Arch second-quarter profit leaps

Arch Capital Group Ltd. reported net income of $458.6 million for the second quarter of 2019, nearly double its profit for the same period last year, as improving market conditions and increased business volume drove growth.

The insurer also experienced a large swing in net realized gains, which moved to $120.8 million after a loss of $76.6 million in the year-ago period.

Net premiums written increased 11.2% to $1.44 billion and underwriting income jumped 24.5% to $293.1 million, according to the Bermuda-based insurer and reinsurer’s earnings statement released late Monday.

The second-quarter combined ratio improved to 80.4% from 82.7% for same period in 2018, the statement said.                       

Improved results were driven by “solid underwriting performance and light catastrophe losses,” said Marc Grandisson, Arch’s president and CEO, said on a conference call with analysts on Tuesday.

Arch is writing more business as rates rise, he said.

“Market conditions continue to improve, and as a result we have increased our writings,” Mr. Grandisson said, “notably in London and (excess and surplus) lines in the U.S.”

Insurance rate changes across all lines average about 3.5% and there is “anecdotal evidence” that a majority of new business came in at “better levels,” he said.

In Arch’s insurance segment, net premiums written increased 19.8% to $627.8 million. Approximately one third of the growth in net premiums written resulted from the insurer’s recent acquisition of a U.K. commercial lines book of business.  

Arch’s reinsurance unit reported $376.1 million in net premiums, a 6.2% increase over the same period last year.

Second-quarter catastrophe losses net of reinsurance totaled $7.2 million, “primarily due to convective storm activity in the U.S.,” said Francois Morin, chief financial officer and treasurer of Arch said on the call.

For the first six months of 2019, Arch reported net premiums written of $2.71 billion, up 13.1% over the 2018 first half, and a profit of $896.7 million, more than double the prior year period.