Core Viewpoint - Arch Capital Group Ltd.'s reinsurance arm achieved record underwriting income of $1.6 billion for the full year 2025, despite facing property catastrophe rate declines of 10% to 20% at the January renewals, with CEO Nicolas Papadopoulo expressing continued confidence in the business [1][3]. Group 1: Financial Performance - The reinsurance arm contributed over 50% of the firm's total underwriting profit in Q4 2025 [3]. - The firm reported a record underwriting income of $1.6 billion for the full year 2025 [1]. Group 2: Market Conditions - Property catastrophe and short tail excess of loss renewals were highly competitive, with rates declining by 10% to 20% [4]. - Increased competition in the reinsurance market is attributed to strong results from companies over the past three years [7]. Group 3: Strategic Outlook - CEO Papadopoulo indicated that the firm is adjusting its writings to target profitability by region, maintaining a positive outlook on the cat business written at 1.1 [5][6]. - The firm aims to leverage its diversified platform to find new opportunities despite the pressure on margins [9]. Group 4: Future Expectations - The CEO noted that the supply of reinsurance is expected to remain high, particularly in light of the absence of major catastrophes aside from the California wildfires [8]. - There is a belief that rates in the casualty sector could continue to meet mid-trend levels for the foreseeable future, despite some unfavorable developments expected from prior years [11].

Core Insights - The company reported strong underwriting performance with a consolidated combined ratio of 80.6% for the fourth quarter, reflecting excellent results across its segments [4] - After-tax operating income reached $1.1 billion in the fourth quarter, a 26% increase from the same period in 2024, with annualized operating return on average common equity at 17.1% for 2025 [4][3] - The company remains optimistic about its long-term investment potential and has committed to share buybacks as a means to return excess capital to shareholders [3][21] Underwriting Performance - The underlying ex-cat combined ratio was 90.8% for the quarter, consistent with the previous year [1] - Gross premium return increased by 2% year-over-year, while net premium return experienced a decline, which was attributed to changes in business mix and timing of ceded written premium accruals [1][12] - The reinsurance segment achieved a record underwriting income of $1.6 billion for the year, with a combined ratio of 74.9% in the fourth quarter [6][14] Market Conditions - The competitive landscape is intensifying, particularly in certain lines of business, but the company believes its underwriting culture and diversified business model will help maintain superior results [2] - In North America, the rate environment is keeping pace with loss cost trends, while international pricing is slightly below loss trends [5][43] - The mortgage segment produced $1 billion in underwriting income for the year, marking the fourth consecutive year exceeding this threshold [7] Financial Metrics - Book value per share increased by 22.6% in 2025, with a compound annual growth rate exceeding 15% since inception [3] - The company repurchased $1.9 billion of its common stock in 2025, representing 5.6% of outstanding shares at the start of the year [21][22] - Net investment income for the quarter was $434 million, contributing to a stable earnings stream from the investment portfolio, which surpassed $47 billion [8][9] Future Outlook - The company plans to continue pursuing growth in areas where risk-adjusted returns meet long-term objectives, particularly in specialty lines and reinsurance [6][10] - The impact of Bermuda's Tax Credits Act 2025 is expected to benefit the company's operating expense ratios and overall financial results [17][19] - The company anticipates that its effective tax rate will return to the previously guided range of 16% to 18% in 2026 [20]

