Arch Capital .(US:ACGL)2026-02-09 21:27Financial Performance - Gross premiums written increased by 1.1% to $4,809 million for the three months ended December 31, 2025, compared to $4,756 million in the same period of 2024[13] - Net premiums earned rose by 2.7% to $4,255 million for Q4 2025, up from $4,143 million in Q4 2024[13] - Underwriting income increased by 32.3% to $827 million in Q4 2025, compared to $625 million in Q4 2024[13] - Net income available to Arch common shareholders surged by 32.8% to $1,228 million for Q4 2025, compared to $925 million in Q4 2024[13] - Comprehensive income available to Arch increased by 199.5% to $1,243 million in Q4 2025, compared to $415 million in Q4 2024[13] - Annualized net income return on average common equity improved to 21.2% for Q4 2025, up from 17.9% in Q4 2024[13] - Net income for the three months ended December 31, 2025, was $1,238 million, compared to $935 million for the same period in 2024, representing a 32.5% increase[25] Underwriting Metrics - The loss ratio improved to 53.6% in Q4 2025 from 57.5% in Q4 2024, reflecting a decrease of 3.9 percentage points[13] - The combined ratio improved to 80.6% in Q4 2025 from 85.0% in Q4 2024, a decrease of 4.4 percentage points[13] - The combined ratio for the insurance segment was 94.0%, reflecting effective underwriting management, while the reinsurance segment achieved a combined ratio of 77.0%[35] - The loss ratio for the insurance segment was 66.3%, while the combined ratio stood at 98.5% for the same period[38] - The loss ratio for the three months ended December 31, 2025, was 60.6%, compared to 59.0% in the previous quarter, indicating a slight deterioration in underwriting performance[47] - The combined ratio for the three months ended December 31, 2025, was 94.0%, an increase from 93.4% in the previous quarter, reflecting higher loss and expense ratios[47] Investment Performance - Total return on investments for the year ended December 31, 2025, was 8.52%, an increase of 344 basis points compared to 5.08% in 2024[13] - The company reported net investment income of $434 million for Q4 2025, an increase from $408 million in Q3 2025[18] - The total return on investments includes investment income and net realized gains and losses, reflecting the impact of market conditions and foreign currency fluctuations[111] - The investment income yield at amortized cost was 4.22% for the three months ended December 31, 2025, compared to 4.07% in the prior quarter[89] - The average effective duration of fixed maturities was 3.34 years as of December 31, 2025, compared to 3.24 years in the previous quarter[84] Balance Sheet Strength - Total assets increased to $79,241 million as of December 31, 2025, up from $79,185 million at the end of Q3 2025[21] - Total liabilities decreased to $55,035 million as of December 31, 2025, compared to $55,466 million at the end of Q3 2025[21] - Book value per common share increased to $65.11 as of December 31, 2025, up from $62.32 at the end of Q3 2025[21] - Retained earnings rose to $27,045 million as of December 31, 2025, compared to $25,817 million at the end of Q3 2025[23] - Total investable assets held by the Company increased to $47,369 million as of December 31, 2025, up from $46,746 million in the previous quarter[84] Shareholder Returns - The company repurchased shares for treasury amounting to $799 million in Q4 2025, increasing total treasury shares to $6,410 million[23] - Aggregate cost of shares repurchased in Q4 2025 was $797.9 million, with 8.9 million shares repurchased[122] - The average price per share repurchased in Q4 2025 was $90.04, slightly higher than the previous quarter's $88.82[122] - The company has a remaining share repurchase authorization of $1,107 million as of December 31, 2025[122] Risk Metrics - The risk-to-capital ratio for Arch MI U.S. is 8.2:1 as of December 31, 2025, indicating a slight increase from 7.9:1 on September 30, 2025[66] - The PMIER sufficiency ratio for Arch MI U.S. is 179% as of December 31, 2025, up from 176% on September 30, 2025[66] - The ending percentage of loans in default increased to 2.17% in Q4 2025 from 2.04% in Q3 2025[70] - The total reserves for losses and loss adjustment expenses, net of recoverables, was $320.6 million at December 31, 2025, down from $332.6 million at December 31, 2024[74] Operational Efficiency - Net cash provided by operating activities decreased by 10.7% to $1,404 million in Q4 2025, down from $1,573 million in Q4 2024[13] - The company reported a loss ratio of 60.6% for the insurance segment, which is a critical metric for assessing underwriting performance[35] - The company experienced a favorable development in prior year loss reserves, positively impacting the loss ratio by (3.5)% in Q4 2025[52] - The net cash provided by operating activities for the three months ended December 31, 2025, was $1,404 million, reflecting robust cash generation capabilities[25]