LA wildfires could cost Arch $550m

Arch Capital, the Bermuda-based re/insurer, expects its share of insured losses from the California wildfires to be between $450 million and $550 million. 

Arch CEO Nicolas Papadopoulo (pictured) said the total insured loss from the wildfires will be between $35 billion and $45 billion.

Papadopoulo made his prediction announcing Arch Capital's fourth-quarter results for 2024.

Arch posted a 60% fall in quarterly profits, as elevated costs dragged gains made in investment income. Arch's net income in the three months to December 31 2024 fell to $925 million compared with $2.3 billion in the same period 2023.

However, the 2023 result was boosted by a $1.7 billion gain when it recorded deferred tax assets related to the new Bermuda Corporate Income Tax. In 2023, the company recorded a $66 million tax expense. In terms of operating income before taxes and contributions from affiliates of $937 million compared to $1.18 billion in 2023. 

Arch was buffeted by fourth quarter pre-tax current accident year catastrophic losses of $393 million, due in part to Hurricanes Milton and Helene.

Papadopoulo added: “We closed the year with a very strong fourth quarter including contributions from all our earnings sources. These are excellent results when you consider the elevated catastrophe environment and the increased risk levels across many lines of business.”

Group underwriting income in the fourth quarter fell by 12.6% from $715 million to $625 million. 

Combined ratio excluding catastrophic activity was flat at 79%.

However, gross written premiums for the group rose by 12% from $4.3 billion in Q4 2023 to $4.6 billion in Q4 last year. 

After-tax operating income in Q4 2024 was $866 million compared with $945 million year on year. 

But group revenue hit $4.14 billion, exceeding estimates of $3.91 billion.

Insurance segment

Insurance gross premiums written rose from $1.9 billion to $2.5 billion - a rise of 28.4%, driven by acquisitions, though underwriting income dropped significantly due to higher loss ratios.

Insurance segment combined ratio was flat at 90.3% year on year. 

Reinsurance segment

Reinsurance gross written premiums fell by 1.5% to $1.9 billion. 

Combined ratio nudged down to 74.8% compared with 76.2% in Q4 2023. 

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