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Name | Symbol | Market | Type |
---|---|---|---|
Arch Capital Group Ltd | NASDAQ:ACGLP | NASDAQ | Preference Share |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 24.99 | 24.64 | 25.04 | 0 | 01:00:00 |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||||
For the quarterly period ended | September 30, 2022 |
Or | |||||||||||
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Bermuda | 98-0374481 | ||||||||||||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||||||||
Waterloo House, Ground Floor | |||||||||||||||||
100 Pitts Bay Road, | Pembroke | HM 08, | Bermuda | (441) | 278-9250 | ||||||||||||
(Address of principal executive offices) | (Registrant’s telephone number, including area code) |
Title of each class | Trading Symbol (s) | Name of each exchange on which registered | |||||||||||||||
Common shares, $0.0011 par value per share | ACGL | NASDAQ | Stock Market | ||||||||||||||
Depositary shares, each representing a 1/1000th interest in a 5.45% Series F preferred share | ACGLO | NASDAQ | Stock Market | ||||||||||||||
Depositary shares, each representing a 1/1000th interest in a 4.55% Series G preferred share | ACGLN | NASDAQ | Stock Market |
Page No. | |||||||||||
PART I | |||||||||||
Item 1. | |||||||||||
Item 2. | |||||||||||
Item 3. | |||||||||||
Item 4. | |||||||||||
PART II | |||||||||||
Item 1. | |||||||||||
Item 1A. | |||||||||||
Item 2. | |||||||||||
Item 3. | |||||||||||
Item 4. | |||||||||||
Item 5. | |||||||||||
Item 6. | |||||||||||
ARCH CAPITAL | 1 | 2022 THIRD QUARTER FORM 10-Q |
ARCH CAPITAL | 2 | 2022 THIRD QUARTER FORM 10-Q |
ARCH CAPITAL | 3 | 2022 THIRD QUARTER FORM 10-Q |
Page No. | ||||||||
September 30, 2022 and December 31, 2021 (unaudited) | ||||||||
For the three and nine month periods ended September 30, 2022 and 2021 (unaudited) | ||||||||
For the three and nine month periods ended September 30, 2022 and 2021 (unaudited) | ||||||||
For the three and nine month periods ended September 30, 2022 and 2021 (unaudited) | ||||||||
For the nine month periods ended September 30, 2022 and 2021 (unaudited) | ||||||||
Notes to Consolidated Financial Statements (unaudited) | ||||||||
ARCH CAPITAL | 4 | 2022 THIRD QUARTER FORM 10-Q |
ARCH CAPITAL | 5 | 2022 THIRD QUARTER FORM 10-Q |
(Unaudited) | |||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
Assets | |||||||||||
Investments: | |||||||||||
Fixed maturities available for sale, at fair value (amortized cost: $19,913,055 and $17,973,823; net of allowance for credit losses: $45,993 and $2,883) | $ | 18,120,727 | $ | 17,998,109 | |||||||
Short-term investments available for sale, at fair value (amortized cost: $1,941,071 and $1,734,738; net of allowance for credit losses: $0 and $0) | 1,940,857 | 1,734,716 | |||||||||
Equity securities, at fair value | 809,869 | 1,804,170 | |||||||||
Other investments, at fair value | 1,578,751 | 1,973,550 | |||||||||
Investments accounted for using the equity method | 3,565,946 | 3,077,611 | |||||||||
Total investments | 26,016,150 | 26,588,156 | |||||||||
Cash | 813,583 | 858,668 | |||||||||
Accrued investment income | 116,263 | 85,453 | |||||||||
Investment in operating affiliates | 891,212 | 1,135,655 | |||||||||
Premiums receivable (net of allowance for credit losses: $38,229 and $39,958) | 3,579,380 | 2,633,280 | |||||||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses (net of allowance for credit losses: $17,366 and $13,230) | 6,356,456 | 5,880,735 | |||||||||
Contractholder receivables (net of allowance for credit losses: $2,360 and $3,437) | 1,735,730 | 1,828,691 | |||||||||
Ceded unearned premiums | 2,115,539 | 1,729,455 | |||||||||
Deferred acquisition costs | 1,122,711 | 901,841 | |||||||||
Receivable for securities sold | 27,042 | 60,179 | |||||||||
Goodwill and intangible assets | 806,655 | 944,983 | |||||||||
Other assets | 2,756,383 | 2,453,849 | |||||||||
Total assets | $ | 46,337,104 | $ | 45,100,945 | |||||||
Liabilities | |||||||||||
Reserve for losses and loss adjustment expenses | $ | 19,288,291 | $ | 17,757,156 | |||||||
Unearned premiums | 7,271,279 | 6,011,942 | |||||||||
Reinsurance balances payable | 1,669,592 | 1,583,253 | |||||||||
Contractholder payables | 1,738,089 | 1,832,127 | |||||||||
Collateral held for insured obligations | 254,720 | 242,352 | |||||||||
Senior notes | 2,725,153 | 2,724,394 | |||||||||
Payable for securities purchased | 174,769 | 64,850 | |||||||||
Other liabilities | 1,411,193 | 1,329,742 | |||||||||
Total liabilities | 34,533,086 | 31,545,816 | |||||||||
Commitments and Contingencies | |||||||||||
Redeemable noncontrolling interests | 8,908 | 9,233 | |||||||||
Shareholders' Equity | |||||||||||
Non-cumulative preferred shares | 830,000 | 830,000 | |||||||||
Common shares ($0.0011 par, shares issued: 587,134,047 and 583,289,850) | 652 | 648 | |||||||||
Additional paid-in capital | 2,186,599 | 2,085,075 | |||||||||
Retained earnings | 15,042,561 | 14,455,868 | |||||||||
Accumulated other comprehensive income (loss), net of deferred income tax | (1,891,827) | (64,600) | |||||||||
Common shares held in treasury, at cost (shares: 217,812,057 and 204,365,956) | (4,372,875) | (3,761,095) | |||||||||
Total shareholders' equity available to Arch | 11,795,110 | 13,545,896 | |||||||||
Total liabilities, noncontrolling interests and shareholders' equity | $ | 46,337,104 | $ | 45,100,945 |
ARCH CAPITAL | 6 | 2022 THIRD QUARTER FORM 10-Q |
(Unaudited) | (Unaudited) | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Net premiums earned | $ | 2,470,750 | $ | 1,929,337 | 6,917,158 | 5,998,668 | |||||||||||||||||
Net investment income | 128,640 | 88,195 | 315,468 | 298,664 | |||||||||||||||||||
Net realized gains (losses) | (183,673) | (25,040) | (742,666) | 320,328 | |||||||||||||||||||
Other underwriting income | 3,077 | 7,274 | 11,944 | 18,913 | |||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | (18,861) | 105,398 | 75,505 | 299,270 | |||||||||||||||||||
Other income (loss) | (13,684) | (3,960) | (34,486) | 1,151 | |||||||||||||||||||
Total revenues | 2,386,249 | 2,101,204 | 6,542,923 | 6,936,994 | |||||||||||||||||||
Expenses | |||||||||||||||||||||||
Losses and loss adjustment expenses | 1,682,696 | 1,226,019 | 3,786,187 | 3,588,950 | |||||||||||||||||||
Acquisition expenses | 447,587 | 306,015 | 1,239,065 | 945,639 | |||||||||||||||||||
Other operating expenses | 274,747 | 230,832 | 842,082 | 736,808 | |||||||||||||||||||
Corporate expenses | 17,710 | 19,672 | 77,662 | 61,007 | |||||||||||||||||||
Amortization of intangible assets | 26,104 | 20,135 | 80,478 | 49,823 | |||||||||||||||||||
Interest expense | 33,063 | 33,176 | 98,566 | 107,222 | |||||||||||||||||||
Net foreign exchange (gains) losses | (90,509) | (36,078) | (182,129) | (38,366) | |||||||||||||||||||
Total expenses | 2,391,398 | 1,799,771 | 5,941,911 | 5,451,083 | |||||||||||||||||||
Income (loss) before income taxes and income (loss) from operating affiliates | (5,149) | 301,433 | 601,012 | 1,485,911 | |||||||||||||||||||
Income tax (expense) benefit | 14,900 | (4,137) | (19,042) | (94,176) | |||||||||||||||||||
Income (loss) from operating affiliates | 8,507 | 124,119 | 37,665 | 224,052 | |||||||||||||||||||
Net income (loss) | $ | 18,258 | $ | 421,415 | $ | 619,635 | $ | 1,615,787 | |||||||||||||||
Net (income) loss attributable to noncontrolling interests | (1,157) | (1,473) | (2,390) | (82,203) | |||||||||||||||||||
Net income (loss) available to Arch | 17,101 | 419,942 | 617,245 | 1,533,584 | |||||||||||||||||||
Preferred dividends | (10,184) | (16,090) | (30,552) | (38,159) | |||||||||||||||||||
Loss on redemption of preferred shares | — | (15,101) | — | (15,101) | |||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 6,917 | $ | 388,751 | $ | 586,693 | $ | 1,480,324 | |||||||||||||||
Net income per common share and common share equivalent | |||||||||||||||||||||||
Basic | $ | 0.02 | $ | 1.00 | $ | 1.59 | $ | 3.74 | |||||||||||||||
Diluted | $ | 0.02 | $ | 0.98 | $ | 1.55 | $ | 3.66 | |||||||||||||||
Weighted average common shares and common share equivalents outstanding | |||||||||||||||||||||||
Basic | 365,190,527 | 389,274,220 | 369,525,348 | 395,899,591 | |||||||||||||||||||
Diluted | 373,727,277 | 397,903,347 | 378,373,180 | 404,260,485 |
ARCH CAPITAL | 7 | 2022 THIRD QUARTER FORM 10-Q |
(Unaudited) | (Unaudited) | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Comprehensive Income | |||||||||||||||||||||||
Net income (loss) | $ | 18,258 | $ | 421,415 | $ | 619,635 | $ | 1,615,787 | |||||||||||||||
Other comprehensive income (loss), net of deferred income tax | |||||||||||||||||||||||
Unrealized appreciation (decline) in value of available-for-sale investments: | |||||||||||||||||||||||
Unrealized holding gains (losses) arising during period | (609,759) | (95,923) | (1,892,119) | (279,102) | |||||||||||||||||||
Reclassification of net realized (gains) losses, included in net income (loss) | 46,585 | (62,654) | 206,573 | (120,504) | |||||||||||||||||||
Foreign currency translation adjustments | (70,388) | (31,710) | (141,681) | (54,089) | |||||||||||||||||||
Comprehensive income (loss) | (615,304) | 231,128 | (1,207,592) | 1,162,092 | |||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | (1,157) | (1,473) | (2,390) | (82,203) | |||||||||||||||||||
Other comprehensive (income) loss attributable to noncontrolling interests | — | 9,423 | — | 13,983 | |||||||||||||||||||
Comprehensive income (loss) available to Arch | $ | (616,461) | $ | 239,078 | $ | (1,209,982) | $ | 1,093,872 |
ARCH CAPITAL | 8 | 2022 THIRD QUARTER FORM 10-Q |
(Unaudited) | (Unaudited) | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Non-cumulative preferred shares | |||||||||||||||||||||||
Balance at beginning of period | $ | 830,000 | $ | 1,280,000 | $ | 830,000 | $ | 780,000 | |||||||||||||||
Preferred shares issued | — | — | — | 500,000 | |||||||||||||||||||
Preferred shares redeemed | — | (450,000) | — | (450,000) | |||||||||||||||||||
Balance at beginning and end of period | $ | 830,000 | $ | 830,000 | $ | 830,000 | $ | 830,000 | |||||||||||||||
Common shares | |||||||||||||||||||||||
Balance at beginning of period | 652 | 647 | 648 | 643 | |||||||||||||||||||
Common shares issued, net | — | 1 | 4 | 5 | |||||||||||||||||||
Balance at end of period | 652 | 648 | 652 | 648 | |||||||||||||||||||
Additional paid-in capital | |||||||||||||||||||||||
Balance at beginning of period | 2,170,661 | 2,028,919 | 2,085,075 | 1,977,794 | |||||||||||||||||||
Amortization of share-based compensation | 13,518 | 14,216 | 80,023 | 71,279 | |||||||||||||||||||
Issue costs on preferred shares | — | — | — | (14,179) | |||||||||||||||||||
Reversal of issue costs on preferred shares redeemed | — | 15,101 | — | 15,101 | |||||||||||||||||||
Other changes | 2,420 | 3,670 | 21,501 | 11,911 | |||||||||||||||||||
Balance at end of period | 2,186,599 | 2,061,906 | 2,186,599 | 2,061,906 | |||||||||||||||||||
Retained earnings | |||||||||||||||||||||||
Balance at beginning of period | 15,035,644 | 13,454,036 | 14,455,868 | 12,362,463 | |||||||||||||||||||
Net income (loss) | 18,258 | 421,415 | 619,635 | 1,615,787 | |||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | (1,157) | (1,473) | (2,390) | (82,203) | |||||||||||||||||||
Preferred share dividends | (10,184) | (16,090) | (30,552) | (38,159) | |||||||||||||||||||
Loss on redemption of preferred shares | — | (15,101) | — | (15,101) | |||||||||||||||||||
Balance at end of period | 15,042,561 | 13,842,787 | 15,042,561 | 13,842,787 | |||||||||||||||||||
Accumulated other comprehensive income (loss), net of deferred income tax | |||||||||||||||||||||||
Balance at beginning of period | (1,258,265) | 230,048 | (64,600) | 488,895 | |||||||||||||||||||
Unrealized appreciation (decline) in value of available-for-sale investments, net of deferred income tax: | |||||||||||||||||||||||
Balance at beginning of period | (1,108,886) | 264,702 | 13,486 | 501,295 | |||||||||||||||||||
Unrealized holding gains (losses) during period, net of reclassification adjustment | (563,174) | (158,577) | (1,685,546) | (399,606) | |||||||||||||||||||
Unrealized holding gains (losses) during period attributable to noncontrolling interests | — | 10,752 | — | 15,188 | |||||||||||||||||||
Balance at end of period | (1,672,060) | 116,877 | (1,672,060) | 116,877 | |||||||||||||||||||
Foreign currency translation adjustments, net of deferred income tax: | |||||||||||||||||||||||
Balance at beginning of period | (149,379) | (34,654) | (78,086) | (12,400) | |||||||||||||||||||
Foreign currency translation adjustments | (70,388) | (31,710) | (141,681) | (54,089) | |||||||||||||||||||
Foreign currency translation adjustments attributable to noncontrolling interests | — | (1,329) | — | (1,204) | |||||||||||||||||||
Balance at end of period | (219,767) | (67,693) | (219,767) | (67,693) | |||||||||||||||||||
Balance at end of period | (1,891,827) | 49,184 | (1,891,827) | 49,184 | |||||||||||||||||||
Common shares held in treasury, at cost | |||||||||||||||||||||||
Balance at beginning of period | (4,361,126) | (3,007,578) | (3,761,095) | (2,503,909) | |||||||||||||||||||
Shares repurchased for treasury | (11,749) | (389,421) | (611,780) | (893,090) | |||||||||||||||||||
Balance at end of period | (4,372,875) | (3,396,999) | (4,372,875) | (3,396,999) | |||||||||||||||||||
Total shareholders’ equity | $ | 11,795,110 | $ | 13,387,526 | $ | 11,795,110 | $ | 13,387,526 |
ARCH CAPITAL | 9 | 2022 THIRD QUARTER FORM 10-Q |
(Unaudited) | |||||||||||
Nine Months Ended | |||||||||||
September 30, | |||||||||||
2022 | 2021 | ||||||||||
Operating Activities | |||||||||||
Net income (loss) | $ | 619,635 | $ | 1,615,787 | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Net realized (gains) losses | 742,680 | (367,313) | |||||||||
Equity in net (income) or loss of investment funds accounted for using the equity method and other income or loss | 106,405 | (372,650) | |||||||||
Amortization of intangible assets | 80,478 | 49,823 | |||||||||
Share-based compensation | 80,029 | 72,303 | |||||||||
Changes in: | |||||||||||
Reserve for losses and loss adjustment expenses, net of unpaid losses and loss adjustment expenses recoverable | 1,553,084 | 1,548,211 | |||||||||
Unearned premiums, net of ceded unearned premiums | 1,125,395 | 985,242 | |||||||||
Premiums receivable | (1,095,741) | (847,098) | |||||||||
Deferred acquisition costs | (242,377) | (247,966) | |||||||||
Reinsurance balances payable | 128,418 | 618,571 | |||||||||
Other items, net | (264,289) | (427,359) | |||||||||
Net cash provided by operating activities | 2,833,717 | 2,627,551 | |||||||||
Investing Activities | |||||||||||
Purchases of fixed maturity investments | (13,065,302) | (29,870,023) | |||||||||
