Arch profits soar, reinsurance unit sees robust growth

Arch Capital posted a vastly improved profit in the first quarter of 2023 as also enjoyed strong growth driven by its reinsurance segment.

The Bermuda company made a net profit of $705 million, compared to $186 million in the same period a year earlier. Its combined ratio was 80.6% compared with 78.7% the year before.

Its gross written premiums in the quarter were $4.7 billion, a 25.8% increase on the year before. Gross premiums written by its reinsurance segment in the 2023 first quarter were 43.1% higher than in the 2022 first quarter. It said this reflected increases in most lines of business, due in part to rate increases, new business opportunities and growth in existing accounts. In addition, the reinsurance segment retained more business in the 2023 first quarter due to a lower level of retrocession activity than in the 2022 first quarter and was impacted by changes in the mix of business.

Gross premiums written by the insurance segment in the 2023 first quarter were 15.1% higher than in the 2022 first quarter. Growth reflected increases in most lines of business, due in part to new business opportunities, increases in existing accounts and rate changes. In addition, the insurance segment retained more business in the 2023 first quarter due to ongoing changes to its reinsurance programs and was impacted by changes in the mix of business.

In contrast, gross premiums written by the mortgage segment in the 2023 first quarter were 6% lower than in the 2022 first quarter. The decrease in gross premiums written primarily reflected lower originations in the Australian market and a reduction in US primary mortgage insurance single premium business, which was partially offset by a higher volume of credit risk transfer transactions.