Reinsurance and investments power Arch to $1.3bn profit

Arch Capital turned in a stellar second quarter result as net income soared 90% to $1.26 billion from $661 million in the 2023, powered by the company's reinsurance segment and strong investment returns. 

The company had net income available to Arch common shareholders of $1.26 billion, representing a 26.3% annualized net income return on average common equity, compared to net income available to Arch common shareholders of $661 million, or $1.75 per share, for the 2023 second quarter.

The Bermuda-based re/insurer also recorded favourable development in prior year loss reserves of $124 million.

“Our excellent results this quarter highlight the value of our ongoing commitment to bottom-line returns combined with disciplined execution throughout the underwriting cycle," said Marc Grandisson, chief executive officer. We are pleased with the contributions made by our underwriting and investment teams, which are key to us being able to consistently generate returns above our target.”

Pre-tax current accident year catastrophic losses for the Company’s insurance and reinsurance segments, net of reinsurance and reinstatement premiums, were $196 million.

The company's combined ratio excluding catastrophic activity and prior year development was 76.7%, compared to 79.7% for the 2023 second quarter.

Gross written premiums for the group rose 11.1% to $%.8 billion while the group's combined ratio improved to 78.7% from 79.8% as underwriting income improved to $762 million. 

By segment, the company's segment saw GWP rise 7.5% to $1.2 billion but underwriting income edged up 0.9% to $109 million. 

The reinsurance segment saw GWP rise 15.6% to $2.9 billion the underwriting profit soar 49.4% to $366 million as the company controlled expenses and grew net premiums earned. 

The mortgage segment reported a 2% drop in GWP to $3 billion but underwriting income improved 13.4% to $287 million. 

Investment income rose to $364 million from $242 million due to higher interest rates and a growth in invested assets due to strong cashflow.

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