Arch Capital Group (ACGL) investor relations material

Executive summary

• Net income available to common shareholders was $1.025B, or $3.00 per diluted share; adjusted after-tax operating income was $910M, or $2.67 per share. Underwriting income totaled $702M.

• The consolidated combined ratio was 82.5%; excluding catastrophe activity and prior-year development, it was 81.2%, compared with 80.5% a year earlier.

• Annualized returns on average common equity were 18.1% on net income and 16.0% on adjusted operating income; management emphasized selective underwriting and long-term risk-adjusted returns amid uneven, more competitive markets.

Financial highlights

• Gross premiums written were $5.391B, down 0.4% YoY; net premiums written were $3.845B, down 3.0%, and net premiums earned were $4.014B, down 6.3%.

• Current-year catastrophe losses were $234M net of reinsurance and reinstatement premiums; favorable prior-year reserve development was $179M net of related adjustments.

• Net investment income was $451M, up from $408M; equity-method investment income was $224M and combined investment income was $675M.

• Invested assets totaled $49.2B, with TTM net investment income of $1.710B and equity-method income of $735M; TTM gross premiums written were $22.8B.

• Operating cash flow was $1.8B in Q3; the effective tax rate on pre-tax operating income was 15.8%.

Outlook and guidance

• Insurance underlying growth is expected to remain measured; selected casualty, specialty and U.S. middle-market lines offer growth opportunities where pricing and terms meet return objectives.

• Reinsurance faces continued rate and premium pressure in property catastrophe, other short-tail lines and catastrophe excess-of-loss; lower rates may gradually pressure underwriting margins.

• Mortgage is expected to remain a steady, diversifying earnings contributor; modest originations reflect affordability constraints from mortgage rates and home prices.

• Similar marine war-risk premium levels are expected in Q4; further volumes depend on regional developments. Insurance expense ratio may decline modestly in 2027 as Bermuda QRTCs rise and middle-market integration duplication subsides.