We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Share Name | Share Symbol | Market | Type |
---|---|---|---|
Arch Capital Group Ltd | NASDAQ:ACGL | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.76 | -0.80% | 94.41 | 91.24 | 98.00 | 95.585 | 92.78 | 94.82 | 1,696,540 | 01:00:00 |
Arch Capital Group Ltd. (NASDAQ: ACGL) announces its 2021 second quarter results. The results included:
All earnings per share amounts discussed in this release are on a diluted basis. The following table summarizes the Company’s underwriting results, both (i) on a consolidated basis and (ii) on a consolidated basis excluding the ‘other’ segment (i.e., results of Watford):
(U.S. dollars in thousands)
Consolidated
Consolidated Excluding ‘Other’ Segment (1)
Three Months Ended June 30,
Three Months Ended June 30,
2021
2020
% Change
2021
2020
% Change
Gross premiums written
$
3,286,291
$
2,317,692
41.8
$
3,117,505
$
2,206,410
41.3
Net premiums written
2,399,524
1,668,311
43.8
2,224,133
1,562,455
42.3
Net premiums earned
2,120,909
1,665,354
27.4
1,936,672
1,533,819
26.3
Underwriting income
386,521
(22,539
)
n/m
395,387
(13,410
)
n/m
Underwriting Ratios
% Point Change
% Point Change
Loss ratio
54.7
%
73.9
%
(19.2
)
52.6
%
73.4
%
(20.8
)
Underwriting expense ratio
27.3
%
27.9
%
(0.6
)
27.2
%
27.8
%
(0.6
)
Combined ratio
82.0
%
101.8
%
(19.8
)
79.8
%
101.2
%
(21.4
)
Combined ratio excluding catastrophic activity and prior year development (1)
80.7
%
89.7
%
(9.0
)
(1)
Presentation represents a “non-GAAP” financial measure as defined in Regulation G. Such presentation excludes the results of Watford Holdings Ltd. (“Watford”). Pursuant to GAAP, the Company consolidates the results of Watford in its financial statements, although it only owned approximately 10% of Watford’s outstanding common equity as of June 30, 2021. See ‘Comments on Regulation G’ for further details.
The following table summarizes the Company’s consolidated financial data, including a reconciliation of net income or loss available to Arch common shareholders to after-tax operating income or loss available to Arch common shareholders and related diluted per share results:
(U.S. dollars in thousands, except share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Net income available to Arch common shareholders
$
663,820
$
288,418
$
1,091,573
$
422,132
Net realized (gains) losses
(167,438
)
(406,645
)
(272,989
)
(297,281
)
Equity in net (income) loss of investment funds accounted for using the equity method
(122,186
)
65,119
(193,872
)
69,328
Net foreign exchange (gains) losses
17,888
42,032
(3,444
)
(22,459
)
Transaction costs and other
(1,421
)
977
(147
)
3,572
Income tax expense (benefit) (1)
16,553
26,713
25,864
31,078
After-tax operating income available to Arch common shareholders
$
407,216
$
16,614
$
646,985
$
206,370
Diluted per common share results:
Net income available to Arch common shareholders
$
1.63
$
0.71
$
2.68
$
1.03
Net realized (gains) losses
(0.41
)
(1.00
)
(0.66
)
(0.72
)
Equity in net (income) loss of investment funds accounted for using the equity method
(0.30
)
0.16
(0.48
)
0.17
Net foreign exchange (gains) losses
0.04
0.10
(0.01
)
(0.06
)
Transaction costs and other
0.00
0.00
0.00
0.01
Income tax expense (benefit) (1)
0.04
0.07
0.06
0.07
After-tax operating income available to Arch common shareholders
$
1.00
$
0.04
$
1.59
$
0.50
Weighted average common shares and common share equivalents outstanding — diluted
406,485,994
408,119,681
407,687,680
411,005,591
Beginning common shareholders’ equity
$
12,316,472
$
10,587,244
$
12,325,886
$
10,717,371
Ending common shareholders’ equity
12,706,072
11,211,825
12,706,072
11,211,825
Average common shareholders’ equity
$
12,511,272
$
10,899,535
$
12,515,979
$
10,964,598
Annualized return on average common equity
21.2
%
10.6
%
17.4
%
7.7
%
Annualized operating return on average common equity
13.0
%
0.6
%
10.3
%
3.8
%
(1)
Income tax expense (benefit) on net realized gains or losses, equity in net income (loss) of investment funds accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other reflects the relative mix reported by jurisdiction and the varying tax rates in each jurisdiction.