Purchases of equity securities | (786,733) | (978,951) | |||||||||
Purchases of other investments | (1,270,099) | (1,350,056) | |||||||||
Proceeds from sales of fixed maturity investments | 9,990,418 | 30,067,792 | |||||||||
Proceeds from sales of equity securities | 1,539,808 | 695,633 | |||||||||
Proceeds from sales, redemptions and maturities of other investments | 1,075,679 | 1,487,919 | |||||||||
Proceeds from redemptions and maturities of fixed maturity investments | 577,864 | 1,234,412 | |||||||||
Net settlements of derivative instruments | (106,347) | (67,830) | |||||||||
Net (purchases) sales of short-term investments | (151,980) | (1,172,798) | |||||||||
Purchase of operating affiliate | — | (753,916) | |||||||||
Impact of the deconsolidation of the variable interest entity | — | (349,202) | |||||||||
Purchases of fixed assets | (38,383) | (34,407) | |||||||||
Other | 128,354 | (361,857) | |||||||||
Net cash used for investing activities | (2,106,721) | (1,453,284) | |||||||||
Financing Activities | |||||||||||
Proceeds from issuance of preferred shares, net | — | 485,821 | |||||||||
Redemption of preferred shares | — | (450,000) | |||||||||
Purchases of common shares under share repurchase program | (585,823) | (872,197) | |||||||||
Proceeds from common shares issued, net | (2,863) | 281 | |||||||||
Third party investment in non-redeemable noncontrolling interests | — | 15,971 | |||||||||
Dividends paid to redeemable noncontrolling interests | — | (1,907) | |||||||||
Other | (84,639) | (21,752) | |||||||||
Preferred dividends paid | (30,552) | (38,096) | |||||||||
Net cash used for financing activities | (703,877) | (881,879) | |||||||||
Effects of exchange rate changes on foreign currency cash and restricted cash | (79,566) | (34,023) | |||||||||
Increase (decrease) in cash and restricted cash | (56,447) | 258,365 | |||||||||
Cash and restricted cash, beginning of year | 1,314,771 | 1,290,544 | |||||||||
Cash and restricted cash, end of period | $ | 1,258,324 | $ | 1,548,909 |
ARCH CAPITAL | 10 | 2022 THIRD QUARTER FORM 10-Q |
ARCH CAPITAL | 11 | 2022 THIRD QUARTER FORM 10-Q |
ARCH CAPITAL | 12 | 2022 THIRD QUARTER FORM 10-Q |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income (loss) | $ | 18,258 | $ | 421,415 | $ | 619,635 | $ | 1,615,787 | |||||||||||||||
Amounts attributable to noncontrolling interests | (1,157) | (1,473) | (2,390) | (82,203) | |||||||||||||||||||
Net income (loss) available to Arch | 17,101 | 419,942 | 617,245 | 1,533,584 | |||||||||||||||||||
Preferred dividends | (10,184) | (16,090) | (30,552) | (38,159) | |||||||||||||||||||
Loss on redemption of preferred shares | — | (15,101) | — | (15,101) | |||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 6,917 | $ | 388,751 | $ | 586,693 | $ | 1,480,324 | |||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted average common shares and common share equivalents outstanding — basic | 365,190,527 | 389,274,220 | 369,525,348 | 395,899,591 | |||||||||||||||||||
Effect of dilutive common share equivalents: | |||||||||||||||||||||||
Nonvested restricted shares | 2,351,039 | 2,131,915 | 2,171,158 | 1,877,930 | |||||||||||||||||||
Stock options (1) | 6,185,711 | 6,497,212 | 6,676,674 | 6,482,964 | |||||||||||||||||||
Weighted average common shares and common share equivalents outstanding — diluted | 373,727,277 | 397,903,347 | 378,373,180 | 404,260,485 | |||||||||||||||||||
Earnings per common share: | |||||||||||||||||||||||
Basic | $ | 0.02 | $ | 1.00 | $ | 1.59 | $ | 3.74 | |||||||||||||||
Diluted | $ | 0.02 | $ | 0.98 | $ | 1.55 | $ | 3.66 |
ARCH CAPITAL | 13 | 2022 THIRD QUARTER FORM 10-Q |
ARCH CAPITAL | 14 | 2022 THIRD QUARTER FORM 10-Q |
Three Months Ended | |||||||||||||||||||||||||||||||||||
September 30, 2022 | |||||||||||||||||||||||||||||||||||
Insurance | Reinsurance | Mortgage | Sub-Total | Other | Total | ||||||||||||||||||||||||||||||
Gross premiums written (1) | $ | 1,862,026 | $ | 1,639,061 | $ | 362,409 | $ | 3,860,683 | $ | — | $ | 3,860,683 | |||||||||||||||||||||||
Premiums ceded | (493,267) | (560,225) | (86,230) | (1,136,909) | — | (1,136,909) | |||||||||||||||||||||||||||||
Net premiums written | 1,368,759 | 1,078,836 | 276,179 | 2,723,774 | — | 2,723,774 | |||||||||||||||||||||||||||||
Change in unearned premiums | (181,851) | (77,062) | 5,889 | (253,024) | — | (253,024) | |||||||||||||||||||||||||||||
Net premiums earned | 1,186,908 | 1,001,774 | 282,068 | 2,470,750 | — | 2,470,750 | |||||||||||||||||||||||||||||
Other underwriting income (loss) | — | 452 | 2,625 | 3,077 | — | 3,077 | |||||||||||||||||||||||||||||
Losses and loss adjustment expenses | (822,663) | (927,911) | 67,878 | (1,682,696) | — | (1,682,696) | |||||||||||||||||||||||||||||
Acquisition expenses | (232,469) | (208,425) | (6,693) | (447,587) | — | (447,587) | |||||||||||||||||||||||||||||
Other operating expenses | (165,499) | (62,777) | (46,471) | (274,747) | — | (274,747) | |||||||||||||||||||||||||||||
Underwriting income (loss) | $ | (33,723) | $ | (196,887) | $ | 299,407 | 68,797 | — | 68,797 | ||||||||||||||||||||||||||
Net investment income | 128,640 | — | 128,640 | ||||||||||||||||||||||||||||||||
Net realized gains (losses) | (183,673) | — | (183,673) | ||||||||||||||||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | (18,861) | — | (18,861) | ||||||||||||||||||||||||||||||||
Other income (loss) | (13,684) | — | (13,684) | ||||||||||||||||||||||||||||||||
Corporate expenses (2) | (17,634) | — | (17,634) | ||||||||||||||||||||||||||||||||
Transaction costs and other (2) | (76) | — | (76) | ||||||||||||||||||||||||||||||||
Amortization of intangible assets | (26,104) | — | (26,104) | ||||||||||||||||||||||||||||||||
Interest expense | (33,063) | — | (33,063) | ||||||||||||||||||||||||||||||||
Net foreign exchange gains (losses) | 90,509 | — | 90,509 | ||||||||||||||||||||||||||||||||
Income (loss) before income taxes and income (loss) from operating affiliates | (5,149) | — | (5,149) | ||||||||||||||||||||||||||||||||
Income tax (expense) benefit | 14,900 | — | 14,900 | ||||||||||||||||||||||||||||||||
Income (loss) from operating affiliates | 8,507 | — | 8,507 | ||||||||||||||||||||||||||||||||
Net income (loss) | 18,258 | — | 18,258 | ||||||||||||||||||||||||||||||||
Amounts attributable to redeemable noncontrolling interests | (1,157) | — | (1,157) | ||||||||||||||||||||||||||||||||
Net income (loss) available to Arch | 17,101 | — | 17,101 | ||||||||||||||||||||||||||||||||
Preferred dividends | (10,184) | — | (10,184) | ||||||||||||||||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 6,917 | $ | — | $ | 6,917 | |||||||||||||||||||||||||||||
Underwriting Ratios | |||||||||||||||||||||||||||||||||||
Loss ratio | 69.3 | % | 92.6 | % | (24.1) | % | 68.1 | % | — | % | 68.1 | % | |||||||||||||||||||||||
Acquisition expense ratio | 19.6 | % | 20.8 | % | 2.4 | % | 18.1 | % | — | % | 18.1 | % | |||||||||||||||||||||||
Other operating expense ratio | 13.9 | % | 6.3 | % | 16.5 | % | 11.1 | % | — | % | 11.1 | % | |||||||||||||||||||||||
Combined ratio | 102.8 | % | 119.7 | % | (5.2) | % | 97.3 | % | — | % | 97.3 | % | |||||||||||||||||||||||
Goodwill and intangible assets | $ | 224,525 | $ | 140,800 | $ | 441,330 | $ | 806,655 | $ | — | $ | 806,655 |
ARCH CAPITAL | 15 | 2022 THIRD QUARTER FORM 10-Q |
Three Months Ended | |||||||||||||||||||||||||||||||||||
September 30, 2021 | |||||||||||||||||||||||||||||||||||
Insurance | Reinsurance | Mortgage | Sub-Total | Other | Total | ||||||||||||||||||||||||||||||
Gross premiums written (1) | $ | 1,596,619 | $ | 1,251,760 | $ | 360,934 | $ | 3,207,415 | $ | — | $ | 3,207,415 | |||||||||||||||||||||||
Premiums ceded | (442,806) | (630,371) | (60,207) | (1,131,486) | — | (1,131,486) | |||||||||||||||||||||||||||||
Net premiums written | 1,153,813 | 621,389 | 300,727 | 2,075,929 | — | 2,075,929 | |||||||||||||||||||||||||||||
Change in unearned premiums | (215,143) | 57,313 | 11,238 | (146,592) | — | (146,592) | |||||||||||||||||||||||||||||
Net premiums earned | 938,670 | 678,702 | 311,965 | 1,929,337 | — | 1,929,337 | |||||||||||||||||||||||||||||
Other underwriting income (loss) | — | 3,293 | 3,981 | 7,274 | — | 7,274 | |||||||||||||||||||||||||||||
Losses and loss adjustment expenses | (668,630) | (545,846) | (11,543) | (1,226,019) | — | (1,226,019) | |||||||||||||||||||||||||||||
Acquisition expenses | (152,467) | (129,450) | (24,098) | (306,015) | — | (306,015) | |||||||||||||||||||||||||||||
Other operating expenses | (138,931) | (45,647) | (46,254) | (230,832) | — | (230,832) | |||||||||||||||||||||||||||||
Underwriting income (loss) | $ | (21,358) | $ | (38,948) | $ | 234,051 | 173,745 | — | 173,745 | ||||||||||||||||||||||||||
Net investment income | 88,195 | — | 88,195 | ||||||||||||||||||||||||||||||||
Net realized gains (losses) | (25,040) | — | (25,040) | ||||||||||||||||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 105,398 | — | 105,398 | ||||||||||||||||||||||||||||||||
Other income (loss) | (3,960) | — | (3,960) | ||||||||||||||||||||||||||||||||
Corporate expenses (2) | (18,636) | — | (18,636) | ||||||||||||||||||||||||||||||||
Transaction costs and other (2) | (1,036) | — | (1,036) | ||||||||||||||||||||||||||||||||
Amortization of intangible assets | (20,135) | — | (20,135) | ||||||||||||||||||||||||||||||||
Interest expense | (33,176) | — | (33,176) | ||||||||||||||||||||||||||||||||
Net foreign exchange gains (losses) | 36,078 | — | 36,078 | ||||||||||||||||||||||||||||||||
Income (loss) before income taxes and income (loss) from operating affiliates | 301,433 | — | 301,433 | ||||||||||||||||||||||||||||||||
Income tax (expense) benefit | (4,137) | — | (4,137) | ||||||||||||||||||||||||||||||||
Income (loss) from operating affiliates | 124,119 | — | 124,119 | ||||||||||||||||||||||||||||||||
Net income (loss) | 421,415 | — | 421,415 | ||||||||||||||||||||||||||||||||
Amounts attributable to redeemable noncontrolling interests | (1,473) | — | (1,473) | ||||||||||||||||||||||||||||||||
Net income (loss) available to Arch | 419,942 | — | 419,942 | ||||||||||||||||||||||||||||||||
Preferred dividends | (16,090) | — | (16,090) | ||||||||||||||||||||||||||||||||
Loss on redemption of preferred shares | (15,101) | — | (15,101) | ||||||||||||||||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 388,751 | $ | — | $ | 388,751 | |||||||||||||||||||||||||||||
Underwriting Ratios | |||||||||||||||||||||||||||||||||||
Loss ratio | 71.2 | % | 80.4 | % | 3.7 | % | 63.5 | % | — | % | 63.5 | % | |||||||||||||||||||||||
Acquisition expense ratio | 16.2 | % | 19.1 | % | 7.7 | % | 15.9 | % | — | % | 15.9 | % | |||||||||||||||||||||||
Other operating expense ratio | 14.8 | % | 6.7 | % | 14.8 | % | 12.0 | % | — | % | 12.0 | % | |||||||||||||||||||||||
Combined ratio | 102.2 | % | 106.2 | % | 26.2 | % | 91.4 | % | — | % | 91.4 | % | |||||||||||||||||||||||
Goodwill and intangible assets | $ | 261,103 | $ | 176,128 | $ | 526,091 | $ | 963,322 | $ | — | $ | 963,322 |
ARCH CAPITAL | 16 | 2022 THIRD QUARTER FORM 10-Q |
Nine Months Ended | |||||||||||||||||||||||||||||||||||
September 30, 2022 | |||||||||||||||||||||||||||||||||||
Insurance | Reinsurance | Mortgage | Sub-Total | Other | Total | ||||||||||||||||||||||||||||||
Gross premiums written (1) | $ | 5,286,798 | $ | 5,151,401 | $ | 1,099,144 | $ | 11,531,185 | $ | — | $ | 11,531,185 | |||||||||||||||||||||||
Premiums ceded | (1,482,886) | (1,770,807) | (241,097) | (3,488,632) | — | (3,488,632) | |||||||||||||||||||||||||||||
Net premiums written | 3,803,912 | 3,380,594 | 858,047 | 8,042,553 | — | 8,042,553 | |||||||||||||||||||||||||||||
Change in unearned premiums | (488,164) | (646,421) | 9,190 | (1,125,395) | — | (1,125,395) | |||||||||||||||||||||||||||||
Net premiums earned | 3,315,748 | 2,734,173 | 867,237 | 6,917,158 | — | 6,917,158 | |||||||||||||||||||||||||||||
Other underwriting income (loss) | — | 5,814 | 6,130 | 11,944 | — | 11,944 | |||||||||||||||||||||||||||||
Losses and loss adjustment expenses | (2,053,161) | (1,920,189) | 187,163 | (3,786,187) | — | (3,786,187) | |||||||||||||||||||||||||||||
Acquisition expenses | (641,807) | (569,915) | (27,343) | (1,239,065) | — | (1,239,065) | |||||||||||||||||||||||||||||
Other operating expenses | (493,412) | (198,606) | (150,064) | (842,082) | — | (842,082) | |||||||||||||||||||||||||||||
Underwriting income (loss) | $ | 127,368 | $ | 51,277 | $ | 883,123 | $ | 1,061,768 | $ | — | $ | 1,061,768 | |||||||||||||||||||||||
Net investment income | 315,468 | — | 315,468 | ||||||||||||||||||||||||||||||||
Net realized gains (losses) | (742,666) | — | (742,666) | ||||||||||||||||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 75,505 | — | 75,505 | ||||||||||||||||||||||||||||||||
Other income (loss) | (34,486) | — | (34,486) | ||||||||||||||||||||||||||||||||
Corporate expenses (2) | (76,928) | — | (76,928) | ||||||||||||||||||||||||||||||||
Transaction costs and other (2) | (734) | — | (734) | ||||||||||||||||||||||||||||||||
Amortization of intangible assets | (80,478) | — | (80,478) | ||||||||||||||||||||||||||||||||
Interest expense | (98,566) | — | (98,566) | ||||||||||||||||||||||||||||||||
Net foreign exchange gains (losses) | 182,129 | — | 182,129 | ||||||||||||||||||||||||||||||||
Income (loss) before income taxes and income (loss) from operating affiliates | 601,012 | — | 601,012 | ||||||||||||||||||||||||||||||||
Income tax (expense) benefit | (19,042) | — | (19,042) | ||||||||||||||||||||||||||||||||
Income (loss) from operating affiliates | 37,665 | — | 37,665 | ||||||||||||||||||||||||||||||||
Net income (loss) | 619,635 | — | 619,635 | ||||||||||||||||||||||||||||||||
Amounts attributable to redeemable noncontrolling interests | (2,390) | — | (2,390) | ||||||||||||||||||||||||||||||||
Net income (loss) available to Arch | 617,245 | — | 617,245 | ||||||||||||||||||||||||||||||||
Preferred dividends | (30,552) | — | (30,552) | ||||||||||||||||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 586,693 | $ | — | $ | 586,693 | |||||||||||||||||||||||||||||
Underwriting Ratios | |||||||||||||||||||||||||||||||||||
Loss ratio | 61.9 | % | 70.2 | % | (21.6) | % | 54.7 | % | — | % | 54.7 | % | |||||||||||||||||||||||
Acquisition expense ratio | 19.4 | % | 20.8 | % | 3.2 | % | 17.9 | % | — | % | 17.9 | % | |||||||||||||||||||||||
Other operating expense ratio | 14.9 | % | 7.3 | % | 17.3 | % | 12.2 | % | — | % | 12.2 | % | |||||||||||||||||||||||
Combined ratio | 96.2 | % | 98.3 | % | (1.1) | % | 84.8 | % | — | % | 84.8 | % | |||||||||||||||||||||||
ARCH CAPITAL | 17 | 2022 THIRD QUARTER FORM 10-Q |
Nine Months Ended | |||||||||||||||||||||||||||||||||||
September 30, 2021 | |||||||||||||||||||||||||||||||||||
Insurance | Reinsurance | Mortgage | Sub-Total | Other | Total | ||||||||||||||||||||||||||||||
