Q - ARCH CAPITAL GROUP LTD.
For the period ended Jun 30, 2025. Filed Aug 5, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 5, 2025
ACGL$107.28-3.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0000947484-25-000047
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations“Comment on Non-GAAP Financial Measures.”Current report: 10-Q
Period ended 2025-06-30; filed 2025-08-05.
0000947484-25-000066
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations“Comment on Non-GAAP Financial Measures.”The baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 33 previous paragraphs and 35 current paragraphs.
16 unchanged; 11 reworded; 5 added; 4 removed; 2 previous and 3 current paragraphs rearranged.
Tables are not compared: 7 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
We reported solid results for the 2025 second quarter, with an annualized net income return on average common equity and operating return on average common equity of 22.9% and 18.2%, respectively. See “Comment on Non-GAAP Financial Measures.” Book value per share grew 7.3% in the 2025 the second quarter, reflecting our disciplined underwriting and capital management. We continue to execute our cycle management strategy by actively allocating capital to the segments with the best risk-adjusted returns, while retaining the flexibility to invest in our platform when we find attractive opportunities. This approach, combined with a diversified global platform and strong distribution relationships, allows us to adapt dynamically to shifting market conditions. We focus on practicing disciplined underwriting that builds a meaningful margin of safety into pricing, take a long-term view of risk and a prudent approach to reserving.
Current report
Overall, property and casualty market conditions remain largely consistent with the 2025 first quarter. Some sectors are seeing increased price competition while others continue to experience rate improvements. We believe the property and casualty market still presents meaningful opportunities for disciplined underwriters to generate attractive risk-adjusted returns on capital.
Current report
Our insurance segment reported $129 million of underwriting income for the 2025 second quarter, with net premium written surpassing $2 billion, which is an increase of 30.7% from the 2024 second quarter. Growth in net premiums written primarily resulted from the U.S MidCorp and Entertainment Insurance businesses acquired from Allianz on August 1, 2024 (“MCE Acquisition”). The integration of the MCE Acquisition is progressing well, and we remain excited about the increased capabilities this team brings to our insurance platform. Organic growth outside of the MCE Acquisition was modest, and growing our presence in middle market remains central to our strategy in North America. We saw selective growth in casualty lines, particularly in alternative market, E&S casualty and large account casualty, where pricing continued to outpace loss trends. However, competitive pressure persists in E&S property, excess D&O and cyber. While pricing in excess D&O and cyber appears to be stabilizing, we are maintaining a cautious stance, and prioritizing margin over volume in
Current report
these lines. Internationally, our Lloyd’s and London market businesses are experiencing increased, but rational, competition. Our long-term investment in establishing a leadership position at Lloyd’s continues to yield strong results reflected in favorable signings and our ability to attract top-tier underwriting talent.
Current report
Our reinsurance segment contributed $451 million of underwriting income in the 2025 second quarter, with over $2 billion of net premiums written. We are growing selectively and focusing on areas where margins are attractive. We anticipate continued selective growth in quota share arrangements in casualty lines and are willing to lean in—partnering with underwriting teams with strong expertise in complex liability risks. We also expanded our property catastrophe writings, primarily in Florida, where we saw attractive risk-adjusted returns and increased demand from clients for additional limits. Specialty lines remained a strategic focus, and our teams found several new opportunities this quarter. That said, our property other than property catastrophe excess of loss portfolio contracted, as cedants retained more risk and margins on certain portions of the portfolio fell below our target. We were generally pleased with the state of the mid-year catastrophe excess of loss renewals. While pricing was slightly down, margins remain attractive with primary insurers maintaining high retentions.
Removed paragraphs (4)
Previous report
We reported solid results for the 2025 first quarter, with net income of $564 million, representing an 11.1% annualized net income return on average common equity, despite incurring $547 million of current year catastrophe losses net of reinstatement premiums in our property and casualty lines.
Previous report
We remain optimistic despite increased competition in certain property and casualty lines as rates are broadly attractive. In a more competitive market, underwriting and risk selection are critical to our cycle management. We continue to leverage the expertise of our underwriting team, investments in data and analytics, and financial resources as we plan for modest growth and maintain margins. For a company with a strong underwriting culture like Arch, we believe this is a market where we can differentiate ourselves and continue to maximize returns for our shareholders.