Each line item in the table above reflects the impact of the Company’s ownership of Watford’s outstanding common equity. See ‘Comments on Regulation G’ for a discussion of non-GAAP financial measures.
Segment Information
The following section provides analysis on the Company’s 2021 second quarter performance by operating segment. For additional details regarding the Company’s operating segments, please refer to the Company’s Financial Supplement dated June 30, 2021. The Company’s segment information includes the use of underwriting income (loss) and a combined ratio excluding catastrophic activity and prior year development. Such items are non-GAAP financial measures (see ‘Comments on Regulation G’ for further details).
Insurance Segment
Three Months Ended June 30,
(U.S. dollars in thousands)
2021
2020
% Change
Gross premiums written
$
1,368,867
$
1,030,362
32.9
Net premiums written
963,555
672,261
43.3
Net premiums earned
865,427
687,909
25.8
Underwriting income (loss)
$
49,353
$
(56,722
)
187.0
Underwriting Ratios
% Point Change
Loss ratio
63.1
%
75.3
%
(12.2
)
Underwriting expense ratio
31.2
%
33.0
%
(1.8
)
Combined ratio
94.3
%
108.3
%
(14.0
)
Catastrophic activity and prior year development:
Current accident year catastrophic events, net of reinsurance and reinstatement premiums
3.2
%
12.5
%
(9.3
)
Net (favorable) adverse development in prior year loss reserves, net of related adjustments
(0.3
)
%
(0.3
)
%
—
Combined ratio excluding catastrophic activity and prior year development (1)
91.4
%
96.1
%
(4.7
)
(1)
See ‘Comments on Regulation G’ for further discussion.
Gross premiums written by the insurance segment in the 2021 second quarter were 32.9% higher than in the 2020 second quarter while net premiums written were 43.3% higher than in the 2020 second quarter. The higher level of net premiums written reflected increases across all lines of business, due in part to rate increases, new business opportunities and growth in existing accounts. Net premiums earned in the 2021 second quarter were 25.8% higher than in the 2020 second quarter, and reflect changes in net premiums written over the previous five quarters.
The 2021 second quarter loss ratio reflected 3.2 points of current year catastrophic activity, compared to 12.5 points in the 2020 second quarter. Estimated net favorable development of prior year loss reserves, before related adjustments, reduced the loss ratio by 0.5 points in the 2021 second quarter, compared to 0.4 points in the 2020 second quarter. The improvement in the 2021 second quarter loss ratio also reflected the effect of changes in mix of business compared to the 2020 second quarter.
The underwriting expense ratio was 31.2% in the 2021 second quarter, compared to 33.0% in the 2020 second quarter, with the decrease primarily due to growth in net premiums earned.
Reinsurance Segment
Three Months Ended June 30,
(U.S. dollars in thousands)
2021
2020
% Change
Gross premiums written
$
1,358,020
$
807,065
68.3
Net premiums written
924,732
565,094
63.6
Net premiums earned
737,024
480,197
53.5
Other underwriting income (loss)
1,053
(651
)
261.8
Underwriting income (loss)
$
95,974
$
(33,125
)
389.7
Underwriting Ratios
% Point Change
Loss ratio
62.9
%
79.8
%
(16.9
)
Underwriting expense ratio
24.2
%
27.0
%
(2.8
)
Combined ratio
87.1
%
106.8
%
(19.7
)
Catastrophic activity and prior year development:
Current accident year catastrophic events, net of reinsurance and reinstatement premiums
2.5
%
25.3
%
(22.8
)
Net (favorable) adverse development in prior year loss reserves, net of related adjustments
(2.5
)
%
(6.0
)
%
3.5
Combined ratio excluding catastrophic activity and prior year development (1)
87.1
%
87.5
%
(0.4
)
(1)
See ‘Comments on Regulation G’ for further discussion.
Gross premiums written by the reinsurance segment in the 2021 second quarter were 68.3% higher than in the 2020 second quarter, while net premiums written were 63.6% higher than in the 2020 second quarter. The growth in net premiums written was observed in most lines of business, primarily related to new business opportunities in other specialty, casualty and property excluding property catastrophe lines and the benefit of rate increases. Net premiums earned by the reinsurance segment in the 2021 second quarter were 53.5% higher than in the 2020 second quarter, and reflect changes in net premiums written over the previous five quarters.