Gross premiums written (1) | $ | 4,381,372 | $ | 4,080,840 | $ | 1,143,691 | $ | 9,602,213 | $ | 457,465 | $ | 9,890,912 | |||||||||||||||||||||||
Premiums ceded | (1,269,165) | (1,535,607) | (171,923) | (2,973,005) | (102,763) | (2,907,002) | |||||||||||||||||||||||||||||
Net premiums written | 3,112,207 | 2,545,233 | 971,768 | 6,629,208 | 354,702 | 6,983,910 | |||||||||||||||||||||||||||||
Change in unearned premiums | (488,636) | (484,607) | 10,735 | (962,508) | (22,734) | (985,242) | |||||||||||||||||||||||||||||
Net premiums earned | 2,623,571 | 2,060,626 | 982,503 | 5,666,700 | 331,968 | 5,998,668 | |||||||||||||||||||||||||||||
Other underwriting income (loss) | — | 3,148 | 15,026 | 18,174 | 739 | 18,913 | |||||||||||||||||||||||||||||
Losses and loss adjustment expenses | (1,750,257) | (1,494,539) | (85,112) | (3,329,908) | (259,042) | (3,588,950) | |||||||||||||||||||||||||||||
Acquisition expenses | (417,541) | (381,060) | (84,297) | (882,898) | (62,741) | (945,639) | |||||||||||||||||||||||||||||
Other operating expenses | (409,386) | (150,856) | (143,697) | (703,939) | (32,869) | (736,808) | |||||||||||||||||||||||||||||
Underwriting income (loss) | $ | 46,387 | $ | 37,319 | $ | 684,423 | $ | 768,129 | $ | (21,945) | $ | 746,184 | |||||||||||||||||||||||
Net investment income | 256,354 | 42,310 | 298,664 | ||||||||||||||||||||||||||||||||
Net realized gains (losses) | 239,690 | 80,638 | 320,328 | ||||||||||||||||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 299,270 | — | 299,270 | ||||||||||||||||||||||||||||||||
Other income (loss) | 1,151 | — | 1,151 | ||||||||||||||||||||||||||||||||
Corporate expenses (2) | (59,279) | — | (59,279) | ||||||||||||||||||||||||||||||||
Transaction costs and other (2) | (793) | (935) | (1,728) | ||||||||||||||||||||||||||||||||
Amortization of intangible assets | (48,925) | (898) | (49,823) | ||||||||||||||||||||||||||||||||
Interest expense | (98,812) | (8,410) | (107,222) | ||||||||||||||||||||||||||||||||
Net foreign exchange gains (losses) | 39,691 | (1,325) | 38,366 | ||||||||||||||||||||||||||||||||
Income (loss) before income taxes and income (loss) from operating affiliates | 1,396,476 | 89,435 | 1,485,911 | ||||||||||||||||||||||||||||||||
Income tax (expense) benefit | (93,942) | (234) | (94,176) | ||||||||||||||||||||||||||||||||
Income (loss) from operating affiliates | 224,052 | — | 224,052 | ||||||||||||||||||||||||||||||||
Net income (loss) | 1,526,586 | 89,201 | 1,615,787 | ||||||||||||||||||||||||||||||||
Amounts attributable to redeemable noncontrolling interests | (1,936) | (1,953) | (3,889) | ||||||||||||||||||||||||||||||||
Amounts attributable to nonredeemable noncontrolling interests | — | (78,314) | (78,314) | ||||||||||||||||||||||||||||||||
Net income (loss) available to Arch | 1,524,650 | 8,934 | 1,533,584 | ||||||||||||||||||||||||||||||||
Preferred dividends | (38,159) | — | (38,159) | ||||||||||||||||||||||||||||||||
Loss on redemption of preferred shares | (15,101) | — | (15,101) | ||||||||||||||||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 1,471,390 | $ | 8,934 | $ | 1,480,324 | |||||||||||||||||||||||||||||
Underwriting Ratios | |||||||||||||||||||||||||||||||||||
Loss ratio | 66.7 | % | 72.5 | % | 8.7 | % | 58.8 | % | 78.0 | % | 59.8 | % | |||||||||||||||||||||||
Acquisition expense ratio | 15.9 | % | 18.5 | % | 8.6 | % | 15.6 | % | 18.9 | % | 15.8 | % | |||||||||||||||||||||||
Other operating expense ratio | 15.6 | % | 7.3 | % | 14.6 | % | 12.4 | % | 9.9 | % | 12.3 | % | |||||||||||||||||||||||
Combined ratio | 98.2 | % | 98.3 | % | 31.9 | % | 86.8 | % | 106.8 | % | 87.9 | % | |||||||||||||||||||||||
ARCH CAPITAL | 18 | 2022 THIRD QUARTER FORM 10-Q |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Reserve for losses and loss adjustment expenses at beginning of period | $ | 18,194,324 | $ | 17,196,648 | $ | 17,757,156 | $ | 16,513,929 | |||||||||||||||
Unpaid losses and loss adjustment expenses recoverable | 5,686,348 | 4,146,020 | 5,599,231 | 4,314,855 | |||||||||||||||||||
Net reserve for losses and loss adjustment expenses at beginning of period | 12,507,976 | 13,050,628 | 12,157,925 | 12,199,074 | |||||||||||||||||||
Net incurred losses and loss adjustment expenses relating to losses occurring in: | |||||||||||||||||||||||
Current year | 1,863,519 | 1,348,528 | 4,280,048 | 3,812,381 | |||||||||||||||||||
Prior years | (180,823) | (122,509) | (493,861) | (223,431) | |||||||||||||||||||
Total net incurred losses and loss adjustment expenses | 1,682,696 | 1,226,019 | 3,786,187 | 3,588,950 | |||||||||||||||||||
Net losses and loss adjustment expense reserves of acquired business (1) | — | 104,307 | — | 104,307 | |||||||||||||||||||
Retroactive reinsurance transactions (2) | — | — | — | (183,893) | |||||||||||||||||||
Impact of deconsolidation of Somers (3) | — | (1,460,611) | — | (1,460,611) | |||||||||||||||||||
Net foreign exchange (gains) losses and other | (243,387) | (78,152) | (524,682) | 10,818 | |||||||||||||||||||
Net paid losses and loss adjustment expenses relating to losses occurring in: | |||||||||||||||||||||||
Current year | (226,575) | (208,923) | (463,847) | (432,348) | |||||||||||||||||||
Prior years | (538,967) | (417,368) | (1,773,840) | (1,610,397) | |||||||||||||||||||
Total net paid losses and loss adjustment expenses | (765,542) | (626,291) | (2,237,687) | (2,042,745) | |||||||||||||||||||
Net reserve for losses and loss adjustment expenses at end of period | 13,181,743 | 12,215,900 | 13,181,743 | 12,215,900 | |||||||||||||||||||
Unpaid losses and loss adjustment expenses recoverable | 6,106,548 | 5,115,147 | 6,106,548 | 5,115,147 | |||||||||||||||||||
Reserve for losses and loss adjustment expenses at end of period | $ | 19,288,291 | $ | 17,331,047 | $ | 19,288,291 | $ | 17,331,047 |
ARCH CAPITAL | 19 | 2022 THIRD QUARTER FORM 10-Q |
ARCH CAPITAL | 20 | 2022 THIRD QUARTER FORM 10-Q |
ARCH CAPITAL | 21 | 2022 THIRD QUARTER FORM 10-Q |
Premium Receivables, Net of Allowance | Allowance for Expected Credit Losses | |||||||
Three Months Ended September 30, 2022 | ||||||||
Balance at beginning of period | $ | 3,634,182 | $ | 38,170 | ||||
Change for provision of expected credit losses (1) | 59 | |||||||
Balance at end of period | $ | 3,579,380 | $ | 38,229 | ||||
Three Months Ended September 30, 2021 | ||||||||
Balance at beginning of period | $ | 2,866,578 | $ | 35,979 | ||||
Change for provision of expected credit losses (1) | 2,736 | |||||||
Balance at end of period | $ | 2,807,720 | $ | 38,715 | ||||
Nine Months Ended September 30, 2022 | ||||||||
Balance at beginning of period | $ | 2,633,280 | $ | 39,958 | ||||
Change for provision of expected credit losses (1) | (1,729) | |||||||
Balance at end of period | $ | 3,579,380 | $ | 38,229 | ||||
Nine Months Ended September 30, 2021 | ||||||||
Balance at beginning of period | $ | 2,064,586 | $ | 37,781 | ||||
Change for provision of expected credit losses (1) | 934 | |||||||
Balance at end of period | $ | 2,807,720 | $ | 38,715 |
Reinsurance Recoverables, Net of Allowance | Allowance for Expected Credit Losses | ||||||||||
Three Months Ended September 30, 2022 | |||||||||||
Balance at beginning of period | $ | 5,938,511 | $ | 14,740 | |||||||
Change for provision of expected credit losses | 2,626 | ||||||||||
Balance at end of period | $ | 6,356,456 | $ | 17,366 | |||||||
Three Months Ended September 30, 2021 | |||||||||||
Balance at beginning of period | $ | 4,314,515 | $ | 11,029 | |||||||
Change for provision of expected credit losses | 1,802 | ||||||||||
Balance at end of period | $ | 5,358,852 | $ | 12,831 | |||||||
Nine Months Ended September 30, 2022 | |||||||||||
Balance at beginning of period | $ | 5,880,735 | $ | 13,230 | |||||||
Change for provision of expected credit losses | 4,136 | ||||||||||
Balance at end of period | $ | 6,356,456 | $ | 17,366 | |||||||
Nine Months Ended September 30, 2021 | |||||||||||
Balance at beginning of period | $ | 4,500,802 | $ | 11,636 | |||||||
Change for provision of expected credit losses | 1,195 | ||||||||||
Balance at end of period | $ | 5,358,852 | $ | 12,831 |
ARCH CAPITAL | 22 | 2022 THIRD QUARTER FORM 10-Q |
September 30, | December 31 | ||||||||||
2022 | 2021 | ||||||||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | $ | 6,356,456 | $ | 5,880,735 | |||||||
% due from carriers with A.M. Best rating of “A-” or better | 69.5 | % | 69.7 | % | |||||||
% due from all other rated carriers | 0.1 | % | 0.1 | % | |||||||
% due from all other carriers with no A.M. Best rating (1) | 30.4 | % | 30.2 | % | |||||||
Largest balance due from any one carrier as % of total shareholders’ equity | 9.1 | % | 6.7 | % |
Contract-holder Receivables, Net of Allowance | Allowance for Expected Credit Losses | ||||||||||
Three Months Ended September 30, 2022 | |||||||||||
Balance at beginning of period | $ | 1,758,018 | $ | 3,005 | |||||||
Change for provision of expected credit losses | (645) | ||||||||||
Balance at end of period | $ | 1,735,730 | $ | 2,360 | |||||||
Three Months Ended September 30, 2021 | |||||||||||
Balance at beginning of period | $ | 1,882,948 | $ | 4,471 | |||||||
Change for provision of expected credit losses | (987) | ||||||||||
Balance at end of period | 1,824,990 | $ | 3,484 | ||||||||
Nine Months Ended September 30, 2022 | |||||||||||
Balance at beginning of period | $ | 1,828,691 | $ | 3,437 | |||||||
Change for provision of expected credit losses | (1,077) | ||||||||||
Balance at end of period | $ | 1,735,730 | $ | 2,360 | |||||||
Nine Months Ended September 30, 2021 | |||||||||||
Balance at beginning of period | $ | 1,986,924 | $ | 8,638 | |||||||
Change for provision of expected credit losses | (5,154) | ||||||||||
Balance at end of period | 1,824,990 | $ | 3,484 |
ARCH CAPITAL | 23 | 2022 THIRD QUARTER FORM 10-Q |
Estimated Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Allowance for Expected Credit Losses | Cost or Amortized Cost | |||||||||||||||||||||||||
September 30, 2022 | |||||||||||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||||||||
Corporate bonds | $ | 7,096,269 | $ | 51,777 | $ | (895,365) | $ | (35,657) | $ | 7,975,514 | |||||||||||||||||||
Residential mortgage backed securities | 763,371 | 7,561 | (84,183) | 2 | 839,991 | ||||||||||||||||||||||||
Municipal bonds | 407,724 | 5,437 | (37,692) | (99) | 440,078 | ||||||||||||||||||||||||
Commercial mortgage backed securities | 1,064,238 | 3,079 | (50,010) | (1,583) | 1,112,752 | ||||||||||||||||||||||||
U.S. government and government agencies | 5,126,407 | 36,074 | (400,784) | — | 5,491,117 | ||||||||||||||||||||||||
Non-U.S. government securities | 2,073,170 | 9,315 | (287,583) | (1,720) | 2,353,158 | ||||||||||||||||||||||||
Asset backed securities | 1,589,548 | 1,076 | (105,037) | (6,936) | 1,700,445 | ||||||||||||||||||||||||
Total | 18,120,727 | 114,319 | (1,860,654) | (45,993) | 19,913,055 | ||||||||||||||||||||||||
Short-term investments | 1,940,857 | 1,419 | (1,633) | — | 1,941,071 | ||||||||||||||||||||||||
Total | $ | 20,061,584 | $ | 115,738 | $ | (1,862,287) | $ | (45,993) | $ | 21,854,126 | |||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||||||||
Corporate bonds | $ | 6,553,333 | $ | 104,170 | $ | (69,194) | $ | (2,037) | $ | 6,520,394 | |||||||||||||||||||
Residential mortgage backed securities | 408,477 | 2,825 | (5,410) | (48) | 411,110 | ||||||||||||||||||||||||
Municipal bonds | 404,666 | 18,724 | (1,409) | (2) | 387,353 | ||||||||||||||||||||||||
Commercial mortgage backed securities | 1,046,484 | 1,740 | (3,117) | (6) | 1,047,867 | ||||||||||||||||||||||||
U.S. government and government agencies | 4,772,764 | 10,076 | (45,967) | — | 4,808,655 | ||||||||||||||||||||||||
Non-U.S. government securities | 2,120,294 | 54,048 | (34,749) | (82) | 2,101,077 | ||||||||||||||||||||||||
Asset backed securities | 2,692,091 | 6,540 | (11,108) | (708) | 2,697,367 | ||||||||||||||||||||||||
Total | 17,998,109 | 198,123 | (170,954) | (2,883) | 17,973,823 | ||||||||||||||||||||||||
Short-term investments | 1,734,716 | 568 | (590) | — | 1,734,738 | ||||||||||||||||||||||||
Total | $ | 19,732,825 | $ | 198,691 | $ | (171,544) | $ | (2,883) | $ | 19,708,561 |
ARCH CAPITAL | 24 | 2022 THIRD QUARTER FORM 10-Q |
Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||||||||||||||
Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||
September 30, 2022 | |||||||||||||||||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||||||||||||||
Corporate bonds | $ | 5,596,229 | $ | (625,774) | $ | 1,470,800 | $ | (269,591) | $ | 7,067,029 | $ | (895,365) | |||||||||||||||||||||||
Residential mortgage backed securities | 620,572 | (63,732) | 93,902 | (20,451) | 714,474 | (84,183) | |||||||||||||||||||||||||||||
Municipal bonds | 373,219 | (36,039) | 9,399 | (1,653) | 382,618 | (37,692) | |||||||||||||||||||||||||||||
Commercial mortgage backed securities | 995,680 | (49,215) | 34,445 | (795) | 1,030,125 | (50,010) | |||||||||||||||||||||||||||||
U.S. government and government agencies | 4,205,475 | (303,805) | 715,347 | (96,979) | 4,920,822 | (400,784) | |||||||||||||||||||||||||||||
Non-U.S. government securities | 1,728,965 | (221,540) | 301,298 | (66,043) | 2,030,263 | (287,583) | |||||||||||||||||||||||||||||
Asset backed securities | 1,193,405 | (74,885) | 310,838 | (30,152) | 1,504,243 | (105,037) | |||||||||||||||||||||||||||||
Total | 14,713,545 | (1,374,990) | 2,936,029 | (485,664) | 17,649,574 | (1,860,654) | |||||||||||||||||||||||||||||
Short-term investments | 227,201 | (1,633) | — | — | 227,201 | (1,633) | |||||||||||||||||||||||||||||
Total | $ | 14,940,746 | $ | (1,376,623) | $ | 2,936,029 | $ | (485,664) | $ | 17,876,775 | $ | (1,862,287) | |||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||||||||||||||
Corporate bonds | $ | 3,639,582 | $ | (63,938) | $ | 98,867 | $ | (5,256) | $ | 3,738,449 | $ | (69,194) | |||||||||||||||||||||||
Residential mortgage backed securities | 222,176 | (3,545) | 46,809 | (1,865) | 268,985 | (5,410) | |||||||||||||||||||||||||||||
Municipal bonds | 26,665 | (385) | 16,361 | (1,024) | 43,026 | (1,409) | |||||||||||||||||||||||||||||
Commercial mortgage backed securities | 675,603 | (2,805) | 5,908 | (312) | 681,511 | (3,117) | |||||||||||||||||||||||||||||
U.S. government and government agencies | 4,211,621 | (44,180) | 33,373 | (1,787) | 4,244,994 | (45,967) | |||||||||||||||||||||||||||||
Non-U.S. government securities | 1,511,301 | (31,983) | 62,957 | (2,766) | 1,574,258 | (34,749) | |||||||||||||||||||||||||||||
Asset backed securities | 1,667,002 | (9,853) | 33,082 | (1,255) | 1,700,084 | (11,108) | |||||||||||||||||||||||||||||
Total | 11,953,950 | (156,689) | 297,357 | (14,265) | 12,251,307 | (170,954) | |||||||||||||||||||||||||||||
Short-term investments | 284,733 | (590) | — | — | 284,733 | (590) | |||||||||||||||||||||||||||||
