting cycle.
Marketing
The company's insurance group’s products are marketed principally through a group of licensed independent retail and wholesale brokers. Clients (insureds) are referred to the company's insurance group through a large number of international, national, and regional brokers, as well as captive managers who receive from the insured or insurer a set fee or brokerage commission, usually equal to a percentage of gross premiums. The company's insurance group may enter into contingent commission arrangements with some brokers that provide for the payment of additional commissions based on the volume or profitability of business. It is the practice for the brokers and producers to make the client aware of any contingent commission arrangements that may be in place with the company. The company has also entered into service agreements with select international brokers that provide access to their proprietary industry analytics. In general, the company's insurance group has no implied or explicit commitments to accept business from any particular broker, and neither brokers nor any other third parties have the authority to bind the company's insurance group, except in cases where underwriting authority may be delegated contractually to select program administrators. Such administrators are subject to a financial and operational due diligence review prior to any such delegation of authority, and ongoing reviews and audits are carried out as deemed necessary by the company's insurance group to assure the continuing integrity of underwriting and related business operations.
Claims Management
The company’s insurance group’s claims management function is performed by claims professionals, as well as experienced external claims managers (third party administrators), where appropriate. In addition to investigating, evaluating and resolving claims, members of the company’s insurance group’s claims departments work with underwriting professionals to develop products and services desired by the group’s clients.
Reinsurance segment
This segment’s operations are conducted on a worldwide basis through its reinsurance subsidiaries, Arch Re Bermuda, Arch Re U.S., its Lloyd’s Syndicates, and Arch Re Europe. Arch Re Bermuda is dual licensed as a Class 4 general business insurer and Class C long-term insurer, and is headquartered in Hamilton, Bermuda. Arch Re Bermuda has been approved as a ‘certified reinsurer,’ which allows for reduced collateral for reinsurance ceded to such reinsurers. Arch Re Bermuda has also been approved as a ‘reciprocal jurisdiction reinsurer,’ which allows ceding companies to eliminate regulatory collateral requirements for reinsurance ceded to such reinsurers while still taking credit for that reinsurance. In October 2024, the U.S. Department of the Treasury, Bureau of Fiscal Services, (BFS), recognized Arch Re Bermuda as an ‘Alien Reinsurer’ (except on excess risks running to the U.S.), which allows T-Listed ceding companies to eliminate regulatory collateral requirements under the U.S. Treasury rules. Arch Re U.S. is licensed or is an accredited or otherwise approved reinsurer in 50 states, the District of Columbia, and Puerto Rico, the provinces of Ontario and Quebec in Canada, with its principal U.S. offices located in Morristown, New Jersey. Treaty and facultative operations in Canada are conducted through the Canadian branch of Arch Re U.S., (Arch Re Canada). Arch Re U.S. is also an authorized insurer in Guam. The company's property facultative reinsurance operations are conducted primarily through Arch Re U.S. These property facultative reinsurance operations have offices throughout the U.S., Canada, Europe, and the U.K.
Arch Re Europe, licensed and authorized as a non-life reinsurer and a life reinsurer, is headquartered in Dublin, Ireland with branch offices in France, Switzerland and the U.K. AMAL is the managing agent for the reinsurance operations of the company’s Lloyd’s Syndicates.
Arch Group Reinsurance Ltd. (‘AGRL’), formed in December 2022, is a registered Class 3A general business insurer carrying on affiliated reinsurance business pursuant to the Insurance Act of 1978 of Bermuda. AGRL, a wholly-owned subsidiary of Arch-U.S., was established to provide internal reinsurance covering certain U.S. lines of business. AGRL is a U.S. taxpayer through a section 953(d) voluntary election under the Internal Revenue Code of 1986, as amended.
Strategy
The company’s reinsurance group’s strategy is to capitalize on its financial capacity, experienced management and operational flexibility to offer multiple products through its operations. The reinsurance group’s operating principles are to actively select and manage risks; and maintain flexibility and respond to changing market conditions; and maintain a low-cost structure.