Previous report
Our reinsurance segment contributed $167 million of underwriting income in the 2025 first quarter, which demonstrates the strong underlying profitability of our diversified reinsurance portfolio in a quarter with significant catastrophic loss activity. While growth in net premiums written in the quarter was modest due to an increased level of competition and greater risk retention by ceding companies, we expect additional demand from existing and new clients during mid-year renewals, particularly in loss-impacted accounts. We anticipate continued growth in casualty lines and are willing to lean in where we can achieve rate increases and are comfortable with the exposure and terms and conditions. Premiums on specialty lines declined primarily due to non-renewals of structured deals. Weaker margins in cyber and parts of our international business also led to reduced premium writings.
Previous report
Our insurance segment reported a $2 million underwriting loss, primarily attributable to the California wildfires. Growth in net premiums written reflected a significant contribution from the U.S MidCorp and Entertainment Insurance businesses acquired from Allianz on August 1, 2024 (“MCE Acquisition”) of $373 million, or 24.2 points of growth, compared to the 2024 first quarter. The integration of the MCE Acquisition is progressing well, and we remain excited about the increased capabilities this team brings to our insurance platform. In the current insurance market, there is increased volatility, and it is possible to achieve double-digit growth in some lines while experiencing similar declines in others. In the 2025 first quarter, we generated meaningful growth in casualty led lines including construction, national accounts casualty and international casualty. At the same time, we experienced premium reductions in other lines of business like E&S property and professional lines (including cyber) due to rate decreases and our desire to maintain margins. We have seen competition increasing in specialty lines in the London market, and believe we can benefit from consolidation around market leaders. Looking ahead, we believe we are well positioned across the insurance segment and expect continued growth in casualty led lines as well as the U.S. middle market, where opportunities remain for both rate and premium growth.
Reworded paragraphs (11)
Previous wording
Arch Capital Group Ltd. (“Arch Capital” and, together with its subsidiaries, “Arch”, “we”, “our” or “us”) is a publicly listed Bermuda exempted company with approximately $24.3 billion in capital at March 31, 2025 and, through operations in Bermuda, the United States, Europe, Canada and Australia, writes insurance, reinsurance and mortgage insurance on a worldwide basis.
Current wording
Arch Capital Group Ltd. (“Arch Capital” and, together with its subsidiaries, “Arch”, “the Company”, “we”, “our” or “us”) is a publicly listed Bermuda exempted company with approximately $25.8 billion in capital at June 30, 2025 and, through operations in Bermuda, the United States, Europe, Canada and Australia, writes insurance, reinsurance and mortgage insurance on a worldwide basis.
Previous wording
Our mortgage segment continued to deliver a steady level of earnings for our shareholders, generating $252 million of underwriting income in the 2025 first quarter. While new originations remain tempered by relatively high mortgage interest rates, underlying fundamentals remained strong and our U.S. market share was stable as industry pricing discipline held. The persistency of our in force U.S. primary mortgage insurance portfolio remained a healthy 81.9% and our delinquency rate remained low. While recessionary trends resulting from tariffs or other economic policies could create headwinds, we still expect the mortgage segment to continue generating attractive underwriting income given the high credit quality and embedded equity of our in-force portfolio.
Current wording
Our mortgage segment continued to deliver a steady level of earnings for our shareholders, generating $238 million of underwriting income in the 2025 second quarter, due to the strength of our in-force portfolio. While new originations were tempered by relatively high mortgage interest rates, underlying fundamentals remained strong and our U.S. market share was stable as industry pricing discipline held. The persistency of our in force U.S. primary mortgage insurance portfolio remained a healthy 81.9% and our delinquency rate remained low. While economic uncertainty could create headwinds, we still expect the mortgage segment to continue generating attractive underwriting income given the high credit quality and embedded equity of our in-force portfolio.
Previous wording
Book value per share represents total common shareholders’ equity available to Arch divided by the number of common shares outstanding. Management uses growth in book value per share as a key measure of the value generated for our common shareholders each period and believes that book value per share is the key driver of Arch Capital’s share price over time. Book value per share is impacted by, among other factors, our underwriting results, investment returns and share repurchase activity, which has an accretive or dilutive impact on book value per share depending on the purchase price. Book value per share was $55.15 at March 31, 2025, compared to $53.11 at December 31, 2024, and $49.36 at March 31, 2024. The 3.8% increase in book value per share for the 2025 first quarter, primarily driven by strong investment and underwriting returns, despite elevated catastrophe activity.
Current wording
Book value per share represents total common shareholders’ equity available to Arch divided by the number of common shares outstanding. Management uses growth in book value per share as a key measure of the value generated for our common shareholders each period and believes that book value per share is the key driver of Arch Capital’s share price over time. Book value per share is impacted by, among other factors, our underwriting results, investment returns and share repurchase activity, which has an accretive or dilutive impact on book value per share depending on the purchase price. Book value per share was $59.17 at June 30, 2025, compared to $55.15 at March 31, 2025, and $52.75 at June 30, 2024. The 7.3% increase in book value per share for the 2025 second quarter primarily reflected strong underwriting and investment returns.
