Arch Capital Group Ltd. Reports 2026 First Quarter Results

Κυριακή, 03 Μαΐου 2026 16:56

Arch Capital Group Ltd. (NASDAQ: ACGL; “Arch,” “our” or “the Company”) announced its 2026 first quarter results. The results included:

Net income available to Arch common shareholders of $1.0 billion, or $2.88 per share, representing a 17.8% annualized net income return on average common equity, compared to net income available to Arch common shareholders of $564 million, or $1.48 per share, for the 2025 first quarter.
After-tax operating income available to Arch common shareholders ⁽¹⁾of $901 million, or $2.50 per share, representing a 15.4% annualized operating return on average common equity ⁽¹⁾, compared to $587 million, or $1.54 per share, for the 2025 first quarter.
Pre-tax current accident year catastrophic losses for the Company’s insurance and reinsurance segments, net of reinsurance and reinstatement premiums, of $174 million.
Favorable development in prior year loss reserves, net of related adjustments, of $200 million.
Combined ratio excluding catastrophic activity and prior year development ⁽¹⁾ of 82.3%, compared to 81.0% for the 2025 first quarter.
Share repurchases of $783 million.
Book value per common share of $66.19 at March 31, 2026, a 1.7% increase from December 31, 2025.

“We started the year on an excellent note, delivering an annualized operating return on average common equity of 15.4%, which reflects our disciplined approach to underwriting and capital allocation,” said Arch CEO Nicolas Papadopoulo. “Our underwriting and cycle management expertise, supported by a strong balance sheet, continue to differentiate Arch and position us to generate best-in-class returns through the cycle.”

All earnings per share amounts discussed in this release are on a diluted basis. The following table summarizes the Company’s underwriting results:

(U.S. Dollars in millions)	Three Months Ended March 31,
	2026		2025		% Change
Gross premiums written	$	6,425	$	6,463	(0.6)
Net premiums written		4,348		4,515	(3.7)
Net premiums earned		3,986		4,188	(4.8)
Underwriting income⁽¹⁾		728		417	74.6
Underwriting Ratios					% Point Change
Loss ratio		52.4%		61.8%	(9.4)
Underwriting expense ratio⁽²⁾		29.3%		28.3%	1.0
Combined ratio		81.7%		90.1%	(8.4)

Combined ratio excluding catastrophic activity and prior year development⁽¹⁾		82.3%		81.0%	1.3

(1)		See ‘Comments on Non-GAAP Financial Measures’ for further details.
(2)		The ‘Underwriting expense ratio’ includes ‘Other underwriting income.’ See ‘Comments on Non-GAAP Financial Measures’ for further details.

The following table summarizes the Company’s consolidated financial data, including a reconciliation of net income or loss available to Arch common shareholders to after-tax operating income or loss available to Arch common shareholders and related diluted per share results (see ‘Comments on Non-GAAP Financial Measures’ for further details):

(U.S. Dollars in millions, except per share data)	Three Months Ended
	March 31,
	2026		2025
Net income available to Arch common shareholders	$	1,037	$	564
Net realized (gains) losses (1)		87		(3)
Equity in net (income) of investments accounted for using the equity method		(160)		(53)
Net foreign exchange (gains) losses		(21)		27
Transaction costs and other		18		10
Income tax expense (benefit) (2)		(60)		42
After-tax operating income available to Arch common shareholders	$	901	$	587

Diluted per common share results:
Net income available to Arch common shareholders	$	2.88	$	1.48
Net realized (gains) losses (1)		0.24		(0.01)
Equity in net (income) of investments accounted for using the equity method		(0.44)		(0.14)
Net foreign exchange (gains) losses		(0.06)		0.07
Transaction costs and other		0.05		0.03
Income tax expense (benefit) (2)		(0.17)		0.11
After-tax operating income available to Arch common shareholders	$	2.50	$	1.54

Weighted average common shares and common share equivalents outstanding — diluted		359.7		381.9

Beginning common shareholders’ equity	$	23,376	$	19,990
Ending common shareholders’ equity		23,358		20,715
Average common shareholders’ equity	$	23,367	$	20,353

Annualized net income return on average common equity		17.8%		11.1%
Annualized operating return on average common equity		15.4%		11.5%

(1)		Net realized gains or losses include, but are not limited to, realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains and losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains and losses realized from the acquisition or disposition of subsidiaries.
(2)		Income tax expense (benefit) on net realized gains or losses, equity in net income of investments accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other reflects the relative mix reported by jurisdiction and the varying tax rates in each jurisdiction.

Segment Information

The following section provides analysis on the Company’s 2026 first quarter performance by reportable segments. For additional details regarding the Company’s reportable segments, please refer to the Company’s Financial Supplement dated March 31, 2026. On August 1, 2024, the insurance segment completed the acquisition of the U.S. MidCorp and Entertainment insurance businesses from Allianz (MCE Acquisition). The Company’s segment information includes the use of underwriting income (loss) and a combined ratio excluding catastrophic activity and prior year development (see ‘Comments on Non-GAAP Financial Measures’ for further details).

