Bermuda-based Arch Capital Group has reported net income available to its common shareholders of $849.5 million in Q4 of 2022, a 29.5% annualised net income return on average common equity, compared to $613.1 million for the same quarter of 2021.
After-tax operating income available to Arch’s common shareholders was $805.9 million, a 28.0% annualised operating return on average common equity, compared to $493.3 million for Q4 of 2021.
Arch also reported pre-tax current accident year catastrophic losses for its insurance and reinsurance segments, net of reinsurance and reinstatement premiums, of $34.6 million.
Arch’s combined ratio, excluding catastrophic activity and prior year development, was 82%, compared to 80.1% for Q4 of 2021.
Meanwhile, gross premiums written by the insurance segment in Q4 2022 were 10.6% higher than in the same quarter the year before, while net premiums written were 17.4% higher.
Arch states that the higher level of net premiums written reflected increases in most lines of business, due in part to rate increases, new business opportunities and growth in existing accounts.
Additionally, Arch suggests that the insurance segment is retaining more business due to ongoing changes in its reinsurance programs, as well as higher levels of growth in lines with a higher retention rate.
Net premiums earned in Q4 2022 were 24% higher than in 2021’s Q4, reflecting changes in net premiums written over the previous five quarters.
The Q4 2022 loss ratio reflected 2.8 points of current-year catastrophic activity, spread across a series of global events that occurred in 2022, compared to 2.0 points of catastrophic activity in Q4 of 2021, suggests Arch.
Gross premiums written by the reinsurance segment in Q4 of 2022 were 77.4% higher than in the same quarter of 2021, while net premiums written were 117.6% higher.
Arch notes that the comparison of gross and net premiums written in Q4 2022 were affected by a few non-recurring transactions, primarily impacting the other specialty line of business.
The firm adds that absent these items, gross and net premiums written would have been higher than in the 2021 fourth quarter by 47.9% and 61.0%, respectively.
Arch suggests the growth in net premiums written reflected increases in most lines of business, primarily related to rate increases, new business opportunities and growth in existing accounts.
Excluding the transactions mentioned above, net premiums earned in the 2022 fourth quarter were 38.1% higher than in Q4 2021.
Arch says that the Q4 2022 loss ratio in this reflected minimal current-year catastrophic activity, compared to 7.1 points of catastrophic activity in Q4 2021.
