Core Viewpoint - Arch Capital Group Ltd. (ACGL) is trading at a premium compared to the Zacks Property and Casualty Insurance industry, with a price-to-book value of 1.66X, slightly above the industry average of 1.63X [1]. Financial Performance - Arch Capital's shares have increased by 3.5% over the past year, which is lower than the performance of its industry, the Finance sector, and the Zacks S&P 500 composite [2]. - The company has a market capitalization of $33.24 billion, with an average trading volume of 0.2 million shares over the last three months. The stock closed at $88.33, which is 24% below its 52-week high of $116.47 [4]. - The trailing 12-month return on equity for Arch Capital is 17.9%, significantly higher than the industry average of 7.6%. The return on invested capital stands at 6.9%, also above the industry average of 5.8% [5]. Growth Projections - The Zacks Consensus Estimate for Arch Capital's 2025 revenues is $18.84 billion, indicating a year-over-year growth of 13.3%. For 2026, the earnings per share and revenues are expected to increase by 13.8% and 8.4%, respectively, compared to 2024 estimates [8]. - Earnings have grown by 33.5% over the past five years, outperforming the industry average growth of 19.3% [8]. Earnings Surprise History - Arch Capital has consistently surpassed earnings estimates in the last four quarters, with an average surprise of 15.53% [9]. Competitive Advantages - The company benefits from widespread operations and a strong product portfolio, which provide diversification and earnings stability. This positions Arch Capital for international expansion and strategic buyouts [10]. - The Mortgage Insurance segment complements its specialty insurance and reinsurance businesses, enhancing its market presence [11]. - A growing base of invested assets, supported by improving cash flows, is expected to drive investment income. The company maintains sufficient liquidity and low leverage, which strengthens its balance sheet and supports growth initiatives [11][12]. Conclusion - Arch Capital has a robust product portfolio and a solid track record of premium growth, with favorable returns on capital. The Insurance and Reinsurance segments are anticipated to experience significant growth across various lines of business [13].

Financial Data and Key Metrics Changes - Arch Capital Group reported a net premium of $3.8 billion for Q4 2024, a 17% increase compared to the same quarter last year [8] - The underwriting income for the quarter was $625 million, down 13% from the previous year, primarily due to losses from catastrophic events [9] - The full-year after-tax operating income was $3.5 billion, with an operating return on average common equity of 18.9% [9] - Book value per share increased by 13% to $53.11, with a nearly 24% increase after adjusting for a special dividend [9][10] - The company repurchased shares worth $24 million in Q4 2024 [10] Business Line Data and Key Metrics Changes - The reinsurance segment delivered $328 million in underwriting income for Q4, with a record $1.2 billion for the full year, writing over $7.7 billion in net premium [14][15] - The insurance segment wrote $6.9 billion in net premium for the full year, a 17% increase, and delivered $345 million in underwriting income [16] - The mortgage segment contributed $267 million in underwriting income for Q4, marking two consecutive years of over $1 billion in underwriting income [19] Market Data and Key Metrics Changes - The delinquency rate in the US mortgage insurance business increased slightly to just over 2% at the end of December, attributed to expected defaults in areas affected by natural catastrophes [20] - The overall credit quality of the mortgage insurance portfolio remains excellent, with strong persistency in the $500 billion-plus insurance in force portfolio [20] - The investment group generated nearly $1.5 billion in annual net investment income from an asset base exceeding $40 billion [21] Company Strategy and Development Direction - The company is focusing on effective cycle management and empowering underwriters to source and retain attractive business without production constraints [12][13] - Arch Capital is selectively deploying capital to areas with attractive risk-adjusted returns, such as insurance and reinsurance liability lines, while improving business mix in underperforming lines [12][13] - The company aims to maintain attractive margins despite expected heightened competition in the market [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating market dynamics, emphasizing a strong underwriting culture and dynamic capital management capabilities [22] - The impact of the California wildfires is expected to result in a net loss between $450 million and $550 million, with significant losses likely affecting the reinsurance market [41] - The company