Financial Data and Key Metrics Changes - The company generated $1.1 billion of after-tax operating income in Q4 2025, a 26% increase from Q4 2024 [5] - The full year 2025 produced $3.7 billion of after-tax operating income, resulting in after-tax operating earnings per share of $9.84 and a 17.1% annualized operating return on average common equity [5] - Book value per share increased by 22.6% in 2025, with a compound annual growth rate exceeding 15% since inception [6] Business Line Data and Key Metrics Changes - The insurance group delivered $119 million of underwriting income in Q4 2025, with a combined ratio of 90.8% [8] - Gross premiums written in the insurance segment increased by 2% year-over-year, while net premiums written declined by 4% [15] - The reinsurance segment achieved a record $1.6 billion of underwriting income for the year, with a combined ratio of 74.9% in Q4 [10] - The mortgage segment produced $1 billion of underwriting income for the year, maintaining strong performance [11] Market Data and Key Metrics Changes - In North America, the company continued to grow in specialty casualty lines, while international units increased writings through the Bermuda platform and in continental Europe [8] - The rate environment in North America is keeping pace with loss-cost trends, while pricing in international business units is slightly below loss trends [9] Company Strategy and Development Direction - The company is starting 2026 with optimism, recognizing increased competition in several lines of business [7] - The Arch Playbook, which emphasizes disciplined risk selection and a diversified business model, remains a key differentiator [7] - The company aims to maximize long-term shareholder value through share buybacks and disciplined capital management [5][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering strong returns throughout the underwriting cycle, despite recognizing competitive pressures [7] - The company anticipates that the impact of the Bermuda Tax Credits Act 2025 will benefit its financial results, particularly in the reinsurance segment [18][19] - The effective tax rate for 2025 was 14.9%, with expectations to return to the 16%-18% range in 2026 [21] Other Important Information - The company repurchased $1.9 billion of shares in 2025, representing 5.6% of outstanding common shares at the start of the year [22] - The investment portfolio surpassed $47 billion at year-end, providing a stable earnings stream [11] Q&A Session Summary Question: Opportunities in property cat reinsurance - Management clarified that opportunities mentioned were not in property cat but in other geographies and specialty lines [24] Question: Capital return and buyback pace - Management indicated that share buybacks will depend on market conditions and stock price, with expectations to remain active throughout the year [25] Question: MCE re-underwriting premium impact - Management noted that the re-underwriting will impact top line in 2026, with no significant seasonality expected [27] Question: Casualty reinsurance market conditions - Management acknowledged that margins are under pressure but expressed optimism about the business due to a diversified platform [46] Question: Demand for casualty reinsurance - Management indicated that demand is stable to down, with cedents retaining more business, impacting supply dynamics [56] Question: Excess capital position - Management stated that excess capital is not static and will be evaluated based on market conditions, with a commitment to return capital to shareholders [61]

Financial Data and Key Metrics Changes - The company generated $1.1 billion of after-tax operating income in Q4 2025, a 26% increase from Q4 2024 [5] - The annualized operating return on average common equity for 2025 was 17.1% [5] - Book value per share increased by 22.6% in 2025, with a compound annual growth rate exceeding 15% since inception [6] - The effective tax rate on pre-tax operating income for 2025 was 14.9%, slightly below the previously guided range of 16%-18% [21] Business Line Data and Key Metrics Changes - The insurance segment reported $119 million of underwriting income in Q4 2025, with a combined ratio of 90.8% [8] - Gross premiums written in the insurance segment increased by 2% year-over-year, while net premiums written declined by 4% [15] - The reinsurance segment achieved a record $1.6 billion of underwriting income for the year, with a combined ratio of 74.9% in Q4 [10] - The mortgage segment produced $1 billion of underwriting income for the year, maintaining strong performance [10] Market Data and Key Metrics Changes - The North American rate environment is keeping pace with loss-cost trends, while international pricing is slightly below loss trends [9] - The company experienced a year-over-year decline in net premiums written, attributed to changes in business mix and timing of ceded written premium accruals [15] - The current accident year combined ratio for the mortgage segment remained low at 34% [17] Company Strategy and Development Direction - The company aims to maximize long-term shareholder value through disciplined execution and consistent results, with a focus on underwriting culture and risk selection [7] - The Arch Playbook remains a differentiator in an evolving market, emphasizing a diversified business model and best-in-class cycle management [7] - The company is positioned to capitalize on attractive margins in various areas, with a focus on growth where risk-adjusted returns meet long-term objectives [9] Management's Comments on Operating Environment and Future Outlook - Management expressed measured optimism heading into 2026, acknowledging increasing competition in several lines of business [7] - The company is prepared to manage the underwriting cycle effectively, with a focus on generating adequate risk-adjusted returns [12] - Management highlighted the importance of leveraging data and analytics to enhance risk selection and improve underwriting discipline [12] Other Important Information - The company repurchased $1.9 billion of its common stock in 2025, representing 5.6% of outstanding shares at the start of the year [22] - The Bermuda Tax Credits Act 2025 is expected to positively impact financial results, particularly in the reinsurance segment and corporate expenses [18][19] Q&A Session Summary Question: Opportunities in property cat and growth expectations for 2026 - Management clarified that opportunities mentioned were not in property cat but in other geographies and specialty lines [24] Question: Capital return and buyback pace - Management indicated that share buybacks would depend on market conditions and stock price, with expectations of being active throughout the year [25] Question: MCE re-underwriting and premium impact - Management noted that re-underwriting would impact top line in 2026, with expectations of offsetting reductions through growth in middle-market business [27] Question: Casualty reinsurance market conditions - Management acknowledged that margins are under pressure but expressed optimism about finding attractive market opportunities [46] Question: Demand for casualty reinsurance and premium assumptions - Management indicated that while demand is stable to down, the underlying business is still growing, and they are actively managing premium projections [87]

