10-KPeriod: FY2012

ARCH CAPITAL GROUP LTD. Annual Report, Year Ended Dec 31, 2012

Filed March 1, 2013For Securities:ACGLACGLNACGLO

Summary

Arch Capital Group Ltd. (ACGL) reported strong performance for the fiscal year ended December 31, 2012, with net income available to common shareholders of $557.7 million, translating to diluted earnings per share of $4.03. Book value per common share increased by 13.9% to $36.19. The company's insurance segment generated $1.83 billion in net premiums written, while the reinsurance segment wrote $1.23 billion in net premiums. Both segments demonstrated underwriting profitability, with the reinsurance segment achieving a combined ratio of 80.2% and the insurance segment at 104.9%. The company's investment portfolio delivered a pre-tax total return of 5.88%, outperforming its benchmark. ACGL continues to focus on specialty lines of insurance and reinsurance, leveraging its experienced management team and strong capital base. The company actively manages its risk exposures, particularly to natural and man-made catastrophic events, and maintains a disciplined underwriting philosophy. Key strategic initiatives include the pending acquisition of CMG Mortgage Insurance Company, which is expected to enhance its U.S. mortgage insurance capabilities. The company also repurchased approximately $172 million of its common shares during 2012 under its share repurchase program.

Financial Highlights

33 data points
Beta

Revenue

$3.48B

Net Income

$593.40M

17.0% Net Margin

EPS (Diluted)

$1.34

Total Assets

$17.82B

Cash & Equivalents

$371.04M

Free Cash Flow

$921.60M

Financial Statements
Beta
Revenue$3.48B
Interest Expense$28.52M
Net Income$593.40M
EPS (Basic)$1.38
EPS (Diluted)$1.34
Shares Outstanding (Basic)403.34M
Shares Outstanding (Diluted)414.78M

Key Highlights

  • 1Net income available to common shareholders was $557.7 million, or $4.03 per diluted share.
  • 2Book value per common share increased by 13.9% to $36.19.
  • 3Total net premiums written across both insurance and reinsurance segments were $3.05 billion.
  • 4The reinsurance segment achieved an underwriting profit with a combined ratio of 80.2%.
  • 5The insurance segment reported a combined ratio of 104.9%, with favorable prior year reserve development.
  • 6The company's investment portfolio generated a pre-tax total return of 5.88%, outperforming its benchmark.
  • 7ACGL announced a definitive agreement to acquire CMG Mortgage Insurance Company for approximately $300 million.

Frequently Asked Questions

In 2012, Arch Capital Group reported a net income available to common shareholders of $557.7 million, or $4.03 per diluted share. Book value per common share grew by 13.9% to $36.19. The company wrote $3.05 billion in net premiums written across its insurance and reinsurance segments.

The insurance segment wrote $1.83 billion in net premiums written and had a combined ratio of 104.9%. The reinsurance segment wrote $1.23 billion in net premiums written and achieved a combined ratio of 80.2%. Both segments benefited from favorable prior period reserve development, particularly the reinsurance segment.

ACGL focuses on specialty lines of insurance and reinsurance, maintains disciplined underwriting, and manages its risk exposures. The company is pursuing strategic growth through the pending acquisition of CMG Mortgage Insurance Company. ACGL also engages in capital management through its share repurchase program, having repurchased $172 million of common shares in 2012.

The company's investment portfolio generated a pre-tax total return of 5.88% in 2012, outperforming its benchmark return index of 4.90%. The portfolio primarily consists of high-quality fixed maturities, with approximately 93% rated investment grade at December 31, 2012.