Arch Capital Group Ltd. operates in the global insurance, reinsurance, and mortgage insurance markets, providing property, casualty, and mortgage insurance and reinsurance on a worldwide basis through its wholly owned subsidiaries. The company focuses on writing specialty lines of insurance and reinsurance, and its operations are conducted in Bermuda, the United States, the United Kingdom, Europe, Canada, and Australia. The insurance and reinsurance industry is highly competitive and cyclical, characterized by periods of intense price competition due to excessive underwriting capacity as well as periods when shortages of capacity permit favorable premium levels. The mortgage insurance market operates on a distinct underwriting cycle, with demand driven mainly by the housing market and general economic conditions.

The company competes with major U.S. and non-U.S. insurers and reinsurers, including Allianz, American International Group, Inc., Berkshire Hathaway, Inc., Chubb Limited, and Munich Re Group, among others. In its mortgage business, it competes with Essent Group Ltd., Enact Holdings Inc., MGIC Investment Corp., NMI Holdings Inc., and Radian Group Inc. Arch Capital's competitive advantages include its experienced management team, strong capital base, disciplined underwriting standards, and a diversified, specialty-focused platform. The company's largest single mortgage insurance customer in the U.S. accounted for 5.3% of its gross premiums written for the year ended December 31, 2025.

Arch Capital generates revenue primarily through the underwriting of insurance, reinsurance, and mortgage insurance policies, earning premiums in exchange for assuming risk. The company's revenue mix is a combination of transactional income from new policies and recurring income from policies that renew. Its primary customer segments include individuals, businesses, and government-sponsored enterprises. The company operates through a multi-channel distribution system, utilizing select international, national, and regional retail and wholesale brokers, as well as managing general agents and program administrators.

The insurance segment offers specialty product lines on a worldwide basis, including property and short-tail specialty, other liability (occurrence and claims-made), commercial multi-peril, commercial automobile, workers compensation, and other lines. For the year ended December 31, 2025, the insurance segment reported net premiums written of $7,798 million and underwriting income of $375 million. The reinsurance segment writes business on both a proportional and non-proportional basis, including treaty and facultative business, across specialty, property (excluding property catastrophe), casualty, property catastrophe, marine and aviation, and other lines. For the year ended December 31, 2025, the reinsurance segment reported net premiums written of $7,618 million and underwriting income of $1,558 million. The mortgage segment includes U.S. primary mortgage insurance, U.S. credit risk transfer and other, and international mortgage insurance and reinsurance. For the year ended December 31, 2025, the mortgage segment reported net premiums written of $1,060 million and underwriting income of $1,000 million.

On August 1, 2024, the Company completed the acquisition of Allianz's U.S. Middle Market Property & Casualty Insurance and U.S. Entertainment Property and Casualty Insurance Business, which is an important part of the Company's growth strategy. In 2025, the Company repurchased approximately $1.9 billion worth of ACGL common shares. At December 31, 2025, the total remaining authorization under the share repurchase program was $1.1 billion. Since the inception of the share repurchase program in 2007 through December 31, 2025, Arch Capital has repurchased 455 million common shares for an aggregate purchase price of $7.8 billion.

For the year ended December 31, 2025, the Company reported net income available to Arch common shareholders of $4,359 million, compared to $4,272 million for 2024. Net premiums written for the year were $16.5 billion. Book value per share was $65.11 at December 31, 2025, a 22.6% increase from $53.11 at December 31, 2024. The annualized net income return on average common equity was 20.1% for 2025, compared to 22.8% for 2024. The annualized operating return on average common equity was 17.1% for 2025, compared to 18.9% for 2024.

The insurance segment's growth is being driven by the MCE Acquisition, which expands the company's U.S. middle market presence and provides a ballast to its existing insurance business. The company continues to focus on specialty risks and building out a diversified platform, with growth in North America in specialty casualty lines, including alternative markets, construction and E&S casualty. Outside the U.S., the company is focused on continued expansion in continental Europe and optimizing opportunities in the London market.

The reinsurance segment is growing selectively, focusing on areas where margins are attractive. The company is leveraging its diversified platform and strong partnerships with brokers and cedants across multiple lines and geographies to navigate a competitive environment. The company continues to like its prospects in most lines of business and sees improving conditions in casualty lines as an advantage.

