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ARCH CAPITAL GROUP LTD.

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Business Summary

Arch Capital Group Ltd. (Arch) operates as a publicly listed Bermuda exempted company, part of the S&P 500 index, providing insurance, reinsurance, and mortgage insurance globally through its wholly-owned subsidiaries . The company focuses on writing specialty lines of insurance and reinsurance . Arch reported total capital of approximately $26.9 billion as of December 31, 2025 .

Arch's core business model revolves around generating underwriting profit through disciplined risk selection and pricing across its three primary segments: insurance, reinsurance, and mortgage . The company emphasizes talent-intensive rather than labor-intensive business and seeks to operate profitably on both a gross and net basis . Revenue is primarily derived from premiums on insurance, reinsurance, and mortgage insurance policies, with a mix of proportional and non-proportional reinsurance arrangements . Primary customer segments include international, national, and regional retail and wholesale brokers, managing general agents, program administrators, and mortgage originators such as mortgage bankers, commercial banks, savings institutions, credit unions, and community banks . The company also engages in strategic partnerships, such as its 30% ownership in Greysbridge Holdings Ltd., which wholly owns Somers, a multi-line Bermuda (re)insurance company, and a 29.5% common equity stake in Coface SA, a global trade credit insurance leader .

The Insurance segment operates in Bermuda, the U.S., the U.K., Europe, Canada, and Australia, focusing on various specialty lines on both an admitted and non-admitted basis . Key U.S. insurance subsidiaries include Arch Insurance Company, Arch Specialty Insurance Company, Arch Indemnity Insurance Company, Arch Property Casualty Insurance Company, and Arch Wilsure Insurance Company . The segment also includes McNeil & Company, Inc., a specialized risk manager and program administrator . In the U.K., operations are conducted through Arch Insurance (U.K.) and Lloyd's Syndicates 2012 and 1955 . Arch Insurance (EU) handles European Union business . A significant operational development was the August 1, 2024, acquisition of Allianz's U.S. Middle Market Property and Casualty insurance business and U.S. Entertainment business, which is an important part of the company's growth strategy in the U.S. and enhances capabilities in middle markets and entertainment insurance .

The Reinsurance segment operates globally through Arch Re Bermuda, Arch Re U.S., Lloyd's Syndicates, and Arch Re Europe . Arch Re Bermuda is dual-licensed as a Class 4 general business insurer and Class C long-term insurer . Arch Re U.S. is licensed or accredited in 50 states, the District of Columbia, and Puerto Rico, and in Ontario and Quebec, Canada . Arch Re Europe, headquartered in Dublin, Ireland, is licensed as a non-life and life reinsurer . The segment writes both treaty and facultative business on proportional and non-proportional bases .

The Mortgage segment includes U.S. and international mortgage insurance and reinsurance operations, and participation in government-sponsored enterprise (GSE) credit risk-sharing transactions . U.S. direct mortgage insurance is primarily provided through Arch Mortgage Insurance Company (AMIC), United Guaranty Residential Insurance Company (UGRIC), and Arch Mortgage Guaranty Company (AMG) . International operations include mortgage insurance and reinsurance in the EEA and U.K. through Arch Insurance (EU), and in Australia through Arch Indemnity . Arch Re Bermuda also participates in GSE credit risk-sharing programs .

For the fiscal year ended December 31, 2025, Arch reported net premiums written of $16.5 billion and net income available to Arch common shareholders of $4.4 billion . Book value per share was $65.11 at December 31, 2025, compared to $53.11 per share at December 31, 2024. Total investable assets held by Arch were $47.4 billion at December 31, 2025. Consolidated reserves for unpaid losses and loss adjustment expenses, net of unpaid losses and loss adjustment expenses recoverable, were approximately $24.5 billion at December 31, 2025.

In 2025, Arch repurchased approximately $1.9 billion worth of common shares . The total remaining authorization under the share repurchase program was $1.1 billion at December 31, 2025.

