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Arch Capital Group Ltd. Reports 2024 First Quarter Results

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Arch Capital Group (NASDAQ: ACGL) reported its 2024 first quarter results with net income of $1.1 billion, representing a 24.6% annualized return on equity. After-tax operating income stood at $933 million. The combined ratio was 78.8%, with a book value per share of $49.36. CEO Marc Grandisson highlighted the exceptional financial performance and commitment to client solutions. The insurance segment saw growth in premiums written, while the reinsurance segment showed increased net premiums. The mortgage segment experienced higher net premiums written and a decrease in loss ratio.

Arch Capital Group (NASDAQ: ACGL) ha riportato i risultati del primo trimestre 2024 con un utile netto di 1,1 miliardi di dollari, equivalente a un rendimento annuale sul capitale proprio del 24,6%. L'utile operativo netto post-imposta è stato di 933 milioni di dollari. Il rapporto combinato si è attestato al 78,8%, con un valore contabile per azione di 49,36 dollari. Il CEO Marc Grandisson ha sottolineato l'eccezionale rendimento finanziario e l'impegno verso le soluzioni per i clienti. Il segmento assicurativo ha registrato una crescita dei premi emessi, mentre il segmento del riassicurazione ha mostrato un aumento dei premi netti. Il segmento ipotecario ha visto un incremento dei premi netti emessi e una riduzione del tasso di sinistralità.
Arch Capital Group (NASDAQ: ACGL) reportó sus resultados del primer trimestre de 2024 con una utilidad neta de 1.1 mil millones de dólares, lo que representa un retorno annualizado sobre el patrimonio del 24.6%. Los ingresos operativos después de impuestos fueron de 933 millones de dólares. La relación combinada fue del 78.8%, con un valor en libros por acción de 49.36 dólares. El CEO Marc Grandisson destacó el excepcional desempeño financiero y el compromiso con las soluciones para clientes. El segmento de seguros mostró un crecimiento en las primas escritas, mientras que el segmento de reaseguros registró un aumento en las primas netas. El segmento de hipotecas experimentó un incremento en las primas netas escritas y una disminución en la tasa de pérdidas.
Arch Capital Group(NASDAQ: ACGL)은 2024년 1분기 순이익이 11억 달러로, 자기자본수익률은 연간 24.6%를 기록했다고 보고했습니다. 법인세 후 운영 소득은 9억 3300만 달러였습니다. 합산비율은 78.8%, 주당 장부가치는 49.36달러였습니다. CEO Marc Grandisson은 탁월한 재무 성과와 고객 솔루션에 대한 헌신을 강조했습니다. 보험 부문은 기록된 프리미엄이 성장했으며, 재보험 부문은 순프리미엄이 증가했습니다. 모기지 부문은 기록된 순프리미엄이 증가하고 손실 비율이 감소하였습니다.
Arch Capital Group (NASDAQ: ACGL) a rapporté ses résultats du premier trimestre 2024 avec un bénéfice net de 1,1 milliard de dollars, représentant un retour sur capitaux propres annualisé de 24,6%. Le revenu d'exploitation après impôts s'élevait à 933 millions de dollars. Le ratio combiné était de 78,8%, avec une valeur comptable par action de 49,36 dollars. Le PDG Marc Grandisson a souligné l'excellente performance financière et l'engagement envers les solutions client. Le segment de l'assurance a connu une croissance des primes émises, tandis que le segment de la réassurance a enregistré une augmentation des primes nettes. Le segment des hypothèques a vu une augmentation des primes nettes émises et une baisse du taux de sinistralité.
Arch Capital Group (NASDAQ: ACGL) meldete die Ergebnisse des ersten Quartals 2024 mit einem Nettogewinn von 1,1 Milliarden Dollar, was einer annualisierten Eigenkapitalrendite von 24,6% entspricht. Das Betriebsergebnis nach Steuern lag bei 933 Millionen Dollar. Die kombinierte Quote betrug 78,8%, der Buchwert pro Aktie lag bei 49,36 Dollar. CEO Marc Grandisson hob die außergewöhnliche finanzielle Leistung und das Engagement für Kundenlösungen hervor. Der Versicherungsbereich verzeichnete ein Wachstum der gezeichneten Prämien, während der Rückversicherungsbereich einen Anstieg der Nettoprämien zeigte. Der Hypothekensektor erlebte einen Anstieg der geschriebenen Nettoprämien und eine Abnahme der Schadenquote.
Positive
  • Net income of $1.1 billion for the 2024 first quarter, reflecting a 24.6% annualized return on equity.