Insurance Segment

	Three Months Ended March 31,
(U.S. Dollars in millions)	2026		2025		% Change

Gross premiums written	$	2,697	$	2,645	2.0
Net premiums written		1,906		1,933	(1.4)
Net premiums earned		1,871		1,860	0.6
Other underwriting income		11		3	266.7

Underwriting income	$	66	$	(2)	3,400.0

Underwriting Ratios					% Point Change
Loss ratio		60.2%		66.0%	(5.8)
Underwriting expense ratio		36.3%		34.1%	2.2
Combined ratio		96.5%		100.1%	(3.6)

Catastrophic activity and prior year development:
Current accident year catastrophic events, net of reinsurance and reinstatement premiums		4.2%		9.5%	(5.3)
Net (favorable) adverse development in prior year loss reserves, net of related adjustments
Loss ratio impact		(0.7)%		(0.9)%	0.2
Underwriting expense ratio impact		0.3%		0.4%	(0.1)
Total impact		(0.4)%		(0.5)%	0.1

Combined ratio excluding catastrophic activity and prior year development		92.7%		91.1%	1.6

Gross premiums written by the insurance segment in the 2026 first quarter were 2.0% higher than in the 2025 first quarter, while net premiums written were 1.4% lower than in the 2025 first quarter. Adjusting for the non-renewal of certain programs related to the MCE Acquisition, net premiums written would have increased by 1.1% compared to the same quarter one year ago. Net premiums earned in the 2026 first quarter were 0.6% higher than in the 2025 first quarter and reflect changes in net premiums written over the previous five quarters.

The 2026 first quarter loss ratio reflected 4.2 points of current year catastrophic activity, compared to 9.5 points in the 2025 first quarter, primarily related to California wildfires. Estimated net favorable development of prior year loss reserves, before related adjustments, reduced the loss ratio by 0.7 points in the 2026 first quarter, compared to 0.9 points in the 2025 first quarter. The balance of the change in the loss ratio resulted, in part, from changes in the mix of business.

The underwriting expense ratio was 36.3% in the 2026 first quarter, compared to 34.1% in the 2025 first quarter. In the 2025 first quarter, the impact of the MCE Acquisition lowered the underwriting expense ratio by approximately 1.9 points, primarily due to the effects of the fair value estimation of the assets acquired at closing, including the non-recognition of deferred acquisition costs. The 2026 first quarter also included higher compensation costs compared to the 2025 first quarter and transitional expenses associated with the MCE Acquisition.

Reinsurance Segment

	Three Months Ended March 31,
(U.S. Dollars in millions)	2026		2025		% Change

Gross premiums written	$	3,414	$	3,494	(2.3)
Net premiums written		2,176		2,316	(6.0)
Net premiums earned		1,831		2,028	(9.7)
Other underwriting income		37		39	(5.1)

Underwriting income	$	441	$	167	164.1

Underwriting Ratios					% Point Change
Loss ratio		51.7%		66.9%	(15.2)
Underwriting expense ratio		24.2%		24.9%	(0.7)
Combined ratio		75.9%		91.8%	(15.9)

Catastrophic activity and prior year development:
Current accident year catastrophic events, net of reinsurance and reinstatement premiums		5.2%		18.3%	(13.1)
Net (favorable) adverse development in prior year loss reserves, net of related adjustments
Loss ratio impact		(8.3)%		(5.9)%	(2.4)
Underwriting expense ratio impact		0.9%		1.4%	(0.5)
Total impact		(7.4)%		(4.5)%	(2.9)

Combined ratio excluding catastrophic activity and prior year development		78.1%		78.0%	0.1

Gross premiums written by the reinsurance segment in the 2026 first quarter were 2.3% lower than in the 2025 first quarter, while net premiums written were 6.0% lower than in the 2025 first quarter. The lower level of net premiums written this quarter was primarily due to a reduction in property catastrophe business written at January 1, amplified by a lower level of reinstatement premiums relative to the 2025 first quarter, which included reinstatement premiums related to the California wildfires. Net premiums earned in the 2026 first quarter were 9.7% lower than in the 2025 first quarter and reflect changes in net premiums written over the previous five quarters.

The 2026 first quarter loss ratio reflected 5.4 points of current year catastrophic activity, compared to 21.7 points in the 2025 first quarter, primarily related to California wildfires. Estimated net favorable development of prior year loss reserves, before related adjustments, reduced the loss ratio by 8.3 points in the 2026 first quarter, compared to 5.9 points in the 2025 first quarter. The balance of the change in the loss ratio resulted, in part, from changes in the mix of business.

The underwriting expense ratio was 24.2% in the 2026 first quarter, compared to 24.9% in the 2025 first quarter. The 2025 first quarter amount included a lower level of contingent commissions on ceded business, primarily due to the impact of the California wildfires.

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