Financial Performance - Net premiums earned for Q2 2025 reached $4,337 million, a 21.6% increase from $3,565 million in Q2 2024[19] - Total revenues for the first half of 2025 were $9,886 million, up 21.0% from $8,170 million in the same period of 2024[19] - Net income available to Arch common shareholders for Q2 2025 was $1,227 million, compared to $1,259 million in Q2 2024, reflecting a slight decrease of 2.5%[19] - Comprehensive income for Q2 2025 was $1,597 million, compared to $1,280 million in Q2 2024, indicating a growth of 24.8%[22] - Net income for the six months ended June 30, 2025, was $1,811 million, compared to $2,389 million for the same period in 2024, representing a decrease of 24%[28] - After-tax operating income available to Arch common shareholders for the first half of 2025 was $1,566 million, down 18.2% from $1,914 million in the same period of 2024[208] Assets and Liabilities - Total assets increased to $78,788 million as of June 30, 2025, up from $70,906 million at the end of 2024, representing an increase of 11.5%[15] - Total liabilities increased to $55,747 million as of June 30, 2025, compared to $50,086 million at the end of 2024, reflecting an increase of 11.3%[15] - The company’s retained earnings grew to $24,477 million as of June 30, 2025, up from $22,686 million at the end of 2024, representing an increase of 7.9%[15] - Total shareholders' equity at the end of the period was $23,041 million, up from $20,665 million year-over-year, indicating a growth of 11%[25] Investment Income - Net investment income for Q2 2025 was $405 million, a 11.3% increase from $364 million in Q2 2024[19] - The company reported net realized gains of $229 million in Q2 2025, up from $122 million in Q2 2024, marking an increase of 87.7%[19] - The gross investment income for the six months ended June 30, 2025, is $836 million, compared to $736 million for the same period in 2024[102] - The company reported a net investment income of $783 million for the six months ended June 30, 2025, up from $691 million in the prior year[102] Underwriting Performance - The insurance segment reported $129 million of underwriting income for Q2 2025, with net premiums written exceeding $2 billion, a 30.7% increase from Q2 2024[187] - The reinsurance segment contributed $451 million of underwriting income in Q2 2025, with over $2 billion of net premiums written, focusing on selective growth in casualty lines[189] - The mortgage segment generated $238 million of underwriting income in Q2 2025, with a persistency rate of 81.9% in the U.S. primary mortgage insurance portfolio[190] Shareholder Actions - The company repurchased $359 million worth of common shares under its share repurchase program during the six months ended June 30, 2025[28] - Arch Capital repurchased 437.9 million common shares for an aggregate purchase price of $6.3 billion since the inception of the share repurchase program[45] - The company repurchased approximately 2.8 million common shares for an aggregate purchase price of $244 million from July 1 to August 5, 2025[179] Market Conditions - The property and casualty market conditions remain largely consistent, with some sectors experiencing increased price competition while others see rate improvements[186] - Competitive pressure persists in E&S property, excess D&O, and cyber lines, with a cautious stance maintained on pricing[187] Tax and Regulatory - The effective tax rate for the six months ended June 30, 2025, was 15.6%, up from 7.7% for the same period in 2024, primarily due to the Corporate Income Tax Act 2023 in Bermuda[173] - The company paid $149 million in income taxes for the six months ended June 30, 2025, compared to $145 million for the same period in 2024[174] Acquisitions - The acquisition of the U.S. MidCorp and Entertainment insurance business from Allianz was completed for $450 million, enhancing the company's capabilities in the U.S. middle markets[34][35] - The total assets acquired in the Allianz transaction amounted to $3,296 million, while total liabilities acquired were $3,122 million, resulting in identifiable net assets of $174 million[39] - Goodwill recognized from the acquisition was $276 million, primarily attributed to long-term growth opportunities in the insurance market[40] Cash Flow - The company provided $2,582 million in net cash from operating activities for the six months ended June 30, 2025, down from $3,082 million in 2024, a decline of 16%[28] - The company experienced a net cash used for investing activities of $2,236 million, compared to $2,918 million in the previous year, a decrease of 23%[28] Risk Management - The allowance for expected credit losses for premium receivables increased to $7,067 million at the end of the second quarter of 2025, up from $6,268 million at the end of the second quarter of 2024, a rise of 12.7%[85] - The reinsurance recoverables on unpaid and paid losses increased to $9,044 million as of June 30, 2025, compared to $8,260 million at December 31, 2024, marking a 9.5% increase[89]
ARCH CAP GROUP R(ACGLN) - 2025 Q2 - Quarterly Report