  • After-tax operating income of $933 million reported for the same quarter, demonstrating solid operational performance.

  • Combined ratio of 78.8% for the 2024 first quarter, showcasing efficient underwriting practices.

  • Book value per common share increased by 5.2% to $49.36 at the end of March 2024, indicating growth in shareholder value.

  • Gross premiums written in the insurance segment increased by 7.4% compared to the 2023 first quarter, showing growth opportunities and rate changes.

Negative
  • The underwriting income in the insurance segment decreased by 24.6% for the 2024 first quarter, impacting profitability.

  • The loss ratio in the insurance segment saw a 3.0% increase, driven by catastrophic activity and the impact of rate changes.

  • The reinsurance segment reported a 4.6% decrease in loss ratio, but an increase in expenses, affecting overall profitability.

  • The mortgage segment experienced a 3.6% decrease in loss ratio, but also a 1.9% decrease in underwriting expense ratio, potentially impacting operational efficiency.

The reported increase in net income to $1.1 billion and earnings per share (EPS) to $2.92 for Arch Capital Group is a strong indicator of the company's robust financial health. The 24.6% return on average common equity is particularly impressive, surpassing the industry benchmark which typically ranges around 10%. Investors should note the growth in both net premiums written and earned across different segments, suggesting that the company's underwriting activities are not only growing but also becoming more profitable. The combined ratios, particularly a decrease to 78.8%, are a testament to effective cost control measures and underwriting discipline, essential elements for profitability in the insurance sector. The favorable development in prior year loss reserves signals the company's prudent reserve practices in previous periods. Looking ahead, the financial strength of Arch Capital and its advantageous positioning in a possibly increasing interest rate environment could mean enhanced investment income, benefiting the company's comprehensive income profile.

The performance of Arch Capital's insurance and reinsurance segments is noteworthy. The insurance segment's gross premiums written increase by 7.4%, although counterbalanced by a decrease in underwriting income, could suggest competitive market conditions or an intentional strategy to capture market share. Investors should consider the significance of the 3% increase in the loss ratio, which could be an area to watch for efficiency improvements. In contrast, the reinsurance segment's substantial growth in premiums written by 40.9% and a remarkable 77.9% increase in underwriting income reflect a strong competitive position and effective management of catastrophic exposure, as evidenced by the improved combined ratio. The significant shift in net premiums is indicative of strategic growth initiatives and favorable market reactions to product offerings and pricing strategies.

Arch Capital Group’s substantial year-over-year growth in both gross and net premiums written suggests the company is expanding its market presence and possibly gaining market share. The market should be cognizant of the broader industry implications, such as the potential for price discipline easing due to competitive pressures or changes in demand dynamics. With a 5.2% increase in book value per share, investors may gain confidence in the intrinsic value growth of the firm. Furthermore, Arch Capital's active management of its investment portfolio, as evidenced by a diversified approach and responses to the interest rate environment, is contributing positively to its overall financial stability. This adaptability to changing market conditions is a significant attribute for long-term value creation.

PEMBROKE, Bermuda--(BUSINESS WIRE)-- Arch Capital Group Ltd. (NASDAQ: ACGL; “Arch,” “our” or “the Company”) announces its 2024 first quarter results. The results included:

  • Net income available to Arch common shareholders of $1.1 billion, or $2.92 per share, representing a 24.6% annualized net income return on average common equity, compared to net income available to Arch common shareholders of $705 million, or $1.87 per share, for the 2023 first quarter.
  • After-tax operating income available to Arch common shareholders(1) of $933 million, or $2.45 per share, representing a 20.7% annualized operating return on average common equity(1), compared to $654 million, or $1.73 per share, for the 2023 first quarter.
  • Pre-tax current accident year catastrophic losses for the Company’s insurance and reinsurance segments, net of reinsurance and reinstatement premiums, of $58 million.
  • Favorable development in prior year loss reserves, net of related adjustments, of $126 million.
  • Combined ratio excluding catastrophic activity and prior year development(1) of 80.8%, compared to 82.2% for the 2023 first quarter.
  • Book value per common share of $49.36 at March 31, 2024, a 5.2% increase from December 31, 2023.