Total | $ | 12,238,683 | $ | (157,279) | $ | 297,357 | $ | (14,265) | $ | 12,536,040 | $ | (171,544) |
ARCH CAPITAL | 25 | 2022 THIRD QUARTER FORM 10-Q |
September 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||
Maturity | Estimated Fair Value | Amortized Cost | Estimated Fair Value | Amortized Cost | ||||||||||||||||||||||
Due in one year or less | $ | 579,231 | $ | 599,970 | $ | 300,889 | $ | 299,772 | ||||||||||||||||||
Due after one year through five years | 10,029,151 | 10,808,495 | 8,355,255 | 8,339,387 | ||||||||||||||||||||||
Due after five years through 10 years | 3,856,180 | 4,495,113 | 4,689,155 | 4,684,393 | ||||||||||||||||||||||
Due after 10 years | 239,008 | 356,289 | 505,758 | 493,927 | ||||||||||||||||||||||
14,703,570 | 16,259,867 | 13,851,057 | 13,817,479 | |||||||||||||||||||||||
Residential mortgage backed securities | 763,371 | 839,991 | 408,477 | 411,110 | ||||||||||||||||||||||
Commercial mortgage backed securities | 1,064,238 | 1,112,752 | 1,046,484 | 1,047,867 | ||||||||||||||||||||||
Asset backed securities | 1,589,548 | 1,700,445 | 2,692,091 | 2,697,367 | ||||||||||||||||||||||
Total | $ | 18,120,727 | $ | 19,913,055 | $ | 17,998,109 | $ | 17,973,823 |
September 30, 2022 | December 31, 2021 | ||||||||||
Fixed maturities | $ | 530,303 | $ | 416,698 | |||||||
Other investments | 1,005,929 | 1,432,553 | |||||||||
Short-term investments | 28,614 | 97,806 | |||||||||
Equity securities | 13,905 | 26,493 | |||||||||
Total | $ | 1,578,751 | $ | 1,973,550 |
September 30, 2022 | December 31, 2021 | ||||||||||
Lending | $ | 398,789 | $ | 536,345 | |||||||
Investment grade fixed income | 229,262 | 147,810 | |||||||||
Term loan investments | 151,649 | 484,950 | |||||||||
Private equity | 117,856 | 91,126 | |||||||||
Energy | 55,250 | 81,692 | |||||||||
Credit related funds | 53,123 | 70,278 | |||||||||
Infrastructure | — | 20,352 | |||||||||
Total | $ | 1,005,929 | $ | 1,432,553 |
September 30, 2022 | December 31, 2021 | ||||||||||
Credit related funds | $ | 1,135,623 | $ | 1,022,334 | |||||||
Private equity | 761,997 | 436,042 | |||||||||
Real estate | 474,666 | 396,395 | |||||||||
Lending | 454,196 | 376,649 | |||||||||
Equities | 261,650 | 395,090 | |||||||||
Infrastructure | 236,920 | 230,070 | |||||||||
Energy | 113,778 | 119,141 | |||||||||
Fixed income | 127,116 | 101,890 | |||||||||
Total | $ | 3,565,946 | $ | 3,077,611 |
ARCH CAPITAL | 26 | 2022 THIRD QUARTER FORM 10-Q |
September 30, 2022 | December 31, 2021 | ||||||||||
Investments accounted for using the equity method (1) | $ | 3,565,946 | $ | 3,077,611 | |||||||
Investments accounted for using the fair value option (2) | 120,498 | 170,595 | |||||||||
Total | $ | 3,686,444 | $ | 3,248,206 |
September 30, | |||||||||||
2022 | 2021 | ||||||||||
Three Months Ended | |||||||||||
Fixed maturities | $ | 123,568 | $ | 75,964 | |||||||
Term loans | 88 | 1,736 | |||||||||
Equity securities | 4,261 | 9,867 | |||||||||
Short-term investments | 9,304 | 1,858 | |||||||||
Other (1) | 8,556 | 17,378 | |||||||||
Gross investment income | 145,777 | 106,803 | |||||||||
Investment expenses | (17,137) | (18,608) | |||||||||
Net investment income | $ | 128,640 | $ | 88,195 | |||||||
Nine Months Ended | |||||||||||
Fixed maturities | $ | 310,963 | $ | 255,215 | |||||||
Term loans | 2,106 | 33,343 | |||||||||
Equity securities | 16,620 | 24,101 | |||||||||
Short-term investments | 15,999 | 3,603 | |||||||||
Other (1) | 26,598 | 51,683 | |||||||||
Gross investment income | 372,286 | 367,945 | |||||||||
Investment expenses | (56,818) | (69,281) | |||||||||
Net investment income | $ | 315,468 | $ | 298,664 |
September 30, | |||||||||||
2022 | 2021 | ||||||||||
Three Months Ended | |||||||||||
Available for sale securities: | |||||||||||
Gross gains on investment sales | $ | 18,030 | $ | 86,819 | |||||||
Gross losses on investment sales | (73,970) | (18,446) | |||||||||
Change in fair value of assets and liabilities accounted for using the fair value option: | |||||||||||
Fixed maturities | (19,304) | (7,492) | |||||||||
Other investments | (17,882) | 3,811 | |||||||||
Equity securities | (584) | 3,042 | |||||||||
Short-term investments | (975) | 16 | |||||||||
Equity securities, at fair value: | |||||||||||
Net realized gains (losses) on sales during the period | (6,401) | 14,736 | |||||||||
Net unrealized gains (losses) on equity securities still held at reporting date | (36,162) | (40,155) | |||||||||
Allowance for credit losses: | |||||||||||
Investments related | 8,652 | (456) | |||||||||
Underwriting related | (4,232) | (3,985) | |||||||||
Derivative instruments (1) | (48,196) | (21,435) | |||||||||
Other | (2,649) | (41,495) | |||||||||
Net realized gains (losses) | $ | (183,673) | $ | (25,040) | |||||||
Nine Months Ended | |||||||||||
Available for sale securities: | |||||||||||
Gross gains on investment sales | $ | 52,923 | $ | 267,362 | |||||||
Gross losses on investment sales | (239,493) | (132,071) | |||||||||
Change in fair value of assets and liabilities accounted for using the fair value option: | |||||||||||
Fixed maturities | (89,148) | 19,973 | |||||||||
Other investments | (35,203) | 111,550 | |||||||||
Equity securities | (6,021) | 10,599 | |||||||||
Short-term investments | (3,132) | 648 | |||||||||
Equity securities, at fair value: | |||||||||||
Net realized gains (losses) on sales during the period | 75,689 | 86,155 | |||||||||
Net unrealized gains (losses) on equity securities still held at reporting date | (318,732) | 45,400 | |||||||||
Allowance for credit losses: | |||||||||||
Investments related | (48,096) | (1,208) | |||||||||
Underwriting related | (7,676) | 2,664 | |||||||||
Derivative instruments (1) | (117,591) | (36,428) | |||||||||
Other | (6,186) | (54,316) | |||||||||
Net realized gains (losses) | $ | (742,666) | $ | 320,328 |
ARCH CAPITAL | 27 | 2022 THIRD QUARTER FORM 10-Q |
ARCH CAPITAL | 28 | 2022 THIRD QUARTER FORM 10-Q |
Structured Securities (1) | Municipal Bonds | Corporate Bonds | Total | |||||||||||||||||||||||
Three Months Ended September 30, 2022 | ||||||||||||||||||||||||||
Balance at beginning of period | $ | 18,283 | $ | 298 | $ | 39,829 | $ | 58,410 | ||||||||||||||||||
Additions for current-period provision for expected credit losses | 1,782 | 12 | 1,986 | 3,780 | ||||||||||||||||||||||
Additions (reductions) for previously recognized expected credit losses | (9,767) | (211) | (2,552) | (12,530) | ||||||||||||||||||||||
Reductions due to disposals | (1,780) | — | (1,887) | (3,667) | ||||||||||||||||||||||
Balance at end of period | $ | 8,518 | $ | 99 | $ | 37,376 | $ | 45,993 | ||||||||||||||||||
Three Months Ended September 30, 2021 | ||||||||||||||||||||||||||
Balance at beginning of period | $ | 759 | $ | 6 | $ | 1,359 | $ | 2,124 | ||||||||||||||||||
Additions for current-period provision for expected credit losses | 48 | — | — | 48 | ||||||||||||||||||||||
Additions (reductions) for previously recognized expected credit losses | 14 | (4) | 395 | 405 | ||||||||||||||||||||||
Reductions due to disposals | (234) | — | (232) | (466) | ||||||||||||||||||||||
Balance at end of period | $ | 587 | $ | 2 | $ | 1,522 | $ | 2,111 | ||||||||||||||||||
Nine Months Ended September 30, 2022 | ||||||||||||||||||||||||||
Balance at beginning of period | $ | 802 | $ | 2 | $ | 2,079 | $ | 2,883 | ||||||||||||||||||
Additions for current-period provision for expected credit losses | 12,560 | 359 | 40,602 | 53,521 | ||||||||||||||||||||||
Additions (reductions) for previously recognized expected credit losses | (2,575) | (262) | (2,772) | (5,609) | ||||||||||||||||||||||
Reductions due to disposals | (2,269) | — | (2,533) | (4,802) | ||||||||||||||||||||||
Balance at end of period | $ | 8,518 | $ | 99 | $ | 37,376 | $ | 45,993 | ||||||||||||||||||
Nine Months Ended September 30, 2021 | ||||||||||||||||||||||||||
Balance at beginning of period | $ | 1,490 | $ | 11 | $ | 896 | $ | 2,397 | ||||||||||||||||||
Additions for current-period provision for expected credit losses | 282 | — | 2,428 | 2,710 | ||||||||||||||||||||||
Additions (reductions) for previously recognized expected credit losses | (751) | (9) | (557) | (1,317) | ||||||||||||||||||||||
Reductions due to disposals | (434) | — | (1,245) | (1,679) | ||||||||||||||||||||||
Balance at end of period | $ | 587 | $ | 2 | $ | 1,522 | $ | 2,111 |
ARCH CAPITAL | 29 | 2022 THIRD QUARTER FORM 10-Q |
September 30, 2022 | December 31, 2021 | ||||||||||
Assets used for collateral or guarantees: | |||||||||||
Affiliated transactions | $ | 4,212,521 | $ | 4,223,955 | |||||||
Third party agreements | 2,847,814 | 2,721,160 | |||||||||
Deposits with U.S. regulatory authorities | 756,368 | 798,100 | |||||||||
Deposits with non-U.S. regulatory authorities | 519,254 | 506,517 | |||||||||
Total restricted assets | $ | 8,335,957 | $ | 8,249,732 |
September 30, 2022 | December 31, 2021 | ||||||||||
Cash | $ | 813,583 | $ | 858,668 | |||||||
Restricted cash (included in ‘other assets’) | 444,741 | 456,103 | |||||||||
Cash and restricted cash | $ | 1,258,324 | $ | 1,314,771 |
Level 1: | Inputs to the valuation methodology are observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets | |||||||
Level 2: | Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument | |||||||
Level 3: | Inputs to the valuation methodology are unobservable and significant to the fair value measurement |
ARCH CAPITAL | 30 | 2022 THIRD QUARTER FORM 10-Q |
ARCH CAPITAL | 31 | 2022 THIRD QUARTER FORM 10-Q |
ARCH CAPITAL | 32 | 2022 THIRD QUARTER FORM 10-Q |
Estimated Fair Value Measurements Using: | |||||||||||||||||||||||
Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
Assets measured at fair value: | |||||||||||||||||||||||
Available for sale securities: | |||||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
Corporate bonds | $ | 7,096,269 | $ | — | $ | 7,096,256 | $ | 13 | |||||||||||||||
Residential mortgage backed securities | 763,371 | — | 763,371 | — | |||||||||||||||||||
Municipal bonds | 407,724 | — | 407,724 | — | |||||||||||||||||||
Commercial mortgage backed securities | 1,064,238 | — | 1,064,238 | — | |||||||||||||||||||
U.S. government and government agencies | 5,126,407 | 5,100,908 | 25,499 | — | |||||||||||||||||||
Non-U.S. government securities | 2,073,170 | — | 2,073,170 | — | |||||||||||||||||||
Asset backed securities | 1,589,548 | — | 1,589,548 | — | |||||||||||||||||||
Total | 18,120,727 | 5,100,908 | 13,019,806 | 13 | |||||||||||||||||||
Short-term investments | 1,940,857 | 1,873,480 | 67,377 | — | |||||||||||||||||||
Equity securities, at fair value | 809,869 | 775,264 | 31,566 | 3,039 | |||||||||||||||||||
Derivative instruments (2) | 176,160 | — | 176,160 | — | |||||||||||||||||||
Residential mortgage loans | 2,255 | — | 2,255 | — | |||||||||||||||||||
Fair value option: | |||||||||||||||||||||||
Corporate bonds | 524,177 | — | 524,177 | — | |||||||||||||||||||
Non-U.S. government bonds | 4,032 | — | 4,032 | — | |||||||||||||||||||
Asset backed securities | 2,094 | — | 2,094 | — | |||||||||||||||||||
Short-term investments | 28,614 | 405 | 28,209 | — | |||||||||||||||||||
Equity securities | 13,905 | 9,312 | 1 | 4,592 | |||||||||||||||||||
Other investments | 175,259 | — | 141,021 | 34,238 | |||||||||||||||||||
Other investments measured at net asset value (1) | 830,670 | ||||||||||||||||||||||
Total | 1,578,751 | 9,717 | 699,534 | 38,830 | |||||||||||||||||||
Total assets measured at fair value | $ | 22,628,619 | $ | 7,759,369 | $ | 13,996,698 | $ | 41,882 | |||||||||||||||
Liabilities measured at fair value: | |||||||||||||||||||||||
Other liabilities | $ | (13,421) | $ | — | $ | — | $ | (13,421) | |||||||||||||||
Derivative instruments (2) | (112,577) | — | (112,577) | — | |||||||||||||||||||
Total liabilities measured at fair value | $ | (125,998) | $ | — | $ | (112,577) | $ | (13,421) |
ARCH CAPITAL | 33 | 2022 THIRD QUARTER FORM 10-Q |
Estimated Fair Value Measurements Using: | |||||||||||||||||||||||
Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
Assets measured at fair value: | |||||||||||||||||||||||
Available for sale securities: | |||||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
Corporate bonds | $ | 6,553,333 | $ | — | $ | 6,553,320 | $ | 13 | |||||||||||||||
Residential mortgage backed securities | 408,477 | — | 408,477 | — | |||||||||||||||||||
Municipal bonds | 404,666 | — | 404,666 | — | |||||||||||||||||||
Commercial mortgage backed securities | 1,046,484 | — | 1,046,484 | — | |||||||||||||||||||
U.S. government and government agencies | 4,772,764 | 4,744,517 | 28,247 | — | |||||||||||||||||||
Non-U.S. government securities | 2,120,294 | — | 2,120,294 | — | |||||||||||||||||||
Asset backed securities | 2,692,091 | — | 2,688,744 | 3,347 | |||||||||||||||||||
Total | 17,998,109 | 4,744,517 | 13,250,232 | 3,360 | |||||||||||||||||||
Short-term investments | 1,734,716 | 1,052,822 | 681,894 | — | |||||||||||||||||||
Equity securities, at fair value | 1,804,170 | 1,762,864 | 38,388 | 2,918 | |||||||||||||||||||
Derivative instruments (2) | 127,121 | — | 127,121 | — | |||||||||||||||||||
Residential mortgage loans | 49,847 | — | 49,847 | — | |||||||||||||||||||
Fair value option: | |||||||||||||||||||||||
Corporate bonds | 388,546 | — | 388,546 | — | |||||||||||||||||||
Non-U.S. government bonds | 23,785 | — | 23,785 | — | |||||||||||||||||||
Asset backed securities | 4,367 | — | 4,367 | — | |||||||||||||||||||
Short-term investments | 97,806 | 528 | 97,278 | — | |||||||||||||||||||
Equity securities | 26,493 | 21,745 | — | 4,748 | |||||||||||||||||||
Other investments | 310,798 | 20,352 | 262,465 | 27,981 | |||||||||||||||||||
Other investments measured at net asset value (1) | 1,121,755 | ||||||||||||||||||||||
Total | 1,973,550 | 42,625 | 776,441 | 32,729 | |||||||||||||||||||
Total assets measured at fair value | $ | 23,687,513 | $ | 7,602,828 | $ | 14,923,923 | $ | 39,007 | |||||||||||||||
Liabilities measured at fair value: | |||||||||||||||||||||||
Other liabilities | $ | (16,960) | $ | — | $ | — | $ | (16,960) | |||||||||||||||
Derivative instruments (2) | (54,224) | — | (54,224) | — | |||||||||||||||||||
Total liabilities measured at fair value | $ | (71,184) | $ | — | $ | (54,224) | $ | (16,960) |
ARCH CAPITAL | 34 | 2022 THIRD QUARTER FORM 10-Q |
Assets | Liabilities | ||||||||||||||||||||||||||||||||||||||||
s | Available For Sale | Fair Value Option | Fair Value | ||||||||||||||||||||||||||||||||||||||
Structured Securities (1) | Corporate Bonds | Corporate Bonds | Other Investments | Equity Securities | Equity Securities | Other Liabilities | |||||||||||||||||||||||||||||||||||
Three Months Ended September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | 2,867 | $ | 3,570 | $ | — | $ | 33,331 | $ | 4,392 | $ | 2,906 | $ | (16,205) | |||||||||||||||||||||||||||
