Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 8-K
 
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
May 9, 2018
Date of Report (Date of earliest event reported)
 
Arch Capital Group Ltd.
(Exact name of registrant as specified in its charter)
 
Bermuda
 
001-16209
 
N/A
(State or other
jurisdiction of
incorporation or
organization)
 
(Commission File Number)
 
(I.R.S. Employer
Identification No.)
 
Waterloo House, Ground Floor, 100 Pitts Bay Road, Pembroke HM 08, Bermuda
(Address of principal executive offices) (Zip Code)
 
Registrant’s telephone number, including area code:
(441) 278-9250
 
N/A
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company     o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act.  o



ITEM 1.01    Entry Into a Material Definitive Agreement.    
On May 10, 2018, Arch Capital Group Ltd. (“ACGL” or the "Company") and Arch Capital Finance LLC (“Arch Finance”), a wholly-owned subsidiary of ACGL, entered into a second supplemental indenture (the “Second Supplemental Indenture”) by and among ACGL, Arch Finance and The Bank of New York Mellon, as trustee (the “Trustee”), to the indenture, dated as of December 8, 2016 (the “Base Indenture”), as supplemented by a first supplemental indenture, dated as of December 8, 2016 (the “First Supplemental Indenture” and, together with the Base Indenture, the “Indenture”) relating to $500,000,000 aggregate principal amount of 4.011% senior notes due 2026 (the “2026 Notes”) and $450,000,000 aggregate principal amount of 5.031% senior notes due 2046 (the “2046 Notes” and, together with the 2026 Notes, the “Senior Notes”) issued by Arch Finance and fully and unconditionally guaranteed by ACGL.
The Indenture originally provided that the Notes are redeemable at any time at the option of Arch Finance at a redemption price equal to a make-whole premium or, following the par call date (September 15, 2026 in the case of the 2026 Notes, and June 15, 2046, in the case of the 2046 Notes), at par, plus in each case, accrued and unpaid interest. The Second Supplemental Indenture limits this optional redemption right to provide that the Notes are not redeemable at the option of Arch Finance on or before December 8, 2021, except in the limited circumstances set forth in the Second Supplemental Indenture. This change is intended to permit the Notes to qualify as Tier 3 ancillary capital under eligible capital requirements of the Bermuda Monetary Authority. Since this amendment does not materially adversely affect the interests of the holders of Notes, the Second Supplemental Indenture was entered into without consent of any holders of Notes.
This description of the Second Supplemental Indenture and related matters is not complete and is qualified in its entirety by the actual terms of the Second Supplemental Indenture, a copy of which is incorporated herein by reference and attached hereto as Exhibit 4.1.
ITEM 5.02.     Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On May 10, 2018, Mark D. Lyons tendered his resignation as the Chief Financial Officer and Treasurer of ACGL, such resignation to be effective on May 25, 2018. Mr. Lyons will assist in the transition of the Chief Financial Officer and Treasurer role until his departure from the Company.  

On May 14, 2018 Mr. Lyons’ employment agreement with the Company was amended to provide that his employment will terminate on May 25, 2018 as a result of his resignation without good reason and the Company waived Mr. Lyons’ noncompetition covenant in the employment agreement.  Mr. Lyons’ covenants relating to nonsolicitation and confidentiality were not waived. A copy of the amendment is attached to this Current Report on Form 8-K as Exhibit 10.1.

On May 14, 2018, the Company announced the appointment of Francois Morin as the Company’s Chief Financial Officer and Treasurer effective May 25, 2018.  As of that date, Mr. Morin will assume the duties of the Company’s principal financial officer and principal accounting officer until the earlier of his resignation or removal.  There are no reportable family relationships or related person transactions involving the Company and Mr. Morin.

Mr. Morin, age 50, most recently served as Senior Vice President, Chief Risk Officer and Chief Actuary of the Company, a position he has held since May 2015. He joined the Company in October 2011 as Chief Actuary and Deputy Chief Risk Officer. From January 1990 through September 2011, Mr. Morin served in various roles for Towers Watson & Co. and its predecessor firm Towers Perrin Forster & Crosby, including its actuarial division, Tillinghast. He holds a B.Sc. in Actuarial Science from Université Laval in Canada. He is a Fellow of the Casualty Actuarial Society, a Chartered Financial Analyst and a Member of the American Academy of Actuaries.

As certain information called for by Item 5.02(c)(3) regarding Mr. Morin’s employment agreement is not yet determined or is unavailable at this time, the Company will provide such information in an amendment to this Form 8-K within four (4) business days after the information is determined or becomes available.

A copy of the press release announcing Mr. Lyons’ departure and Mr. Morin’s appointment is attached to this Current Report on Form 8-K as Exhibit 99.1.



