10-KPeriod: FY2016

ARCH CAPITAL GROUP LTD. Annual Report, Year Ended Dec 31, 2016

Filed March 1, 2017For Securities:ACGLACGLNACGLO

Summary

ARCH CAPITAL GROUP LTD. (ACGL) reported strong financial performance for the fiscal year ended December 31, 2016. The company's net income available to common shareholders was $664.7 million, demonstrating a significant increase from the previous year. Book value per share also grew to $55.19, reflecting the company's solid capital base and effective capital management strategies. The company's operations are diversified across insurance, reinsurance, and mortgage insurance segments. The mortgage segment experienced substantial growth, notably driven by the significant acquisition of United Guaranty Corporation (UGC) on December 31, 2016. This strategic acquisition is expected to bolster the company's market position and revenue streams in the mortgage insurance sector. ACGL maintains a disciplined underwriting philosophy focused on specialty lines, capitalizing on opportunities with attractive risk/reward characteristics. The company's robust capital position, experienced management team, and strategic focus on profitability across its diverse business lines position it well for continued growth and value creation for its shareholders.

Financial Highlights

33 data points
Beta

Revenue

$4.46B

Net Income

$692.74M

15.5% Net Margin

EPS (Diluted)

$1.78

Total Assets

$29.37B

Cash & Equivalents

$842.94M

Free Cash Flow

$1.38B

Financial Statements
Beta
Revenue$4.46B
Interest Expense$66.25M
Net Income$692.74M
EPS (Basic)$1.83
EPS (Diluted)$1.78
Shares Outstanding (Basic)362.38M
Shares Outstanding (Diluted)374.15M

Key Highlights

  • 1Net income available to Arch common shareholders was $664.7 million, a significant increase from the prior year.
  • 2Book value per share grew by 15.8% to $55.19 at December 31, 2016, compared to $47.64 at December 31, 2015.
  • 3Completed the acquisition of United Guaranty Corporation (UGC) for $3.26 billion on December 31, 2016, significantly expanding the mortgage operations.
  • 4Total investable assets grew to $20.5 billion at December 31, 2016.
  • 5The company demonstrated a strong underwriting income of $454.7 million across its segments.
  • 6The reinsurance segment reported underwriting income of $261.1 million, with a combined ratio of 78.7%.
  • 7The mortgage segment's underwriting income more than doubled to $141.4 million, with a combined ratio of 56.6%.

Frequently Asked Questions

In 2016, Arch Capital Group Ltd. reported a net income available to common shareholders of $664.7 million and a book value per share of $55.19, showing strong growth from the prior year.

The most significant strategic move was the completion of the acquisition of United Guaranty Corporation (UGC) for $3.26 billion on December 31, 2016. This acquisition substantially expanded the company's mortgage insurance operations.

The company operates across insurance, reinsurance, and mortgage segments. All segments showed robust performance, with the mortgage segment experiencing particularly strong growth and the reinsurance segment maintaining a favorable combined ratio.

Arch Capital focuses on specialty lines of insurance and reinsurance, capitalizing on profitable underwriting opportunities with attractive risk/reward characteristics. The company emphasizes disciplined underwriting and prudently manages its risk exposure through various methods, including reinsurance.