The 2021 second quarter loss ratio reflected 2.6 points of current year catastrophic activity, compared to 26.3 points in the 2020 second quarter. Estimated net favorable development of prior year loss reserves, before related adjustments, reduced the loss ratio by 2.8 points in the 2021 second quarter, compared to 8.4 points in the 2020 second quarter. The 2021 second quarter loss ratio also reflected the effect of changes in the mix of business.
The underwriting expense ratio was 24.2% in the 2021 second quarter, compared to 27.0% in the 2020 second quarter. Approximately 2.1 points of the difference is due to a lower level of acquisition expenses related to favorable prior year loss reserve development this quarter than in the 2020 second quarter. The remainder of the decrease in the underwriting expense ratio was primarily related to growth in net premiums earned.
Mortgage Segment
Three Months Ended June 30,
(U.S. dollars in thousands)
2021
2020
% Change
Gross premiums written
$
391,511
$
369,144
6.1
Net premiums written
335,846
325,100
3.3
Net premiums earned
334,221
365,713
(8.6
)
Other underwriting income
4,148
6,450
(35.7
)
Underwriting income
$
250,060
$
76,437
227.1
Underwriting Ratios
% Point Change
Loss ratio
3.0
%
61.3
%
(58.3
)
Underwriting expense ratio
23.5
%
19.6
%
3.9
Combined ratio
26.5
%
80.9
%
(54.4
)
Prior year development:
Net (favorable) adverse development in prior year loss reserves, net of related adjustments
(13.1
)
%
(0.1
)
%
(13.0
)
Combined ratio excluding prior year development (1)
39.6
%
81.0
%
(41.4
)
(1) See ‘Comments on Regulation G’ for further discussion.
Gross premiums written by the mortgage segment in the 2021 second quarter were 6.1% higher than in the 2020 second quarter, while net premiums written were 3.3% higher. The growth in net premiums written primarily reflected growth in Australian single premium mortgage insurance and the benefit of premiums received related to the exercise of early redemption options by GSEs for certain seasoned callable credit risk transfer contracts. This growth was partially offset by a lower level of U.S. primary mortgage insurance in force on monthly premium policies, which resulted from the continued high level of refinancing activity. Net premiums earned in the 2021 second quarter were 8.6% lower than in the 2020 second quarter, reflecting a lower level of single premium policy terminations and a decrease in U.S. primary mortgage insurance in force on monthly premium policies.
The 2021 second quarter loss ratio reflected the impact of lower new delinquencies and favorable cure activity. The percentage of loans in default on U.S. primary mortgage insurance business was 3.11% at June 30, 2021, compared to 3.86% at March 31, 2021. Estimated net favorable development in prior year loss reserves, before related adjustments, reduced the 2021 second quarter loss ratio by 12.9 points, compared to 0.1 points in the 2020 second quarter. Approximately 5.9 points of favorable development in the quarter was attributable to reserve releases associated with the various vintage credit risk transfer contracts that were called by the GSEs, as mentioned above.
The underwriting expense ratio was 23.5% in the 2021 second quarter, compared to 19.6% in the 2020 second quarter, with the increase primarily reflecting higher operating expenses and, to a lesser extent, a decline in net premiums earned on U.S. primary mortgage insurance business.
Corporate and Non-Underwriting
Corporate and non-underwriting results include net investment income, other income (loss), corporate expenses, transaction costs and other, amortization of intangible assets, interest expense, items related to the Company’s non-cumulative preferred shares, net realized gains or losses (which includes changes in the allowance for credit losses on financial assets and net impairment losses recognized in earnings), equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses, income or loss from operating affiliates and income taxes. Such amounts exclude the results of the ‘other’ segment.
Pre-tax net investment income for the 2021 second quarter was $0.22 per share, or $89.4 million, compared to $0.25 per share, or $101.0 million, for the 2020 second quarter. The annualized pre-tax investment income yield was 1.47% for the 2021 second quarter, compared to 1.92% for the 2020 second quarter, with the decrease primarily due to lower yields available in the financial markets. Total return, a non-GAAP measure, was 1.58% for the 2021 second quarter, compared to 3.72% for the 2020 second quarter. See ‘Comments on Regulation G’ for a discussion of non-GAAP financial measures.
Interest expense for the 2021 second quarter was $31.4 million, compared to $25.1 million for the 2020 second quarter. The higher level of interest expense mainly resulted from the issuance of $1.0 billion of 3.635% senior notes on June 30, 2020.
