Arch Capital Q3 Earnings, Revenues Top on Higher Premiums

Core Insights - Arch Capital Group Ltd. (ACGL) reported third-quarter 2024 operating income of $1.99 per share, exceeding the Zacks Consensus Estimate by 2.6%, although it represented a 13.6% decrease year over year [1] - The results were negatively impacted by lower underwriting income due to higher catastrophic losses from Hurricane Helene, but were partially offset by growth in all lines of business and higher invested assets [1] Financial Performance - Gross premiums written increased by 20.2% year over year to $5.4 billion, while net premiums written rose 20.6% to $4 billion, driven by higher premiums in both Insurance and Reinsurance segments [2] - Pre-tax net investment income surged 48.3% year over year to $399 million, surpassing estimates, attributed to higher interest rates and growth in invested assets [3] - Operating revenues reached $4.4 billion, a 24.6% increase year over year, driven by higher net premiums earned and net investment income, beating the Zacks Consensus Estimate by 8.1% [4] Underwriting Results - Underwriting income decreased by 25.4% year over year to $538 million, with a combined ratio deteriorating by 870 basis points to 86.6 [5] - In the Insurance segment, gross premiums written rose 14.6% to $2.3 billion, while net premiums written increased 19.6% to $1.8 billion [6] - The Reinsurance segment saw gross premiums written improve by 29.2% to $2.8 billion, with net premiums written up 24.5% to $1.9 billion, although underwriting income fell by 51.9% [8] Mortgage Segment - In the Mortgage segment, gross premiums written decreased by 2.3% to $339 million, while net premiums written increased by 4.1% to $282 million [9] - Underwriting income in this segment decreased by 4.6% year over year to $269 million, with a combined ratio deteriorating by 1010 basis points to 14.8 [10] Financial Position - As of September 30, 2024, Arch Capital had cash of $1.03 billion, an 11.8% increase from the end of 2023, while debt remained unchanged at $2.7 billion [11] - The book value per share increased by 21.4% from the end of 2023 to $57, and cash from operations improved by 2.4% year over year to $2 billion [11]