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1. Company Snapshot

1.a. Company Description

Arch Capital Group Ltd., together with its subsidiaries, provides insurance, reinsurance, and mortgage insurance products worldwide.The company's Insurance segment offers primary and excess casualty coverages; loss sensitive primary casualty insurance programs; collateral protection, debt cancellation, and service contract reimbursement products; directors' and officers' liability, errors and omissions liability, employment practices and fiduciary liability, crime, professional indemnity, and other financial related coverages; medical professional and general liability insurance coverages; and workers' compensation and umbrella liability, as well as commercial automobile and inland marine products.It also provides property, energy, marine, and aviation insurance; travel insurance; accident, disability, and medical plan insurance coverages; captive insurance programs; employer's liability; and contract and commercial surety coverages.


This segment markets its products through a group of licensed independent retail and wholesale brokers.Its Reinsurance segment provides casualty reinsurance for third party liability and workers' compensation exposures; marine and aviation; surety, accident and health, workers' compensation catastrophe, agriculture, trade credit, and political risk products; reinsurance protection for catastrophic losses, and personal lines and commercial property exposures; life reinsurance; casualty clash; and risk management solutions.This segment markets its reinsurance products through brokers.


The company's Mortgage segment offers direct mortgage insurance and mortgage reinsurance.The company was incorporated in 1995 and is based in Pembroke, Bermuda.

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1.b. Last Insights on ACGLN

Arch Capital Group's recent earnings release showed a 12.41% earnings surprise and 0.99% revenue surprise for Q1 2025. The company's premiums increased year-over-year, but poor underwriting income offset this growth. New business opportunities, increased exposures, and a better renewal rate environment are expected to drive future growth, according to recent analysis, citing "new business opportunities" as a key driver.

1.c. Company Highlights

2. Arch Capital's Q4 Earnings: A Strong Finish to a Record Year

Arch Capital reported a robust fourth quarter, with after-tax operating income reaching $1.1 billion, a 26% increase from the same period in 2024. The company's quarterly consolidated combined ratio stood at 80.6%, reflecting excellent underwriting results across the group. For the full year 2025, Arch Capital generated $3.7 billion of after-tax operating income, a new high, resulting in after-tax operating earnings per share of $9.84. The actual EPS for Q4 came in at $3.38, beating estimates of $2.59.

Publication Date: Feb -11

📋 Highlights
  • Record After-Tax Operating Income:: Generated $1.1B in Q4 2025, up 26% YoY, and $3.7B for the full year, a new high.
  • Book Value Growth:: 2025 book value per share rose 22.6%, with a 15%+ CAGR since 2001, outpacing peers.
  • Underwriting Income:: Achieved $1.6B in record underwriting income for 2025, driven by reinsurance and insurance segments.
  • Share Buybacks:: Repurchased $1.9B in 2025, including $798M in Q4 and $349M in early 2026, signaling capital return prioritization.
  • Investment Contributions:: Investment portfolio of $47B generated $434M net investment income in Q4, bolstering overall returns.

Segment Performance

The company's underwriting teams performed well, leveraging the strengths of its platform to source new opportunities in reinsurance, which delivered a record $1.6 billion of underwriting income for the year. The insurance group also reported solid underwriting performance, with an underlying ex-cat combined ratio of 90.8% in the fourth quarter. The mortgage segment produced $1 billion of underwriting income for the year, its fourth consecutive year exceeding the $1 billion threshold.

Investment Income and Capital Management

Investments generated $434 million of net investment income in the quarter, while equity method investments added another $155 million to net income. Arch Capital continues to look to its investment portfolio to provide a stable recurring earnings stream. The company repurchased $798 million of its shares in the fourth quarter, bringing its total year-end buyback to $1.9 billion. As of the latest data, the company has repurchased an additional $349 million in shares.

Valuation and Outlook

With a Price-to-Book Ratio (P/B) of 1.54, Arch Capital's valuation appears reasonable, considering its strong financial performance. The company's Return on Equity (ROE) stands at 19.74%, indicating efficient use of shareholder capital. Looking ahead to 2026, analysts estimate revenue growth at 4.3%. As François Morin mentioned, "our number one mission is to put the capital to work in the business where we think it makes sense, where we can generate adequate returns." This strategic focus, combined with the company's solid financials, positions Arch Capital for continued success.

3. NewsRoom

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Short Interest in Arch Capital Group Ltd. (NASDAQ:ACGLN) Increases By 133.4%

Feb -12

Source: defenseworld.net

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Arch Capital Group (NASDAQ:ACGLN) Trading 0.2% Higher – What’s Next?

Dec -11

Source: defenseworld.net

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What Analysts Think Is Changing the Story for Arch Capital Group Now

Dec -05

Source:

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Arch Capital Group Ltd. (ACGL): A Bull Case Theory

Dec -04

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Is Arch Capital Stock Underperforming the Dow?

