Arch Capital Group Ltd. reported first-quarter net income of $185.6 million, down 57% from $427.8 million in the same period last year.

Net premiums written grew 5.0% to $2.63 billion, and the company’s combined ratio improved to 78.7% from 90.7% in the first quarter of 2021, the insurer and reinsurer reported Wednesday after markets closed.

Net investment income rose 2.2% to $80.4 million, from $88.0 million in the first quarter of 2021.

In the insurance segment, net premiums written grew 21.3% to $1.21 billion, from $995 million in the year-earlier period. The growth resulted from rate increases, new business and growth in existing accounts.

“The underlying conditions of our business continue to improve as we benefit from better market conditions in the property/casualty industry,” Arch CEO Marc Grandisson said Thursday on an earnings call with analysts.

Arch’s property/casualty units remain in a “growth phase of the underwriting cycle … as we continue to earn in the rate increases of the past 24 months,” Mr. Grandisson said.

U.S. operations, he said, saw “meaningful” growth, mainly in professional lines including cyber and travel.

In the reinsurance segment, net premiums written grew 14.0% to $1.14 billion, from $999 million in last year’s first quarter. Arch said in its earnings statement that the increases came in specialty, casualty and property excluding property catastrophe lines.

In the reinsurance segment, “the emphasis remains on quota share treaties over excess of loss reinsurance,” which allows Arch to participate in primary insurance rate increases, Mr. Grandisson said.

Mr. Grandisson noted that global inflation and supply chain issues pushed up interest rates, “which in turn led to investment markdowns in the quarter.”  

“Inflation is top of mind for everyone in the property/casualty industry,” he said.

Arch had a net realized loss of $292,414 million on its financial statement, defined as the cumulative amount of realized gains and losses resulting from the sale of securities.