ITEM 5.07    Submission of Matters to a Vote of Security Holders.
ACGL’s annual meeting of shareholders was held on May 9, 2018. At the meeting, the holders of 123,520,476 common shares, which represents approximately 90 percent of the outstanding shares entitled to vote as of the record date of March 14, 2018, were represented in person or by proxy. Matters submitted to shareholders at the meeting and the voting results thereof were as follows:
Item 1. The vote on the election of the four Class II directors to hold office until the 2021 annual meeting of shareholders or until their successors are elected and qualified. The voting results were as follows:

NOMINEE
FOR
AGAINST
WITHHELD
BROKER NON-VOTES
Eric W. Doppstadt
113,084,859
1,719,951
49,992
8,665,674
Laurie S. Goodman
114,607,599
201,254
45,949
8,665,674
Constantine Iordanou
113,738,815
1,093,381
22,606
8,665,674
John M. Pasquesi
111,333,550
3,492,366
28,886
8,665,674

Item 2. The vote on a proposal on advisory vote on executive compensation (say-on-pay). The voting results were as follows:

FOR
AGAINST
ABSTAIN
BROKER NON-VOTES
105,020,452
9,787,156
47,194
8,665,674

Item 3. The vote on the ratification of the selection of PricewaterhouseCoopers LLP as ACGL’s independent registered public accounting firm for the year ending December 31, 2018. The voting results were as follows:

FOR
AGAINST
ABSTAIN
BROKER NON-VOTES
122,277,110
1,218,771
24,595
0

Item 4. The vote on the approval of the 2018 Long-Term Incentive and Share Award Plan. The voting results were as follows:

FOR
AGAINST
ABSTAIN
BROKER NON-VOTES
105,565,507
9,246,506
42,789
8,665,674

Item 5. The vote on the approval of an amendment to the Memorandum of Association to effect a three-for-one common share split. The voting results were as follows:
FOR
AGAINST
ABSTAIN
BROKER NON-VOTES
123,365,986
79,715
74,775
0

Item 6. The vote on the election of certain individuals as Designated Company Directors of certain of ACGL’s non-U.S. subsidiaries. The voting results were as follows:



DIRECTOR
FOR
AGAINST
WITHHOLD
BROKER NON-VOTES
Robert Appleby
114,754,655
44,288
55,859
8,665,674
Anthony Asquith
114,746,948
51,632
56,222
8,665,674
Stephen Bashford
114,760,045
44,358
50,399
8,665,674
Dennis R. Brand
114,708,466
107,126
39,210
8,665,674
Ian Britchfield
114,734,736
50,481
69,585
8,665,674
Pierre-Andre Camps
114,727,783
57,474
69,545
8,665,674
Chung Foo Choy
114,740,986
45,110
68,706
8,665,674
Paul Cole
114,739,537
44,658
70,607
8,665,674
Graham B.R. Collis
110,825,451
325,033
3,704,318
8,665,674
Michael Constantinides
114,734,041
58,107
62,654
8,665,674
Stephen J. Curley
114,746,466
44,641
63,695
8,665,674
Nick Denniston
114,746,996
45,448
62,358
8,665,674
Christopher A. Edwards
114,746,489
44,658
63,655
8,665,674
Seamus Fearon
114,739,538
57,685
57,579
8,665,674
Michael Feetham
114,745,415
45,692
63,695
8,665,674
Beau H. Franklin
114,742,558
58,555
53,689
8,665,674
Giuliano Giovannetti
114,710,401
82,796
61,605
8,665,674
Michael Hammer
114,747,215
45,448
62,139
8,665,674
W. Preston Hutchings
114,752,281
60,895
41,626
8,665,674
Constantine Iordanou
114,771,661
55,800
27,341
8,665,674
Jason Kittinger
114,733,656
58,845
62,301
8,665,674
Gerald Konig
114,739,604
52,561
62,637
8,665,674
Jean-Philippe Latour
114,734,715
57,514
62,573
8,665,674
Lino Leoni
114,747,217
64,145
43,440
8,665,674
Mark D. Lyons
111,045,642
144,164
3,664,996
8,665,674
Patrick Mailloux
114,733,421
73,435
47,946
8,665,674
Paul Martin
114,740,786
45,448
68,568
8,665,674



