Arch Capital enters restated $925 million two-tranche credit facility

By Marisa Wong

Los Angeles, Aug. 24 – Arch Capital Group Ltd. and some of its subsidiaries entered into a fourth amended and restated credit agreement on Aug. 23 with Bank of America, NA as administrative agent, letter-of-credit administrator and a fronting bank, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement amends and restates the company’s existing credit agreement dated Dec. 17, 2019 and provides for a $425 million tranche A secured facility for letters of credit and a $500 million tranche B unsecured facility for revolving loans and letters of credit.

The senior credit facility may be increased up to an aggregate of $1.5 billion.

Arch Capital Group (U.S.) Inc. guarantees the obligations of Arch Capital; Arch Capital guarantees the obligations of Arch Capital Group (U.S.) and Arch U.S. MI Holdings Inc.; and Arch Capital Finance LLC guarantees the obligations of Arch Capital and Arch Capital Group (U.S.).

Commitments will expire on Aug. 23, 2028, and all loans then outstanding under the credit agreement must be repaid at that time. Letters of credit will not have an expiration date later than Aug. 23, 2029.

The letter-of-credit fee for tranche A commitments and credit extensions is 40 basis points. The letter-of-credit fee for tranche B commitments and credit extensions ranges from 75 bps to 137.5 bps, depending on debt ratings.

The commitment fee is 12.5 bps for tranche A commitments. The commitment fee for tranche B commitments ranges from 7.5 bps to 20 bps, depending on ratings.

The applicable margin for term SOFR loans under the tranche B facility ranges from 87.5 bps to 150 bps, based on ratings.

The credit agreement requires that subsidiary borrowers maintain certain ratings.

In addition, Arch Capital is required to comply with a maximum consolidated leverage ratio covenant, and each of Arch Capital, Arch Reinsurance Co. and Arch Reinsurance Ltd. is required to comply with a minimum consolidated tangible net worth covenant.

BofA Securities, Inc. is lead arranger and bookrunner.

Arch Capital is an insurance, reinsurance and mortgage insurance provider based in Hamilton, Bermuda.

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