Dec -04

Source:

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The Bull Case for Arch Capital Group (ACGL) Could Change Following Q3 Earnings Beat and Analyst Optimism

Nov -29

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Ackman Seeks to Sell New Fund With a Bonus: a Stake in His Firm

Nov -25

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Arch Capital Trades Above 50-Day SMA: Time to Buy ACGL Stock?

Nov -21

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.90%)

6. Segments

Reinsurance

Expected Growth: 7.2%

The reinsurance segment is expected to grow faster than the global average due to increasing demand for risk management solutions and the expanding global insurance market. Arch Capital Group Ltd.'s strong market position and diversified portfolio will enable it to capitalize on this trend.

Insurance

Expected Growth: 7.0%

The insurance segment is expected to grow in line with the global economy, driven by increasing demand for insurance products. Arch Capital Group Ltd.'s diversified product offerings and strong distribution channels will enable it to capitalize on this trend.

Unallocated Net Investment Income

Expected Growth: 6.9%

The unallocated net investment income segment is expected to grow in line with the global average, driven by the company's investment strategy and market conditions.

Unallocated Equity in net income (loss) of investment funds accounted for using the equity method

Expected Growth: 6.8%

The unallocated equity in net income segment is expected to grow slightly slower than the global average, driven by the performance of the company's equity method investments.

Unallocated Net Realized Gains (Losses)

Expected Growth: 6.9%

The unallocated net realized gains segment is expected to grow in line with the global average, driven by the company's investment strategy and market conditions.

Unallocated Other Income (Loss)

Expected Growth: 6.7%

The unallocated other income segment is expected to grow slightly slower than the global average, driven by the company's overall business performance.

Mortgage

Expected Growth: 6.5%

The mortgage segment is expected to grow slightly slower than the global average due to the cyclical nature of the housing market. However, Arch Capital Group Ltd.'s strong market position and diversified portfolio will enable it to weather market fluctuations.

7. Detailed Products

Property Insurance

Provides coverage for commercial and residential properties against damage or loss due to natural disasters, fires, and other perils.

Casualty Insurance

Offers liability coverage for businesses and individuals against accidents, injuries, and other unforeseen events.

Marine Insurance

Provides coverage for ships, cargo, and other marine-related risks.

Aviation Insurance

Offers coverage for aircraft, airlines, and airports against damage, loss, or liability.

Reinsurance

Provides insurance coverage for insurance companies, helping them manage risk and protect against large losses.

Mortgage Insurance

Provides coverage for lenders against default on mortgage loans.

Title Insurance

Offers protection for buyers and lenders against defects in title to real property.

8. Arch Capital Group Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Arch Capital Group Ltd. is medium, as there are some alternative products and services available in the market, but they are not highly attractive to customers.

Bargaining Power Of Customers

The bargaining power of customers for Arch Capital Group Ltd. is low, as customers have limited options and are not highly concentrated.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Arch Capital Group Ltd. is medium, as suppliers have some bargaining power due to the specialized nature of their products and services.

Threat Of New Entrants

The threat of new entrants for Arch Capital Group Ltd. is high, as the industry has low barriers to entry and new entrants can easily enter the market.

Intensity Of Rivalry

The intensity of rivalry for Arch Capital Group Ltd. is high, as the industry is highly competitive and companies are constantly competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 12.93%
Debt Cost 3.95%
Equity Weight 87.07%
Equity Cost 7.27%
WACC 6.84%
Leverage 14.85%

11. Quality Control: Arch Capital Group Ltd. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Hartford Financial Services

A-Score: 7.0/10

Value: 6.7

Growth: 7.3

Quality: 6.6

Yield: 4.0

Momentum: 7.5

Volatility: 10.0

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Manulife

A-Score: 7.0/10

Value: 6.7

Growth: 3.9

Quality: 6.7

Yield: 8.0

Momentum: 7.0

Volatility: 9.7

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Arch Capital

A-Score: 6.8/10

Value: 7.0

Growth: 8.9

Quality: 8.0

Yield: 4.0

Momentum: 3.0

Volatility: 10.0

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Sun Life Financial

A-Score: 6.7/10

Value: 6.6

Growth: 4.3

Quality: 6.3

Yield: 8.0

Momentum: 5.0

Volatility: 10.0

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Truist

A-Score: 5.7/10

Value: 4.7

Growth: 2.8

Quality: 5.7

Yield: 8.0

Momentum: 5.0

Volatility: 8.0

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AIG

A-Score: 5.3/10

Value: 3.9

Growth: 2.6

Quality: 6.3

Yield: 4.0

Momentum: 6.0

Volatility: 9.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

17.72$

Current Price

17.72$

Potential

-0.00%

Expected Cash-Flows