Business Outlook

Management's specific forward-looking statements indicate that the Bermuda Corporate Income Tax Act (CIT Act), effective January 1, 2025, will subject Arch Capital to a 15% tax rate on its net taxable income in Bermuda . Additionally, the adoption of the OECD Pillar II tax laws, including the "under-taxed profit rule" now effective in several jurisdictions where Arch operates, has resulted in an increase to the company's 2025 effective tax rate and aggregate tax liability . The amendments to Section 59A of the Code relating to the base erosion and anti-abuse tax (BEAT) by the One Big Beautiful Bill Act (OBBBA), effective for taxable years beginning after December 31, 2025, permanently set the BEAT percentage at 10.5% . The company does not believe these BEAT amendments will have a material impact on its U.S. operations, effective tax rate, cash taxes, or intercompany arrangements .

A key growth area for Arch is the expansion of its U.S. middle market presence and entry into the entertainment insurance market, as evidenced by the August 1, 2024, acquisition of Allianz's U.S. Middle Market Property and Casualty insurance business and U.S. Entertainment business . This acquisition is described as an important part of the company's growth strategy, enhancing capabilities in these new niche areas and providing a ballast to the existing insurance business . The company aims to build more integrated long-term alignment with strategic partners offering superior access to niche opportunities, quality scalable businesses, or lines with reliable defensive qualities .

Another growth vector involves the continued expansion in continental Europe and optimizing opportunities in the London market within the insurance segment . The company also seeks to diversify revenues globally, as demonstrated by the acquisition of Arch Indemnity in Australia in 2021 and continued growth in insuring and reinsuring European banks . The mortgage group's strategy includes capitalizing on its financial capacity, mortgage insurance technology platform, operational flexibility, and experienced management to offer mortgage insurance, reinsurance, and other risk-sharing products in the U.S., Europe, the U.K., and Australia .

Operationally, Arch employs artificial intelligence (AI) technology and analytics to drive data-driven decisions, streamline processes, and serve customers and partners across all underwriting segments . The use of AI technology is vetted through the company's AI governance framework . The company also focuses on maintaining a low cost structure in its reinsurance group by operating primarily as a broker market reinsurer . The PRA's supervisory statement SS5/25, "Enhancing banks' and insurers' approaches to managing climate-related risks," which took effect on December 3, 2025, requires U.K. regulated entities to complete an internal review of their current position against updated expectations and develop a plan to remedy any gaps by June 3, 2026 .

Regarding capital allocation, Arch Capital has an authorized common share repurchase program. Since its inception in 2007 through December 31, 2025, Arch Capital has repurchased 455 million common shares for an aggregate purchase price of $7.8 billion . At December 31, 2025, the total remaining authorization under the share repurchase program was $1.1 billion . In 2025, the company repurchased approximately $1.9 billion worth of common shares . The timing and amount of future repurchases will depend on various factors, including results of operations, market conditions, and economic development .

Management explicitly flagged several structural headwinds and execution risks. The ongoing Russia-Ukraine hostilities have created disruptions in certain sectors of the global economy, impacting lines of business such as marine and energy . There is also a possibility that the U.S. approach to Russian sanctions may diverge from that of the U.K. and EU, causing uncertainty in these business lines . Recent U.S. policies and actions, such as those relating to Venezuela and Greenland, may jeopardize global alliances and create geopolitical uncertainty, potentially leading to volatile global capital markets, sanctions, trade restrictions, and harm to international relationships . The implementation of the Basel III Capital Accord, informally denominated as "Basel III Endgame" in the U.S., is expected to be fully implemented by January 2027 . A proposed rule in 2023 to implement Basel III Endgame in the U.S. would apply to banks with assets greater than $100 billion , potentially increasing capital charges for mortgages held in portfolio and eliminating capital relief for mortgage loans .

