Arch Capital Q2 Earnings Beat Estimates on Higher Premiums

Core Insights - Arch Capital Group Ltd. (ACGL) reported second-quarter 2025 operating income of $2.58 per share, exceeding the Zacks Consensus Estimate by 11.7% and reflecting a year-over-year increase of 0.49% [1][7] - The quarterly results were bolstered by higher premiums in both the Insurance and Reinsurance segments, along with improved net investment income [1] Premiums and Investment Income - Gross premiums written rose 15.1% year over year to $6.2 billion, while net premiums written increased 15% to $4.3 billion, driven by higher premiums across the Insurance and Reinsurance segments [2][7] - Pre-tax net investment income grew 11.3% year over year to $405 million, surpassing the Zacks Consensus Estimate of $401 million [2] Revenue and Underwriting Performance - Operating revenues reached $4.8 billion, a 20.9% increase year over year, driven by higher net premiums earned and net investment income, beating the Zacks Consensus Estimate by 2.62% [3] - Underwriting income increased 7.3% year over year to $818 million, while pre-tax current accident year catastrophic losses narrowed to $154 million from $196 million in the prior year [3] Combined Ratio Analysis - The combined ratio deteriorated by 250 basis points to 81.2, slightly better than the Zacks Consensus Estimate of 82 [4] - In the Insurance segment, the combined ratio worsened by 80 basis points to 93.4, while in the Reinsurance segment, it improved by 100 basis points to 78.5 [5][6] Segment Performance - In the Insurance segment, gross premiums written increased 27.5% year over year to $2.7 billion, with net premiums written climbing 30.7% to $2 billion [5] - The Reinsurance segment saw gross premiums written improve by 8.7% year over year to $3.2 billion, with net premiums written rising 5.8% to $2.1 billion [6] Financial Position - As of June 30, 2025, Arch Capital had cash of $983 million, a 0.4% increase from the end of 2024, and debt remained unchanged at $2.7 billion [9] - The book value per share increased by 11.4% year over year to $59.17, while annualized operating return on average common equity contracted by 230 basis points to 18.2% [9] Share Repurchase - The company repurchased $163 million worth of shares during the second quarter of 2025 [10]