On a pre-tax basis, net foreign exchange losses for the 2021 second quarter were $17.9 million, compared to net foreign exchange losses for the 2020 second quarter of $42.4 million. For both periods, such amounts were primarily unrealized and resulted from the effects of revaluing the Company’s net insurance liabilities required to be settled in foreign currencies at each balance sheet date. Changes in the value of available-for-sale investments held in foreign currencies due to foreign currency rate movements are reflected as a direct increase or decrease to shareholders’ equity and are not included in the consolidated statements of income. Although the Company generally attempts to match the currency of its projected liabilities with investments in the same currencies, the Company may elect to over or underweight one or more currencies from time to time, which could increase the Company’s exposure to foreign currency fluctuations and increase the volatility of the Company’s shareholders’ equity.
The Company’s effective tax rate on income before income taxes (based on the Company’s estimated annual effective tax rate) was an expense of 7.0% for the 2021 second quarter, compared to an expense of 8.1% for the 2020 second quarter. The Company’s effective tax rate on pre-tax operating income available to Arch common shareholders was an expense of 7.6% for the 2021 second quarter, compared to a benefit of 0.9% for the 2020 second quarter. The Company’s effective tax rate may fluctuate from period to period based upon the relative mix of income or loss reported by jurisdiction, the level of catastrophic loss activity incurred, and the varying tax rates in each jurisdiction. The Company’s quarterly tax provision is adjusted to reflect changes in its estimated annual effective tax rate, if any.
During the 2021 first quarter, the Company changed its presentation of ‘income (loss) from operating affiliates’ on its consolidated statements of income for all periods presented to reclass such item from ‘other income (loss).’ The Company also changed its presentation of ‘investment in operating affiliates’ on its consolidated balance sheet for all periods presented to reclass such item from ‘other assets.’ Income from operating affiliates for the 2021 second quarter was $24.5 million, or $0.06 per share, primarily related to the Company’s recent acquisition of a 29.5% stake in Coface, compared to a loss of $3.2 million, or $0.01 per share, for the 2020 second quarter.
Conference Call
The Company will hold a conference call for investors and analysts at 11:00 a.m. Eastern Time on July 29, 2021. A live webcast of this call will be available via the Investors section of the Company’s website at http://www.archgroup.com. A telephone replay of the conference call also will be available beginning on July 29, 2021 at 2:00 p.m. Eastern Time until August 5, 2021 at midnight Eastern Time. To access the replay, domestic callers should dial 855-859-2056, and international callers should dial 404-537-3406 (passcode 5788667 for all callers).
Please refer to the Company’s Financial Supplement dated June 30, 2021, which is available via the Investors section of the Company’s website at http://www.archgroup.com. The Financial Supplement provides additional detail regarding the financial performance of the Company. From time to time, the Company posts additional financial information and presentations to its website, including information with respect to its subsidiaries. Investors and other recipients of this information are encouraged to check the Company’s website regularly for additional information regarding the Company.
Arch Capital Group Ltd., a publicly listed Bermuda exempted company with approximately $16.7 billion in capital at June 30, 2021, provides insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly owned subsidiaries.
Comments on Regulation G
Throughout this release, the Company presents its operations in the way it believes will be the most meaningful and useful to investors, analysts, rating agencies and others who use the Company’s financial information in evaluating the performance of the Company and that investors and such other persons benefit from having a consistent basis for comparison between quarters and for comparison with other companies within the industry. These measures may not, however, be comparable to similarly titled measures used by companies outside of the insurance industry. Investors are cautioned not to place undue reliance on these non-GAAP financial measures in assessing the Company’s overall financial performance.
This presentation includes the use of “after-tax operating income or loss available to Arch common shareholders,” which is defined as net income available to Arch common shareholders, excluding net realized gains or losses (which includes changes in the allowance for credit losses on financial assets and net impairment losses recognized in earnings), equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other, net of income taxes, and the use of annualized operating return on average common equity. The presentation of after-tax operating income available to Arch common shareholders and annualized operating return on average common equity are non-GAAP financial measures as defined in Regulation G. The reconciliation of such measures to net income available to Arch common shareholders and annualized return on average common equity (the most directly comparable GAAP financial measures) in accordance with Regulation G is included on page 2 of this release.
