Bermuda headquartered re/insurer Arch Capital Group Ltd. has reported strong growth in its reinsurance business in the second-quarter of 2023, as the segment’s underwriting result improved by 75% to $245 million with a combined ratio of 81.9%.
During the quarter, Arch Capital’s reinsurance segment, Arch Re, witnessed gross premiums written (GPW) growth of 42% to $2.5 billion, as net premiums written (NPW) rose 47% to $1.7 billion, and net premiums earned (NPE) grew 45% to $1.3 billion.
Much of the growth in GPW reflected increases in property catastrophe, property excluding property catastrophe and other specialty lines, due in part to rate increases, new business opportunities, and also growth in existing accounts.
At the same time, growth in NPW reflected a lower level of retrocession activity year-on-year.
Within reinsurance, Arch Capital has reported Q2 2023 underwriting income of $245 million compared with $140 million a year earlier.
The segment’s loss ratio declined 2.6% year-on-year to 55.3% and the underwriting expense ratio fell from 27.5% to 26.6%. All in all, the reinsurance segment produced a Q2 2023 combined ratio of 81.9%, an improvement on the 85.4% seen a year earlier.
Within its insurance business, Arch Capital has also reported growth for Q2 2023. GPW increased almost 15% to $2 billion, as NPW rose 18% to $1.5 billion, and NPE jumped 21% to $1.3 billion.
Arch Capital attributes the GPW growth to increases in most lines of business in the quarter, driven by new business opportunities, increases in existing accounts, and rate changes. Further, the insurance segment retained more business in Q2 2023.
Underwriting income within the insurance segment increased more than 11% to $108 million.
The unit’s loss ratio deteriorated slightly to 57.3%, as did the expense ratio to 34.6%. The insurance segment combined ratio hit 91.9% in Q2 2023, compared with 91.1% a year earlier.
Within its mortgage business, Arch Capital has reported a decline in GPW to $347 million, a dip in NPW to $265 million, and a decline in NPE to $294 million for Q2 2023.
The reduction in GPW primarily reflected lower originations in the Australian market and a decrease in U.S. primary mortgage insurance business, which Arch notes was partially offset by a higher volume of credit risk transfer transactions.
Underwriting income in the mortgage segment fell from $299 million in Q2 2022 to $253 million in Q2 2023.
Across the group, Arch Capital has reported Q2 2023 GPW growth of 25% to $4.9 billion, as NPW increased 28% to $3.4 billion, and NPE rose 28% to almost $3 billion.
The underwriting result improved by 13% to $606 million in Q2 2023, compared with $536 million a year earlier.
Arch Capital’s Q2 2023 loss ratio increased 2.9% to 50.3% in the quarter, while the underwriting expense ratio fell slightly to 29.5%.
The combined ratio for the second-quarter of 2023 stands at 79.8%, which is a slight deterioration from the 77.1% reported a year earlier.
In terms of catastrophe losses, the company has reported pre-tax current accident year losses for the insurance and reinsurance segments, net of reinsurance and reinstatement premiums, of $119 million.
Additionally, Arch Capital has reported favorable development in prior year loss reserves in the quarter, net of related adjustments, of $116 million.
All in all, net income available to Arch Capital common shareholders amounts to $661 million in Q2 2023, up from the $394 million reported in Q2 2022.