Financial Data and Key Metrics Changes - The company generated $1.1 billion of after-tax operating income in Q4 2025, a 26% increase from Q4 2024 [4] - The full year 2025 produced $3.7 billion of after-tax operating income, resulting in after-tax operating earnings per share of $9.84 and a 17.1% annualized operating return on average common equity [4] - Book value per share increased by 22.6% in 2025, with a compound annual growth rate exceeding 15% since inception [5] Business Line Data and Key Metrics Changes - The insurance group delivered $119 million of underwriting income in Q4 2025, with a combined ratio of 90.8% [6] - Gross premiums written in the insurance segment increased by 2% from Q4 2024, while net premiums written declined year-over-year [6][14] - The reinsurance segment achieved a record $1.6 billion of underwriting income for the year, with a combined ratio of 74.9% in Q4 2025 [9] - The mortgage segment produced $1 billion of underwriting income for the year, maintaining strong performance [10][16] Market Data and Key Metrics Changes - In North America, the company continues to grow in specialty casualty lines, while international pricing is tracking slightly below loss trends [8] - The rate environment in North America is largely keeping pace with loss-cost trends, while competition is increasing in several lines of business [5][8] Company Strategy and Development Direction - The company emphasizes a diversified business model and disciplined risk selection as key differentiators in a competitive market [5] - The Arch Playbook remains a valid strategy for navigating the evolving market conditions [5] - The company aims to maximize long-term shareholder value through share buybacks and disciplined capital management [4][20] Management's Comments on Operating Environment and Future Outlook - Management expressed measured optimism heading into 2026, acknowledging increased competition but confidence in the company's ability to deliver strong returns [5] - The company is focused on maintaining underwriting discipline and adapting to changing market conditions [11] - Management highlighted the importance of leveraging data and analytics for improved risk selection [11] Other Important Information - The company recognized a full-year effect of the Bermuda Tax Credits Act 2025, impacting financial results positively [17][18] - The effective tax rate for 2025 was 14.9%, with expectations to return to the 16%-18% range in 2026 [19] Q&A Session Summary Question: Opportunities in property cat reinsurance - Management clarified that opportunities mentioned were not in property cat but in other geographies and specialty lines [23] Question: Capital management and buyback pace - Management indicated that share buybacks would depend on market conditions and stock price, with expectations to remain active throughout the year [24] Question: MCE re-underwriting impact - Management noted that the re-underwriting would impact top line in 2026, with no significant seasonality expected [25] Question: Casualty reinsurance market conditions - Management acknowledged that margins are under pressure but expressed optimism about the business due to a diversified platform [42][44] Question: Demand for casualty reinsurance - Management indicated that while there is stable demand, the willingness of cedents to retain more business has added to competition [52] Question: Impact of Bermuda tax credits on expenses - Management stated that the Bermuda tax credits would benefit the expense ratio but did not expect significant changes in other expense items [93]

INVESTOR PRESENTATION 2025 Fourth Quarter ©2026 Arch Capital Group Ltd. All rights reserved. ©2026 Arch Capital Group Ltd. All rights reserved. 1 Informational Statements The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. This release or any other written or oral statements made by or on behalf of Arch and its subsidiaries may include forward-looking statements, which reflect the Company's current views with respect to future events and financial pe ...