The company’s reinsurance group writes business on both a proportional and non-proportional basis and writes both treaty and facultative business. In a proportional reinsurance arrangement (also known as pro rata reinsurance, quota share reinsurance or participating reinsurance), the reinsurer shares a proportional part of the original premiums and losses of the reinsured.
Marketing
The company’s reinsurance group generally markets its reinsurance products through brokers, except its property facultative reinsurance group, which generally deals directly with the ceding companies. The company’s reinsurance group generally pays brokerage fees to brokers based on negotiated percentages of the premiums written through such brokers.
Risk Management and Retrocession
The company’s reinsurance group purchases a combination of per event excess of loss, per risk excess of loss, proportional retrocessional agreements and other structures that are available in the market. Such arrangements reduce the effect of individual or aggregate losses on, and in certain cases may also increase the underwriting capacity of, the company’s reinsurance group. The company’s reinsurance group will continue to evaluate its retrocessional requirements based on its net appetite for risk.
For catastrophe exposed reinsurance business, the company’s reinsurance group seeks to limit the amount of exposure it assumes from any one reinsured and the amount of the aggregate exposure to catastrophe losses from a single event in any one geographic zone.
Claims Management
Claims management includes the receipt of initial loss reports, creation of claim files, determination of whether further investigation is required, establishment and adjustment of case reserves and payment of claims. Additionally, audits are conducted for both specific claims and overall claims procedures at the offices of selected ceding companies. The company’s reinsurance group makes use of outside consultants for claims work from time to time.
Mortgage Operations
The company’s mortgage operations include mortgage insurance and reinsurance in the U.S. and internationally, as well as participation in GSE credit risk-sharing transactions. The company’s mortgage group includes direct mortgage insurance in the U.S. primarily through Arch Mortgage Insurance Company (AMIC), United Guaranty Residential Insurance Company (UGRIC), and Arch Mortgage Guaranty Company (AMG and together with AMIC and UGRIC, ‘Arch MI U.S.); mortgage reinsurance primarily through Arch Re Bermuda on both a proportional and non-proportional basis globally; mortgage insurance and reinsurance in the EEA and the U.K. primarily through Arch Insurance (EU), and in Australia through Arch Indemnity; and participation in various GSE credit risk-sharing products primarily through Arch Re Bermuda.
In 2014, the company entered the U.S. mortgage insurance marketplace, underwriting on the AMIC platform. AMIC is licensed and operates in all 50 states, the District of Columbia, Puerto Rico and Guam. In December 2016, the company completed the acquisition of UGC and its primary operating subsidiary, United Guaranty Residential Insurance Company (UGRIC), which is licensed and operates in all 50 states, the District of Columbia and the U.S. Virgin Islands.
Arch Mortgage Insurance Company and United Guaranty Residential Insurance Company have each been approved as an eligible mortgage insurer by Fannie Mae and Freddie Mac, subject to maintaining certain ongoing requirements (eligible mortgage insurer). Arch Mortgage Guaranty Company offers direct mortgage insurance to U.S. mortgage lenders with respect to mortgages that lenders intend to retain in portfolio or include in non-agency securitizations. Arch Mortgage Guaranty Company, which is licensed in all 50 states and the District of Columbia, insures mortgages that are not intended to be sold to the GSEs, and it is therefore not approved by either GSE as an eligible mortgage insurer.
In 2019, Arch LMI was authorized by APRA to write lenders’ mortgage insurance. In August 2021, the company acquired Arch Indemnity, which is also authorized by APRA to write lenders’ mortgage insurance. In December 2022, the company converted Arch LMI to a services company for its Australian lenders mortgage insurance operations and the company relinquished its APRA authorization. Arch LMI and Arch Indemnity are headquartered in Sydney, Australia. Following the conversion of Arch LMI, Arch Indemnity is the primary provider of direct lenders’ mortgage insurance and reinsurance to the Australian market.