The Company believes that net realized gains or losses, equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other in any particular period are not indicative of the performance of, or trends in, the Company’s business performance. Although net realized gains or losses, equity in net income or loss of investment funds accounted for using the equity method and net foreign exchange gains or losses are an integral part of the Company’s operations, the decision to realize investment gains or losses, the recognition of the change in the carrying value of investments accounted for using the fair value option in net realized gains or losses, the recognition of equity in net income or loss of investment funds accounted for using the equity method and the recognition of foreign exchange gains or losses are independent of the insurance underwriting process and result, in large part, from general economic and financial market conditions. Furthermore, certain users of the Company’s financial information believe that, for many companies, the timing of the realization of investment gains or losses is largely opportunistic. In addition, changes in the allowance for credit losses and net impairment losses recognized in earnings on the Company’s investments represent other-than-temporary declines in expected recovery values on securities without actual realization. The use of the equity method on certain of the Company’s investments in certain funds that invest in fixed maturity securities is driven by the ownership structure of such funds (either limited partnerships or limited liability companies). In applying the equity method, these investments are initially recorded at cost and are subsequently adjusted based on the Company’s proportionate share of the net income or loss of the funds (which include changes in the fair value of the underlying securities in the funds). This method of accounting is different from the way the Company accounts for its other fixed maturity securities and the timing of the recognition of equity in net income or loss of investment funds accounted for using the equity method may differ from gains or losses in the future upon sale or maturity of such investments. Transaction costs and other include advisory, financing, legal, severance, incentive compensation and other costs related to acquisitions and Watford’s non-recurring listing expenses. The Company believes that transaction costs and other, due to their non-recurring nature, are not indicative of the performance of, or trends in, the Company’s business performance. Due to these reasons, the Company excludes net realized gains or losses, equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other from the calculation of after-tax operating income or loss available to Arch common shareholders.
The Company believes that showing net income available to Arch common shareholders exclusive of the items referred to above reflects the underlying fundamentals of the Company’s business since the Company evaluates the performance of and manages its business to produce an underwriting profit. In addition to presenting net income available to Arch common shareholders, the Company believes that this presentation enables investors and other users of the Company’s financial information to analyze the Company’s performance in a manner similar to how the Company’s management analyzes performance. The Company also believes that this measure follows industry practice and, therefore, allows the users of the Company’s financial information to compare the Company’s performance with its industry peer group. The Company believes that the equity analysts and certain rating agencies which follow the Company and the insurance industry as a whole generally exclude these items from their analyses for the same reasons.
The Company’s segment information includes the presentation of consolidated underwriting income or loss and a subtotal of underwriting income or loss before the contribution from the ‘other’ segment. Such measures represent the pre-tax profitability of its underwriting operations and include net premiums earned plus other underwriting income, less losses and loss adjustment expenses, acquisition expenses and other operating expenses. Other operating expenses include those operating expenses that are incremental and/or directly attributable to the Company’s individual underwriting operations. Underwriting income or loss does not incorporate items included in the Company’s corporate (non-underwriting) segment. While these measures are presented in the Segment Information footnote to the Company’s Consolidated Financial Statements, they are considered non-GAAP financial measures when presented elsewhere on a consolidated basis. The reconciliations of underwriting income or loss to income before income taxes (the most directly comparable GAAP financial measure) on a consolidated basis and a subtotal before the contribution from the ‘other’ segment, in accordance with Regulation G, is shown on the following pages.
Management measures segment performance for its three underwriting segments based on underwriting income or loss. The Company does not manage its assets by underwriting segment and, accordingly, investment income and other non-underwriting related items are not allocated to each underwriting segment. As noted earlier, the ‘other’ segment includes the results of Watford. Watford has its own management and board of directors that is responsible for its own results and profitability. For the ‘other’ segment, performance is measured based on net income or loss. The Company does not guarantee or provide credit support for Watford, and the Company’s financial exposure to Watford is limited to its investment in Watford’s senior notes, common and preferred shares and counterparty credit risk (mitigated by collateral) arising from reinsurance transactions.
Along with consolidated underwriting income, the Company provides a subtotal of underwriting income or loss before the contribution from the ‘other’ segment and believes that this presentation enables investors and other users of the Company’s financial information to analyze the Company’s underwriting performance in a manner similar to how the Company’s management analyzes performance.