Total gains or (losses) (realized/unrealized) | |||||||||||||||||||||||||||||||||||||||||
Included in earnings (2) | (601) | 52 | — | 116 | 200 | 133 | (89) | ||||||||||||||||||||||||||||||||||
Included in other comprehensive income | 144 | (59) | — | — | — | — | 965 | ||||||||||||||||||||||||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||||||||||||||||||||||||||
Purchases | — | — | — | 1,458 | — | — | — | ||||||||||||||||||||||||||||||||||
Issuances | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Sales | (2,051) | (3,550) | — | (667) | — | — | — | ||||||||||||||||||||||||||||||||||
Settlements | (359) | — | — | — | — | — | 1,908 | ||||||||||||||||||||||||||||||||||
Transfers in and/or out of Level 3 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Balance at end of period | $ | — | $ | 13 | $ | — | $ | 34,238 | $ | 4,592 | $ | 3,039 | $ | (13,421) | |||||||||||||||||||||||||||
Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | 3,424 | $ | 13 | $ | 998 | $ | 73,900 | $ | 73,678 | $ | 49,136 | $ | (466) | |||||||||||||||||||||||||||
Total gains or (losses) (realized/unrealized) | |||||||||||||||||||||||||||||||||||||||||
Included in earnings (2) | 10 | — | — | — | 38 | 11 | — | ||||||||||||||||||||||||||||||||||
Included in other comprehensive income | 10 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||||||||||||||||||||||||||
Purchases | — | — | — | — | — | 208 | (17,345) | ||||||||||||||||||||||||||||||||||
Issuances | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Sales (3) | — | — | (998) | (44,143) | (69,181) | (46,773) | — | ||||||||||||||||||||||||||||||||||
Settlements | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Transfers in and/or out of Level 3 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Balance at end of period | $ | 3,444 | $ | 13 | $ | — | $ | 29,757 | $ | 4,535 | $ | 2,582 | $ | (17,811) | |||||||||||||||||||||||||||
Nine Months Ended September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||
Balance at beginning of year | $ | 3,347 | $ | 13 | $ | — | $ | 27,981 | $ | 4,748 | $ | 2,918 | $ | (16,960) | |||||||||||||||||||||||||||
Total gains or (losses) (realized/unrealized) | |||||||||||||||||||||||||||||||||||||||||
Included in earnings (2) | (592) | 52 | — | 150 | (156) | (103) | (284) | ||||||||||||||||||||||||||||||||||
Included in other comprehensive income | (1) | (59) | — | — | — | — | 1,915 | ||||||||||||||||||||||||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||||||||||||||||||||||||||
Purchases | — | — | — | 12,228 | — | 227 | — | ||||||||||||||||||||||||||||||||||
Issuances | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Sales | (2,051) | (3,550) | — | (3,138) | — | (3) | — | ||||||||||||||||||||||||||||||||||
Settlements | (703) | — | — | (2,983) | — | — | 1,908 | ||||||||||||||||||||||||||||||||||
Transfers in and/or out of Level 3 | — | 3,557 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Balance at end of period | $ | — | $ | 13 | $ | — | $ | 34,238 | $ | 4,592 | $ | 3,039 | $ | (13,421) | |||||||||||||||||||||||||||
Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||
Balance at beginning of year | $ | 3,426 | $ | 13 | $ | 985 | $ | 67,103 | $ | 68,988 | $ | 42,015 | $ | (461) | |||||||||||||||||||||||||||
Total gains or (losses) (realized/unrealized) | |||||||||||||||||||||||||||||||||||||||||
Included in earnings (2) | (46) | — | 13 | 881 | 4,728 | 1,837 | — | ||||||||||||||||||||||||||||||||||
Included in other comprehensive income | 67 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||||||||||||||||||||||||||
Purchases | — | — | — | 13,003 | — | 5,503 | (17,345) | ||||||||||||||||||||||||||||||||||
Issuances | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Sales (3) | — | — | (998) | (51,230) | (69,181) | (46,773) | — | ||||||||||||||||||||||||||||||||||
Settlements | (3) | — | — | — | — | — | (5) | ||||||||||||||||||||||||||||||||||
Transfers in and/or out of Level 3 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Balance at end of period | $ | 3,444 | $ | 13 | $ | — | $ | 29,757 | $ | 4,535 | $ | 2,582 | $ | (17,811) |
ARCH CAPITAL | 35 | 2022 THIRD QUARTER FORM 10-Q |
Estimated Fair Value | |||||||||||||||||
Asset Derivatives (1) | Liability Derivatives (1) | Notional Value (2) | |||||||||||||||
September 30, 2022 | |||||||||||||||||
Futures contracts | $ | 72,730 | $ | (60,684) | $ | 2,189,945 | |||||||||||
Foreign currency forward contracts | 25,281 | (26,995) | 835,941 | ||||||||||||||
TBAs | — | — | — | ||||||||||||||
Other | 78,149 | (24,898) | 3,766,549 | ||||||||||||||
Total | $ | 176,160 | $ | (112,577) | |||||||||||||
December 31, 2021 | |||||||||||||||||
Futures contracts | $ | 34,999 | $ | (9,808) | $ | 2,826,564 | |||||||||||
Foreign currency forward contracts | 7,734 | (11,390) | 915,962 | ||||||||||||||
TBAs | 11,227 | — | 11,227 | ||||||||||||||
Other | 73,161 | (33,026) | 3,736,773 | ||||||||||||||
Total | $ | 127,121 | $ | (54,224) |
ARCH CAPITAL | 36 | 2022 THIRD QUARTER FORM 10-Q |
Derivatives not designated as | September 30, | |||||||||||||
hedging instruments: | 2022 | 2021 | ||||||||||||
Three Months Ended | ||||||||||||||
Net realized gains (losses): | ||||||||||||||
Futures contracts | $ | (26,347) | $ | (10,073) | ||||||||||
Foreign currency forward contracts | (18,340) | (16,146) | ||||||||||||
TBAs | — | (46) | ||||||||||||
Other (1) | (3,509) | 4,830 | ||||||||||||
Total | $ | (48,196) | $ | (21,435) | ||||||||||
Nine Months Ended | ||||||||||||||
Net realized gains (losses): | ||||||||||||||
Futures contracts | $ | (112,326) | $ | (17,394) | ||||||||||
Foreign currency forward contracts | (46,016) | (36,922) | ||||||||||||
TBAs | (51) | (46) | ||||||||||||
Other (1) | 40,802 | 17,934 | ||||||||||||
Total | $ | (117,591) | $ | (36,428) |
ARCH CAPITAL | 37 | 2022 THIRD QUARTER FORM 10-Q |
September 30, | |||||||||||
2022 | 2021 | ||||||||||
Three Months Ended | |||||||||||
Balance, beginning of period | $ | 8,459 | $ | 57,533 | |||||||
Impact of deconsolidation of Somers | — | (48,919) | |||||||||
Other | 449 | 1,623 | |||||||||
Balance, end of period | $ | 8,908 | $ | 10,237 | |||||||
Nine Months Ended | |||||||||||
Balance, beginning of year | $ | 9,233 | $ | 58,548 | |||||||
Impact of deconsolidation of Somers | — | (48,919) | |||||||||
Other | (325) | 608 | |||||||||
Balance, end of period | $ | 8,908 | $ | 10,237 |
September 30, | |||||||||||
2022 | 2021 | ||||||||||
Three Months Ended | |||||||||||
Amounts attributable to non-redeemable noncontrolling interests | $ | — | $ | — | |||||||
Amounts attributable to redeemable noncontrolling interests | (1,157) | (1,473) | |||||||||
Net (income) loss attributable to noncontrolling interests | $ | (1,157) | $ | (1,473) | |||||||
Nine Months Ended | |||||||||||
Amounts attributable to non-redeemable noncontrolling interests | $ | — | $ | (78,314) | |||||||
Amounts attributable to redeemable noncontrolling interests | (2,390) | (3,889) | |||||||||
Net (income) loss attributable to noncontrolling interests | $ | (2,390) | $ | (82,203) |
September 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maximum Exposure to Loss | Maximum Exposure to Loss | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bellemeade Entities (Issue Date) | Total VIE Assets | On-Balance Sheet (Asset) Liability | Off-Balance Sheet | Total | Coverage Remaining from Reinsurers (1) | Total VIE Assets | On-Balance Sheet (Asset) Liability | Off-Balance Sheet | Total | |||||||||||||||||||||||||||||||||||||||||||||||
2017-1 Ltd. (Oct-17) | $ | 46,772 | $ | (23) | $ | 88 | $ | 65 | $ | — | $ | 108,368 | $ | (159) | $ | 424 | $ | 265 | ||||||||||||||||||||||||||||||||||||||
2018-1 Ltd. (Apr-18) | 103,131 | (220) | 644 | 424 | — | 181,136 | (528) | 1,268 | 740 | |||||||||||||||||||||||||||||||||||||||||||||||
2018-3 Ltd. (Oct-18) | 217,701 | (862) | 2,107 | 1,245 | — | 302,563 | (1,018) | 2,496 | 1,478 | |||||||||||||||||||||||||||||||||||||||||||||||
2019-1 Ltd. (Mar-19) | 119,193 | (496) | 2,704 | 2,208 | — | 181,324 | (380) | 5,807 | 5,427 | |||||||||||||||||||||||||||||||||||||||||||||||
2019-2 Ltd. (Apr-19) | 347,050 | (656) | 4,308 | 3,652 | — | 398,316 | (515) | 3,998 | 3,483 | |||||||||||||||||||||||||||||||||||||||||||||||
2019-3 Ltd. (Jul-19) | 257,663 | (192) | 1,492 | 1,300 | — | 409,859 | (584) | 3,190 | 2,606 | |||||||||||||||||||||||||||||||||||||||||||||||
2019-4 Ltd. (Oct-19) | 283,684 | (532) | 3,663 | 3,131 | — | 411,954 | (462) | 4,759 | 4,297 | |||||||||||||||||||||||||||||||||||||||||||||||
2020-2 Ltd. (Sep-20) | 122,897 | (20) | 595 | 575 | 153 | 217,766 | (177) | 1,984 | 1,807 | |||||||||||||||||||||||||||||||||||||||||||||||
2020-3 Ltd. (Nov-20) | 268,385 | (204) | 2,845 | 2,641 | 8,569 | 348,818 | (128) | 5,793 | 5,665 | |||||||||||||||||||||||||||||||||||||||||||||||
2020-4 Ltd. (Dec-20) | 107,396 | 10 | 707 | 717 | 4,795 | 176,826 | (50) | 1,630 | 1,580 | |||||||||||||||||||||||||||||||||||||||||||||||
2021-1 Ltd. (Mar-21) | 497,069 | (2,234) | 936 | (1,298) | 43,198 | 568,986 | (303) | 3,283 | 2,980 | |||||||||||||||||||||||||||||||||||||||||||||||
2021-2 Ltd. (Jun-21) | 471,039 | (2,047) | 984 | (1,063) | 80,268 | 522,807 | 281 | 4,124 | 4,405 | |||||||||||||||||||||||||||||||||||||||||||||||
2021-3 Ltd. (Sep-21) | 498,309 | (2,414) | 991 | (1,423) | 129,127 | 507,873 | (411) | 3,446 | 3,035 | |||||||||||||||||||||||||||||||||||||||||||||||
2022-1 Ltd. (Jan-22) | 283,500 | (1,326) | 627 | (699) | 33,260 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2022-2 Ltd. (Sep-22) | 201,005 | — | 744 | 744 | 126,160 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 3,824,794 | $ | (11,216) | $ | 23,435 | $ | 12,219 | $ | 425,530 | $ | 4,336,596 | $ | (4,434) | $ | 42,202 | $ | 37,768 | ||||||||||||||||||||||||||||||||||||||
ARCH CAPITAL | 38 | 2022 THIRD QUARTER FORM 10-Q |
Amounts Reclassified from AOCI | ||||||||||||||||||||||||||||||||
Consolidated Statement of Income | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||
Details About | Line Item That Includes | September 30, | September 30, | |||||||||||||||||||||||||||||
AOCI Components | Reclassification | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||
Unrealized appreciation (decline) on available-for-sale investments | ||||||||||||||||||||||||||||||||
Net realized gains (losses) | $ | (55,940) | $ | 68,373 | $ | (186,570) | $ | 135,291 | ||||||||||||||||||||||||
Provision for credit losses | 8,652 | (457) | (48,096) | (1,208) | ||||||||||||||||||||||||||||
Total before tax | (47,288) | 67,916 | (234,666) | 134,083 | ||||||||||||||||||||||||||||
Income tax (expense) benefit | 703 | (5,262) | 28,093 | (13,579) | ||||||||||||||||||||||||||||
Net of tax | $ | (46,585) | $ | 62,654 | $ | (206,573) | $ | 120,504 |
Before Tax Amount | Tax Expense (Benefit) | Net of Tax Amount | |||||||||||||||
Three Months Ended September 30, 2022 | |||||||||||||||||
Unrealized appreciation (decline) in value of investments: | |||||||||||||||||
Unrealized holding gains (losses) arising during period | $ | (671,907) | $ | (62,148) | $ | (609,759) | |||||||||||
Less reclassification of net realized gains (losses) included in net income | (47,288) | (703) | (46,585) | ||||||||||||||
Foreign currency translation adjustments | (70,388) | — | (70,388) | ||||||||||||||
Other comprehensive income (loss) | $ | (695,007) | $ | (61,445) | $ | (633,562) | |||||||||||
Three Months Ended September 30, 2021 | |||||||||||||||||
Unrealized appreciation (decline) in value of investments: | |||||||||||||||||
Unrealized holding gains (losses) arising during period | $ | (104,607) | $ | (8,684) | $ | (95,923) | |||||||||||
Less reclassification of net realized gains (losses) included in net income | 67,916 | 5,262 | 62,654 | ||||||||||||||
Foreign currency translation adjustments | (32,060) | (350) | (31,710) | ||||||||||||||
Other comprehensive income (loss) | $ | (204,583) | $ | (14,296) | $ | (190,287) | |||||||||||
Nine Months Ended September 30, 2022 | |||||||||||||||||
Unrealized appreciation (decline) in value of investments: | |||||||||||||||||
Unrealized holding gains (losses) arising during period | $ | (2,132,845) | $ | (240,726) | $ | (1,892,119) | |||||||||||
Less reclassification of net realized gains (losses) included in net income | (234,666) | (28,093) | (206,573) | ||||||||||||||
Foreign currency translation adjustments | (141,515) | 166 | (141,681) | ||||||||||||||
Other comprehensive income (loss) | $ | (2,039,694) | $ | (212,467) | $ | (1,827,227) | |||||||||||
Nine Months Ended September 30, 2021 | |||||||||||||||||
Unrealized appreciation (decline) in value of investments: | |||||||||||||||||
Unrealized holding gains (losses) arising during period | $ | (307,910) | $ | (28,808) | $ | (279,102) | |||||||||||
Less reclassification of net realized gains (losses) included in net income | 134,083 | 13,579 | 120,504 | ||||||||||||||
Foreign currency translation adjustments | (54,083) | 6 | (54,089) | ||||||||||||||
Other comprehensive income (loss) | $ | (496,076) | $ | (42,381) | $ | (453,695) |
ARCH CAPITAL | 39 | 2022 THIRD QUARTER FORM 10-Q |
ARCH CAPITAL | 40 | 2022 THIRD QUARTER FORM 10-Q |
Page No. | |||||||||||
Current Outlook | |||||||||||
Financial Measures | |||||||||||
Comments on Non-GAAP Measures | |||||||||||
Results of Operations | |||||||||||
Insurance Segment | |||||||||||
Reinsurance Segment | |||||||||||
Mortgage Segment | |||||||||||
Corporate Segment | |||||||||||
Critical Accounting Policies, Estimates and Recent Accounting Pronouncements | |||||||||||
Financial Condition | |||||||||||
Liquidity | |||||||||||
Capital Resources and Other | |||||||||||
ARCH CAPITAL | 41 | 2022 THIRD QUARTER FORM 10-Q |
ARCH CAPITAL | 42 | 2022 THIRD QUARTER FORM 10-Q |
Arch Portfolio | Benchmark Return | ||||||||||
Pre-tax total return (before investment expenses): | |||||||||||
2022 Third Quarter | (3.01) | % | (4.01) | % | |||||||
2021 Third Quarter | 0.01 | % | (0.40) | % | |||||||
Nine Months Ended September 30, 2022 | (8.83) | % | (12.78) | % | |||||||
Nine Months Ended September 30, 2021 | 1.50 | % | 0.87 | % |
ARCH CAPITAL | 43 | 2022 THIRD QUARTER FORM 10-Q |
% | |||||
ICE BoAML 1-5 Year A - AAA U.S. Corporate Index | 13.00 | % | |||
ICE BoAML 5-10 Year A - AAA U.S. Corporate Index | 11.00 | ||||
ICE BoAML 1-5 Year U.S. Treasury Index | 11.00 | ||||
MSCI ACWI Net Total Return USD Index | 9.30 | ||||
ICE BoAML 1-10 Year BBB U.S. Corporate Index | 5.00 | ||||
JPM CLOIE Investment Grade | 5.00 | ||||
S&P/LSTA Leveraged Loan Total Return Index | 4.965 | ||||
ICE BoAML U.S. Mortgage Backed Securities Index | 4.00 | ||||
ICE BoAML AAA US Fixed Rate CMBS | 4.00 | ||||
ICE BoAML 1-5 Year U.K. Gilt Index | 4.00 | ||||
ICE BoAML German Government 1-10 Year Index | 3.50 | ||||
