8-KMaterial AgreementsFinancial EventsExhibits & Filings

ARCH CAPITAL GROUP LTD. 8-K Report, Material Agreement (Dec 22, 2006)

Filed December 22, 2006For Securities:ACGLACGLNACGLO

Summary

Arch Capital Group Ltd. (ACGL) has filed a Form 8-K detailing an amendment and restatement of a Letter of Credit and Reimbursement Agreement for its subsidiary, Arch Reinsurance Ltd. (ARL). This agreement, dated December 21, 2006, with Barclays Capital as the lead arranger and Barclays Bank PLC as agent and lender, among others, reduces the maximum face amount of letters of credit available from $200 million to $150 million. This facility allows ARL to obtain letters of credit in various currencies with expirations up to four years, through December 31, 2007. The agreement includes standard covenants related to asset disposals, incurring liens or indebtedness, and maintaining specific financial strength ratings. It also outlines events of default that could lead to acceleration of ARL's obligations, such as payment defaults, covenant breaches, ACGL failing to meet net worth or leverage ratio requirements, and bankruptcy events. Investors should note this reflects a change in ARL's available credit facility and the associated financial covenants.

Key Highlights

  • 1Arch Reinsurance Ltd. (ARL), a subsidiary of Arch Capital Group Ltd. (ACGL), entered into an Amended and Restated Letter of Credit and Reimbursement Agreement.
  • 2The maximum face amount of letters of credit available under the facility has been reduced from $200 million to $150 million.
  • 3The agreement is with Barclays Capital (mandated lead arranger), Barclays Bank PLC (agent and lender), and includes ING Bank N.V. and Lloyds TSB Bank plc as lenders.
  • 4The facility allows for the issuance or renewal of letters of credit in USD, Pounds Sterling, or Euros with expirations up to four years.
  • 5The agreement is effective from December 21, 2006, and terminates on December 31, 2007.
  • 6Customary covenants are included, restricting asset disposals, liens, and indebtedness, subject to thresholds and exceptions.
  • 7Affirmative covenants require ARL to maintain certain financial strength ratings, and events of default can lead to acceleration of obligations.

Frequently Asked Questions

This 8-K filing announces the amendment and restatement of a Letter of Credit and Reimbursement Agreement for Arch Reinsurance Ltd. (ARL), a subsidiary of Arch Capital Group Ltd. (ACGL). This agreement provides ARL with a facility to obtain letters of credit.

The primary change is a reduction in the maximum face amount of letters of credit available under the facility, from $200 million in the previous agreement to $150 million in the new agreement.

The agreement allows ARL to issue or renew letters of credit in multiple currencies (USD, Pounds Sterling, Euros) with maturities up to four years. It includes standard covenants related to financial health, such as maintaining financial strength ratings and adhering to net worth and leverage limits. It also specifies events of default that could lead to acceleration of obligations.

The parties are Arch Reinsurance Ltd. (ARL) as the obligor, Barclays Capital as the mandated lead arranger, Barclays Bank PLC as the agent and lender, and ING Bank N.V. and Lloyds TSB Bank plc as other lenders.