2026 third quarter
Filed Oct 27, 2026Arch Capital Group Ltd. reports 2026 third quarter results with $1.0 billion of net income available to Arch common shareholders and $910 million of after-tax operating income.
Investment income and insurance premium production grew, but consolidated underwriting income, net income, operating income and net premiums earned declined as catastrophic activity increased and reinsurance and mortgage premium volumes contracted.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Gross premiums writtenother | $5.39B | – | (0.4)% |
| Net premiums writtenother | $3.85B | – | (3.0)% |
| Net premiums earnedother | $4.01B | – | (6.3)% |
| Other underwriting incomeother | $61M | – | – |
| Underwriting incomenon-GAAP | $702M | – | (19.4)% |
| Loss ratioother | 55.0% | – | 3.6 points |
| Acquisition expense ratioother | 17.7% | – | – |
| Other operating expense ratioother | 9.8% | – | – |
| Underwriting expense ratioother | 27.5% | – | (0.9) points |
| Combined ratioother | 82.5% | – | 2.7 points |
| Combined ratio excluding catastrophic activity and prior year developmentnon-GAAP | 81.2% | – | 0.7 points |
| Pre-tax current accident year catastrophic losses for insurance and reinsurance segments, net of reinsurance and reinstatement premiumsother | $234M | – | – |
| Favorable development in prior year loss reserves, net of related adjustmentsother | $179M | – | – |
| Net income available to Arch common shareholdersGAAP | $1.02B | – | – |
| Net income available to Arch common shareholders per diluted common shareGAAP | $3.00 | – | – |
| After-tax operating income available to Arch common shareholdersnon-GAAP | $910M | – | – |
| After-tax operating income available to Arch common shareholders per diluted common sharenon-GAAP | $2.67 | – | – |
| Weighted average common shares and common share equivalents outstanding, dilutedGAAP | 341.4 | – | – |
| Annualized net income return on average common equityGAAP | 18.1% | – | – |
| Annualized operating return on average common equitynon-GAAP | 16.0% | – | – |
| Pre-tax net investment incomeother | $451M | – | – |
| Pre-tax net investment income per shareother | $1.32 | – | – |
| Equity in net income of investments accounted for using the equity methodother | $224M | – | – |
| Pre-tax investment income yield, at amortized costother | 4.09% | – | – |
| Total return on investmentsnon-GAAP | (0.42)% | – | – |
| Net realized gains (losses)GAAP | −$99M | – | – |
| Corporate benefit (expenses)GAAP | −$5M | – | – |
| Amortization of intangible assetsGAAP | −$30M | – | – |
| Interest expenseGAAP | −$62M | – | – |
| Income tax expenseGAAP | −$184M | – | – |
| Effective tax rate on income before income taxesGAAP | 15.1% | – | – |
| Effective tax rate on pre-tax operating income available to Arch common shareholdersnon-GAAP | 15.8% | – | – |
| Income from operating affiliatesGAAP | $33M | – | – |
| Income from operating affiliates per shareGAAP | $0.10 per share | – | – |
| Book value per common shareGAAP | $67.90 | a 0.2% decrease from June 30, 2026 | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| InsuranceGross premiums written were 7.8% higher, while net premiums written were 2.7% higher. Adjusting for non-renewal of certain programs related to the MCE Acquisition, net premiums written would have increased by 5.8% and reflected strong growth in international business. | Net premiums earned $1,937 million | – | (1.6)% |
| ReinsuranceNet premiums written declined due, in part, to non-renewals and share reductions. The loss ratio was also impacted by changes in rate and mix of business. | Net premiums earned $1,807 million | – | (10.3)% |
| MortgageGross premiums written declined with lower U.S. primary mortgage insurance monthly premiums and U.S. credit risk transfer premiums, partially offset by growth in international business. Net premiums written primarily reflected lower U.S. credit risk transfer premiums. | Net premiums earned $270 million | – | (10.3)% |
Capital returns
- Share repurchases of $1.4 billion.
- Preferred dividends $(10) million.
What drove it
- Pre-tax net investment income was $451 million, compared to $408 million, with the increase reflecting growth in average investable assets.
- Insurance underwriting expense ratio was 33.6%, compared to 34.4%, primarily reflecting the benefit of Bermuda qualified refundable tax credits.
- Reinsurance underwriting expense ratio was 22.4%, compared to 24.5%, primarily reflecting the impact of higher commissions on retrocessions; the quarter also reflected the benefit of QRTCs.
- Mortgage favorable prior-year reserve development was primarily related to better than expected cure rates.
- Corporate expenses declined primarily due to the benefit of QRTCs.
Concerns
- Consolidated net premiums earned were $4,014 million, compared to $4,285 million, and underwriting income was $702 million, compared to $871 million.
- The consolidated combined ratio was 82.5%, compared to 79.8%, while the combined ratio excluding catastrophic activity and prior year development was 81.2%, compared to 80.5%.
