Arch Capital Earnings Fall To $3.00 A Share As Catastrophe Losses Rise, Despite $1.4 Billion Buyback
Third-quarter premiums shrank and the combined ratio rose to 82.5%, while investment income climbed and book value per share held at $67.90.
Arch Capital Group, the Bermuda-based insurer, said net income available to common shareholders fell to $1.0 billion, or $3.00 per share, in the third quarter, from $1.3 billion, or $3.56 per share, a year earlier. Catastrophe losses rose and premiums earned shrank, while $1.4 billion of share repurchases cut the share count that profit is divided across.
Underwriting slips, ratio worsens
Net premiums earned fell 6.3% to $4,014 million, and underwriting income dropped 19.4% to $702 million. The combined ratio, where lower means more profitable, rose to 82.5% from 79.8%.
Pre-tax catastrophe losses for the insurance and reinsurance segments came to $234 million after reinsurance and reinstatement premiums. In the insurance segment, 5.7 points of loss ratio came from catastrophe activity, which includes losses tied to the Iran conflict, against 2.2 points a year earlier. The segment also booked extra earned premium from the conflict.
Favorable development of prior-year reserves added $179 million. Excluding catastrophes and reserve development, the combined ratio was 81.2%, against 80.5%.
After-tax operating income, which strips out investment swings and one-time items, was $910 million, or $2.67 per share, against $1.0 billion, or $2.77 per share. Annualized return on average common equity was 18.1% on net income and 16.0% on operating income.
Buybacks and investment income cushion the blow
Arch, which sells insurance, reinsurance and mortgage insurance worldwide through subsidiaries, had about 341.4 million diluted shares in the quarter, down from 376.1 million a year earlier. That shrinkage softened the per-share decline.
Pre-tax net investment income rose to $451 million from $408 million, which the company attributed to growth in average investable assets. Book value per common share was $67.90 at September 30, 2026, down 0.2% from June 30.
By segment, reinsurance net premiums earned fell 10.3% and underwriting income fell 18.5% to $393 million. Mortgage underwriting income fell 22.7% to $201 million. Insurance underwriting income fell 16.3% to $108 million, even as gross premiums written there rose 7.8%.
A market turning uneven
CEO Nicolas Papadopoulo said Arch is "operating in a transitioning market where conditions are increasingly uneven, but we are prepared and welcome the challenge."
Management holds its earnings call at 10:00 a.m. Eastern on Wednesday.
The call Wednesday gives management a chance to expand on that "increasingly uneven" market description.
Sources
- 8-K Filing — ARCH CAPITAL GROUP LTD. (ACGL) — SEC EDGAR
- Exhibit ex-991release93026.htm — ARCH CAPITAL GROUP LTD. 8-K exhibit — SEC EDGAR
- Exhibit ex-992supplement93026.htm — ARCH CAPITAL GROUP LTD. 8-K exhibit — SEC EDGAR
- If You Invested $1000 in Arch Capital Group a Decade Ago, This is How Much It'd Be Worth Now — Yahoo Finance
- Arch Capital Group Ltd. Reports 2026 Third Quarter Results — businesswire.com