Risk Factors

Arch Capital faces material risks across macroeconomic, geopolitical, regulatory, and operational dimensions. Macroeconomic risks include the effects of inflation, which can materially impact the adequacy of loss reserves, especially in longer-tailed lines of business, and governmental actions like increasing interest rates, which may affect the market value of the investment portfolio or the size of the mortgage origination market . Global recessionary conditions, including inflation and slow growth rates, are expected to impact the insurance and reinsurance industry . Geopolitical risks stem from increased tensions, hostilities, war, and terrorism, which are inherently unpredictable and can cause unexpected, large losses, even in lines where exclusions are attempted . The ongoing Russia-Ukraine hostilities have already disrupted sectors like marine and energy, and potential divergence in sanctions policies among the U.S., U.K., and EU could create further uncertainty . Regulatory risks are significant, as Arch's global insurance, reinsurance, and mortgage subsidiaries are subject to varying degrees of regulation across numerous jurisdictions, including new IAIG designation, which subjects global operations to additional scrutiny . Changes to existing regulations, such as the Bermuda CIT Act effective January 1, 2025, which imposes a 15% tax rate on net taxable income , or the OECD Pillar II initiatives, have already increased the company's 2025 effective tax rate and aggregate tax liability . Non-compliance or regulatory fragmentation could lead to restrictions on business, fines, increased capital requirements, or limitations on oversight . Operational risks include the inherent uncertainties in underwriting and reserving for losses, which are based on probabilities and modeling, and can deviate substantially from estimates due to factors like reporting lags, adverse economic conditions, or changes in inflation . As of December 31, 2025, consolidated reserves for unpaid losses and loss adjustment expenses, net of recoverables, were approximately $24.5 billion . The failure of loss limitation methods, such as reinsurance or geographic diversification, could have a material adverse effect . Cybersecurity incidents, including AI-powered attacks, pose a continuous threat, potentially leading to data loss, business disruption, regulatory action, and fines, despite existing technical and organizational measures .

Management Priorities

Management's message to shareholders conveys a focus on disciplined underwriting, strategic growth, and robust risk management, underpinned by a collaborative and talent-driven culture. The company aims to "Enable Possibility" for its customers, communities, and employees, emphasizing a highly engaged and talented workforce . Management highlights the August 1, 2024, acquisition of Allianz's U.S. Middle Market Property and Casualty insurance business and U.S. Entertainment business as an important part of its growth strategy, enhancing capabilities in these niche markets and providing a ballast to the existing insurance business . Strategic priorities include capitalizing on profitable underwriting opportunities, maintaining disciplined underwriting standards using experience and strategic analytics, and focusing on superior claims management . The company also emphasizes promoting and utilizing an efficient multi-channel distribution system, growing strategic partnerships, and creating or acquiring scalable and diversified underwriting platforms that can adapt to underwriting cycles . Management explicitly states the company's use of AI technology and analytics to drive data-driven decisions, streamline processes, and serve customers and partners, with an established AI governance framework . Regarding capital allocation, management indicates that share repurchases will be considered on an opportunistic basis, noting that approximately $1.9 billion worth of common shares were repurchased in 2025 , with $1.1 billion remaining under the current authorization as of December 31, 2025. Management acknowledges the impact of the Bermuda CIT Act, effective January 1, 2025, which will subject Arch Capital to a 15% tax rate on its net taxable income in Bermuda , and the OECD Pillar II initiatives, which have increased the 2025 effective tax rate and aggregate tax liability .

