Arch Capital .(ACGL)2024-11-07 21:30Financial Performance - Net premiums earned for Q3 2024 were $3,970 million, an increase from $3,248 million in Q3 2023, representing a growth of 22.2%[10] - Total revenues for the nine months ended September 30, 2024, reached $12,892 million, compared to $9,659 million for the same period in 2023, marking a 33.1% increase[10] - Net income available to Arch common shareholders for Q3 2024 was $978 million, up from $713 million in Q3 2023, reflecting a growth of 37.2%[10] - Net income for the three months ended September 30, 2024, was $988 million, compared to $723 million for the same period in 2023, representing a 37% increase[11] - For the nine months ended September 30, 2024, net income reached $3,377 million, compared to $2,109 million in 2023, reflecting a 60% increase[12] - Total shareholders' equity at the end of the period was $22,274 million, up from $15,239 million in 2023, marking a 46% increase[12] - The company’s diluted net income per common share for Q3 2024 was $2.56, compared to $1.88 in Q3 2023, representing an increase of 36.2%[10] - After-tax operating income available to Arch common shareholders for the nine months ended September 30, 2024, was $2,676 million, up from $2,256 million in the same period of 2023, reflecting an 18.6% growth[123] Assets and Liabilities - The total assets as of September 30, 2024, amounted to $73,656 million, compared to $58,906 million at the end of 2023, indicating a 25.1% increase[9] - Total liabilities increased to $51,382 million as of September 30, 2024, from $40,551 million at the end of 2023, reflecting a growth of 26.7%[9] - The reserve for losses and loss adjustment expenses stood at $28,679 million as of September 30, 2024, up from $22,752 million at the end of 2023, a rise of 26.1%[9] - Goodwill and intangible assets increased to $1,486 million as of September 30, 2024, from $731 million at the end of 2023, a growth of 103.5%[9] - The net reserve for losses and loss adjustment expenses at the end of the period was $21,116 million, compared to $15,340 million in the prior year[30] Investment Performance - The company reported net investment income of $399 million for Q3 2024, compared to $269 million in Q3 2023, an increase of 48.3%[10] - The equity in net income of investment funds accounted for using the equity method was $171 million in Q3 2024, compared to $59 million in Q3 2023, a significant increase of 189.8%[10] - The company reported unrealized holding gains of $585 million during the period, compared to unrealized losses of $94 million in the previous year[12] - The company reported net realized gains of $358 million for the third quarter of 2024, compared to a loss of $354 million in the same quarter of 2023[64] - The gross investment income for the three months ended September 30, 2024, was $422 million, compared to $289 million for the same period in 2023[56] Underwriting and Premiums - Gross premiums written totaled $5.44 billion, with $2.34 billion from insurance, $2.76 billion from reinsurance, and $339 million from mortgage segments[24] - Underwriting income for the total company was $538 million, with $120 million from insurance, $149 million from reinsurance, and $269 million from mortgage[24] - The combined ratio improved to 86.6%, with a loss ratio of 60.5% and an acquisition expense ratio of 17.2%[25] - The insurance segment's third quarter results included two months of activity from the MCE Acquisition, contributing $120 million of underwriting income[111] - The loss ratio for the insurance segment increased to 61.6% in the third quarter of 2024 from 57.5% in the same quarter of 2023, reflecting a 4.1 percentage point change[128] Acquisitions - The Company completed the acquisition of Allianz's U.S. Middle Market Property & Casualty Insurance and U.S. Entertainment Property and Casualty Insurance Business for a total cash consideration of $450 million[17] - The Company completed the acquisition of Watford Insurance Company for a total consideration of $35 million during the third quarter[103] - The acquisition enhances the Company's capabilities in the U.S. middle markets and provides entry into a new niche entertainment insurance market[17] Tax and Dividends - The effective tax rate for the nine months ended September 30, 2024, was 8.1%, a decrease from 8.8% for the same period in 2023[97] - The company declared a special cash dividend of $1.9 billion, representing $5.00 per outstanding common share, payable on December 4, 2024[106] Risk and Reserves - The reserve for losses and loss adjustment expenses is based on actuarial and statistical projections, reflecting the company's expectations of ultimate settlement costs[196] - The IBNR reserves increased to $13,558 million, up from $10,078 million, marking a 34.7% rise[197] - The additional case reserves in the insurance segment grew to $818 million, compared to $484 million previously, an increase of 69.0%[197] Market Conditions - The company estimates that losses from Hurricane Milton will be in a range of $275 million to $375 million, net of reinsurance and reinstatement premiums, based on industry insured losses of $25 billion to $35 billion[104] - The delinquency rate for the 2024 policy year was 0.16%, indicating a significant improvement compared to previous years[203]