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Arch profit falls 40% in Q2


Arch Capital Group Ltd. reported second-quarter net income of $394.16 million, down 40.622% from the same period last year.

Net premiums written grew 20.7% to $2.68 billion, and Arch’s second-quarter combined ratio improved to 77.1% from 79.8% in second-quarter 2021, the company said in its earnings statement Wednesday after markets closed.

Net investment income rose 19% to $106.39 million.

The company listed a net realized loss of $266.58 million on its balance sheet.

In the insurance segment, net premiums written grew 27.5% to $1.228 billion, with growth driven by rate increases, new business opportunities and growth in existing accounts, the statement said.

North American premium growth was broad-based, driven by excess and surplus lines and professional lines including cyber, according to Arch CEO Marc Grandisson, speaking on the company’s Thursday earnings call with analysts.

The hardening of property/casualty rates continues in many lines, said Mr. Grandisson. “For the vast majority of property/casualty lines, we have been able to achieve compounded rate increases meaningfully above loss cost trends for the last two or three annual renewals,” he said.

In the reinsurance segment, net premiums written grew 25.7% to $1.162 billion, driven by specialty, property catastrophe and property excluding property catastrophe lines. Writing more quota share business, he said, has allowed Arch to “participate in the rate increases seen by our cedents.”

June and July reinsurance renewals demonstrated a market which “seems to want substantial rate increases to accept catastrophe exposures,” as Florida catastrophe exposures commanded rate increases of 30% on average, momentum which Mr. Grandisson says he thinks will extend to January 1 renewals.