In addition, the Company’s segment information includes the use of a combined ratio excluding catastrophic activity and prior year development, for the insurance and reinsurance segments, and a combined ratio excluding prior year development, for the mortgage segment. These ratios are non-GAAP financial measures as defined in Regulation G. The reconciliation of such measures to the combined ratio (the most directly comparable GAAP financial measure) in accordance with Regulation G are shown on the individual segment pages. The Company’s management utilizes the adjusted combined ratios excluding current accident year catastrophic events and favorable or adverse development in prior year loss reserves in its analysis of the underwriting performance of each of its underwriting segments.
Total return on investments includes investment income, equity in net income or loss of investment funds accounted for using the equity method, net realized gains and losses (excluding changes in the allowance for credit losses on non-investment related financial assets) and the change in unrealized gains and losses generated by Arch’s investment portfolio. Total return is calculated on a pre-tax basis and before investment expenses, excludes amounts reflected in the ‘other’ segment, and reflects the effect of financial market conditions along with foreign currency fluctuations. Management uses total return on investments as a key measure of the return generated to Arch common shareholders, and compares the return generated by the Company’s investment portfolio against benchmark returns during the periods presented.
The following tables summarize the Company’s results by segment for the 2021 second quarter and 2020 second quarter and a reconciliation of underwriting income or loss to income or loss before income taxes and net income or loss available to Arch common shareholders:
(U.S. Dollars in thousands)
Three Months Ended
June 30, 2021
Insurance
Reinsurance
Mortgage
Sub-total
Other
Total
Gross premiums written (1)
$
1,368,867
$
1,358,020
$
391,511
$
3,117,505
$
240,942
$
3,286,291
Premiums ceded
(405,312
)
(433,288
)
(55,665
)
(893,372
)
(65,551
)
(886,767
)
Net premiums written
963,555
924,732
335,846
2,224,133
175,391
2,399,524
Change in unearned premiums
(98,128
)
(187,708
)
(1,625
)
(287,461
)
8,846
(278,615
)
Net premiums earned
865,427
737,024
334,221
1,936,672
184,237
2,120,909
Other underwriting income (loss)
—
1,053
4,148
5,201
328
5,529
Losses and loss adjustment expenses
(545,880
)
(463,823
)
(9,880
)
(1,019,583
)
(140,248
)
(1,159,831
)
Acquisition expenses
(136,852
)
(133,585
)
(30,117
)
(300,554
)
(34,589
)
(335,143
)
Other operating expenses
(133,342
)
(44,695
)
(48,312
)
(226,349
)
(18,594
)
(244,943
)
Underwriting income (loss)
$
49,353
$
95,974
$
250,060
395,387
(8,866
)
386,521
Net investment income
89,430
22,183
111,613
Net realized gains (losses)
163,394
39,513
202,907
Equity in net income (loss) of investment funds accounted for using the equity method
122,186
—
122,186
Other income (loss)
6,852
—
6,852
Corporate expenses
(17,175
)
—
(17,175
)
Transaction costs and other
1,444
(220
)
1,224
Amortization of intangible assets
(14,388
)
(898
)
(15,286
)
Interest expense
(31,439
)
(4,261
)
(35,700
)
Net foreign exchange gains (losses)
(17,892
)
117
(17,775
)
Income (loss) before income taxes and income (loss) from operating affiliates
697,799
47,568
745,367
Income tax expense
(50,953
)
(226
)
(51,179
)
Income (loss) from operating affiliates
24,476
—
24,476
Net income (loss)
671,322
47,342
718,664
Dividends attributable to redeemable noncontrolling interests
(580
)
(981
)
(1,561
)
Amounts attributable to nonredeemable noncontrolling interests
—
(41,617
)
(41,617
)
Net income (loss) available to Arch
670,742
4,744
675,486
Preferred dividends
(11,666
)
—
(11,666
)
Net income (loss) available to Arch common shareholders
$
659,076
$
4,744
$
663,820
Underwriting Ratios
Loss ratio
63.1
%
62.9
%
3.0
%
52.6
%
76.1
%
54.7
%
Acquisition expense ratio
15.8
%
18.1
%
9.0
%
15.5
%
18.8
%
15.8
%
Other operating expense ratio
15.4
%
6.1
%
14.5
%
11.7
%
10.1
%
11.5
%
Combined ratio
94.3
%
87.1
%
26.5
%
79.8
%
105.0
%
82.0
%
Net premiums written to gross premiums written
70.4
%
68.1
%
85.8
%
71.3
%
72.8
%
73.0
%
(1)
Certain amounts included in the gross premiums written of each segment are related to intersegment transactions and are included in the gross premiums written of each segment. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total.