Marc Grandisson, Chief Executive Officer of ACGL commented: “We are extremely pleased with the outstanding financial results across our operations in the first quarter. I am especially proud of the ongoing commitment of our Arch colleagues to delivering value-added solutions to our clients and partners in this ever-changing risk environment. This level of hard and smart work bodes well for our future success to the benefit of our shareholders.”

All earnings per share amounts discussed in this release are on a diluted basis. The following table summarizes the Company’s underwriting results:

(U.S. Dollars in millions)

 

Three Months Ended March 31,

 

 

2024

 

2023

 

% Change

Gross premiums written

 

$

5,933

 

$

4,780

 

24.1

Net premiums written

 

 

4,085

 

 

3,424

 

19.3

Net premiums earned

 

 

3,422

 

 

2,883

 

18.7

Underwriting income

 

 

736

 

 

570

 

29.1

Underwriting Ratios

 

 

 

 

 

% Point Change

Loss ratio

 

 

50.5%

 

 

51.0%

 

(0.5)

Underwriting expense ratio

 

 

28.3%

 

 

29.6%

 

(1.3)

Combined ratio

 

 

78.8%

 

 

80.6%

 

(1.8)

 

 

 

 

 

 

 

Combined ratio excluding catastrophic activity and prior year development (1)

 

 

80.8%

 

 

82.2%

 

(1.4)

(1)

See ‘Comments on Regulation G - Non-GAAP Financial Measures’ for further details.

The following table summarizes the Company’s consolidated financial data, including a reconciliation of net income or loss available to Arch common shareholders to after-tax operating income or loss available to Arch common shareholders and related diluted per share results (see ‘Comments on Regulation G - Non-GAAP Financial Measures’ for further details):

(U.S. Dollars in millions, except per share data)

Three Months Ended

 

March 31,

 

2024

 

2023

Net income available to Arch common shareholders

$

1,110

 

$

705

Net realized (gains) losses (1)

 

(67)

 

 

(17)

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

 

(99)

 

 

(48)

Net foreign exchange (gains) losses

 

(31)

 

 

18

Transaction costs and other

 

7

 

 

(1)

Income tax expense (benefit) (2)

 

13

 

 

(3)

After-tax operating income available to Arch common shareholders

$

933

 

$

654

 

 

 

 

Diluted per common share results:

 

 

 

Net income available to Arch common shareholders

$

2.92

 

$

1.87

Net realized (gains) losses (1)

 

(0.18)

 

 

(0.05)

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

 

(0.26)

 

 

(0.13)

Net foreign exchange (gains) losses

 

(0.08)

 

 

0.05

Transaction costs and other

 

0.02

 

 

0.00

Income tax expense (benefit) (2)

 

0.03

 

 

(0.01)

After-tax operating income available to Arch common shareholders

$

2.45

 

$

1.73

 

 

 

 

Weighted average common shares and common share equivalents outstanding — diluted

 

380.5

 

 

377.6

 

 

 

 

Beginning common shareholders’ equity

$

17,523

 

$

12,080

Ending common shareholders’ equity

 

18,525

 

 

13,158

Average common shareholders’ equity

$

18,024

 

$

12,619

 

 

 

 

Annualized net income return on average common equity

 

24.6%

 

 

22.3%

Annualized operating return on average common equity

 

20.7%

 

 

20.7%

(1)

Net realized gains or losses include realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains and losses on derivative instruments and changes in the allowance for credit losses on financial assets.