Core Insights - Baron Asset Fund outperformed the Russell Midcap Growth Index by 11.59 percentage points in Q4 2025, returning 7.89% [1] - The Fund's strong performance was attributed to favorable stock selection, particularly in the financial sector with Arch Capital Group Ltd. [1][3] Fund Performance - The Russell Midcap Growth Index ended Q4 2025 down 3.70% [1] - Baron Asset Fund held 53 positions, with the top 10 holdings representing 52.8% of net assets and the top 20 holdings representing 73.3% [1] Arch Capital Group Ltd. Overview - Arch Capital Group Ltd. (NASDAQ:ACGL) is an insurance company with a market capitalization of $35.852 billion [2] - The stock closed at $96.06 on February 9, 2026, with a one-month return of 5.83% and a twelve-month return of 7.21% [2] Financial Performance of Arch Capital Group Ltd. - Arch Capital's stock rose due to strong earnings results, with Q3 earnings per share exceeding expectations [3] - The company achieved an 18% return on equity and 9% growth in book value per share, with 18% growth when adjusted for a special dividend [3] - Share repurchases reduced the share count by 4% year to date, indicating management's confidence in the company's valuation [3] Hedge Fund Interest - Arch Capital Group Ltd. was held by 40 hedge fund portfolios at the end of Q3 2025, down from 46 in the previous quarter [4] - While the company has potential, certain AI stocks are considered to offer greater upside potential with less downside risk [4]

Core Viewpoint - Arch Capital Group Ltd. reported strong financial performance for Q4 2025, with significant increases in underwriting income and net income, reflecting effective management strategies and a diversified business model [1][4]. Financial Performance - Underwriting income rose by 32.3% year-on-year to $827 million in Q4 2025, driven by robust performance in both insurance and reinsurance segments [1]. - Group-wide net income reached $1.2 billion, marking a 21.2% annualized return on average common equity, compared to $925 million in Q4 2024 [4]. Combined Ratio and Loss Ratios - The combined ratio improved by 4.4 percentage points to 80.6%, down from 85% in Q4 2024, with the loss ratio decreasing to 53.6% from 57.5% [2]. - In the reinsurance segment, the combined ratio strengthened by 6 percentage points to 77%, with a loss ratio of 54.5%, reflecting a decrease in current-year catastrophic activity [5]. Premiums and Reserves - Overall gross premiums written (GPW) remained stable at $4.8 billion, while net premiums written (NPW) decreased to $3.7 billion from $3.8 billion in Q4 2024 [2][3]. - The estimated net favorable development of prior year loss reserves contributed positively, with a reduction in the loss ratio by 3.5 points in Q4 2025 [6]. Segment Performance - In the reinsurance segment, underwriting income increased by 39.6% year-on-year to $458 million, while in the insurance segment, underwriting income surged by 296.7% to $119 million [5][7]. - The mortgage business saw a decline in underwriting income by 6.4% to $250 million, with GPW down by 1.5% to $326 million [9][10]. Investment Income - Arch reported pre-tax net investment income of $434 million, attributed to growth in average invested assets and strong operating cash flows [11]. Management Commentary - The CEO highlighted the outstanding financial performance in 2025, emphasizing the effectiveness of the company's diversified platform and cycle management strategy, expressing optimism for continued success in 2026 [12].

Core Viewpoint - Arch Capital Group (ACGL) has shown modest performance with a 6% gain over the past year, attributed to solid underwriting results but limited share price appreciation due to concerns over slower growth, underwriting margin fears, and increased Bermuda taxes [1]. Company Performance - Arch Capital Group has delivered solid underwriting results, which have contributed to its modest share price performance [1]. - The company's share price appreciation has been constrained by concerns regarding growth and underwriting margins, as well as higher taxes in Bermuda [1]. Market Sentiment - There is a belief that the concerns surrounding Arch Capital Group are overstated, suggesting potential for future growth and recovery [1].

Core Viewpoint - Arch Capital Group (ACGL) has shown modest performance with a 6% gain over the past year, attributed to solid underwriting results but limited share price appreciation due to concerns over slower growth, underwriting margin fears, and increased Bermuda taxes [1] Group 1: Company Performance - Arch Capital Group has delivered solid underwriting results despite the modest share price performance [1] - The company's share price appreciation has been constrained by concerns regarding growth and underwriting margins [1] Group 2: Market Concerns - There are fears related to slower growth and underwriting margins that are perceived to be overstated [1] - Higher taxes in Bermuda are also contributing to the limited share price appreciation [1]