10-KPeriod: FY2014

ARCH CAPITAL GROUP LTD. Annual Report, Year Ended Dec 31, 2014

Filed February 27, 2015For Securities:ACGLACGLNACGLO

Summary

Arch Capital Group Ltd. (ACGL) reported strong financial performance in its 2014 10-K filing, demonstrating growth across its insurance, reinsurance, and mortgage segments. The company generated $3.62 billion in net premiums and achieved a net income of $812.4 million, or $6.02 per diluted share. Book value per common share increased by 14.5% to $45.58, reflecting robust underwriting and investment returns, despite a low interest rate environment. The company strategically expanded its mortgage segment with the acquisition of Arch MI U.S., positioning it for broader market reach. ACGL maintained a disciplined underwriting approach across all segments, focusing on specialty lines with attractive risk/reward characteristics. The company's capital base remained strong, supporting its operations and strategic initiatives, including a significant share repurchase program where $887.1 million remained authorized at year-end 2014.

Financial Highlights

33 data points
Beta

Revenue

$3.99B

Net Income

$834.36M

20.9% Net Margin

EPS (Diluted)

$2.01

Total Assets

$21.97B

Cash & Equivalents

$485.70M

Free Cash Flow

$1.04B

Financial Statements
Beta
Revenue$3.99B
Interest Expense$45.63M
Net Income$834.36M
EPS (Basic)$2.07
EPS (Diluted)$2.01
Shares Outstanding (Basic)392.45M
Shares Outstanding (Diluted)404.77M

Key Highlights

  • 1Net premiums written reached $3.62 billion, a significant increase from the prior year, indicating strong business growth.
  • 2Net income available to Arch common shareholders was $812.4 million, resulting in diluted earnings per share of $6.02.
  • 3Book value per common share increased by 14.5% to $45.58, demonstrating effective capital generation.
  • 4The company completed the acquisition of Arch MI U.S., bolstering its mortgage segment and expanding its market presence.
  • 5The reinsurance segment showed strong underwriting income despite a slight decrease in net premiums written, primarily due to favorable prior period reserve development.
  • 6The insurance segment reported a significant increase in underwriting income, driven by improved loss ratios and expense management.
  • 7ACGL continued its share repurchase program, with $887.1 million remaining authorization at year-end 2014, indicating a commitment to returning capital to shareholders.

Frequently Asked Questions

Arch Capital Group Ltd. reported a net income of $812.4 million, or $6.02 per diluted share, for the year ended December 31, 2014.

ACGL's book value per common share increased by 14.5% to $45.58 at December 31, 2014, compared to $39.82 at December 31, 2013, reflecting growth from underwriting and investment returns.

ACGL's business operations are classified into three underwriting segments: insurance, reinsurance, and mortgage. Additionally, there are two other operating segments: 'other' and corporate (non-underwriting).

Yes, ACGL completed the acquisition of CMG Mortgage Insurance Company, subsequently renamed Arch Mortgage Insurance Company (Arch MI U.S.), which expanded its presence in the U.S. mortgage insurance market.

The total return on ACGL's investment portfolio outperformed its benchmark in 2014, driven by strong returns on investment grade fixed income, alternative investments, and equities. The pre-tax total return for the portfolio was 3.21% compared to a benchmark of 2.58%.