(2)

Income tax expense (benefit) on net realized gains or losses, equity in net income (loss) of investment funds accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other reflects the relative mix reported by jurisdiction and the varying tax rates in each jurisdiction.

Segment Information

The following section provides analysis on the Company’s 2024 first quarter performance by operating segment. For additional details regarding the Company’s operating segments, please refer to the Company’s Financial Supplement dated March 31, 2024. The Company’s segment information includes the use of underwriting income (loss) and a combined ratio excluding catastrophic activity and prior year development (see ‘Comments on Regulation G - Non-GAAP Financial Measures’ for further details).

Insurance Segment

 

Three Months Ended March 31,

(U.S. Dollars in millions)

2024

 

2023

 

% Change

 

 

 

 

 

 

Gross premiums written

$

2,126

 

$

1,979

 

7.4

Net premiums written

 

1,542

 

 

1,437

 

7.3

Net premiums earned

 

1,451

 

 

1,257

 

15.4

 

 

 

 

 

 

Underwriting income

$

86

 

$

114

 

(24.6)

 

 

 

 

 

 

Underwriting Ratios

 

 

 

 

% Point Change

Loss ratio

 

58.9%

 

 

55.9%

 

3.0

Underwriting expense ratio

 

35.2%

 

 

35.0%

 

0.2

Combined ratio

 

94.1%

 

 

90.9%

 

3.2

 

 

 

 

 

 

Catastrophic activity and prior year development:

 

 

 

 

 

Current accident year catastrophic events, net of reinsurance and reinstatement premiums

 

1.9%

 

 

1.6%

 

0.3

Net (favorable) adverse development in prior year loss reserves, net of related adjustments

 

(0.5)%

 

 

(0.5)%

 

Combined ratio excluding catastrophic activity and prior year development

 

92.7%

 

 

89.8%

 

2.9

Gross premiums written by the insurance segment in the 2024 first quarter were 7.4% higher than in the 2023 first quarter, while net premiums written were 7.3% higher than in the 2023 first quarter. Growth in net premiums written reflected increases in most lines of business, due in part to new business opportunities, increases in existing accounts and rate changes. Net premiums earned in the 2024 first quarter were 15.4% higher than in the 2023 first quarter, and reflect changes in net premiums written over the previous five quarters.

The 2024 first quarter loss ratio reflected 2.1 points of activity related to the Baltimore bridge collapse along with 1.9 points of current year catastrophic activity, spread across a series of global events, compared to 1.4 points of catastrophic activity in the 2023 first quarter. Estimated net favorable development of prior year loss reserves, before related adjustments, reduced the loss ratio by 0.7 points in the 2024 first quarter, compared to 0.9 points in the 2023 first quarter. The balance of the change in the loss ratio resulted, in part, from the impact of rate increases and changes in the mix of business.

The underwriting expense ratio was 35.2% in the 2024 first quarter, compared to 35.0% in the 2023 first quarter.

Reinsurance Segment

 

Three Months Ended March 31,

(U.S. Dollars in millions)

2024

 

2023

 

% Change

 

 

 

 

 

 

Gross premiums written

$

3,467

 

$

2,460

 

40.9

Net premiums written

 

2,266

 

 

1,726

 

31.3

Net premiums earned

 

1,666

 

 

1,330

 

25.3

Other underwriting income (loss)

 

2

 

 

4

 

(50.0)

 

 

 

 

 

 

Underwriting income

$

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FAQ

What was the net income reported by Arch Capital Group for the 2024 first quarter?

Arch Capital Group reported a net income of $1.1 billion for the 2024 first quarter.

What was the after-tax operating income for Arch in the 2024 first quarter?

After-tax operating income for Arch in the 2024 first quarter was $933 million.

How much was the increase in book value per common share for Arch from December 2023 to March 2024?

The book value per common share for Arch increased by 5.2% from December 2023 to March 2024.

What was the change in gross premiums written in the insurance segment for Arch from the 2023 first quarter to the 2024 first quarter?

Gross premiums written in the insurance segment increased by 7.4% for Arch from the 2023 first quarter to the 2024 first quarter.

Arch Capital Group Ltd.

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