The mortgage segment continues to generate steady earnings, with the company expecting it to serve as a steady diversifying contributor to overall earnings. The team remains focused on underwriting discipline, expense management, and enhancing data and analytical platforms. While lower mortgage rates are beginning to support increased origination activity, the current market is still constrained due to affordability challenges.

The company's cost structure is managed through tight control over staffing levels and a focus on maintaining a low cost structure, particularly in the reinsurance segment. The underwriting expense ratio for the insurance segment was 33.9% in 2025, compared to 33.4% in 2024. The underwriting expense ratio for the reinsurance segment was 24.0% in 2025, compared to 23.5% in 2024. The underwriting expense ratio for the mortgage segment was 15.0% for 2025, compared to 17.0% for 2024.

The company had approximately 8,000 employees globally as of February 19, 2026, compared to around 7,200 last year. The company invests in technology and data analytics to sharpen insights, enhance risk selection, and deliver a differentiated customer experience. The company employs artificial intelligence technology and analytics to drive data-driven decisions, streamline processes, and help serve customers and partners, with the use of AI technology vetted through its AI governance framework.

In 2025, the company repurchased approximately $1.9 billion worth of ACGL common shares. At December 31, 2025, the total remaining authorization under the share repurchase program was $1.1 billion. The company paid a special cash dividend on its common shares during fiscal year 2024, but there is no assurance that any dividend will be declared and paid in the future.

The company faces headwinds from increased competition across its property and casualty businesses, with property catastrophe and short-tail excess of loss renewals being highly competitive with rates down 10% to 20%. The company also faces constraints from the effects of inflation, trade and tariff disputes, and other economic conditions, which could impact its business, financial condition, and results of operations. The company is subject to increased taxation in Bermuda as a result of the Bermuda CIT Act, effective January 1, 2025, and may become subject to increased taxation in other countries as a result of the implementation of the OECD's plan on Base Erosion and Profit Shifting.

Management's message to shareholders emphasizes the company's very good results for 2025, with an annualized net income return on average common equity and operating return on average common equity of 20.1% and 17.1%, respectively. Management highlights meaningful contributions from all three segments along with solid investment returns, resulting in book value growth for 2025 of 22.6%. The strategic priorities emphasized for the period ahead include emphasizing risk selection, leveraging the diversified specialty platform and the expertise of underwriting teams, investing in data and analytics to sharpen insights, and fostering a culture that attracts best-in-class talent. Management also notes the company's commitment to delivering long-term value for shareholders, as demonstrated by the repurchase of $1.9 billion of Arch common shares during 2025.

For the year ended December 31, 2025, total net premiums written were $16.5 billion. Net income available to Arch common shareholders was $4,359 million for 2025, compared to $4,272 million for 2024. Diluted earnings per share were not explicitly stated in the provided text, but net income available to Arch common shareholders was $4,359 million. Book value per share was $65.11 at December 31, 2025, compared to $53.11 at December 31, 2024. The annualized net income return on average common equity was 20.1% for 2025, compared to 22.8% for 2024. The annualized operating return on average common equity was 17.1% for 2025, compared to 18.9% for 2024. Net investment income was $1,625 million for 2025, compared to $1,495 million for 2024. The insurance segment reported underwriting income of $375 million for 2025, compared to $345 million for 2024. The reinsurance segment reported underwriting income of $1,558 million for 2025, compared to $1,222 million for 2024. The mortgage segment reported underwriting income of $1,000 million for 2025, compared to $1,094 million for 2024. The company's effective tax rate was 14.7% for 2025, compared to 7.7% for 2024.

The company faces significant risks from the highly cyclical nature of the insurance and reinsurance industry, which can lead to periods of excess underwriting capacity and unfavorable premium rates. Claims for natural catastrophic events, such as hurricanes, wildfires, and earthquakes, could cause large losses and substantial volatility in results, with the frequency and severity of such events potentially increasing due to climate change. The company is also exposed to credit risk from its reinsurance recoverables, which were approximately $9.5 billion at December 31, 2025, and the failure of reinsurers to meet their obligations could have a material adverse effect. Additionally, the company is subject to increased taxation in Bermuda as a result of the Bermuda CIT Act, effective January 1, 2025, which imposes a 15% corporate income tax, and may become subject to increased taxation in other countries due to the OECD's Pillar II initiatives, which could increase its effective tax rate and aggregate tax liability.