10-KPeriod: FY2023

ARCH CAPITAL GROUP LTD. Annual Report, Year Ended Dec 31, 2023

Filed February 23, 2024For Securities:ACGLACGLNACGLO

Summary

Arch Capital Group Ltd. (ACGL) reported a strong financial performance for the fiscal year ended December 31, 2023. The company, a global provider of insurance, reinsurance, and mortgage insurance, demonstrated significant growth and profitability across its segments. Net income available to Arch common shareholders reached $4.4 billion, and book value per share increased by 43.9% to $46.94. This robust performance was driven by favorable market conditions in its property and casualty segments, as well as steady underwriting performance in its mortgage segment. The company's strategic focus on underwriting acumen, prudent reserving, and capital allocation continues to yield positive results, positioning it well for sustained long-term value creation. Key financial highlights include a substantial increase in net premiums earned in both the insurance and reinsurance segments, reflecting rate increases and new business opportunities. The company's investment portfolio also contributed positively, with a pre-tax total return of 7.57% for 2023, driven by strong returns across various strategies. Despite market uncertainties, Arch Capital maintains a disciplined approach to risk management and capital allocation, supported by a strong capital base and experienced management team.

Financial Highlights

32 data points
Beta

Revenue

$13.63B

Net Income

$4.44B

32.6% Net Margin

EPS (Diluted)

$11.62

Total Assets

$58.91B

Cash & Equivalents

$917.00M

Free Cash Flow

$5.75B

Financial Statements
Beta
Revenue$13.63B
Interest Expense$133.00M
Net Income$4.44B
EPS (Basic)$11.94
EPS (Diluted)$11.62
Shares Outstanding (Basic)368.70M
Shares Outstanding (Diluted)378.80M

Key Highlights

  • 1Achieved Net Income available to Arch common shareholders of $4.4 billion for the fiscal year 2023.
  • 2Book value per share increased by 43.9% to $46.94 at December 31, 2023, up from $32.62 at December 31, 2022.
  • 3Net premiums earned increased by 19.4% in the insurance segment and 47.4% in the reinsurance segment for 2023 compared to 2022.
  • 4Total investable assets reached $34.6 billion at December 31, 2023, with a pre-tax investment income yield of 3.53% for the year.
  • 5The company's underwriting strategy, focused on specialty lines and disciplined underwriting, resulted in a combined ratio of 91.7% for the insurance segment and 81.4% for the reinsurance segment.
  • 6The mortgage segment demonstrated resilience, with underwriting income of $1.06 billion in 2023, supported by strong persistency rates in its U.S. primary mortgage insurance portfolio.
  • 7Arch Capital maintained strong capital adequacy, with a PMIER sufficiency ratio of 213% for its U.S. mortgage insurance operations.

Frequently Asked Questions

Arch Capital reported a strong financial performance in 2023, with net income available to Arch common shareholders of $4.4 billion. Book value per share saw a significant increase of 43.9% to $46.94. The company experienced growth in net premiums earned across its insurance and reinsurance segments and benefited from positive returns in its investment portfolio.

The insurance segment saw a 19.4% increase in net premiums earned, driven by rate increases and new business. The reinsurance segment experienced even stronger growth with a 47.4% rise in net premiums earned, also attributed to new business and rate adjustments. The mortgage segment delivered resilient underwriting income of $1.06 billion, supported by strong persistency in its U.S. primary mortgage insurance portfolio.

Arch Capital's profitability is driven by its disciplined underwriting approach, which focuses on specialty lines and rate adequacy, regardless of market conditions. Strong investment returns, prudent reserving practices, and effective capital allocation also contribute significantly to its financial success. The company's diversified business model across insurance, reinsurance, and mortgage operations helps mitigate risks and capture opportunities in various market cycles.

Arch Capital's objective for 2024 remains focused on delivering long-term shareholder value through underwriting acumen, prudent reserving, and cycle-focused capital allocation. The company anticipates continued favorable market conditions in its property and casualty segments and expects its mortgage segment to generate steady earnings. Arch Capital remains committed to its disciplined underwriting culture and will actively allocate capital to segments offering the best risk-adjusted returns.