Bermuda-based Arch Capital Group has reported a 146% increase in operating income over the first quarter of 2022, helped by improvements in underwriting income across all three of its main business segments – insurance, reinsurance and mortgage.
Operating income amounted to $457.6 million for the quarter, compared to $185.9 million in Q1 of 2021, and the company’s combined ratio similarly improved by 12.0 percentage points to 78.8%.
However, net income for the period more than halved from $427.8 million to $185.6 million.
Looking at the reinsurance segment specifically, underwriting income amounted to $108.8 million over Q1, compared to a loss of $19.7 million last year, with the combined ratio also improving by 16.3 points to 86.6%.
Arch notes that the reinsurance loss ratio for the quarter reflected 6.5 points of current year catastrophic activity, primarily related to Russia’s invasion of Ukraine, compared to 24.7 points of catastrophic activity in the 2021 first quarter, primarily related to winter storms Uri and Viola as well as other minor global events.
Estimated net favorable development of prior year loss reserves, before related adjustments, reduced the loss ratio by 4.0 points in the 2022 first quarter, compared to 4.2 points in the 2021 first quarter.
The improvement in the 2022 first quarter loss ratio also reflected the impact of rate increases and changes in mix of business.
Gross premiums written by the reinsurance segment in the 2022 first quarter were 16.9% higher than in the 2021 first quarter, while net premiums written were 14.0% higher than in the 2021 first quarter.
The growth in net premiums written was observed in other specialty, casualty and property excluding property catastrophe lines, primarily related to rate increases, new business opportunities and growth in existing accounts.
For the primary insurance segment, underwriting income improved nearly two and a half times over to $63.5 million, and the combined ratio improved 3.9 points to 93.8%.
Here, the loss ratio reflected 3.1 points of current year catastrophic activity, mainly related to Russia’s invasion of Ukraine and other catastrophes, compared to 5.1 points of catastrophic activity in the 2021 first quarter.
Premiums in the insurance segment were 21.5% higher than in the 2021 first quarter while net premiums written were 21.3% higher than in the 2021 first quarter, reflecting increases in most lines of business, due in part to rate increases, new business opportunities and growth in existing accounts.
