Summary: Arch Mortgage Insurance Co.

Standard&Poor's Rating Services' rating on Arch Mortgage Insurance Co. (Arch MI) is based on its leadership position in the niche credit union market, the strong credit quality of its credit union customers, and the company's improved capital position based on its reinsurance agreement with Arch Reinsurance Ltd. (Arch Re). Our rating further benefits from implicit support from Arch Capital Group Ltd. (Arch). We currently view Arch MI as moderately strategic to the group. Therefore, it receives one notch of credit support. Offsetting these strengths are the competitive challenges Arch MI could face as it expands into the bank channel at the regional and national levels as well as its fixed-cost structure that will challenge its near-term operating profitability.

...Standard & Poor's Rating Services' rating on Arch Mortgage Insurance Co. (Arch MI) is based on its leadership position in the niche credit union market, the strong credit quality of its credit union customers, and the company's improved capital position based on its reinsurance agreement with Arch Reinsurance Ltd. (Arch Re). Our rating further benefits from implicit support from Arch Capital Group Ltd. (Arch). We currently view Arch MI as moderately strategic to the group. Therefore, it receives one notch of credit support. Offsetting these strengths are the competitive challenges Arch MI could face as it expands into the bank channel at the regional and national levels as well as its fixed-cost structure that will challenge its near-term operating profitability. Arch MI is an important component of Arch's broader strategy to diversify into the mortgage (re)insurance space in which it has invested considerable resources. Arch MI's expansion into the broader U.S. MI market will create substantive...

Summary