Robert McDowell
114,744,955
46,192
63,655
8,665,674
David H. McElroy
114,727,330
87,269
40,203
8,665,674
Francois Morin
114,750,339
56,724
47,739
8,665,674
David J. Mulholland
114,756,462
44,658
53,682
8,665,674
Mark Nolan
111,032,399
127,380
3,695,023
8,665,674
Nicolas Papadopoulo
114,772,361
48,756
33,685
8,665,674
Michael Price
114,749,350
66,543
38,909
8,665,674
Elisabeth Quinn
114,752,986
43,609
58,207
8,665,674
Maamoun Rajeh
114,761,313
57,824
35,665
8,665,674
Andrew T. Rippert
114,733,061
67,850
53,891
8,665,674
Arthur Scace
114,734,132
50,581
70,089
8,665,674
Soren Scheuer
114,751,773
45,654
57,375
8,665,674
Matthew Shulman
114,766,417
46,330
42,055
8,665,674
William A. Soares
114,741,621
60,427
52,754
8,665,674
Patrick Storey
114,744,333
46,774
63,695
8,665,674
Hugh Sturgess
114,765,484
47,295
42,023
8,665,674
Ross Totten
114,744,267
47,018
63,517
8,665,674
Gerald Wolfe
114,717,516
63,387
73,899
8,665,674

ITEM 8.01    Other Events.

Preferred Share Dividends.  On May 9, 2018, the Board of Directors (the “Board”) of ACGL declared dividends with respect to the outstanding 18,000,000 depositary shares, each representing a 1/1000th interest in a share of 5.25% Non-Cumulative Preferred Shares, Series E, $0.01 per share (“Series E Shares”), with a $25,000 liquidation preference per share (equivalent to a $25.00 liquidation preference per depositary share), as outlined below.  All such dividends will be payable out of lawfully available funds for the payment of dividends under Bermuda law on June 30, 2018 to holders of record of the Series E Shares, as of June 15, 2018, unless determined otherwise by the Board or the Executive Committee of the Board on or prior to the effective date. In addition, the Board declared dividends with respect to the Series E Shares, to be payable out of lawfully available funds for the payment of dividends under Bermuda law on September 30, 2018 to holders of record of the Series E Shares, as of September 15, 2018, unless determined otherwise by the Board or the Executive Committee of the Board on or prior to the effective date.
Series
Effective Date for Declaration
Dividend Period
Dividend Amount
Rate Per Share
Series E
6/30/18
3/31/18-6/29/18

$5,906,250

$0.328125
Series E
9/30/18
6/30/18-9/29/18

$5,906,250

$0.328125

In addition, on May 9, 2018, the Board of ACGL declared dividends with respect to the outstanding 13,200,000 depositary shares, each representing a 1/1000th interest in a share of 5.45% Non-Cumulative Preferred Shares, Series F, $0.01 per share (“Series F Shares”), with a $25,000 liquidation preference per share (equivalent to a $25.00 liquidation preference per depositary share), as outlined below.  All such dividends will be payable out of lawfully available funds for the payment of dividends under Bermuda law on June 30, 2018 to holders of record of the Series F Shares, as of June 15, 2018, unless determined otherwise by the Board or the Executive Committee of the Board on or prior to the effective date. In addition, the Board declared dividends with respect to the Series F Shares, to be payable out of lawfully available funds for the payment of dividends under Bermuda law on September 30, 2018 to holders of record of the Series F Shares, as of September 15, 2018, unless determined otherwise by the Board or the Executive Committee of the Board on or prior to the effective date.
Series
Effective Date for Declaration
Dividend Period
Dividend Amount
Rate Per Share
Series F
6/30/18
3/31/18-6/29/18

$4,496,250


$0.340625

Series F
9/30/18
6/30/18-9/29/18

$4,496,250


$0.340625






Common Share Split.  As reported above in ITEM 5.07, at ACGL’s Annual Meeting on May 9, 2018, ACGL’s shareholders voted to amend the company’s Memorandum of Association to effect a three-for-one split of the company’s common shares. The amendment will become effective on June 18, 2018, which will become the record date for the determination of the owners of common shares entitled to additional common shares. The distribution date for such additional common shares will be on or about June 20, 2018. At that time, each record date shareholder will become the record owner of, and entitled to receive two additional common shares for each common share then owned of record by such shareholder. Shareholders will receive information about the additional common shares to which they are entitled on or about the distribution date. The Board reserves the right, notwithstanding shareholder approval of the proposed amendment to the Memorandum of Association, and without further action by the shareholders, to elect not to proceed with the amendment.

ITEM 9.01    Financial Statements and Exhibits.

(d):    The following exhibits are being filed herewith.
Exhibit Number
 
Description
4.1
 

10.1
 
99.1
 



SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
ARCH CAPITAL GROUP LTD.
 
 
 
 
 
 
Date: May 15, 2018
By:
/s/ W. Preston Hutchings
 
 
Name:
W. Preston Hutchings
 
 
Title:
Senior Vice President and Chief Investment Officer