Strategy
The mortgage insurance market operates on a distinct underwriting cycle, with demand driven mainly by the housing market and general economic conditions. As a result, the creation of the mortgage group provides the company with a more diverse revenue stream. The company’s mortgage group’s strategy is to capitalize on its financial capacity, mortgage insurance technology platform, operational flexibility and experienced management to offer mortgage insurance, reinsurance and other risk-sharing products in the U.S. Europe, the U.K. and Australia. The key elements of the company’s strategy are to capitalize on profitable underwriting opportunities; maintain a disciplined credit risk philosophy; provide superior and innovative mortgage products and services; maintain its position as a leading provider of the U.S. mortgage insurance business; and Diversify revenues by capitalizing on international opportunities.
The company’s mortgage group focuses on the following areas:
Direct Mortgage Insurance in the United States: Under their monoline insurance licenses, each of Arch’s eligible mortgage insurers may only offer private mortgage insurance covering first lien, one-to-four family residential mortgages. Nearly all of the company’s mortgage insurance written provides first loss protection on loans originated by mortgage lenders and sold to the GSEs. Each GSE’s Congressional charter generally prohibits it from purchasing a mortgage where the principal balance of the mortgage is in excess of 80% of the value of the property securing the mortgage unless the excess portion of the mortgage is protected against default by lender recourse, participation or by a qualified insurer. As a result, such high loan-to-value mortgages purchased by Fannie Mae or Freddie Mac generally are insured with private mortgage insurance.
The company’s primary U.S. mortgage insurance policies predominantly cover individual loans and are effective at the time the loan is originated. The company also may enter into insurance transactions with lenders and investors, under which it insures a portfolio of loans at or after origination.
Mortgage insurance and reinsurance in Europe and other countries where the company identifies profitable underwriting opportunities.
Reinsurance
Arch Re Bermuda provides quota share and excess of loss reinsurance covering the U.S. and international mortgages.
Other Credit Risk-Sharing Products
In addition to providing traditional mortgage insurance and reinsurance, the company offers various credit risk-sharing products to government agencies and mortgage lenders. The GSEs have reduced their exposure to mortgage risk by shifting a portion of it to the private sector, creating opportunities for insurers to assume additional mortgage risk. Arch Re Bermuda and its affiliates have regularly participated in both Fannie Mae and Freddie Mac single family and multifamily risk sharing programs since their inception over 10 years ago.
In 2019, the company established Arch Credit Risk Services (Bermuda) Ltd. (Arch CRS). Arch CRS is licensed by the Bermuda Monetary Authority (BMA) as an insurance agent in Bermuda. Arch CRS offers mortgage credit assessment and underwriting advisory services with respect to participation in GSE credit risk transfer transactions.
Sales and Distribution
In the U.S., the company employs a sales force to directly sell mortgage insurance products and services to its customers, which include mortgage originators, such as mortgage bankers, mortgage brokers, commercial banks, savings institutions, credit unions, and community banks. The company’s largest single mortgage insurance customer in the U.S. (including branches and affiliates) accounted for 6.3% of its gross premiums written for the year ending December 31, 2024. In Europe, Bermuda and Australia, the company’s products and services are distributed on a direct basis and through brokers.
Claims Management
With respect to its direct mortgage insurance business, the claims process generally begins with notification by the insured or servicer to the company of a default on an insured loan. The insured is generally required to notify the company of a default after the borrower misses two consecutive monthly payments. In the U.S., the company’s master policies generally provide that within 60 days of the perfection of a primary insurance claim, it has the option of:
paying the insurance coverage percentage specified in the certificate of insurance multiplied by the loss amount;
in the event the property is sold pursuant to an approved prearranged sale, paying the lesser of 100% of the loss amount less the proceeds of sale of the property, or the specified coverage percentage multiplied by the loss amount; or
paying 100% of the loss amount in exchange for the insured’s conveyance to the company of good and marketable title to the property, with it then selling the property for the company’s own account.
While the company selects the claim settlement option that best mitigates the amount of its claim payment, in the U.S. the company generally pays the coverage percentage multiplied by the loss amount.
Other Operations
In 2014, the company and HPS Investment Partners, LLC (HPS) sponsored the formation of Somers. Somers’ strategy is to combine a diversified reinsurance and insurance business with a disciplined investment strategy.
