Fitch: Arch Capital notes A-

Fitch Ratings said it assigned an A- rating to Arch Capital Finance LLC's issuance of $500 million 4.011% senior notes due 2026 and $450 million 5.031% senior notes due 2046.

The ratings also were placed on negative watch.

Arch Capital is a wholly owned subsidiary of Arch Capital Group, Ltd. and fully and unconditionally guaranteed the notes on a senior unsecured basis, Fitch said.

The negative watch is applied to Arch Capital Group’s issuer default rating of A, along with the A- rating on its $300 million 7.35% senior unsecured notes due 2034, BBB+ rating on its $325 million 6.75% series C non-cumulative preferred shares and BBB+ rating on its $450 million 5.25% series E non-cumulative preferred shares.

The A- rating on Arch Capital Group (U.S.) Inc.’s $500 million 5.144% senior notes due 2043 also is on negative watch.

The proceeds will be used to fund a portion of the cash consideration for Arch Capital’s acquisition of United Guaranty Corp. from American International Group, Inc., Fitch said.

The debt offering is not contingent on the closing of the UGC acquisition, which is expected to be completed by year-end 2016 or early first quarter 2017, subject to regulatory approvals, the agency said.

The negative watch reflects an anticipated change to a ring-fencing environment classification for Arch Capital Group from a group solvency approach following the purchase of United Guaranty as the acquisition increases the amount of capital outside of the Bermuda group solvency environment, Fitch explained.

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