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Arch Capital Group Ltd. on Monday reported fourth-quarter net income of $849.5 million, a 38.6% increase compared with the 2021 fourth quarter, attributing the rise to lower-than-average losses and favorable development of mortgage reserves, among other things.
“Each of our three underwriting segments produced exceptional results,” CEO Marc Grandisson said on a Tuesday conference call with analysts.
Arch’s combined ratio improved to 73.5% in the fourth quarter from 77.6% in the prior year quarter, which included a negative combined ratio for its mortgage business. The combined ratio for its insurance business improved to 92.1% from 92.9% and its reinsurance combined ratio improved to 78.4% from 83.1%.
The company said that the 2022 fourth-quarter loss ratio reflected 2.8 points of current year catastrophic activity, spread across various global events throughout the year, versus 2.0 points of catastrophic activity in the prior year fourth quarter.
Arch reported net written premium for the fourth quarter of $3 billion, a 17.4% increase over the 2021 fourth quarter.
Net investment income for the quarter was $181.1 million, more than double the amount for the same period in 2021.
Mr. Grandisson said the insurance market remains “rational and disciplined.”
He added, “our P&C insurance underwriting teams continue to lean into hard market conditions and our mortgage team delivered record underwriting income.”
Mr. Grandisson said the company expects to allocate more capital to the property/casualty segment during the next several years.