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — General
  2. [2] Item 1, Business — General
  3. [3] Item 1, Business — General
  4. [4] Item 1, Business — Insurance Operations — Underwriting Philosophy
  5. [5] Item 1, Business — Insurance Operations — Strategy
  6. [6] Item 1, Business — Reinsurance Operations — Strategy
  7. [7] Item 1, Business — Insurance Operations — Marketing; Item 1, Business — Mortgage Operations — Sales and Distribution
  8. [8] Item 1, Business — Our History; Item 1, Business — Other Operations
  9. [9] Item 1, Business — Insurance Operations
  10. [10] Item 1, Business — Insurance Operations
  11. [11] Item 1, Business — Insurance Operations
  12. [12] Item 1, Business — Insurance Operations
  13. [13] Item 1, Business — Insurance Operations
  14. [14] Item 1, Business — Our History; Item 1, Business — Insurance Operations
  15. [15] Item 1, Business — Reinsurance Operations
  16. [16] Item 1, Business — Reinsurance Operations
  17. [17] Item 1, Business — Reinsurance Operations
  18. [18] Item 1, Business — Our History; Item 1, Business — Reinsurance Operations
  19. [19] Item 1, Business — Reinsurance Operations — Strategy
  20. [20] Item 1, Business — Mortgage Operations
  21. [21] Item 1, Business — Mortgage Operations
  22. [22] Item 1, Business — Mortgage Operations
  23. [23] Item 1, Business — Mortgage Operations
  24. [24] Item 1, Business — General
  25. [25] Item 1, Business — General
  26. [26] Item 1, Business — General
  27. [27] Item 1, Business — General
  28. [28] Item 1, Business — Investments
  29. [29] Item 1, Business — Reserves
  30. [30] Item 1, Business — Our History
  31. [31] Item 1, Business — Our History
  32. [32] Item 1, Business — Taxation of Arch Capital — Bermuda
  33. [33] Item 1, Business — Taxation of Arch Capital — OECD's Pillar II
  34. [34] Item 1, Business — Taxation of Arch Capital — United States
  35. [35] Item 1, Business — Taxation of Arch Capital — United States
  36. [36] Item 1, Business — Our History; Item 1, Business — Insurance Operations
  37. [37] Item 1, Business — Insurance Operations
  38. [38] Item 1, Business — Insurance Operations — Strategy
  39. [39] Item 1, Business — Insurance Operations — Strategy
  40. [40] Item 1, Business — Mortgage Operations — Strategy
  41. [41] Item 1, Business — Mortgage Operations — Strategy
  42. [42] Item 1, Business — Insurance Operations — Strategy; Item 1, Business — Reinsurance Operations — Strategy; Item 1, Business — Mortgage Operations — Strategy
  43. [43] Item 1, Business — Insurance Operations — Strategy; Item 1, Business — Reinsurance Operations — Strategy; Item 1, Business — Mortgage Operations — Strategy
  44. [44] Item 1, Business — Reinsurance Operations — Strategy
  45. [45] Item 1, Business — Regulation — United Kingdom — Sustainability Considerations
  46. [46] Item 1, Business — Our History
  47. [47] Item 1, Business — Our History
  48. [48] Item 1, Business — Our History
  49. [49] Item 1, Business — Our History
  50. [50] Item 1A, Risk Factors — Risks Relating to Our Industry, Business and Operations — Sanctions imposed by the U.S., U.K. and EU on Russia and Russia-related businesses have impacted certain sectors in which we write business.
  51. [51] Item 1A, Risk Factors — Risks Relating to Our Industry, Business and Operations — Sanctions imposed by the U.S., U.K. and EU on Russia and Russia-related businesses have impacted certain sectors in which we write business.
  52. [52] Item 1A, Risk Factors — Risks Relating to Our Industry, Business and Operations — Certain U.S. policies and actions have created geopolitical risks which are not possible to manage or predict, some of which may result in uncertainty in the global markets.
  53. [53] Item 1A, Risk Factors — Risks Relating to Our Mortgage Operations — The implementation of the Basel III Capital Accord and FHFA's Enterprise Regulatory Capital Framework may adversely affect the use of mortgage insurance and SRT and CRT opportunities.
  54. [54] Item 1A, Risk Factors — Risks Relating to Our Mortgage Operations — The implementation of the Basel III Capital Accord and FHFA's Enterprise Regulatory Capital Framework may adversely affect the use of mortgage insurance and SRT and CRT opportunities.
