8-KMaterial AgreementsFinancial EventsOther Events+1

ARCH CAPITAL GROUP LTD. 8-K Report, Material Agreement (Dec 13, 2013)

Filed December 13, 2013For Securities:ACGLACGLNACGLO

Summary

Arch Capital Group Ltd. (ACGL) announced on December 13, 2013, through its wholly-owned subsidiary Arch Capital Group (U.S.) Inc., the successful completion of a public offering of $500 million in aggregate principal amount of 5.144% Senior Notes due 2043. These Senior Notes are fully and unconditionally guaranteed by the parent company, Arch Capital Group Ltd. This offering was made under the company's existing universal shelf registration statement, indicating it was a well-planned financing event. The issuance of these notes represents a material definitive agreement and creates a direct financial obligation for the company. Key investor considerations include the fixed interest rate of 5.144% and the long maturity of 30 years. The notes are unsecured and rank equally with other unsecured and unsubordinated debt. Importantly, the Senior Notes are subject to a special mandatory redemption under specific circumstances related to a previously disclosed acquisition of certain assets and shares of PMI Mortgage Insurance Co., CMFG Life Insurance Company, and CMG Mortgage Insurance Company. If this acquisition is terminated or not completed by June 30, 2014, the notes will be redeemed at 101% of their principal amount, plus accrued interest, providing a specific downside protection mechanism for noteholders in that scenario.

Key Highlights

  • 1Arch Capital Group Ltd. successfully priced $500 million in aggregate principal amount of 5.144% Senior Notes due 2043.
  • 2The Senior Notes are fully and unconditionally guaranteed by the parent company, Arch Capital Group Ltd.
  • 3The offering was made under the company's existing universal shelf registration statement.
  • 4The Senior Notes bear a fixed interest rate of 5.144% and mature on November 1, 2043.
  • 5The notes are unsecured and rank equally with other unsecured and unsubordinated indebtedness of the Issuer and the Company.
  • 6A special mandatory redemption feature is in place, triggered if a previously disclosed acquisition related to PMI Mortgage Insurance Co. is terminated or not completed by June 30, 2014.
  • 7In case of a special mandatory redemption, the notes will be redeemed at 101% of the principal amount plus accrued interest.

Frequently Asked Questions

This 8-K filing reports the entry into a material definitive agreement regarding the completion of a public offering of $500 million in Senior Notes by Arch Capital Group (U.S.) Inc., a subsidiary of Arch Capital Group Ltd. It also details the creation of a direct financial obligation for the company.

The Senior Notes have an aggregate principal amount of $500 million, a fixed interest rate of 5.144%, and mature on November 1, 2043. They are guaranteed by Arch Capital Group Ltd. and are unsecured and unsubordinated obligations.

The Senior Notes are subject to a special mandatory redemption if a specific acquisition (involving PMI Mortgage Insurance Co. and related entities) is terminated or not completed by June 30, 2014. If this occurs, the notes will be redeemed at 101% of their principal amount plus accrued interest. This provides investors with a form of protection if the strategic acquisition that may have been a factor in the company's decision to issue debt does not materialize.

The Senior Notes are unsecured and rank equally and ratably with the other unsecured and unsubordinated indebtedness of both the Issuer (Arch Capital Group (U.S.) Inc.) and the Guarantor (Arch Capital Group Ltd.).