Arch Capital experiences significant growth in Q3 due to mortgage business

27-10-2016

Arch Capital Group reported a sharp increase in profits during the third quarter and the Bermuda-based re/insurer also enjoyed healthy growth, due to a large increase in the amount of mortgage business it is underwriting.

Arch Capital made a net income of $247.4 million in the third quarter, compared with $74.5 million in the same period of 2015. The group’s combined ratio decreased by 2.7 percentage points to 88 percent in the third quarter of this year.

Its overall gross written premiums (GWP) in the period increased to $1.3 billion for the three-month period ending September 30, an increase of 7.5 percent from $1.2 billion for the same period in 2015.

This growth was driven by the mortgage segment in which GWP were 76.4 percent higher than in the 2015 third quarter, reflecting growth in Australian mortgage reinsurance and in US primary business and from GSE credit risk-sharing transactions receiving insurance accounting treatment.

It also saw some small growth in the reinsurance business where gross premiums written were 0.9 percent higher than in the 2015 third quarter while net premiums written were 0.3 percent lower than in the 2015 third quarter.

The decrease in net premiums written reflected reductions in programmes and property lines, partially offset by growth in travel and in ‘other’ lines including alternative markets and high excess comp business.

The company also said the reduction in programme business primarily reflected the continued impact of the non-renewal of a large programme in the latter part of 2015 while the lower level in property lines reflected continued weak market conditions.

Its reinsurance business went down, however, with GWP 1.5 percent lower than in the 2015 third quarter, while net premiums written were 1 percent lower than in the 2015 period.

The decrease in net premiums written reflected reductions in casualty, marine and aviation lines, was partly due to reductions in premium, estimates reflecting current market conditions.

Such amounts were partially offset by growth in other specialty business, reflecting additional agriculture business and strong renewals on pro rata UK motor business.

Arch Capital Group, Bermuda, Insurance, Reinsurance, Mortgage, Results, UK

Bermuda Re