  55. [55] Item 1A, Risk Factors — Risks Relating to Our Mortgage Operations — The implementation of the Basel III Capital Accord and FHFA's Enterprise Regulatory Capital Framework may adversely affect the use of mortgage insurance and SRT and CRT opportunities.
  56. [56] Item 1A, Risk Factors — Risks Relating to Our Industry, Business and Operations — The effects of inflation, trade and tariff disputes and other economic conditions impact the insurance and reinsurance industry in ways which may negatively impact our business, financial condition and results of operations.
  57. [57] Item 1A, Risk Factors — Risks Relating to Our Industry, Business and Operations — The effects of inflation, trade and tariff disputes and other economic conditions impact the insurance and reinsurance industry in ways which may negatively impact our business, financial condition and results of operations.
  58. [58] Item 1A, Risk Factors — Risks Relating to Our Industry, Business and Operations — We could face unanticipated losses from increased geopolitical tensions, hostilities, war, terrorism, cyber attacks and general political instability, and these or other unanticipated losses could have a material adverse effect on our financial condition and results of operations.
  59. [59] Item 1A, Risk Factors — Risks Relating to Our Industry, Business and Operations — Sanctions imposed by the U.S., U.K. and EU on Russia and Russia-related businesses have impacted certain sectors in which we write business.
  60. [60] Item 1A, Risk Factors — Risks Relating to Our Industry, Business and Operations — Our insurance, reinsurance and mortgage subsidiaries are subject to supervision and regulation. Changes to existing regulation and supervisory standards, or failure to comply with applicable requirements, could adversely affect our business and results of operations.
  61. [61] Item 1A, Risk Factors — Risks Relating to Taxation — We are 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.”
  62. [62] Item 1A, Risk Factors — Risks Relating to Taxation — We are 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.”
  63. [63] Item 1A, Risk Factors — Risks Relating to Our Industry, Business and Operations — Our insurance, reinsurance and mortgage subsidiaries are subject to supervision and regulation. Changes to existing regulation and supervisory standards, or failure to comply with applicable requirements, could adversely affect our business and results of operations.
  64. [64] Item 1A, Risk Factors — Risks Relating to Our Industry, Business and Operations — Underwriting risks and reserving for losses are based on probabilities and related modeling, which are subject to inherent uncertainties.
  65. [65] Item 1A, Risk Factors — Risks Relating to Our Industry, Business and Operations — Underwriting risks and reserving for losses are based on probabilities and related modeling, which are subject to inherent uncertainties.
  66. [66] Item 1A, Risk Factors — Risks Relating to Our Industry, Business and Operations — The failure of any of the loss limitation methods we employ could have a material adverse effect on our financial condition or results of operations.
  67. [67] Item 1A, Risk Factors — Risks Relating to Our Industry, Business and Operations — We could be materially impacted by a cyber attack, data breach, ransomware, phishing, social engineering or other cybersecurity incident resulting in loss of business data, personal data and other confidential or secret information, a disruption in our business operations, regulatory or other legal action, and fines.
  68. [68] Item 1, Business — Human Capital — Our People and Culture
  69. [69] Item 1, Business — Insurance Operations — Strategy
  70. [70] Item 1, Business — Insurance Operations — Strategy
  71. [71] Item 1, Business — Insurance Operations — Strategy
  72. [72] Item 1, Business — Insurance Operations — Strategy; Item 1, Business — Reinsurance Operations — Strategy; Item 1, Business — Mortgage Operations — Strategy
  73. [73] Item 1, Business — Our History
  74. [74] Item 1, Business — Our History
  75. [75] Item 1, Business — Taxation of Arch Capital — Bermuda
  76. [76] Item 1, Business — Taxation of Arch Capital — OECD's Pillar II

Analysis on 5/19/2026