ICE BoAML 0-3 Year U.S. Treasury Index | 3.25 | ||||
ICE BoAML 5-10 Year U.S. Treasury Index | 3.00 | ||||
ICE BoAML 1-10 Year U.S. Municipal Securities Index | 3.00 | ||||
Bloomberg Barclays ABS Aaa Index | 3.00 | ||||
ICE BoAML 1-5 Year Australia Government Index | 2.75 | ||||
ICE BoAML U.S. High Yield Constrained Index | 2.50 | ||||
ICE BoAML 1-5 Year Canada Government Index | 2.00 | ||||
ICE BofA CCC and Lower US High Yield Constrained Index | 1.38 | ||||
Bloomberg Barclays Global High Yield Index | 1.38 | ||||
S&P DJ Global ex-US Select Real Estate Securities Net Index | 0.825 | ||||
FTSE Nareit All Mortgage Capped Index Total Return USD | 0.825 | ||||
Bloomberg Barclays CMBS: Erisa Eligible Unhedged USD | 0.825 | ||||
ICE BoAML 15+ Year Canada Government Index | 0.50 | ||||
Total | 100.00 | % |
ARCH CAPITAL | 44 | 2022 THIRD QUARTER FORM 10-Q |
ARCH CAPITAL | 45 | 2022 THIRD QUARTER FORM 10-Q |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net income available to Arch common shareholders | $ | 6,917 | $ | 388,751 | $ | 586,693 | $ | 1,480,324 | |||||||||||||||
Net realized (gains) losses | 183,674 | 25,040 | 742,667 | (247,949) | |||||||||||||||||||
Equity in net (income) loss of investment funds accounted for using the equity method | 18,861 | (105,398) | (75,505) | (299,270) | |||||||||||||||||||
Net foreign exchange (gains) losses | (90,537) | (36,078) | (182,189) | (39,522) | |||||||||||||||||||
Transaction costs and other | 76 | 1,036 | 734 | 889 | |||||||||||||||||||
Loss on redemption of preferred shares | — | 15,101 | — | 15,101 | |||||||||||||||||||
Income tax expense (benefit) (1) | (13,019) | 6,236 | (37,933) | 32,100 | |||||||||||||||||||
After-tax operating income available to Arch common shareholders | $ | 105,972 | $ | 294,688 | $ | 1,034,467 | $ | 941,673 | |||||||||||||||
Beginning common shareholders’ equity | $ | 11,587,566 | $ | 12,706,072 | $ | 12,715,896 | $ | 12,325,886 | |||||||||||||||
Ending common shareholders’ equity | $ | 10,965,110 | $ | 12,557,526 | $ | 10,965,110 | $ | 12,557,526 | |||||||||||||||
Average common shareholders’ equity | $ | 11,276,338 | $ | 12,631,799 | $ | 11,840,503 | $ | 12,441,706 | |||||||||||||||
Annualized net income return on average common equity % | 0.2 | 12.3 | 6.6 | 15.9 | |||||||||||||||||||
Annualized operating return on average common equity % | 3.8 | 9.3 | 11.6 | 10.1 |
Three Months Ended September 30, | |||||||||||||||||
2022 | 2021 | % Change | |||||||||||||||
Gross premiums written | $ | 1,862,026 | $ | 1,596,619 | 16.6 | ||||||||||||
Premiums ceded | (493,267) | (442,806) | |||||||||||||||
Net premiums written | 1,368,759 | 1,153,813 | 18.6 | ||||||||||||||
Change in unearned premiums | (181,851) | (215,143) | |||||||||||||||
Net premiums earned | 1,186,908 | 938,670 | 26.4 | ||||||||||||||
Losses and loss adjustment expenses | (822,663) | (668,630) | |||||||||||||||
Acquisition expenses | (232,469) | (152,467) | |||||||||||||||
Other operating expenses | (165,499) | (138,931) | |||||||||||||||
Underwriting income (loss) | $ | (33,723) | $ | (21,358) | (57.9) | ||||||||||||
Underwriting Ratios | % Point Change | ||||||||||||||||
Loss ratio | 69.3 | % | 71.2 | % | (1.9) | ||||||||||||
Acquisition expense ratio | 19.6 | % | 16.2 | % | 3.4 | ||||||||||||
Other operating expense ratio | 13.9 | % | 14.8 | % | (0.9) | ||||||||||||
Combined ratio | 102.8 | % | 102.2 | % | 0.6 |
ARCH CAPITAL | 46 | 2022 THIRD QUARTER FORM 10-Q |
Nine Months Ended September 30, | |||||||||||||||||
2022 | 2021 | % Change | |||||||||||||||
Gross premiums written | $ | 5,286,798 | $ | 4,381,372 | 20.7 | ||||||||||||
Premiums ceded | (1,482,886) | (1,269,165) | |||||||||||||||
Net premiums written | 3,803,912 | 3,112,207 | 22.2 | ||||||||||||||
Change in unearned premiums | (488,164) | (488,636) | |||||||||||||||
Net premiums earned | 3,315,748 | 2,623,571 | 26.4 | ||||||||||||||
Losses and loss adjustment expenses | (2,053,161) | (1,750,257) | |||||||||||||||
Acquisition expenses | (641,807) | (417,541) | |||||||||||||||
Other operating expenses | (493,412) | (409,386) | |||||||||||||||
Underwriting income (loss) | $ | 127,368 | $ | 46,387 | 174.6 | ||||||||||||
Underwriting Ratios | % Point Change | ||||||||||||||||
Loss ratio | 61.9 | % | 66.7 | % | (4.8) | ||||||||||||
Acquisition expense ratio | 19.4 | % | 15.9 | % | 3.5 | ||||||||||||
Other operating expense ratio | 14.9 | % | 15.6 | % | (0.7) | ||||||||||||
Combined ratio | 96.2 | % | 98.2 | % | (2.0) |
Three Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Professional lines | $ | 412,173 | 30.1 | $ | 310,185 | 26.9 | |||||||||||||||||
Property, energy, marine and aviation | 241,357 | 17.6 | 205,021 | 17.8 | |||||||||||||||||||
Programs | 189,263 | 13.8 | 196,048 | 17.0 | |||||||||||||||||||
Excess and surplus casualty | 110,917 | 8.1 | 98,320 | 8.5 | |||||||||||||||||||
Travel, accident and health | 107,434 | 7.8 | 62,837 | 5.4 | |||||||||||||||||||
Construction and national accounts | 98,381 | 7.2 | 102,294 | 8.9 | |||||||||||||||||||
Lenders products | 41,889 | 3.1 | 38,905 | 3.4 | |||||||||||||||||||
Other | 167,345 | 12.2 | 140,203 | 12.2 | |||||||||||||||||||
Total | $ | 1,368,759 | 100.0 | $ | 1,153,813 | 100.0 |
ARCH CAPITAL | 47 | 2022 THIRD QUARTER FORM 10-Q |
Nine Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Professional lines | $ | 1,109,416 | 29.2 | $ | 803,392 | 25.8 | |||||||||||||||||
Property, energy, marine and aviation | 687,742 | 18.1 | 564,462 | 18.1 | |||||||||||||||||||
Programs | 482,003 | 12.7 | 503,822 | 16.2 | |||||||||||||||||||
Excess and surplus casualty | 331,715 | 8.7 | 258,259 | 8.3 | |||||||||||||||||||
Travel, accident and health | 378,736 | 10.0 | 226,214 | 7.3 | |||||||||||||||||||
Construction and national accounts | 334,720 | 8.8 | 333,484 | 10.7 | |||||||||||||||||||
Lenders products | 103,163 | 2.7 | 114,151 | 3.7 | |||||||||||||||||||
Other | 376,417 | 9.9 | 308,423 | 9.9 | |||||||||||||||||||
Total | $ | 3,803,912 | 100.0 | $ | 3,112,207 | 100.0 |
Three Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Professional lines | $ | 341,833 | 28.8 | $ | 249,007 | 26.5 | |||||||||||||||||
Property, energy, marine and aviation | 202,483 | 17.1 | 178,167 | 19.0 | |||||||||||||||||||
Programs | 150,453 | 12.7 | 137,299 | 14.6 | |||||||||||||||||||
Excess and surplus casualty | 100,175 | 8.4 | 84,048 | 9.0 | |||||||||||||||||||
Travel, accident and health | 133,445 | 11.2 | 56,102 | 6.0 | |||||||||||||||||||
Construction and national accounts | 109,905 | 9.3 | 104,261 | 11.1 | |||||||||||||||||||
Lenders products | 33,253 | 2.8 | 33,030 | 3.5 | |||||||||||||||||||
Other | 115,361 | 9.7 | 96,756 | 10.3 | |||||||||||||||||||
Total | $ | 1,186,908 | 100.0 | $ | 938,670 | 100.0 |
Nine Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Professional lines | $ | 945,761 | 28.5 | $ | 662,776 | 25.3 | |||||||||||||||||
Property, energy, marine and aviation | 557,481 | 16.8 | 488,326 | 18.6 | |||||||||||||||||||
Programs | 438,943 | 13.2 | 369,113 | 14.1 | |||||||||||||||||||
Excess and surplus casualty | 289,305 | 8.7 | 232,314 | 8.9 | |||||||||||||||||||
Travel, accident and health | 368,260 | 11.1 | 168,378 | 6.4 | |||||||||||||||||||
Construction and national accounts | 306,204 | 9.2 | 317,597 | 12.1 | |||||||||||||||||||
Lenders products | 91,435 | 2.8 | 119,507 | 4.6 | |||||||||||||||||||
Other | 318,359 | 9.6 | 265,560 | 10.1 | |||||||||||||||||||
Total | $ | 3,315,748 | 100.0 | $ | 2,623,571 | 100.0 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Current year | 69.8 | % | 71.7 | % | 62.5 | % | 67.2 | % | |||||||||||||||
Prior period reserve development | (0.5) | % | (0.5) | % | (0.6) | % | (0.5) | % | |||||||||||||||
Loss ratio | 69.3 | % | 71.2 | % | 61.9 | % | 66.7 | % |
ARCH CAPITAL | 48 | 2022 THIRD QUARTER FORM 10-Q |
Three Months Ended September 30, | |||||||||||||||||
2022 | 2021 | % Change | |||||||||||||||
Gross premiums written | $ | 1,639,061 | $ | 1,251,760 | 30.9 | ||||||||||||
Premiums ceded | (560,225) | (630,371) | |||||||||||||||
Net premiums written | 1,078,836 | 621,389 | 73.6 | ||||||||||||||
Change in unearned premiums | (77,062) | 57,313 | |||||||||||||||
Net premiums earned | 1,001,774 | 678,702 | 47.6 | ||||||||||||||
Other underwriting income (loss) | 452 | 3,293 | |||||||||||||||
Losses and loss adjustment expenses | (927,911) | (545,846) | |||||||||||||||
Acquisition expenses | (208,425) | (129,450) | |||||||||||||||
Other operating expenses | (62,777) | (45,647) | |||||||||||||||
Underwriting income (loss) | $ | (196,887) | $ | (38,948) | (405.5) | ||||||||||||
Underwriting Ratios | % Point Change | ||||||||||||||||
Loss ratio | 92.6 | % | 80.4 | % | 12.2 | ||||||||||||
Acquisition expense ratio | 20.8 | % | 19.1 | % | 1.7 | ||||||||||||
Other operating expense ratio | 6.3 | % | 6.7 | % | (0.4) | ||||||||||||
Combined ratio | 119.7 | % | 106.2 | % | 13.5 |
Nine Months Ended September 30, | |||||||||||||||||
2022 | 2021 | % Change | |||||||||||||||
Gross premiums written | $ | 5,151,401 | $ | 4,080,840 | 26.2 | ||||||||||||
Premiums ceded | (1,770,807) | (1,535,607) | |||||||||||||||
Net premiums written | 3,380,594 | 2,545,233 | 32.8 | ||||||||||||||
Change in unearned premiums | (646,421) | (484,607) | |||||||||||||||
Net premiums earned | 2,734,173 | 2,060,626 | 32.7 | ||||||||||||||
Other underwriting income | 5,814 | 3,148 | |||||||||||||||
Losses and loss adjustment expenses | (1,920,189) | (1,494,539) | |||||||||||||||
Acquisition expenses | (569,915) | (381,060) | |||||||||||||||
Other operating expenses | (198,606) | (150,856) | |||||||||||||||
Underwriting income (loss) | $ | 51,277 | $ | 37,319 | 37.4 | ||||||||||||
Underwriting Ratios | % Point Change | ||||||||||||||||
Loss ratio | 70.2 | % | 72.5 | % | (2.3) | ||||||||||||
Acquisition expense ratio | 20.8 | % | 18.5 | % | 2.3 | ||||||||||||
Other operating expense ratio | 7.3 | % | 7.3 | % | — | ||||||||||||
Combined ratio | 98.3 | % | 98.3 | % | — |
ARCH CAPITAL | 49 | 2022 THIRD QUARTER FORM 10-Q |
Three Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Other specialty | $ | 381,004 | 35.3 | $ | 167,006 | 26.9 | |||||||||||||||||
Property excluding property catastrophe | 341,809 | 31.7 | 237,025 | 38.1 | |||||||||||||||||||
Casualty | 230,308 | 21.3 | 187,066 | 30.1 | |||||||||||||||||||
Property catastrophe | 77,606 | 7.2 | (7,125) | (1.1) | |||||||||||||||||||
Marine and aviation | 28,633 | 2.7 | 19,159 | 3.1 | |||||||||||||||||||
Other | 19,476 | 1.8 | 18,258 | 2.9 | |||||||||||||||||||
Total | $ | 1,078,836 | 100.0 | $ | 621,389 | 100.0 | |||||||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Other specialty | $ | 1,179,548 | 34.9 | $ | 747,662 | 29.4 | |||||||||||||||||
Property excluding property catastrophe | 936,270 | 27.7 | 778,959 | 30.6 | |||||||||||||||||||
Casualty | 709,487 | 21.0 | 631,212 | 24.8 | |||||||||||||||||||
Property catastrophe | 361,028 | 10.7 | 197,724 | 7.8 | |||||||||||||||||||
Marine and aviation | 115,579 | 3.4 | 131,045 | 5.1 | |||||||||||||||||||
Other | 78,682 | 2.3 | 58,631 | 2.3 | |||||||||||||||||||
Total | $ | 3,380,594 | 100.0 | $ | 2,545,233 | 100.0 | |||||||||||||||||
Three Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Other specialty | $ | 330,142 | 33.0 | $ | 195,649 | 28.8 | |||||||||||||||||
Property excluding property catastrophe | 282,488 | 28.2 | 210,280 | 31.0 | |||||||||||||||||||
Casualty | 221,636 | 22.1 | 159,697 | 23.5 | |||||||||||||||||||
Property catastrophe | 117,820 | 11.8 | 61,107 | 9.0 | |||||||||||||||||||
Marine and aviation | 25,182 | 2.5 | 29,818 | 4.4 | |||||||||||||||||||
Other | 24,506 | 2.4 | 22,151 | 3.3 | |||||||||||||||||||
Total | $ | 1,001,774 | 100.0 | $ | 678,702 | 100.0 | |||||||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Other specialty | $ | 846,081 | 30.9 | $ | 571,364 | 27.7 | |||||||||||||||||
Property excluding property catastrophe | 781,562 | 28.6 | 600,842 | 29.2 | |||||||||||||||||||
Casualty | 634,208 | 23.2 | 492,574 | 23.9 | |||||||||||||||||||
Property catastrophe | 289,575 | 10.6 | 225,285 | 10.9 | |||||||||||||||||||
Marine and aviation | 109,142 | 4.0 | 112,699 | 5.5 | |||||||||||||||||||
Other | 73,605 | 2.7 | 57,862 | 2.8 | |||||||||||||||||||
Total | $ | 2,734,173 | 100.0 | $ | 2,060,626 | 100.0 | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Current year | 97.5 | % | 91.1 | % | 74.9 | % | 78.3 | % | |||||||||||||||
Prior period reserve development | (4.9) | % | (10.7) | % | (4.7) | % | (5.8) | % | |||||||||||||||
Loss ratio | 92.6 | % | 80.4 | % | 70.2 | % | 72.5 | % |
ARCH CAPITAL | 50 | 2022 THIRD QUARTER FORM 10-Q |
Three Months Ended September 30, | |||||||||||||||||
2022 | 2021 | % Change | |||||||||||||||
Gross premiums written | $ | 362,409 | $ | 360,934 | 0.4 | ||||||||||||
Premiums ceded | (86,230) | (60,207) | |||||||||||||||
Net premiums written | 276,179 | 300,727 | (8.2) | ||||||||||||||
Change in unearned premiums | 5,889 | 11,238 | |||||||||||||||
Net premiums earned | 282,068 | 311,965 | (9.6) | ||||||||||||||
Other underwriting income | 2,625 | 3,981 | |||||||||||||||
Losses and loss adjustment expenses | 67,878 | (11,543) | |||||||||||||||
Acquisition expenses | (6,693) | (24,098) | |||||||||||||||
Other operating expenses | (46,471) | (46,254) | |||||||||||||||
Underwriting income | $ | 299,407 | $ | 234,051 | 27.9 | ||||||||||||
Underwriting Ratios | % Point Change | ||||||||||||||||
Loss ratio | (24.1) | % | 3.7 | % | (27.8) | ||||||||||||
Acquisition expense ratio | 2.4 | % | 7.7 | % | (5.3) | ||||||||||||
Other operating expense ratio | 16.5 | % | 14.8 | % | 1.7 | ||||||||||||
Combined ratio | (5.2) | % | 26.2 | % | (31.4) |
Nine Months Ended September 30, | |||||||||||||||||
2022 | 2021 | % Change | |||||||||||||||
Gross premiums written | $ | 1,099,144 | $ | 1,143,691 | (3.9) | ||||||||||||
Premiums ceded | (241,097) | (171,923) | |||||||||||||||
Net premiums written | 858,047 | 971,768 | (11.7) | ||||||||||||||
Change in unearned premiums | 9,190 | 10,735 | |||||||||||||||
Net premiums earned | 867,237 | 982,503 | (11.7) | ||||||||||||||
Other underwriting income | 6,130 | 15,026 | |||||||||||||||
Losses and loss adjustment expenses | 187,163 | (85,112) | |||||||||||||||
Acquisition expenses | (27,343) | (84,297) | |||||||||||||||
Other operating expenses | (150,064) | (143,697) | |||||||||||||||
Underwriting income | $ | 883,123 | $ | 684,423 | 29.0 | ||||||||||||
Underwriting Ratios | % Point Change | ||||||||||||||||
Loss ratio | (21.6) | % | 8.7 | % | (30.3) | ||||||||||||
Acquisition expense ratio | 3.2 | % | 8.6 | % | (5.4) | ||||||||||||
Other operating expense ratio | 17.3 | % | 14.6 | % | 2.7 | ||||||||||||
Combined ratio | (1.1) | % | 31.9 | % | (33.0) |
ARCH CAPITAL | 51 | 2022 THIRD QUARTER FORM 10-Q |