Previous wording
Our annualized net income return on average common equity was 11.1% for the 2025 first quarter, compared to 24.6% for the 2024 first quarter. Our Operating ROAE was 11.5% for the 2025 first quarter, compared to 20.7% for the 2024 first quarter. Returns for 2025 reflected strong underwriting and investment returns, albeit with an elevated level of catastrophe activity.
Current wording
Our annualized net income return on average common equity was 22.9% for the 2025 second quarter, compared to 26.3% for the 2024 second quarter, and 17.0% for the six months ended June 30, 2025, compared to 25.4% for the 2024 period. Our Operating ROAE was 18.2% for the 2025 second quarter, compared to 20.5% for the 2024 second quarter and 14.8% for the six months ended June 30, 2025, compared to 20.5% for the 2024 period. Returns for 2025 reflected strong underwriting and investment returns.
Previous wording
Total return for the 2025 period primarily reflected the effects of sustained higher interest rates available in the market. We continue to maintain a relatively short duration on our fixed income portfolio of 3.32 years at March 31, 2025.
Current wording
Total return for the 2025 periods reflected the effects of lower yields on U.S. Government bonds and slightly underperformed their benchmark returns, primarily due to the anticipated sale of certain alternative investments accounted for using the equity method. We continue to maintain a relatively short duration on our fixed income portfolio of 3.48 years at June 30, 2025, compared to 3.31 years at December 31, 2024.
Previous wording
The benchmark return index is a customized combination of indices intended to approximate a target portfolio by asset mix and average credit quality with a fixed income component matching the approximate estimated duration and currency mix of our insurance and reinsurance liabilities. It is recalibrated annually. Although the estimated fixed income duration and average credit quality of this index will move as the duration and rating of its constituent securities change, generally we do not adjust the composition of the benchmark return index during the year except to incorporate changes to the mix of liability currencies and durations noted above. The benchmark return index should not be interpreted as expressing a preference for or aversion to any particular sector or sector weight. At March 31, 2025, the fixed income portion of the benchmark had an average credit quality of “A1” by Moody’s and an estimated fixed income duration of 3.33 years.
Current wording
The benchmark return index is a customized combination of indices intended to approximate a target portfolio by asset mix and average credit quality with a fixed income component matching the approximate estimated duration and currency mix of our insurance and reinsurance liabilities. It is recalibrated annually. Although the estimated fixed income duration and average credit quality of this index will move as the duration and rating of its constituent securities change, generally we do not adjust the composition of the benchmark return index during the year except to incorporate changes to the mix of liability currencies and
Previous wording
Throughout this filing, we present our operations in the way we believe will be the most meaningful and useful to investors, analysts, rating agencies and others who use our financial information in evaluating the performance of our company. This presentation includes the use of after-tax operating income available to Arch common shareholders, which is defined as net income available to Arch common shareholders, excluding net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses, transaction costs and other, income taxes, and the use of annualized operating return on average common equity. The presentation of after-tax operating income available to Arch common shareholders and annualized operating return on average common equity are non-GAAP financial measures as defined in Regulation G. The reconciliation of such measures to net income available to Arch common shareholders and annualized net income return on average common equity (the most directly comparable GAAP financial measures) in accordance with Regulation G is included under “Results of Operations” below.
Current wording
Throughout this filing, we present our operations in the way we believe will be the most meaningful and useful to investors, analysts, rating agencies and others who use our financial information in evaluating the performance of our company. This presentation includes the use of after-tax operating income available to Arch common shareholders, which is defined as net income available to Arch common shareholders, excluding net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses, transaction costs and other, income taxes, and the use of annualized operating return on average common equity. The presentation of after-tax operating income available to Arch common shareholders and annualized operating return on average common equity are non-GAAP financial measures as defined in Regulation G. The reconciliation of such measures
Previous wording
The use of the equity method on certain of our investments funds that invest in fixed maturity securities is driven by the ownership structure of such funds (either limited partnerships or limited liability companies). In applying the equity method, these investments are initially recorded at cost and are subsequently adjusted based on our proportionate share of the net income or loss of the funds (which include changes in the market value of the underlying securities in the funds). This method of accounting is different from the way we account for our other investments and the timing of the recognition of equity in net income or loss of investments accounted for using the equity method may differ from gains or losses in the future upon sale or maturity of such investments.
