8-KMaterial Agreements

ARCH CAPITAL GROUP LTD. 8-K Report, Material Agreement (Jan 28, 2008)

Filed January 28, 2008For Securities:ACGLACGLNACGLO

Summary

Arch Capital Group Ltd. (ACGL) announced on January 28, 2008, a significant strategic move through its wholly-owned subsidiary, Arch Reinsurance Ltd. The company has entered into a Joint Venture Agreement with Gulf Investment Corporation GSC (GIC) to establish a new reinsurance company based in the Dubai International Financial Centre (DIFC). This joint venture, with an initial capitalization commitment of $100 million from each party and the potential for an additional $100 million combined, aims to underwrite property and casualty reinsurance, primarily targeting the Gulf Cooperation Council (GCC) region. Arch Re will contribute its reinsurance expertise, focusing on management, business development, and underwriting, while GIC will leverage its regional investments and connections to build the business and secure clients. The structure ensures equal ownership and board representation, highlighting a balanced partnership for expansion into a key growth market.

Key Highlights

  • 1Arch Capital Group Ltd. (ACGL) has formed a joint venture with Gulf Investment Corporation GSC (GIC) to establish a new reinsurance company in the Dubai International Financial Centre (DIFC).
  • 2The joint venture will focus on providing property and casualty reinsurance primarily within the Gulf Cooperation Council (GCC) region.
  • 3Each partner, Arch Reinsurance Ltd. (a subsidiary of ACGL) and GIC, has committed an initial capital of $100.0 million.
  • 4An additional $100.0 million in aggregate capital can be called upon by the joint venture's board, subject to conditions.
  • 5Arch Re will provide strategic and operational expertise in reinsurance, while GIC will leverage its regional investments and market access.
  • 6Both shareholders will hold a 50% ownership stake and have equal representation on the joint venture's board.
  • 7The agreement includes provisions for deadlock resolution, share transfers, and referrals of competing reinsurance business.

Frequently Asked Questions

The primary purpose of the joint venture is to establish and operate a new reinsurance company in the Dubai International Financial Centre (DIFC) to provide property and casualty reinsurance, with a strategic focus on the Gulf Cooperation Council (GCC) region.

Both Arch Reinsurance Ltd. (a subsidiary of ACGL) and Gulf Investment Corporation GSC (GIC) have committed to fund $100.0 million of the joint venture's initial capitalization. They also have the option to fund additional capital calls up to an aggregate of $100.0 million.

Arch Re will contribute its expertise in reinsurance operations, including management recruitment, business plan development, and underwriting. GIC will contribute its investment and regional expertise to help build the business and introduce the joint venture to clients and insurance companies within the Territory.

In the event of a deadlock between Arch Re and GIC, the matter will be escalated to the Chief Executive Officers of ACGL and GIC. If they cannot resolve it, either shareholder can offer to sell its shares to the other, who is then obligated to either buy or sell its shares.