In 2017, the company and Kelso sponsored the formation of Premia. Premia’s strategy is to reinsure or acquire companies or reserve portfolios in the non-life property and casualty insurance and reinsurance run-off market. Arch Re Bermuda is providing a quota share reinsurance treaty on certain business written by Premia, and subsidiaries of Arch Capital are providing certain administrative and support services to Premia, in each case pursuant to separate multi-year agreements. Arch has appointed two directors to serve on the seven person board of directors of Premia.
Competition
In its property casualty insurance and reinsurance businesses, the company competes with insurers and reinsurers that provide specialty, property, and casualty lines of insurance, including, but not limited to Allianz, American Financial Group, Inc., American International Group, Inc., Aviva, AXA XL, AXIS Capital Holdings Limited, Berkshire Hathaway, Inc., Chubb Limited, CNA Financial Corp., Convex Group Limited, Everest Group Ltd., Fairfax Financial Holdings Limited, Hannover Rück SE, The Hartford Financial Services Group, Inc., Liberty Mutual Group, Lloyd’s, Markel Corporation, Munich Re Group, PartnerRe Ltd., RenaissanceRe Holdings Ltd., RLI Corp., SCOR, Sompo International, Swiss Reinsurance Company, Tokio Marine, The Travelers Companies, Inc., W.R. Berkley Corp. and Zurich Insurance Group.
In its mortgage business, the company competes with insurers and reinsurers that provide mortgage insurance, including the U.S. mortgage insurance subsidiaries of Essent Group Ltd., Enact Holdings Inc., MGIC Investment Corporation, NMI Holdings Inc. and Radian Group Inc.
In its non-U.S. mortgage insurance businesses, the company competes with insurance subsidiaries of Helia Group Ltd. and QBE Insurance Group, Ltd. in Australia.
Regulation
The company’s main Bermuda insurance operating subsidiary, Arch Re Bermuda, is dual licensed as a Class 4 general business insurer and a Class C long-term insurer and is subject to the Insurance Act 1978 of Bermuda and related regulations, as amended (Insurance Act). AGRL, a Class 3A general insurer in Bermuda, is also subject to the Insurance Act.
Arch Insurance Canada and Arch Re Canada are subject to federal, as well as provincial and territorial, regulation in Canada in the provinces and territories in which they underwrite insurance/reinsurance. The Office of the Superintendent of Financial Institutions (OSFI) is the federal regulatory body that, under the Insurance Companies Act (Canada), prudentially regulates federal Canadian and non-Canadian insurance and reinsurance companies operating in Canada. Arch Insurance Canada is licensed to carry on insurance business by OSFI and in each province and territory. Arch Re Canada is licensed to carry on reinsurance business by OSFI and in the provinces of Ontario and Quebec.
The BMA acts as group supervisor of the company’s group of insurance and reinsurance companies (Group) and has designated Arch Re Bermuda as the designated insurer (Designated Insurer). Arch Re Bermuda is also subject to an enhanced capital requirement (ECR), which is established by reference to either the Bermuda Solvency Capital Requirement model (BSCR) or an approved internal capital model.
OSFI has implemented a risk-based methodology for assessing insurance/reinsurance companies operating in Canada known as its Supervisory Framework. In applying the Supervisory Framework, OSFI considers the inherent risks of the business and the quality of risk management for each significant activity of each operating entity. Under the Insurance Companies Act (Canada), approval of the Minister of Finance (Canada) is required in connection with certain acquisitions of shares of, or control of, Canadian insurance companies, such as Arch Insurance Canada, and notice to and/or approval of OSFI is required in connection with the payment of dividends by or redemption of shares by Canadian insurance companies, such as Arch Insurance Canada.
The company conducts insurance operations on several platforms in the U.K., including Arch Insurance (U.K.) and the company's Lloyd’s syndicates: Arch Syndicate 2012, (Arch Syndicate 2012), and Arch Syndicate 1955, (Arch Syndicate 1955, and, together with Arch Syndicate 2012, the company's Lloyd’s Syndicates). Arch Managing Agency Limited, (AMAL), is the managing agent of the company's Lloyd’s Syndicates.