Current wording
The use of the equity method on certain of our investments funds that invest in fixed maturity securities is driven by the ownership structure of such funds (either limited partnerships or limited liability companies). In applying the equity method, these investments are initially recorded at cost and are subsequently adjusted based on our proportionate share of the net income or loss of the funds (which include changes in the market value of the underlying securities in the funds). This method of accounting is different from the way in which we account for our other investments; and, the timing of the recognition of equity in net income or loss of investments accounted for using the equity method may differ from gains or losses in the future upon sale or maturity of such investments.
Previous wording
We believe that showing net income available to Arch common shareholders exclusive of the items referred to above reflects the underlying fundamentals of our business since we evaluate the performance of and manage our business to produce an underwriting profit. In addition to presenting the net income available to Arch common shareholders, we believe that this presentation enables investors and other users of our financial information to analyze our performance in a manner similar to how management analyzes performance. We also believe that this measure follows industry practice and, therefore, allows
Current wording
presenting the net income available to Arch common shareholders, we believe that this presentation enables investors and other users of our financial information to analyze our performance in a manner similar to how management analyzes performance. We also believe that this measure follows industry practice and, therefore, allows the users of financial information to compare our performance with our industry peer group. We believe that the equity analysts and certain rating agencies that follow us and the insurance industry as a whole generally exclude these items from their analyses for the same reasons.
Previous wording
Our presentation of segment information includes the use of a current year loss ratio which excludes favorable or adverse development in prior year loss reserves. This ratio is a non-GAAP financial measure as defined in Regulation G. The reconciliation of such measure to the loss ratio (the most directly comparable GAAP financial measure) in accordance with Regulation G is shown on the individual segment pages. Management utilizes the current year loss ratio in its analysis of the underwriting performance of each of our underwriting segments. Effective in the 2025 first quarter, the ‘Other operating expense ratio’ includes ‘Other underwriting income (loss).’
Current wording
Our presentation of segment information includes the use of a current year loss ratio which excludes favorable or adverse development in prior year loss reserves. This ratio is a non-GAAP financial measure as defined in Regulation G. The reconciliation of such measure to the loss ratio (the most directly comparable GAAP financial measure) in accordance with Regulation G is shown on the individual segment pages. Management utilizes the current year loss ratio in its analysis of the underwriting performance of each of our underwriting segments. Effective in the 2025 first quarter, the ‘Other operating expense ratio’ includes ‘Other underwriting income.’
Previous wording
Total return on investments includes investment income, equity in net income or loss of investments accounted for using the equity method, net realized gains or losses (excluding changes in the allowance for credit losses on non-investment related financial assets) and the change in unrealized gains or losses generated by Arch’s investment portfolio. Total return is calculated on a pre-tax basis and before investment expenses, and reflects the effect of financial market conditions along with foreign currency
Current wording
Total return on investments includes investment income, equity in net income or loss of investments accounted for using the equity method, net realized gains or losses (excluding changes in the allowance for credit losses on non-investment related financial assets) and the change in unrealized gains or losses generated by Arch’s investment portfolio. Total return is calculated on a pre-tax basis and before investment expenses, and reflects the effect of financial market conditions along with foreign currency fluctuations. In addition, total return incorporates the timing of investment returns during the periods. There is no directly comparable GAAP financial measure for total return. Management uses total return on investments as a key measure of the return generated to Arch common shareholders on the capital held in the business, and compares the return generated by our investment portfolio against benchmark returns which we measured our portfolio against during the periods.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
durations noted above. The benchmark return index should not be interpreted as expressing a preference for or aversion to any particular sector or sector weight. At June 30, 2025, the fixed income portion of the benchmark had an average credit quality of “A1” by Moody’s and an estimated fixed income duration of 3.24 years.
Current report — wording carried from elsewhere
to net income available to Arch common shareholders and annualized net income return on average common equity (the most directly comparable GAAP financial measures) in accordance with Regulation G is included under “Results of Operations” below.
Current report — wording carried from elsewhere
We believe that showing net income available to Arch common shareholders exclusive of the items referred to above reflects the underlying fundamentals of our business since we evaluate the performance of and manage our business to produce an underwriting profit. In addition to
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
the users of financial information to compare our performance with our industry peer group. We believe that the equity analysts and certain rating agencies that follow us and the insurance industry as a whole generally exclude these items from their analyses for the same reasons.
Previous report — wording carried elsewhere
fluctuations. In addition, total return incorporates the timing of investment returns during the periods. There is no directly comparable GAAP financial measure for total return. Management uses total return on investments as a key measure of the return generated to Arch common shareholders on the capital held in the business, and compares the return generated by our investment portfolio against benchmark returns which we measured our portfolio against during the periods.