(U.S. Dollars in thousands)
Three Months Ended
June 30, 2020
Insurance
Reinsurance
Mortgage
Sub-total
Other
Total
Gross premiums written (1)
$
1,030,362
$
807,065
$
369,144
$
2,206,410
$
157,927
$
2,317,692
Premiums ceded
(358,101
)
(241,971
)
(44,044
)
(643,955
)
(52,071
)
(649,381
)
Net premiums written
672,261
565,094
325,100
1,562,455
105,856
1,668,311
Change in unearned premiums
15,648
(84,897
)
40,613
(28,636
)
25,679
(2,957
)
Net premiums earned
687,909
480,197
365,713
1,533,819
131,535
1,665,354
Other underwriting income (loss)
—
(651
)
6,450
5,799
868
6,667
Losses and loss adjustment expenses
(518,203
)
(383,433
)
(224,100
)
(1,125,736
)
(104,786
)
(1,230,522
)
Acquisition expenses
(107,671
)
(90,522
)
(34,052
)
(232,245
)
(22,544
)
(254,789
)
Other operating expenses
(118,757
)
(38,716
)
(37,574
)
(195,047
)
(14,202
)
(209,249
)
Underwriting income (loss)
$
(56,722
)
$
(33,125
)
$
76,437
(13,410
)
(9,129
)
(22,539
)
Net investment income
101,031
30,454
131,485
Net realized gains (losses)
385,089
171,499
556,588
Equity in net income (loss) of investment funds accounted for using the equity method
(65,119
)
—
(65,119
)
Other income (loss)
33
—
33
Corporate expenses
(16,943
)
—
(16,943
)
Transaction costs and other
(977
)
—
(977
)
Amortization of intangible assets
(16,489
)
—
(16,489
)
Interest expense
(25,130
)
(6,009
)
(31,139
)
Net foreign exchange gains (losses)
(42,438
)
3,227
(39,211
)
Income (loss) before income taxes and income (loss) from operating affiliates
305,647
190,042
495,689
Income tax expense
(26,529
)
402
(26,127
)
Income (loss) from operating affiliates
(3,173
)
—
(3,173
)
Net income (loss)
275,945
190,444
466,389
Dividends attributable to redeemable noncontrolling interests
(934
)
(1,036
)
(1,970
)
Amounts attributable to nonredeemable noncontrolling interests
—
(165,598
)
(165,598
)
Net income (loss) available to Arch
275,011
23,810
298,821
Preferred dividends
(10,403
)
—
(10,403
)
Net income (loss) available to Arch common shareholders
$
264,608
$
23,810
$
288,418
Underwriting Ratios
Loss ratio
75.3
%
79.8
%
61.3
%
73.4
%
79.7
%
73.9
%
Acquisition expense ratio
15.7
%
18.9
%
9.3
%
15.1
%
17.1
%
15.3
%
Other operating expense ratio
17.3
%
8.1
%
10.3
%
12.7
%
10.8
%
12.6
%
Combined ratio
108.3
%
106.8
%
80.9
%
101.2
%
107.6
%
101.8
%
Net premiums written to gross premiums written
65.2
%
70.0
%
88.1
%
70.8
%
67.0
%
72.0
%
(1)
Certain amounts included in the gross premiums written of each segment are related to intersegment transactions and are included in the gross premiums written of each segment. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total.
Cautionary Note Regarding Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 (“PSLRA”) provides a “safe harbor” for forward-looking statements. This release or any other written or oral statements made by or on behalf of the Company may include forward-looking statements, which reflect the Company’s current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements. Forward-looking statements, for purposes of the PSLRA or otherwise, can generally be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” and similar statements of a future or forward-looking nature or their negative or variations or similar terminology.
Forward-looking statements involve the Company’s current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. Important factors that could cause actual events or results to differ materially from those indicated in such statements are discussed below and elsewhere in this release and in the Company’s periodic reports filed with the Securities and Exchange Commission (the “SEC”), and include:
All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein or elsewhere. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Source - Arch Capital Group Ltd. arch-corporate
View source version on businesswire.com: https://www.businesswire.com/news/home/20210728006005/en/
Arch Capital Group Ltd. François Morin: (441) 278-9250
Investor Relations Donald Watson: (914) 872-3616; dwatson@archgroup.com
1 Year Arch Capital Chart |
1 Month Arch Capital Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions