Terms

Series

5.45% Non-Cumulative Preferred Shares, Series F

Liquidation Preference

$25.00

Coupon Rate

5.45%

Rate Type

Fixed

Annual Dividend

$1.36

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

August 17, 2022

First Call Price

$25.00

Capital Stack Ranking

Junior To: All Liabilities To Creditors, Senior Notes, Revolving Credit Agreement Borrowings; Pari Passu With: Series C Non-Cumulative Preferred Shares, Series E Non-Cumulative Preferred Shares, Any Other Parity Shares; Senior To: Common Shares, Series D Preferred Shares, Any Other Junior Shares

Regulatory (Basel III) Call

Yes

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

No

Depositary Share Fraction

0.001

Shares Offered

8,000,000

Prospectus Summary

Arch Capital Group Ltd. (ACGL), a Bermuda-based specialty insurance and reinsurance holding company, is offering 8,000,000 depositary shares (NASDAQ: ACGLO), each representing a 1/1,000th interest in a share of its Series F 5.45% Non-Cumulative Preferred Shares with a $25,000 liquidation preference per underlying share (equivalent to $25 per depositary share). Dividends are paid quarterly in arrears on the last day of March, June, September, and December at a fixed annual rate of 5.45% ($1.3625 per depositary share per year). The shares are non-cumulative: if dividends are not declared for any period, they are permanently foregone and will not accrue or be owed in future periods. The Series F Preferred Shares rank senior to Arch Capital's common shares and the Series D Preferred Shares (issued to AIG), and are pari passu with the outstanding Series C and Series E Non-Cumulative Preferred Shares. As a holding company issue, these shares are structurally subordinated to all debt and policyholder obligations at the operating subsidiary level; creditors of Arch Capital's insurance and reinsurance subsidiaries have prior claims on those entities' assets. A regulatory capital call provision allows Arch Capital to redeem the shares at par ($25 per depositary share) within 90 days of determining that a 'capital disqualification event' has occurred — i.e., if the shares lose their qualifying treatment under the Bermuda Monetary Authority's Enhanced Capital Requirement — which could force redemption at an inopportune time for investors. At the $25.00 offering price, the shares yield 5.45% annually (~$0.3406 per depositary share per quarter). Dividends are expected to qualify as qualified dividend income (QDI) for non-corporate U.S. shareholders, taxed at preferential 15%/20% rates, provided standard holding period requirements are met; however, dividends paid before the NASDAQ listing may not qualify. Dividends paid to U.S. corporate holders do not qualify for the dividends-received deduction (DRD). The dividend stopper provision prevents Arch Capital from paying dividends on or repurchasing common or junior shares unless the most recent full quarterly dividend on the Series F Preferred Shares has been declared and paid — though this does not guarantee payment to preferred holders, as dividends remain entirely at board discretion.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If Arch Capital has not paid full dividends on the Series F Preferred Shares for the most recently completed dividend period, it cannot pay dividends on or repurchase its common shares or any other junior-ranking shares.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 75 (Strong)