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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 Delivers Record Results with Strong Underwriting and Capital Return

Arch Capital reported record after-tax operating income of over $1 billion and net income of $1.3 billion in 3Q 2025, representing a 37% year-over-year increase. The company's quarterly consolidated combined ratio was 79.8%, reflecting excellent underwriting and low catastrophe activity. Earnings per share (EPS) came in at $3.59, significantly beating estimates of $2.26. The Property and Casualty Insurance Group reported underwriting income of $129 million, up 8% year-over-year, with a combined ratio of 93.4%. The reinsurance segment delivered a record $482 million of underwriting income, with a combined ratio of 76.1%.

Publication Date: Oct -30

📋 Highlights
  • Record Operating Income:: Achieved $1 billion after-tax operating income and $1.3 billion net income, both up 37% YoY.
  • High Underwriting Efficiency:: Consolidated combined ratio of 79.8% driven by low catastrophe activity and strong risk selection.
  • Reinsurance Segment Performance:: Generated record $482 million underwriting income with a 76.1% combined ratio.
  • Capital Return Strategy:: Repurchased $732 million of shares in Q3, reflecting confidence in capital-generating capabilities.
  • Book Value Growth:: Book value per share increased 5.3% in the quarter, with annualized ROE at 23.8%.

Segment Performance

The company's three business segments delivered excellent underlying results, with an overall ex-cat accident year combined ratio of 80.5%. The mortgage segment generated $260 million of underwriting income, with the segment remaining on pace to deliver approximately $1 billion of underwriting income for the year. As Nicolas Alain Papadopoulo noted, the distinguishing strengths of the insurance segment are its breadth across specialty lines and areas where the team applied deep knowledge and experience to drive better risk selection.

Capital Return and Valuation

Arch Capital repurchased $732 million of shares in the quarter, demonstrating its commitment to returning capital to investors. With a Price-to-Book Ratio (P/B) of 1.4, the company's valuation appears reasonable, especially considering its strong capital position and diversified business. The Dividend Yield stands at 5.82%, providing an attractive return for income investors.

Outlook and Growth Prospects

The company remains bullish about its insurance and reinsurance segments, citing opportunities for growth in casualty lines and excess of loss positions. François Morin mentioned that the company has a long wish list for acquisitions, but they're not holding excess capital for potential M&A transactions due to the low leverage ratio and strong balance sheet. Analysts estimate next year's revenue growth at 4.0%, indicating a moderate pace of expansion.

Underwriting and Reserving

The company's underwriting income included $103 million of favorable prior year development on a pre-tax basis in the third quarter. François Morin noted that the overall picture shows favorable reserves, with actual versus expected reserves showing lower-than-expected numbers. The remediation of the MGA portfolio acquired in the MCE deal is ongoing, with expected impact in 2026.

3. NewsRoom

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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

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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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Arch Capital Group (ACGL): Evaluating Undervaluation After Recent Share Price Pullback

Nov -18

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KNSL Lags Industry, Trades at Premium: Time to Hold the Stock?

Nov -18

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Are Wall Street Analysts Predicting Arch Capital Stock Will Climb or Sink?

Nov -13

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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

Stock-Card
Arch Capital

A-Score: 7.5/10

Value: 6.9

Growth: 8.9

Quality: 8.9

Yield: 8.0

Momentum: 2.5

Volatility: 10.0

1-Year Total Return ->

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Manulife

A-Score: 7.0/10

Value: 6.9

Growth: 3.9

Quality: 6.7

Yield: 9.0

Momentum: 6.0

Volatility: 9.7

1-Year Total Return ->

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Hartford Financial Services

A-Score: 6.9/10

Value: 6.3

Growth: 7.3

Quality: 6.4

Yield: 4.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

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Sun Life Financial

A-Score: 6.8/10

Value: 6.0

Growth: 4.3

Quality: 6.2

Yield: 8.0

Momentum: 6.0

Volatility: 10.0

1-Year Total Return ->

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Truist

A-Score: 5.8/10

Value: 4.8

Growth: 2.8

Quality: 5.5

Yield: 8.0

Momentum: 6.0

Volatility: 8.0

1-Year Total Return ->

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AIG

A-Score: 5.8/10

Value: 6.1

Growth: 2.6

Quality: 6.9

Yield: 4.0

Momentum: 6.0

Volatility: 9.0

1-Year Total Return ->

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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

17.07$

Current Price

17.07$

Potential

-0.00%

Expected Cash-Flows