All U.K. companies are also subject to a range of statutory provisions, including the laws and regulations of the Companies Act 2006 (as amended) (the U.K. Companies Act).
The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) regulate insurance and reinsurance companies and the FCA regulates firms carrying on insurance distribution activities operating in the U.K. under the Financial Services and Markets Act 2000 (theFSMA).
The operations of AMAL (as managing agent of Arch Syndicate 2012 and Arch Syndicate 1955) and each syndicate’s respective corporate members, are subject to the byelaws and regulations made by (or on behalf of) the Council of Lloyd’s, and requirements made under those byelaws. The Council of Lloyd’s, established in 1982 by Lloyd’s Act 1982, has overall responsibility and control of Lloyd’s. Those byelaws, regulations and requirements provide a framework for the regulation of the Lloyd’s market, including specifying conditions in relation to underwriting and claims operations of Lloyd’s participants. The Council of Lloyd’s has discretionary powers to regulate corporate members’ underwriting at Lloyd’s. Lloyd’s is also subject to the provisions of the FSMA. Lloyd's is authorized by the PRA and regulated by the PRA and FCA. Those entities acting within the Lloyd’s market are required to comply with the requirements of the FSMA and provisions of the PRA’s or FCA's rules, although the PRA has delegated certain of its powers, including some of those relating to prudential requirements, to Lloyd’s. Each corporate member of Lloyd’s is required to contribute a percentage of the member’s premium income for each year of account to the Lloyd’s central fund.
The company’s three Irish operating subsidiaries are Arch Re Europe, Arch Insurance (EU) and Arch Underwriters Europe Limited (Arch Underwriters Europe). Arch Re Europe was licensed and authorized by the CBI as a non-life reinsurer in October 2008 and as a life reinsurer in November 2009. Arch Insurance (EU) was licensed and authorized by the CBI as a non-life insurer in 2011. As part of its Brexit plan, Arch Insurance (EU) received approval from the CBI to expand the nature of its business in 2019 and commenced writing expanded insurance lines in the EEA in 2020 with the Part VII Transfer completed at the end of December 2020. Arch Underwriters Europe was registered by the CBI as an insurance and reinsurance intermediary in July 2014. Arch Re Europe, Arch Insurance (EU) and Arch Underwriters Europe are subject to the supervision of the CBI and must comply with Irish insurance acts and regulations, as well as with directions and guidance issued by the CBI. Arch Re Europe and Arch Insurance (EU) are required to comply with Solvency II requirements.
The company’s Irish subsidiaries are also subject to the general body of Irish company laws and regulations, including the provisions of the Companies Act 2014.
As Arch Re Europe, Arch Insurance (EU) and Arch Underwriters Europe are authorized by the CBI in Ireland, a Member State of the EU, those authorizations are recognized throughout the EEA.
Arch Insurance (EU) has branches in Italy, France, Spain and the U.K. Arch Re Underwriting ApS in Denmark (Arch Re Denmark) is an underwriting agency underwriting accident and health and other reinsurance business for Arch Re Europe. Arch Re Europe also has branches in the U.K., France and Switzerland (Arch Re Europe Swiss Branch).
The PRA and the FCA adopt separate methods of assessing regulated firms on a periodic basis. Arch Insurance (U.K.) and AMAL are subject to periodic assessment by the PRA along with all regulated firms. Arch Insurance (U.K.) and AMAL are subject to regulation by both the PRA and FCA.
The company also conducts property and casualty insurance business in Australia through Lloyd’s. This insurance business is managed by and distributed through local coverholders and is subject to Lloyd’s Supervision. In addition, the business is subject to local Australian prudential regulatory oversight by APRA, and additional separate financial services market conduct regulation by ASIC.
APRA is an independent statutory authority responsible for prudential supervision of institutions across banking, insurance and superannuation and promotes financial stability in Australia. Arch Indemnity has been authorized to conduct monoline lenders’ mortgage insurance business in Australia since June 2002 and was acquired by Arch Capital on August 30, 2021.
History
Arch Capital Group Ltd., formerly known as Risk Capital Holdings, Inc., was founded in 1995. The company was incorporated in 2000.
