Bermuda-based re/insurer Arch Capital Group saw its net income fall by $304 million to $133.7 million in the first quarter.
After-tax operating income for the quarter was estimated at $189.8 million, compared to $275.9 million in the prior year quarter.
Pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums was $118.4 million, which included $86.6 million of losses related to the COVID-19 global pandemic for the company’s insurance and reinsurance segments.
Gross premiums written by the insurance segment in the 2020 first quarter were 28.2% higher than in the 2019 first quarter while net premiums written were 33.4% higher than in the 2019 first quarter.
The higher level of net premiums written reflected increases in most lines of business, primarily due to new business opportunities, rate increases and growth in existing accounts.
Net premiums earned in the 2020 first quarter were 29.3% higher than in the 2019 first quarter, and reflect changes in net premiums written over the previous five quarters.
Estimated net favorable development of prior year loss reserves, before related adjustments, reduced the loss ratio by 0.2 points in the 2020 first quarter, compared to 0.8 points in the 2019 first quarter.
Premiums written for the reinsurance segment in the 2020 first quarter were affected by the presence of an $88 million loss portfolio transfer contract, written and fully earned in the period in the other specialty line of business.
Absent this transaction, gross and net premiums written would have been higher than in the 2019 first quarter by 51.5% and 57.2%, respectively.
The growth in net premiums written also reflected increases in most lines of business, primarily due to growth in existing accounts, new business, including premiums written through Barbican which was acquired in the 2019 fourth quarter, and rate increases.
Excluding the loss portfolio transfer contract, net premiums earned by the reinsurance segment in the 2020 first quarter were 31.6% higher than in the 2019 first quarter, and reflect changes in net premiums written over the previous five quarters.
The underwriting expense ratio was 22.9% in the 2020 first quarter, compared to 26.0% in the 2019 first quarter, with the decrease primarily due to growth in net premiums earned.