- Current accident year catastrophic losses for the insurance and reinsurance segments were $234 million.
- Net realized losses were $99 million, compared to net realized gains of $210 million; negative total return on investments primarily reflected rising interest rates on fixed income securities.
- Interest expense was $62 million, compared to $37 million, primarily resulting from June 2026 capital raising activity.
- Mortgage combined ratio excluding prior year development was 41.6%, compared to 32.7%, and the loss ratio excluding net favorable development reflected a modestly higher level of delinquencies.
What to watch
- The evolution of market conditions described by management as increasingly uneven.
- The level of current accident year catastrophic activity, including losses related to the Iran conflict.
- Reinsurance non-renewals and share reductions.
- Mortgage delinquencies, cure rates, U.S. primary mortgage insurance monthly premiums and U.S. credit risk transfer premiums.
- The effect of interest-rate movements on fixed income securities and total return on investments.
- The benefits of Bermuda qualified refundable tax credits and the higher interest expense following June 2026 capital raising activity.
Balance sheet and cash flow
- Beginning common shareholders’ equity $23,200 million.
- Ending common shareholders’ equity $22,162 million.
- Average common shareholders’ equity $22,681 million.
- The Company had approximately $27.3 billion in capital at September 30, 2026.
- Book value per common share of $67.90 at September 30, 2026, a 0.2% decrease from June 30, 2026.
Analysis
Arch reported $1,025 million of GAAP net income available to common shareholders, or $3.00 per diluted share, compared with $1,340 million, or $3.56 per diluted share, in the 2025 third quarter. After-tax operating income available to common shareholders was $910 million, or $2.67 per diluted share, compared with $1,042 million, or $2.77 per diluted share. Annualized net income return on average common equity was 18.1%, compared with 23.8%, and annualized operating return on average common equity was 16.0%, compared with 18.5%.
Underwriting production was lower at the consolidated level. Gross premiums written were $5,391 million, down 0.4%, net premiums written were $3,845 million, down 3.0%, and net premiums earned were $4,014 million, down 6.3%. Underwriting income declined to $702 million from $871 million. The combined ratio increased to 82.5% from 79.8%, while the combined ratio excluding catastrophic activity and prior year development increased to 81.2% from 80.5%. Pre-tax current accident year catastrophic losses for the insurance and reinsurance segments were $234 million, while favorable prior-year loss-reserve development, net of related adjustments, was $179 million.
Insurance was the source of premium growth, with gross premiums written up 7.8% and net premiums written up 2.7%; adjusted for specified MCE Acquisition-related non-renewals, net premiums written would have increased by 5.8%. Reinsurance and mortgage both saw lower written and earned premiums. Reinsurance underwriting income was $393 million versus $482 million, and mortgage underwriting income was $201 million versus $260 million. Mortgage profitability remained high, but its combined ratio excluding prior year development rose to 41.6% from 32.7% amid lower net premiums earned, lower ceding and profit commissions, and a modestly higher level of delinquencies excluding favorable reserve development.
Investment income provided a counterweight to weaker underwriting. Pre-tax net investment income increased to $451 million from $408 million because of growth in average investable assets, and equity in net income of equity-method investments increased to $224 million from $134 million. However, total return on investments was (0.42)%, compared with 1.80%, and the company recorded net realized losses of $99 million versus net realized gains of $210 million. Management attributed the negative total return primarily to rising interest rates on fixed income securities.
Capital allocation was substantial, with $1.4 billion of share repurchases. Ending common shareholders’ equity was $22,162 million, versus beginning common shareholders’ equity of $23,200 million, and book value per common share was $67.90, a 0.2% decrease from June 30, 2026. The release provided no forward financial guidance. Management emphasized an increasingly uneven market and continued focus on superior risk-adjusted returns, leaving catastrophe activity, reinsurance renewal and share decisions, mortgage credit trends, and investment-market movements as central items for subsequent periods.
Management, verbatim
We delivered a strong quarter, driven by solid underwriting performance across our three segments and continued strength from our investment portfolio.
Nicolas Papadopoulo, Arch CEO
We are operating in a transitioning market where conditions are increasingly uneven, but we are prepared and welcome the challenge.
Nicolas Papadopoulo, Arch CEO
The market will continue to evolve, but our core principles will not, and we remain focused on producing superior risk-adjusted returns over the long term.
Nicolas Papadopoulo, Arch CEO
Not in the filing
stated, not guessed- Forward financial guidance was not provided.
- Previous-outlook guidance was not provided.
- Cash balance was not provided.
- Debt balance was not provided.
- Operating cash flow was not provided.
- Free cash flow was not provided.
- Dividend declaration or payment information was not provided.
- A consolidated total revenue line was not provided.
- Gross margin was not provided.
- Operating income was not provided.
- Reinsurance current accident year catastrophic activity is described as 7.5 points in narrative text and 6.9% in the segment table; no single figure has been selected beyond the reported consolidated catastrophic-loss amount.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.