S&P reviews United Guaranty, changes Arch Capital to negative

S&P said it affirmed its A- long-term counterparty credit rating on Arch Capital Group Ltd. (ACGL) as well as its counterparty credit and financial strength ratings on its operating subsidiaries.

The outlook was revised to negative from stable on all ratings on Arch Capital and its subsidiaries except for Arch Mortgage Insurance Co., which continues to carry a positive outlook.

S&P also placed its BBB+ long-term counterparty credit and financial strength ratings on United Guaranty Corp.'s U.S.-domiciled operating subsidiaries on CreditWatch with positive implications. The ratings on AIG United Guaranty Insurance (Asia) Ltd. remain on CreditWatch with negative implications, where they were placed Jan. 27, 2016.

"The outlook revision on ACGL reflects execution risks inherent in the proposed acquisition," S&P credit analyst Hardeep Manku said in a news release.

The acquisition of United Guaranty accelerates Arch Capital’s push into the U.S. primary mortgage insurance sector, complementing its own initiative started in 2014 through Arch Mortgage.

The combined United Guaranty and Arch Mortgage business will constitute one of the largest players in the sector, providing increased presence and scale benefits to Arch Capital, the agency added.

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