Three Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Underwriting location: | |||||||||||||||||||||||
United States | $ | 188,290 | 68.2 | $ | 221,315 | 73.6 | |||||||||||||||||
Other | 87,889 | 31.8 | 79,412 | 26.4 | |||||||||||||||||||
Total | $ | 276,179 | 100.0 | $ | 300,727 | 100.0 |
Nine Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Underwriting location: | |||||||||||||||||||||||
United States | $ | 590,606 | 68.8 | $ | 703,489 | 72.4 | |||||||||||||||||
Other | 267,441 | 31.2 | 268,279 | 27.6 | |||||||||||||||||||
Total | $ | 858,047 | 100.0 | $ | 971,768 | 100.0 |
(U.S. Dollars in millions) | Three Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Total new insurance written (NIW) (1) | $ | 17,425 | $ | 27,841 | |||||||||||||||||||
Credit quality (FICO): | |||||||||||||||||||||||
>=740 | $ | 11,615 | 66.7 | $ | 17,514 | 62.9 | |||||||||||||||||
680-739 | 5,322 | 30.5 | 9,012 | 32.4 | |||||||||||||||||||
620-679 | 485 | 2.8 | 1,315 | 4.7 | |||||||||||||||||||
<620 | 3 | — | — | — | |||||||||||||||||||
Total | $ | 17,425 | 100.0 | $ | 27,841 | 100.0 | |||||||||||||||||
Loan-to-value (LTV): | |||||||||||||||||||||||
95.01% and above | $ | 973 | 5.6 | $ | 1,554 | 5.6 | |||||||||||||||||
90.01% to 95.00% | 9,916 | 56.9 | 14,240 | 51.1 | |||||||||||||||||||
85.01% to 90.00% | 4,839 | 27.8 | 8,394 | 30.1 | |||||||||||||||||||
85.00% and below | 1,697 | 9.7 | 3,653 | 13.1 | |||||||||||||||||||
Total | $ | 17,425 | 100.0 | $ | 27,841 | 100.0 | |||||||||||||||||
Monthly vs. single: | |||||||||||||||||||||||
Monthly | $ | 16,911 | 97.1 | $ | 26,515 | 95.2 | |||||||||||||||||
Single | 514 | 2.9 | 1,326 | 4.8 | |||||||||||||||||||
Total | $ | 17,425 | 100.0 | $ | 27,841 | 100.0 | |||||||||||||||||
Purchase vs. refinance: | |||||||||||||||||||||||
Purchase | $ | 17,159 | 98.5 | $ | 25,711 | 92.3 | |||||||||||||||||
Refinance | 266 | 1.5 | 2,130 | 7.7 | |||||||||||||||||||
Total | $ | 17,425 | 100.0 | $ | 27,841 | 100.0 |
ARCH CAPITAL | 52 | 2022 THIRD QUARTER FORM 10-Q |
(U.S. Dollars in millions) | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Total new insurance written (NIW) (1) | $ | 60,939 | $ | 83,232 | |||||||||||||||||||
Credit quality (FICO): | |||||||||||||||||||||||
>=740 | $ | 40,888 | 67.1 | $ | 54,572 | 65.6 | |||||||||||||||||
680-739 | 18,376 | 30.2 | 25,543 | 30.7 | |||||||||||||||||||
620-679 | 1,667 | 2.7 | 3,117 | 3.7 | |||||||||||||||||||
<620 | 8 | — | — | — | |||||||||||||||||||
Total | $ | 60,939 | 100.0 | $ | 83,232 | 100.0 | |||||||||||||||||
Loan-to-value (LTV): | |||||||||||||||||||||||
95.01% and above | $ | 3,264 | 5.4 | $ | 4,646 | 5.6 | |||||||||||||||||
90.01% to 95.00% | 33,984 | 55.8 | 40,464 | 48.6 | |||||||||||||||||||
85.01% to 90.00% | 17,163 | 28.2 | 25,381 | 30.5 | |||||||||||||||||||
85.01% and below | 6,528 | 10.7 | 12,741 | 15.3 | |||||||||||||||||||
Total | $ | 60,939 | 100.0 | $ | 83,232 | 100.0 | |||||||||||||||||
Monthly vs. single: | |||||||||||||||||||||||
Monthly | $ | 58,984 | 96.8 | $ | 78,229 | 94.0 | |||||||||||||||||
Single | 1,955 | 3.2 | 5,003 | 6.0 | |||||||||||||||||||
Total | $ | 60,939 | 100.0 | $ | 83,232 | 100.0 | |||||||||||||||||
Purchase vs. refinance: | |||||||||||||||||||||||
Purchase | $ | 59,375 | 97.4 | $ | 71,226 | 85.6 | |||||||||||||||||
Refinance | 1,564 | 2.6 | 12,006 | 14.4 | |||||||||||||||||||
Total | $ | 60,939 | 100.0 | $ | 83,232 | 100.0 |
Three Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Underwriting location: | |||||||||||||||||||||||
United States | $ | 196,874 | 69.8 | $ | 236,892 | 75.9 | |||||||||||||||||
Other | 85,194 | 30.2 | 75,073 | 24.1 | |||||||||||||||||||
Total | $ | 282,068 | 100.0 | $ | 311,965 | 100.0 |
Nine Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Underwriting location: | |||||||||||||||||||||||
United States | $ | 615,599 | 71.0 | $ | 747,830 | 76.1 | |||||||||||||||||
Other | 251,638 | 29.0 | 234,673 | 23.9 | |||||||||||||||||||
Total | $ | 867,237 | 100.0 | $ | 982,503 | 100.0 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Current year | 20.6 | % | 18.2 | % | 18.3 | % | 18.8 | % | |||||||||||||||
Prior period reserve development | (44.7) | % | (14.5) | % | (39.9) | % | (10.1) | % | |||||||||||||||
Loss ratio | (24.1) | % | 3.7 | % | (21.6) | % | 8.7 | % |
ARCH CAPITAL | 53 | 2022 THIRD QUARTER FORM 10-Q |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Fixed maturities | $ | 123,568 | $ | 75,964 | $ | 310,963 | $ | 232,690 | |||||||||||||||
Equity securities | 4,261 | 9,867 | 16,620 | 23,799 | |||||||||||||||||||
Short-term investments | 9,304 | 1,858 | 15,999 | 3,474 | |||||||||||||||||||
Other (1) | 8,644 | 19,114 | 28,704 | 55,699 | |||||||||||||||||||
Gross investment income | 145,777 | 106,803 | 372,286 | 315,662 | |||||||||||||||||||
Investment expenses (2) | (17,137) | (18,608) | (56,818) | (59,308) | |||||||||||||||||||
Net investment income | $ | 128,640 | $ | 88,195 | $ | 315,468 | 256,354 |
ARCH CAPITAL | 54 | 2022 THIRD QUARTER FORM 10-Q |
September 30, 2022, | December 31, 2021 | ||||||||||
Average effective duration (in years) | 2.84 | 2.70 | |||||||||
Average S&P/Moody’s credit ratings (1) | AA/Aa2 | AA-/Aa3 | |||||||||
ARCH CAPITAL | 55 | 2022 THIRD QUARTER FORM 10-Q |
Estimated Fair Value | % of Total | ||||||||||
September 30, 2022 | |||||||||||
U.S. government and gov’t agencies (1) | $ | 5,746,853 | 30.8 | ||||||||
AAA | 3,344,746 | 17.9 | |||||||||
AA | 2,030,730 | 10.9 | |||||||||
A | 3,382,545 | 18.1 | |||||||||
BBB | 3,001,304 | 16.1 | |||||||||
BB | 532,162 | 2.9 | |||||||||
B | 357,543 | 1.9 | |||||||||
Lower than B | 12,417 | 0.1 | |||||||||
Not rated | 242,730 | 1.3 | |||||||||
Total | $ | 18,651,030 | 100.0 | ||||||||
December 31, 2021 | |||||||||||
U.S. government and gov’t agencies (1) | $ | 5,063,191 | 27.5 | ||||||||
AAA | 3,783,386 | 20.5 | |||||||||
AA | 2,459,413 | 13.4 | |||||||||
A | 2,943,594 | 16.0 | |||||||||
BBB | 2,936,398 | 15.9 | |||||||||
BB | 501,588 | 2.7 | |||||||||
B | 371,747 | 2.0 | |||||||||
Lower than B | 43,756 | 0.2 | |||||||||
Not rated | 311,734 | 1.7 | |||||||||
Total | $ | 18,414,807 | 100.0 |
Severity of gross unrealized losses: | Estimated Fair Value | Gross Unrealized Losses | % of Total Gross Unrealized Losses | ||||||||||||||
September 30, 2022 | |||||||||||||||||
0-10% | $ | 10,662,904 | $ | (551,217) | 29.6 | ||||||||||||
10-20% | 5,851,810 | (952,285) | 51.2 | ||||||||||||||
20-30% | 1,070,957 | (326,093) | 17.5 | ||||||||||||||
Greater than 30% | 63,903 | (31,059) | 1.7 | ||||||||||||||
Total | $ | 17,649,574 | $ | (1,860,654) | 100.0 | ||||||||||||
December 31, 2021 | |||||||||||||||||
0-10% | $ | 12,231,146 | $ | (166,867) | 97.6 | ||||||||||||
10-20% | 16,884 | (2,412) | 1.4 | ||||||||||||||
20-30% | 2,593 | (759) | 0.4 | ||||||||||||||
Greater than 30% | 684 | (916) | 0.5 | ||||||||||||||
Total | $ | 12,251,307 | $ | (170,954) | 100.0 |
Estimated Fair Value | Credit Rating (1) | ||||||||||
Bank of America Corporation | $ | 430,809 | A-/A2 | ||||||||
JPMorgan Chase & Co. | 297,868 | A-/A1 | |||||||||
Morgan Stanley | 268,742 | A-/A1 | |||||||||
Citigroup Inc. | 260,312 | BBB+/A3 | |||||||||
The Goldman Sachs Group, Inc. | 243,516 | BBB+/A2 | |||||||||
Wells Fargo & Company | 237,947 | BBB+/A1 | |||||||||
Blackstone Inc. | 165,585 | BBB/Baa3 | |||||||||
Blue Owl Capital Inc. | 157,904 | BBB-/Baa3 | |||||||||
UBS Group AG | 125,810 | A/Aa3 | |||||||||
Dai-ichi Life Holdings, Inc. | 106,357 | AA-/A1 | |||||||||
Total | $ | 2,294,850 |
Agencies | Investment Grade | Below Investment Grade | Total | ||||||||||||||||||||
September 30, 2022 | |||||||||||||||||||||||
RMBS | $ | 602,423 | $ | 143,188 | $ | 17,760 | $ | 763,371 | |||||||||||||||
CMBS | 18,022 | 957,327 | 88,889 | 1,064,238 | |||||||||||||||||||
ABS | — | 1,410,672 | 180,970 | 1,591,642 | |||||||||||||||||||
Total | $ | 620,445 | $ | 2,511,187 | $ | 287,619 | $ | 3,419,251 | |||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
RMBS | $ | 268,229 | $ | 129,296 | $ | 10,952 | $ | 408,477 | |||||||||||||||
CMBS | 22,198 | 926,302 | 97,984 | 1,046,484 | |||||||||||||||||||
ABS | — | 2,543,907 | 152,551 | 2,696,458 | |||||||||||||||||||
Total | $ | 290,427 | $ | 3,599,505 | $ | 261,487 | $ | 4,151,419 |
September 30, 2022 | December 31, 2021 | ||||||||||
Equities (1) | $ | 527,658 | $ | 883,722 | |||||||
Exchange traded funds | |||||||||||
Fixed income (2) | 269,276 | 455,467 | |||||||||
Equity and other (3) | 26,840 | 491,474 | |||||||||
Total | $ | 823,774 | $ | 1,830,663 |
ARCH CAPITAL | 56 | 2022 THIRD QUARTER FORM 10-Q |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Premiums written: | |||||||||||||||||||||||
Direct | $ | 2,247,480 | $ | 1,993,098 | $ | 6,503,383 | $ | 5,795,236 | |||||||||||||||
Assumed | 1,613,203 | 1,214,317 | 5,027,802 | 4,095,676 | |||||||||||||||||||
Ceded | (1,136,909) | (1,131,486) | (3,488,632) | (2,907,002) | |||||||||||||||||||
Net | $ | 2,723,774 | $ | 2,075,929 | $ | 8,042,553 | $ | 6,983,910 | |||||||||||||||
Premiums earned: | |||||||||||||||||||||||
Direct | $ | 2,067,084 | $ | 1,754,462 | $ | 5,925,934 | $ | 5,263,286 | |||||||||||||||
Assumed | 1,525,027 | 1,129,434 | 4,037,580 | 3,169,016 | |||||||||||||||||||
Ceded | (1,121,361) | (954,559) | (3,046,356) | (2,433,634) | |||||||||||||||||||
Net | $ | 2,470,750 | $ | 1,929,337 | $ | 6,917,158 | $ | 5,998,668 | |||||||||||||||
Losses and LAE: | |||||||||||||||||||||||
Direct | $ | 1,228,281 | $ | 1,101,793 | $ | 3,016,634 | $ | 3,134,305 | |||||||||||||||
Assumed | 1,370,308 | 961,285 | 2,661,854 | 2,182,852 | |||||||||||||||||||
Ceded | (915,893) | (837,059) | (1,892,301) | (1,728,207) | |||||||||||||||||||
Net | $ | 1,682,696 | $ | 1,226,019 | $ | 3,786,187 | $ | 3,588,950 |
Bellemeade Entities (Issue Date) | Initial Coverage at Issuance | Current Coverage | Remaining Retention, Net | ||||||||||||||
2017-1 Ltd. (1) | $ | 368,114 | $ | 46,772 | $ | 137,613 | |||||||||||
2018-1 Ltd. (2) | 374,460 | 103,131 | 136,200 | ||||||||||||||
2018-3 Ltd. (3) | 506,110 | 217,701 | 143,738 | ||||||||||||||
2019-1 Ltd. (4) | 341,790 | 119,193 | 109,450 | ||||||||||||||
2019-2 Ltd. (5) | 621,022 | 347,050 | 182,251 | ||||||||||||||
2019-3 Ltd. (6) | 700,920 | 257,663 | 203,047 | ||||||||||||||
2019-4 Ltd. (7) | 577,267 | 283,684 | 136,334 | ||||||||||||||
2020-2 Ltd. (8) | 449,167 | 123,049 | 233,262 | ||||||||||||||
2020-3 Ltd. (9) | 451,816 | 276,954 | 159,632 | ||||||||||||||
2020-4 Ltd. (10) | 337,013 | 112,191 | 137,694 | ||||||||||||||
2021-1 Ltd. (11) | 643,577 | 540,267 | 152,499 | ||||||||||||||
2021-2 Ltd. (12) | 616,017 | 551,307 | 140,012 | ||||||||||||||
2021-3 Ltd. (13) | 639,391 | 627,436 | 136,033 | ||||||||||||||
2022-1 Ltd. (14) | 316,760 | 316,760 | 150,269 | ||||||||||||||
2022-2 Ltd. (15) | 327,165 | 327,165 | 222,386 | ||||||||||||||
Total | $ | 7,270,589 | $ | 4,250,323 | $ | 2,380,420 |
ARCH CAPITAL | 57 | 2022 THIRD QUARTER FORM 10-Q |
September 30, 2022 | December 31, 2021 | ||||||||||
Insurance segment: | |||||||||||
Case reserves | $ | 2,214,924 | $ | 2,102,891 | |||||||
IBNR reserves | 4,797,323 | 4,269,904 | |||||||||
Total net reserves | 7,012,247 | 6,372,795 | |||||||||
Reinsurance segment: | |||||||||||
Case reserves | 1,720,426 | 1,733,571 | |||||||||
Additional case reserves | 583,197 | 426,531 | |||||||||
IBNR reserves | 3,100,704 | 2,656,527 | |||||||||
Total net reserves | 5,404,327 | 4,816,629 | |||||||||
Mortgage segment: | |||||||||||
Case reserves | 542,975 | 741,897 | |||||||||
IBNR reserves | 222,194 | 226,604 | |||||||||
Total net reserves | 765,169 | 968,501 | |||||||||
Total: | |||||||||||
Case reserves | 4,478,325 | 4,578,359 | |||||||||
Additional case reserves | 583,197 | 426,531 | |||||||||
IBNR reserves | 8,120,221 | 7,153,035 | |||||||||
Total net reserves | $ | 13,181,743 | $ | 12,157,925 |
September 30, 2022 | December 31, 2021 | ||||||||||
Insurance segment: | |||||||||||
Professional lines | $ | 1,888,083 | $ | 1,673,615 | |||||||
Construction and national accounts | 1,559,888 | 1,490,206 | |||||||||
Programs | 846,580 | 793,187 | |||||||||
Excess and surplus casualty | 739,676 | 657,307 | |||||||||
Property, energy, marine and aviation | 713,021 | 599,093 | |||||||||
Travel, accident and health | 132,337 | 96,051 | |||||||||
Lenders products | 40,960 | 58,351 | |||||||||
Other | 1,091,702 | 1,004,985 | |||||||||
Total net reserves | $ | 7,012,247 | $ | 6,372,795 |
September 30, 2022 | December 31, 2021 | ||||||||||
Reinsurance segment: | |||||||||||
Casualty | $ | 2,223,204 | $ | 2,123,360 | |||||||
Other specialty | 1,215,362 | 1,113,766 | |||||||||
Property excluding property catastrophe | 971,430 | 711,859 | |||||||||
Property catastrophe | 586,249 | 486,911 | |||||||||
Marine and aviation | 270,574 | 246,861 | |||||||||
Other | 137,508 | 133,872 | |||||||||
Total net reserves | $ | 5,404,327 | $ | 4,816,629 |
ARCH CAPITAL | 58 | 2022 THIRD QUARTER FORM 10-Q |
September 30, 2022 | December 31, 2021 | ||||||||||
U.S. primary mortgage insurance (1) | $ | 545,577 | $ | 710,708 | |||||||
U.S. credit risk transfer (CRT) and other | 108,667 | 112,549 | |||||||||
International mortgage insurance/ reinsurance | 110,925 | 145,244 | |||||||||
Total net reserves | $ | 765,169 | $ | 968,501 |
(U.S. Dollars in millions) | September 30, 2022 | December 31, 2021 | |||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Insurance In Force (IIF) (1): | |||||||||||||||||||||||
U.S. primary mortgage insurance | $ | 294,857 | 58.8 | $ | 280,945 | 61.0 | |||||||||||||||||
U.S. credit risk transfer (CRT) and other (2) | 143,897 | 28.7 | 110,018 | 23.9 | |||||||||||||||||||
International mortgage insurance/reinsurance (3) | 63,068 | 12.6 | 69,655 | 15.1 | |||||||||||||||||||
Total | $ | 501,822 | 100.0 | $ | 460,618 | 100.0 | |||||||||||||||||
Risk In Force (RIF) (4): | |||||||||||||||||||||||
U.S. primary mortgage insurance | $ | 75,343 | 85.1 | $ | 70,619 | 84.3 | |||||||||||||||||
U.S. credit risk transfer (CRT) and other (2) | 6,473 | 7.3 | 5,120 | 6.1 | |||||||||||||||||||
International mortgage insurance/reinsurance (3) | 6,727 | 7.6 | 7,983 | 9.5 | |||||||||||||||||||
Total | $ | 88,543 | 100.0 | $ | 83,722 | 100.0 |
(U.S. Dollars in millions) | IIF | RIF | Delinquency | ||||||||||||||||||||||||||
Amount | % | Amount | % | Rate (1) | |||||||||||||||||||||||||
Policy year: | |||||||||||||||||||||||||||||
2012 and prior | $ | 10,362 | 3.5 | $ | 2,509 | 3.3 | 8.22 | % | |||||||||||||||||||||
2013 | 3,196 | 1.1 | 855 | 1.1 | 2.12 | % | |||||||||||||||||||||||
2014 | 3,903 | 1.3 | 1,071 | 1.4 | 2.61 | % | |||||||||||||||||||||||
2015 | 6,607 | 2.2 | 1,780 | 2.4 | 2.11 | % | |||||||||||||||||||||||
2016 | 11,021 | 3.7 | 2,953 | 3.9 | 2.47 | % | |||||||||||||||||||||||
2017 | 10,017 | 3.4 | 2,654 | 3.5 | 3.27 | % | |||||||||||||||||||||||
2018 | 10,744 | 3.6 | 2,742 | 3.6 | 3.95 | % | |||||||||||||||||||||||