anticipates competitive primary market conditions but expects favorable growth in both North America and international insurance for 2025 [18][22] Other Important Information - The company recognized $146 million of favorable prior development on a pre-tax basis, contributing 3.5 points to the combined ratio across segments [27] - The effective tax rate for the quarter was 6.7%, with an expected annualized effective tax rate of 16% to 18% for 2025 due to a new corporate income tax in Bermuda [31][32] - The balance sheet remains strong with common shareholders' equity of $20 billion after recognizing a $1.9 billion common dividend [33] Q&A Session Summary Question: Insurance underlying loss ratio - The impact of the Midcorp acquisition is about one point, suggesting an ongoing insurance underlying loss ratio around fifty-eight [35][36] Question: Reinsurance conditions and PML - The company is pleased with the business and is looking to write more, indicating attractive returns despite competitive pressures [38][39] Question: California fire losses impact - The significant losses from the California wildfires are expected to affect rates for the rest of the year [41] Question: Catastrophe load guidance - The guidance of 7% to 8% for catastrophe load includes contributions from the Midcorp acquisition and reflects the heavier property book [45][46] Question: Casualty GL umbrella environment - The company is comfortable with its reserve position and is seeing rate changes keeping up with loss trends [50][51] Question: MI reserve releases - Reserve releases are driven by better-than-expected performance across all segments, with healthy margins anticipated [60][61] Question: Share buybacks - The company is open to share buybacks if capital cannot be deployed effectively in the business [62][66] Question: Favorable development in reinsurance - Most favorable development is seen in property cat and property other than cat lines, with no significant changes in casualty [74] Question: Competitive pressures in casualty lines - Competitive pressures are mainly observed in public DNO and cyber areas, where margins have eroded [78] Question: Integration of Midcorp - The integration is on plan, with double-digit rate increases observed in both property and liability sides [126][128]

Financial Data and Key Metrics Changes - The company reported a net premium of $3.8 billion for Q4 2024, representing a 17% increase compared to the same quarter last year [6] - Underwriting income for the quarter was $625 million, down 13% from the previous year, primarily due to losses from catastrophic events [6] - Full year after-tax operating income was $3.5 billion, with an operating return on average common equity of 18.9% [6] - Book value per share increased to $53.11, a 13% rise for the year, and nearly 24% when adjusted for a $5 per share special dividend paid in December [7] - The company repurchased shares worth $24 million in Q4, reflecting ongoing capital management efforts [8] Business Line Data and Key Metrics Changes - The reinsurance segment delivered $328 million of underwriting income in Q4, with full year results showing a record $1.2 billion of underwriting income and over $7.7 billion of net premium written [10] - The insurance segment achieved $6.9 billion of net premium in 2024, a 17% increase from 2023, with $345 million of underwriting income [11] - The mortgage segment contributed $267 million of underwriting income in Q4, marking the second consecutive year of over $1 billion in underwriting income [13] Market Data and Key Metrics Changes - The delinquency rate in the U.S. mortgage insurance business increased to just over 2% in December, attributed to expected defaults in areas affected by natural catastrophes [14] - The overall credit quality of the mortgage insurance portfolio remains excellent, with strong persistency in the insurance in force portfolio exceeding $500 billion [13] Company Strategy and Development Direction - The company is focusing on effective cycle management and empowering underwriters to source and retain attractive business without production constraints [9] - The strategy includes selectively deploying capital to areas with attractive risk-adjusted returns, such as insurance and reinsurance liability lines, while reallocating capital from less profitable lines [9] - The company aims to maintain attractive margins despite heightened competition and is committed to maximizing shareholder returns over the long term [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the significant impact of California wildfires, estimating a net loss between $450 million and $550 million, which is expected to affect the reinsurance market [5][29] - The outlook for both North America and international insurance growth is favorable for 2025, although competition for premium volumes has