Bermuda-based insurance and reinsurance company, Arch Capital Group Ltd., generated net income of $1 billion in the second quarter of 2026, down roughly $200 million year-on-year, as catastrophe losses across the business increased to $201 million.
Although net income fell year-on-year, Arch delivered a strong second quarter, with after-tax operating income of $893 million, compared with $979 million in Q2’25.
Pre-tax current accident year catastrophic losses for the firm’s insurance and reinsurance segments, net of reinsurance and reinstatement premiums, hit $201 million in Q2’26, an increase on the prior year’s $154 million.
However, partially offsetting the rise in cat losses in the quarter were favourable development in prior year loss reserves, net of related adjustments, of $165 million, an increase on Q2’25’s $139 million.
Group-wide, gross premiums written (GPW) decreased by 1.1% to $6.1 billion, as net premiums written (NPW) fell by almost 7% to $4.1 billion, and net premiums earned (NPE) fell by more than 8% to $4 billion.
Underwriting income across the business decreased by almost 20% year-on-year to $657 million in Q2’26, as the combined ratio deteriorated by 2.3 percentage points to 83.5%. This is comprised of a loss ratio of 55.1% and an expense ratio of 28.4%.
In the carrier’s reinsurance segment, GPW increased slightly to $3.2 billion, while NPW decreased by 10.4% to $1.8 billion, and NPE decreased by 12.8% to $1.8 billion. Arch explains that reductions in NPW this quarter were due, in part, to non-renewals, share reductions as well as targeted increased retrocessions.
The reinsurance arm’s underwriting income decreased by 9.1% year-on-year to $410 million in Q2’26, although the reinsurance combined ratio strengthened by 1 percentage point to 77.5%, comprised of a loss ratio of 54.6% and an expense ratio of 22.9%.
Arch’s insurance segment delivered GPW of $2.6 billion in Q2’26, a decrease of 2.9% year-on-year, while NPW fell by 5.1% to $1.9 billion, and NPE fell by 4.5% to $1.9. billion. Other underwriting income increased by $2 million to $15 million, as underwriting income in the insurance arm decreased by almost 80% to $27 million.
The insurance segment combined ratio deteriorated by 5.1 percentage points to 98.5%, comprised of a loss ratio of 63% and an expense ratio 35.5%.
In contrast to the declines in the insurance and reinsurance businesses, Arch’s mortgage segment saw its GPW increase slightly to $324 million in Q2’26, while NPW rose by 7.5% to $272 million, and NPE increased by 1.4% to $285 million.
The segment’s underwriting income fell by 7.6% year-on-year to $220 million in Q2’26. The combined ratio moved from 15.2% in Q2’25 to 22.8% in Q2’26, comprised of a loss ratio of 6.5% and an expense ratio of 16.3%.
On the asset side of the balance sheet, pre-tax net investment income totalled $417 million at the end of June 2026, compared with $408 million at the end of Q1’26, and $405 million in Q2’25.
Arch CEO, Nicolas Papadopoulo, commented: “We delivered a strong quarter, driven by solid underwriting performance across our three segments, reflecting the continued strength of our diversified platform and disciplined execution across the enterprise. Our leadership positions in Specialty Insurance, including our Mortgage and Reinsurance operations, provide us with a meaningful competitive advantage. Clients not only come to us for capacity, but also for our underwriting expertise, claims capabilities, creative solutions and valuable perspectives that help them better manage risk.”