2019 | 19,961 | 6.8 | 5,038 | 6.7 | 2.24 | % | |||||||||||||||||||||||
2020 | 68,974 | 23.4 | 17,294 | 23.0 | 0.87 | % | |||||||||||||||||||||||
2021 | 91,486 | 31.0 | 23,152 | 30.7 | 0.66 | % | |||||||||||||||||||||||
2022 | 58,586 | 19.9 | 15,295 | 20.3 | 0.17 | % | |||||||||||||||||||||||
Total | $ | 294,857 | 100.0 | $ | 75,343 | 100.0 | 1.73 | % |
(U.S. Dollars in millions) | IIF | RIF | Delinquency | ||||||||||||||||||||||||||
Amount | % | Amount | % | Rate (1) | |||||||||||||||||||||||||
Policy year: | |||||||||||||||||||||||||||||
2012 and prior | $ | 13,030 | 4.6 | $ | 2,960 | 4.2 | 8.48 | % | |||||||||||||||||||||
2013 | 4,206 | 1.5 | 1,148 | 1.6 | 2.63 | % | |||||||||||||||||||||||
2014 | 4,822 | 1.7 | 1,328 | 1.9 | 3.14 | % | |||||||||||||||||||||||
2015 | 8,703 | 3.1 | 2,340 | 3.3 | 2.67 | % | |||||||||||||||||||||||
2016 | 14,344 | 5.1 | 3,841 | 5.4 | 3.29 | % | |||||||||||||||||||||||
2017 | 13,128 | 4.7 | 3,436 | 4.9 | 4.09 | % | |||||||||||||||||||||||
2018 | 14,046 | 5.0 | 3,562 | 5.0 | 5.28 | % | |||||||||||||||||||||||
2019 | 25,841 | 9.2 | 6,467 | 9.2 | 3.13 | % | |||||||||||||||||||||||
2020 | 82,502 | 29.4 | 20,341 | 28.8 | 0.97 | % | |||||||||||||||||||||||
2021 | 100,323 | 35.7 | 25,196 | 35.7 | 0.29 | % | |||||||||||||||||||||||
Total | $ | 280,945 | 100.0 | $ | 70,619 | 100.0 | 2.36 | % |
ARCH CAPITAL | 59 | 2022 THIRD QUARTER FORM 10-Q |
(U.S. Dollars in millions) | September 30, 2022 | December 31, 2021 | |||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Credit quality (FICO): | |||||||||||||||||||||||
>=740 | $ | 46,538 | 61.8 | $ | 42,451 | 60.1 | |||||||||||||||||
680-739 | 24,671 | 32.7 | 23,646 | 33.5 | |||||||||||||||||||
620-679 | 3,850 | 5.1 | 4,196 | 5.9 | |||||||||||||||||||
<620 | 284 | 0.4 | 326 | 0.5 | |||||||||||||||||||
Total | $ | 75,343 | 100.0 | $ | 70,619 | 100.0 | |||||||||||||||||
Weighted average FICO score | 748 | 746 | |||||||||||||||||||||
Loan-to-value (LTV): | |||||||||||||||||||||||
95.01% and above | $ | 7,334 | 9.7 | $ | 7,538 | 10.7 | |||||||||||||||||
90.01% to 95.00% | 43,049 | 57.1 | 38,829 | 55.0 | |||||||||||||||||||
85.01% to 90.00% | 20,876 | 27.7 | 20,006 | 28.3 | |||||||||||||||||||
85.00% and below | 4,084 | 5.4 | 4,246 | 6.0 | |||||||||||||||||||
Total | $ | 75,343 | 100.0 | $ | 70,619 | 100.0 | |||||||||||||||||
Weighted average LTV | 92.9 | % | 92.8 | % | |||||||||||||||||||
Total RIF, net of external reinsurance | $ | 56,890 | $ | 54,574 |
(U.S. Dollars in millions) | September 30, 2022 | December 31, 2021 | |||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Total RIF by State: | |||||||||||||||||||||||
California | $ | 6,219 | 8.3 | $ | 5,559 | 7.9 | |||||||||||||||||
Texas | 6,080 | 8.1 | 5,594 | 7.9 | |||||||||||||||||||
Florida | 3,275 | 4.3 | 3,303 | 4.7 | |||||||||||||||||||
Georgia | 3,150 | 4.2 | 2,902 | 4.1 | |||||||||||||||||||
North Carolina | 3,139 | 4.2 | 2,921 | 4.1 | |||||||||||||||||||
Illinois | 3,087 | 4.1 | 2,933 | 4.2 | |||||||||||||||||||
Minnesota | 2,996 | 4.0 | 2,916 | 4.1 | |||||||||||||||||||
Massachusetts | 2,771 | 3.7 | 2,537 | 3.6 | |||||||||||||||||||
Virginia | 2,647 | 3.5 | 2,446 | 3.5 | |||||||||||||||||||
Michigan | 2,587 | 3.4 | 2,492 | 3.5 | |||||||||||||||||||
Other | 39,392 | 52.3 | 37,016 | 52.4 | |||||||||||||||||||
Total | $ | 75,343 | 100.0 | $ | 70,619 | 100.0 |
(U.S. Dollars in thousands, except policy, loan and claim count) | Nine Months Ended | ||||||||||
September 30, | |||||||||||
2022 | 2021 | ||||||||||
Roll-forward of insured loans in default: | |||||||||||
Beginning delinquent number of loans | 27,645 | 52,234 | |||||||||
New notices | 26,328 | 26,483 | |||||||||
Cures | (33,225) | (46,334) | |||||||||
Paid claims | (534) | (613) | |||||||||
Ending delinquent number of loans (1) | 20,214 | 31,770 | |||||||||
Ending number of policies in force (1) | 1,168,735 | 1,188,768 | |||||||||
Delinquency rate (1) | 1.73 | % | 2.67 | % | |||||||
Losses: | |||||||||||
Number of claims paid | 534 | 613 | |||||||||
Total paid claims | $ | 16,865 | $ | 22,848 | |||||||
Average per claim | $ | 31.6 | $ | 37.3 | |||||||
Severity (2) | 74.3 | % | 80.2 | % | |||||||
Average case reserve per default (in thousands) (1) | $ | 27.7 | $ | 23.5 |
(U.S. dollars in thousands, except share data) | September 30, 2022 | December 31, 2021 | |||||||||
Total shareholders’ equity available to Arch | $ | 11,795,110 | $ | 13,545,896 | |||||||
Less preferred shareholders’ equity | 830,000 | 830,000 | |||||||||
Common shareholders’ equity available to Arch | $ | 10,965,110 | $ | 12,715,896 | |||||||
Common shares and common share equivalents outstanding, net of treasury shares (1) | 369,321,990 | 378,923,894 | |||||||||
Book value per share | $ | 29.69 | $ | 33.56 |
ARCH CAPITAL | 60 | 2022 THIRD QUARTER FORM 10-Q |
Nine Months Ended | |||||||||||
September 30, | |||||||||||
2022 | 2021 | ||||||||||
Total cash provided by (used for): | |||||||||||
Operating activities | $ | 2,833,717 | $ | 2,580,697 | |||||||
Investing activities | (2,106,721) | (1,184,436) | |||||||||
Financing activities | (703,877) | (895,943) | |||||||||
Effects of exchange rate changes on foreign currency cash | (79,566) | (30,501) | |||||||||
Increase (decrease) in cash and restricted cash | $ | (56,447) | $ | 469,817 |
(U.S. dollars in thousands, except share data) | September 30, 2022 | December 31, 2021 | |||||||||
Senior notes | $ | 2,725,153 | $ | 2,724,394 | |||||||
Shareholders’ equity available to Arch: | |||||||||||
Series F non-cumulative preferred shares | 330,000 | 330,000 | |||||||||
Series G non-cumulative preferred shares | 500,000 | 500,000 | |||||||||
Common shareholders’ equity | 10,965,110 | 12,715,896 | |||||||||
Total | $ | 11,795,110 | $ | 13,545,896 | |||||||
Total capital available to Arch | $ | 14,520,263 | $ | 16,270,290 | |||||||
Debt to total capital (%) | 18.8 | 16.7 | |||||||||
Preferred to total capital (%) | 5.7 | 5.1 | |||||||||
Debt and preferred to total capital (%) | 24.5 | 21.8 |
ARCH CAPITAL | 61 | 2022 THIRD QUARTER FORM 10-Q |
Interest | Principal | Carrying | ||||||||||||||||||
Issuer/Due | (Fixed) | Amount | Amount | |||||||||||||||||
Arch Capital: | ||||||||||||||||||||
May 1, 2034 | 7.350 | % | $ | 300,000 | $ | 297,585 | ||||||||||||||
June 30, 2050 | 3.635 | % | 1,000,000 | 988,891 | ||||||||||||||||
Arch-U.S.: | ||||||||||||||||||||
Nov. 1, 2043 (1) | 5.144 | % | 500,000 | 495,156 | ||||||||||||||||
Arch Finance: | ||||||||||||||||||||
Dec. 15, 2026 (1) | 4.011 | % | 500,000 | 497,962 | ||||||||||||||||
Dec. 15, 2046 (1) | 5.031 | % | 450,000 | 445,559 | ||||||||||||||||
Total | $ | 2,750,000 | $ | 2,725,153 |
September 30, 2022 | |||||||||||
Arch Capital | Arch-U.S. | ||||||||||
Assets | |||||||||||
Total investments | $ | 47,722 | $ | 169,143 | |||||||
Cash | 12,798 | 7,463 | |||||||||
Investment in operating affiliates | 5,448 | — | |||||||||
Due from subsidiaries and affiliates | 1,485 | 15 | |||||||||
Other assets | 7,437 | 29,346 | |||||||||
Total assets | $ | 74,890 | $ | 205,967 | |||||||
Liabilities | |||||||||||
Senior notes | 1,286,476 | 495,156 | |||||||||
Due to subsidiaries and affiliates | 1,838 | 507,103 | |||||||||
Other liabilities | 36,038 | 41,580 | |||||||||
Total liabilities | $ | 1,324,352 | $ | 1,043,839 | |||||||
Non-cumulative preferred shares | $ | 830,000 | — | ||||||||
December 31, 2021 | |||||||||||
Arch Capital | Arch-U.S. | ||||||||||
Assets | |||||||||||
Total investments | $ | 2,038 | $ | 137,124 | |||||||
Cash | 16,317 | 18,392 | |||||||||
Investment in operating affiliates | 6,877 | — | |||||||||
Due from subsidiaries and affiliates | — | 26,000 | |||||||||
Other assets | 9,615 | 37,040 | |||||||||
Total assets | $ | 34,847 | $ | 218,556 | |||||||
Liabilities | |||||||||||
Senior notes | 1,286,208 | 495,063 | |||||||||
Due to subsidiaries and affiliates | — | 521,839 | |||||||||
Other liabilities | 24,767 | 47,410 | |||||||||
Total liabilities | $ | 1,310,975 | $ | 1,064,312 | |||||||
Non-cumulative preferred shares | $ | 830,000 | — | ||||||||
September 30, 2022 | |||||||||||
Nine Months Ended | Arch Capital | Arch-U.S. | |||||||||
Revenues | |||||||||||
Net investment income | $ | 1,349 | $ | 600 | |||||||
Net realized gains (losses) | 23 | (338) | |||||||||
Equity in net income (loss) of investments accounted for using the equity method | — | 6,913 | |||||||||
Total revenues | 1,372 | 7,175 | |||||||||
Expenses | |||||||||||
Corporate expenses | 70,048 | 10,882 | |||||||||
Interest expense | 44,068 | 35,328 | |||||||||
Total expenses | 114,116 | 46,210 | |||||||||
Income (loss) before income taxes and income (loss) from operating affiliates | (112,744) | (39,035) | |||||||||
Income tax (expense) benefit | — | 7,918 | |||||||||
Income (loss) from operating affiliates | (758) | — | |||||||||
Net income available to Arch | (113,502) | (31,117) | |||||||||
Preferred dividends | (30,552) | — | |||||||||
Net income (loss) available to Arch common shareholders | $ | (144,054) | $ | (31,117) |
ARCH CAPITAL | 62 | 2022 THIRD QUARTER FORM 10-Q |
December 31, 2021 | |||||||||||
Year Ended | Arch Capital | Arch-U.S. | |||||||||
Revenues | |||||||||||
Net investment income | 1,524 | 11,596 | |||||||||
Net realized gains (losses) | — | 72,437 | |||||||||
Equity in net income (loss) of investments accounted for using the equity method | — | 18,149 | |||||||||
Total revenues | 1,524 | 102,182 | |||||||||
Expenses | |||||||||||
Corporate expenses | 71,818 | 5,875 | |||||||||
Interest expense | 58,741 | 47,292 | |||||||||
Net foreign exchange (gains) losses | 7 | — | |||||||||
Total expenses | 130,566 | 53,167 | |||||||||
Income (loss) before income taxes and income (loss) from operating affiliates | (129,042) | 49,015 | |||||||||
Income tax (expense) benefit | — | (12,513) | |||||||||
Income (loss) from operating affiliates | (590) | — | |||||||||
Net income available to Arch | (129,632) | 36,502 | |||||||||
Preferred dividends | (48,343) | — | |||||||||
Loss on redemption of preferred shares | (15,101) | — | |||||||||
Net income (loss) available to Arch common shareholders | $ | (193,076) | $ | 36,502 |
ARCH CAPITAL | 63 | 2022 THIRD QUARTER FORM 10-Q |
(U.S. dollars in billions) | Interest Rate Shift in Basis Points | ||||||||||||||||||||||||||||
-100 | -50 | — | +50 | +100 | |||||||||||||||||||||||||
September 30, 2022 | |||||||||||||||||||||||||||||
Total fair value | $ | 25.75 | $ | 25.40 | $ | 25.05 | $ | 24.70 | $ | 24.37 | |||||||||||||||||||
Change from base | 2.8 | % | 1.4 | % | (1.4) | % | (2.7) | % | |||||||||||||||||||||
Change in unrealized value | $ | 0.70 | $ | 0.35 | $ | (0.35) | $ | (0.68) | |||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||
Total fair value | $ | 25.79 | $ | 25.44 | $ | 25.21 | $ | 24.75 | $ | 24.43 | |||||||||||||||||||
Change from base | 2.3 | % | 0.9 | % | (1.8) | % | (3.1) | % | |||||||||||||||||||||
Change in unrealized value | $ | 0.58 | $ | 0.23 | $ | (0.45) | $ | (0.78) |
ARCH CAPITAL | 64 | 2022 THIRD QUARTER FORM 10-Q |
(U.S. dollars in billions) | Credit Spread Shift in Percentage Points | ||||||||||||||||||||||||||||
-100 | -50 | — | +50 | +100 | |||||||||||||||||||||||||
September 30, 2022 | |||||||||||||||||||||||||||||
Total fair value | $ | 26.03 | $ | 25.54 | $ | 25.05 | $ | 24.56 | $ | 24.07 | |||||||||||||||||||
Change from base | 3.9 | % | 2.0 | % | (2.0) | % | (3.9) | % | |||||||||||||||||||||
Change in unrealized value | $ | 0.98 | $ | 0.49 | $ | (0.49) | $ | (0.98) | |||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||
Total fair value | $ | 26.17 | $ | 25.69 | $ | 25.21 | $ | 24.72 | $ | 24.24 | |||||||||||||||||||
Change from base | 3.8 | % | 1.9 | % | (1.9) | % | (3.8) | % | |||||||||||||||||||||
Change in unrealized value | $ | 0.97 | $ | 0.48 | $ | (0.48) | $ | (0.97) |
ARCH CAPITAL | 65 | 2022 THIRD QUARTER FORM 10-Q |
(U.S. dollars in thousands, except per share data) | September 30, 2022 | December 31, 2021 | |||||||||
Net assets (liabilities), denominated in foreign currencies, excluding shareholders’ equity and derivatives | $ | (366,136) | $ | (825,371) | |||||||
Shareholders’ equity denominated in foreign currencies (1) | 978,889 | 1,095,706 | |||||||||
Net foreign currency forward contracts outstanding (2) | 8,369 | 15,151 | |||||||||
Net exposures denominated in foreign currencies | $ | 621,122 | $ | 285,486 | |||||||
Pre-tax impact of a hypothetical 10% appreciation of the U.S. Dollar against foreign currencies: | |||||||||||
Shareholders’ equity | $ | (62,112) | $ | (28,549) | |||||||
Book value per share | $ | (0.17) | $ | (0.08) | |||||||
Pre-tax impact of a hypothetical 10% decline of the U.S. Dollar against foreign currencies: | |||||||||||
Shareholders’ equity | $ | 62,112 | $ | 28,549 | |||||||
Book value per share | $ | 0.17 | $ | 0.08 |
ARCH CAPITAL | 66 | 2022 THIRD QUARTER FORM 10-Q |
ARCH CAPITAL | 67 | 2022 THIRD QUARTER FORM 10-Q |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan or Programs ($000’s) (2) | ||||||||||||||||||||||
7/1/2022-7/31/2022 | 235,544 | $ | 42.97 | 233,177 | $ | 596,541 | ||||||||||||||||||||
8/1/2022-8/31//2022 | 24,798 | 45.56 | 3,017 | $ | 596,411 | |||||||||||||||||||||
9/1/2022-9/30/2022 | 10,739 | 46.31 | — | $ | 596,411 | |||||||||||||||||||||
Total | 271,081 | $ | 43.34 | 236,194 |
ARCH CAPITAL | 68 | 2022 THIRD QUARTER FORM 10-Q |
Incorporated by Reference | ||||||||||||||||||||||||||||||||
Exhibit Number | Exhibit Description | Form | Original Number | Date Filed | Filed Herewith | |||||||||||||||||||||||||||
15 | X | |||||||||||||||||||||||||||||||
31.1 | X | |||||||||||||||||||||||||||||||
31.2 | X | |||||||||||||||||||||||||||||||
32.1 | X | |||||||||||||||||||||||||||||||
32.2 | X | |||||||||||||||||||||||||||||||
101.INS | XBRL Instance Document | |||||||||||||||||||||||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | |||||||||||||||||||||||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||||||||||||||||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||||||||||||||||||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||||||||||||||||||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||||||||||||||||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||||||||||||||||||||||||||
ARCH CAPITAL | 69 | 2022 THIRD QUARTER FORM 10-Q |
ARCH CAPITAL GROUP LTD. | ||||||||
(REGISTRANT) | ||||||||
/s/ Marc Grandisson | ||||||||
Date: November 3, 2022 | Marc Grandisson | |||||||
Chief Executive Officer (Principal Executive Officer) | ||||||||
/s/ François Morin | ||||||||
Date: November 3, 2022 | François Morin | |||||||
Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) and Treasurer |
ARCH CAPITAL | 70 | 2022 THIRD QUARTER FORM 10-Q |
1 Year Arch Capital Chart |
1 Month Arch Capital Chart |
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