Arch Capital’s Q1 combined ratio deteriorates to 91.8%

Arch Capital’s first quarter profit dropped 50% to $564 million as claims from the California wildfires cut into its earnings. 

The Bermuda-based re/insurer reported a reinsurance combined ratio of 91.8% for Q1 2025, up 14.4 points from 77.4% in the prior-year period.

Overall, the combined ratio of Arch Capital group — whose insurance brands include Arch Reinsurance, Arch Insurance North America and Alternative Re — did not fare much better, deteriorating to 90.1% in Q1 this year compared with 78.8% in the prior year first quarter.

Arch blamed its slashed net income on higher natural catastrophe losses, mainly from the California wildfires. 

Pre-tax catastrophe re/insurance losses, net of reinsurance and reinstatement premiums, were $547 million, primarily related to the wildfires. This compared with $70 million in the first quarter of 2024, which included the Baltimore bridge collapse.

However, group gross premium written (GPW) in the first quarter rose by 8.9% to $6.46 billion. 

“We delivered solid results this quarter despite the losses arising from the California wildfires, resulting in an annualised operating return on equity of 11.5%,” said Nicolas Papadopoulo (pictured), Arch chief executive officer. 

“Although the market has generally become more competitive, we remain optimistic about our prospects to deliver long-term shareholder value. For a company with a strong underwriting culture like Arch, this is a market where we can stand out.”

Arch’s insurance segment saw GPW rise a healthy 24% from $2.13 billion to $2.65 billion. 

But the reinsurance segment GPW was flat at $3.49 billion compared with $3.47 billion in Q1 2024. 

Group underwriting income fell by 43.3% to $417 million in Q1 2025 from $736 million in the prior-year period.

Insurance segment underwriting income suffered a huge fall from $86 million in Q1 2024 to a $2 million loss in the first three months of this year.

Nicolas Papadopoulo, Arch CEO, said: “We delivered solid results this quarter despite the losses arising from the California wildfires, resulting in an annualised operating return on equity of 11.5%. Although the market has generally become more competitive, we remain optimistic about our prospects to deliver long-term shareholder value. For a company with a strong underwriting culture like Arch, this is a market where we can stand out.”

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