increased [12] - Management expressed confidence in navigating market dynamics due to a strong underwriting culture and a proven track record in cycle management [17] Other Important Information - The company recognized $393 million in current accident year catastrophe losses for the quarter, primarily due to Hurricane Milton and Hurricane Helene [18] - The effective tax rate on pre-tax operating income was 6.7% for the quarter and 8.2% for the full year, with expectations for a 16% to 18% range for 2025 [22] Q&A Session Summary Question: On the insurance underlying loss ratio - Management confirmed that the impact of the Mid Corp acquisition adds about one point to the loss ratio, with Arch's standalone running at just under 57 [25][26] Question: Conditions for reinsurance at January 1 - Management indicated that they are pleased with the business and are looking to write more, as they find the returns attractive [27][28] Question: Impact of California fires on cat renewal seasons - Management expects the significant losses from the California fires to dampen enthusiasm in the market and affect rates for the rest of the year [29] Question: Catastrophe load guidance - Management confirmed that the guidance of 7% to 8% includes contributions from the Mid Corp acquisition, which has a heavier property book [31] Question: Comments on casualty GL umbrella environment - Management stated that they are comfortable with their reserve position and noted that rate changes are keeping up with loss trends [33][34] Question: MI reserve release details - Management explained that reserve releases are driven by better-than-expected performance in the U.S. mortgage insurance segment [40][41] Question: Share buybacks and capital deployment - Management indicated that they regularly assess capital deployment opportunities and will consider share buybacks if excess capital cannot be effectively utilized [43][45] Question: Favorable development in reinsurance - Management noted that the majority of favorable development was in property cat and property other than cat lines [51] Question: Competitive pressures eroding margins - Management highlighted public DNO and cyber lines as areas experiencing significant rate decreases [53] Question: Integration of MidCorp - Management reported that the integration is on plan and that they are seeing double-digit rate increases in both property and liability sides [87][88]

Core Insights - Arch Capital Group Ltd. (ACGL) reported fourth-quarter 2024 operating income of $2.26 per share, exceeding the Zacks Consensus Estimate by 22%, although it decreased 9.2% year over year [1] - The results were driven by higher premiums written across its Insurance, Reinsurance, and Mortgage segments, along with improved net investment income [1] Premiums and Revenues - Gross premiums written increased by 11.9% year over year to $4.7 billion, while net premiums written rose 17.1% year over year to $3.8 billion [2] - Total revenues reached $4.5 billion, marking a 14.4% year-over-year increase and surpassing the Zacks Consensus Estimate by 6.1% [3] Investment Income and Losses - Net investment income grew by 29.3% year over year to $405 million, although it fell short of the estimate of $416.5 million [2] - Pre-tax current accident year catastrophic losses amounted to $393 million, significantly higher than the previous year's loss of $137 million, attributed to Hurricanes Milton and Helene [3] Underwriting Performance - The combined ratio deteriorated by 610 basis points to 85, compared to the estimate of 84.9 [4] - Underwriting income for the Insurance segment decreased by 69.7% year over year to $30 million, with a combined ratio of 98.5 [6] Segment Analysis - In the Insurance segment, gross premiums written surged 28.4% year over year to $2.5 billion, while net premiums written climbed 34.9% to $1.9 billion [5] - The Reinsurance segment saw gross premiums written decrease by 1.5% year over year to $1.9 billion, with net premiums written rising by 2% to $1.6 billion [6][7] - The Mortgage segment experienced a 5.4% year-over-year drop in gross premiums written to $331 million, while net premiums written increased by 8.6% to $277 million [8][9] Financial Position - As of December 31, 2024, Arch Capital had cash of $979 million, a 6.8% increase from the end of 2023, and debt of $2.7 billion, which rose by 0.07% year over year [11] - Book value per share was reported at $53.11, reflecting a 13.1% increase from the previous year [11] Full-Year Performance - For the full year 2024, Arch Capital reported an operating income of $9.28 per share, exceeding the Zacks Consensus Estimate by 4.7% and increasing 9.8% year over year [12] - Total revenues for 2024 reached $17.44 billion, beating the consensus mark by 6.6% and increasing by 28% year over year [12]

Core Insights - Arch Capital Group (ACGL) reported a revenue of $4.55 billion for the quarter ended December 2024, reflecting a year-over-year increase of 23.8% and a surprise of +6.14% over the Zacks Consensus Estimate of $4.28 billion [1] - The earnings per share (EPS) for the quarter was $2.26, down from $2.49 in the same quarter last year, with an EPS surprise of +22.16% compared to the consensus estimate of $1.85 [1] Financial Performance Metrics - Loss Ratio: 57.5%, better than the estimated 58.7% [4] - Combined Ratio: 85%, outperforming the average estimate of 87.3% [4] - Expense Ratio - Other Operating Expense: 9.9%, compared to the estimated 10.1% [4] - Expense Ratio - Total Acquisition Expense: 17.6%, better than the average estimate of 18.6% [4] Revenue Breakdown - Net Investment Income: $405 million, slightly below the average estimate of $415.62 million, but a year-over-year increase of +29.4% [4] - Net Premiums Earned: $4.14 billion, exceeding the estimated $3.87 billion, with a year-over-year change of +23.9% [4] - Insurance Segment Net Premiums Earned: $1.93 billion, surpassing the estimate of $1.66 billion, reflecting a +33.4% year-over-year change [4] - Reinsurance Segment Net Premiums Earned: $1.90 billion, slightly below the estimate of $1.92 billion, with a +17.5% year-over-year change [4] - Mortgage Segment Net Premiums Earned: $306 million, exceeding the estimate of $280.41 million, representing an +11.3% year-over-year change [4] - Other Underwriting Income: $6 million, above the estimate of $4.39 million, but a -40% change year-over-year [4] - Equity in Net Income of Investment Funds: $143 million, significantly above the estimate of $60.02 million, with a +40.2% year-over-year change [4] - Other Income: $12 million, exceeding the estimate of $4.67 million, but a -29.4% change year-over-year [4] Stock Performance - Arch Capital's shares have returned +3.7% over the past month, outperforming the Zacks S&P 500 composite's +2.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

分组1 - Arch Capital Group (ACGL) reported quarterly earnings of $2.26 per share, exceeding the Zacks Consensus Estimate of $1.85 per share, but down from $2.49 per share a year ago, representing an earnings surprise of 22.16% [1] - The company posted revenues of $4.55 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 6.14%, compared to $3.67 billion in the same quarter last year [2] - Arch Capital has surpassed consensus EPS estimates in all four of the last quarters and has topped consensus revenue estimates three times during the same period [2] 分组2 - The stock has gained approximately 1.3% since the beginning of the year, while the S&P 500 has increased by 2.5% [3] - The current consensus EPS estimate for the upcoming quarter is $2.37 on revenues of $4.52 billion, and for the current fiscal year, it is $9 on revenues of $18.75 billion [7] - The Zacks Industry Rank for Insurance - Property and Casualty is currently in the bottom 46% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Premiums and Revenues - Gross premiums written increased by 11.9% to $4,756 million for the three months ended December 31, 2024, compared to $4,251 million in the same period of 2023[12]. - Net premiums written rose by 17.1% to $3,819 million for the three months ended December 31, 2024, up from $3,261 million in the prior year[12]. - Net premiums earned for Q4 2024 reached $4,143 million, up 23.9% from $3,344 million in Q4 2023[17]. - Total revenues for Q4 2024 were $4,548 million, an increase of 14.4% compared to $3,975 million in Q4 2023[17]. - Gross premiums written totaled $4,756 million, with the insurance segment contributing $2,484 million, reinsurance $1,941 million, and mortgage $331 million[34]. - Net premiums earned for the year ended December 31, 2024, reached $15,100 million, a significant increase from $12,440 million in 2023, reflecting a growth of 21.3%[75]. - Total net premiums written for the year ended December 31, 2024, reached $7,746 million, a 17.9% increase from $6,554 million in 2023[51]. Income and Profitability - Net income available to Arch common shareholders decreased by 60.2% to $925 million for the three months ended December 31, 2024, down from $2,324 million in the prior year[12]. - After-tax operating income available to Arch common shareholders was $866 million for the three months ended December 31, 2024, an 8.4% decrease from $945 million in the same period of 2023[12]. - Comprehensive income available to Arch decreased by 86.7% to $415 million for the three months ended December 31, 2024, compared to $3,111 million in the prior year[12]. - Net income attributable to Arch for Q4 2024 was $925 million, a decrease of 60.3% from $2,324 million in Q4 2023[17]. - The company reported a net income available to common shareholders of $4,403 million for the year ended December 31, 2023[42]. Ratios and Performance Metrics - The combined ratio increased to 85.0% for the three months ended December 31, 2024, compared to 78.9% in the same period of 2023[12]. - The annualized net income return on average common equity was 17.9% for the three months ended December 31, 2024, down from 58.2% in the same period of 2023[12]. - The total return on investments was -1.05% for the three months ended December 31, 2024, a decrease of 581 basis points compared to 4.76% in the prior year[12]. - The combined ratio for the insurance segment was 98.5%, while the reinsurance segment reported a combined ratio of 83.0%[34]. - The loss ratio for the insurance segment was 66.3%, while the reinsurance segment had a loss ratio of 58.9%[34]. - The combined ratio for Q4 2024 was 85.0%, a decrease from 86.6% in Q3 2024 and 78.9% in Q4 2023, indicating improved underwriting performance[75]. Investment Income and Assets - Net investment income grew by 29.4% to $405 million for the three months ended December 31, 2024, compared to $313 million in the same period of 2023[12]. - The company reported net realized losses of $161 million during the same period[34]. - Total investable assets amounted to $41,388 million, with total assets at $70,906 million and total liabilities at $50,086 million[34]. - The company reported gross investment income of $428 million for the three months ended December 31, 2024, compared to $332 million for the same period in 2023, reflecting a year-over-year increase of 28.9%[86]. - Total fixed maturities as of December 31, 2024, were $27,889 million, a decrease from $29,531 million on September 30, 2024[89]. Liabilities and Equity - The company reported total assets of $70,906 million as of December 31, 2024, up from $58,906 million a year earlier, representing a 20.4% increase[19]. - The company’s total liabilities were $50,086 million as of December 31, 2024, compared to $40,551 million a year earlier, marking a 23.5% increase[19]. - Common shareholders' equity decreased to $19.990 billion from $21.444 billion in September 2024[121]. - Total capital available to Arch is $23.548 billion, down from $25.001 billion in September 2024[121]. Mortgage Insurance Metrics - U.S. primary mortgage insurance net premiums written were $208 million for the three months ended December 31, 2024, representing 75.1% of total net premiums written[59]. - Insurance in force (IIF) for U.S. primary mortgage insurance was $290,435 million as of December 31, 2024, accounting for 58.0% of total IIF[59]. - The persistency rate for analysts is reported at 82.1% for December 31, 2024, down from 83.6% in the previous quarter[63]. - The risk-to-capital ratio for Arch MI U.S. is 7.8:1 as of December 31, 2024, indicating a slight increase in risk exposure compared to 7.3:1 in the previous quarter[63]. - The total Risk in Force (RIF) for U.S. mortgage insurance operations as of December 31, 2024, is $76,034 million, a slight decrease from $76,448 million on September 30, 2024[62]. Share Repurchase and Capital Management - Aggregate cost of shares repurchased in the quarter is $23.5 million, with 0.3 million shares repurchased at an average price of $89.65 per share[123]. - Remaining share repurchase authorization is $976.5 million[123]. - Cumulative shares repurchased since the program's inception total 433.8 million[123].

The Zacks Property and Casualty Insurance (P&C) industry is likely to benefit from better pricing, prudent underwriting and exposure growth. Industry players like The Progressive Corporation (PGR) , Chubb Limited (CB) , The Travelers Companies (TRV) , The Allstate Corporation (ALL) and Arch Capital Group (ACGL) are poised to grow despite a rise in catastrophic activities. Given an active catastrophe environment, the policy renewal rate should accelerate. Also, the increasing adoption of technology and the e ...

Arch Capital Group Ltd. (ACGL) is slated to report fourth-quarter 2024 earnings on Feb. 10, after market close. The insurer delivered an earnings surprise in each of the trailing four quarters, the average beat being 17.07%.See the Zacks Earnings Calendar to stay ahead of market-making news.Factors to ConsiderIncreases in most lines of business due in part to new business opportunities and rate changes and growth in existing accounts in the Insurance and Reinsurance segments are likely to have favored net p ...

Wall Street analysts expect Arch Capital Group (ACGL) to post quarterly earnings of $1.85 per share in its upcoming report, which indicates a year-over-year decline of 25.7%. Revenues are expected to be $4.23 billion, up 15.2% from the year-ago quarter.The consensus EPS estimate for the quarter has been revised 0.8% lower over the last 30 days to the current level. This reflects how the analysts covering the stock have collectively reevaluated their initial estimates during this timeframe.Ahead of a company ...