Arch Capital Group Ltd., the Bermuda-based insurer and reinsurer, has reported a 32.3% year-on-year rise in underwriting income to $827 million for the fourth quarter of 2025, with a strong performance in both insurance and reinsurance.
Group-wide, the combined ratio improved by 4.4 percentage points to 80.6%, down from 85% in Q4’24, as the loss ratio decreased to 53.6%, down from 57.5% in 2024. Overall gross premiums written (GPW) remained relatively flat at $4.8 billion, compared to $4.76 billion in Q4’24.
Pre-tax current accident year catastrophic losses for the insurance and reinsurance segments, net of reinsurance and reinstatement premiums, were $164 million. The re/insurer also reported favourable development in prior year loss reserves, net of related adjustments, of $118 million.
Group net premiums written (NPW) for the quarter came down to $3.7 billion compared to $3.8 billion in Q4’24, meanwhile, net premiums earned (NPE) rose slightly to $4.3 billion compared to $4.1 billion in Q4’24.
Lastly, for Q4’25, Arch reported a group-wide net income of $1.2 billion, representing a 21.2% annualised net income return on average common equity, compared to $925 million in Q4’24.
Arch’s after-tax operating income is $1.1 billion, representing an 18.9% annualised operating return on average common equity, compared to $866 million in Q4’24.
Within Arch’s reinsurance segment, underwriting income increased by 39.6% year-on-year to $458 million from $328 million, as the combined ratio strengthened by 6 percentage points to 77%, with a 4.4 percentage point improvement in the loss ratio to 54.5%, and a lower expense ratio of 22.5%.
Arch explained that this quarter’s loss ratio reflected 5.4 points of current-year catastrophic activity, compared to 12.9 points in Q4’24.
The estimated net favourable development of prior year loss reserves, before related adjustments, reduced the loss ratio by 3.5 points in Q4’25, compared to 3.8 points in the comparative quarter. The balance of the change in the loss ratio was influenced by a higher level of attritional losses and changes in the mix of business.
In the segment, GPW were 0.2% higher at $1.9 billion, while NPW were 5.2% lower at $1.5 billion, and NPE were 4.6% higher at $1.9 billion.
Arch said the changes in NPW in Q4’25 followed a similar direction to GPW, with the exception of property catastrophe, which was impacted by a change in the timing of certain retrocession purchases.
In the insurance segment, underwriting income rose 296.7% year-on-year to $119 million, as the combined ratio improved to 94% for Q4’25. The loss ratio came down by 5.7 percentage points to 60.6%, and the expense ratio increased to 33.4%.
The insurance arm generated GPW of $2.5 billion in Q4’25, an increase of 2.3% year-on-year, as NPW dropped by 4% to $1.8 billion, and NPE increased by 2.1% to $1.9 billion.
Arch notes that the impact on NPW was driven by the timing of ceded written premium accruals related to the MCE acquisition in the prior year quarter, and changes in business mix resulting from different levels of net-to-gross retention ratios.
The segment’s Q4’25 loss ratio reflected 3.3 points of current year catastrophic activity, compared to 8.3 points of catastrophic activity last year. Estimated net favourable development of prior year loss reserves, before related adjustments, reduced the loss ratio by 0.2 points in Q4’25, compared to 0.3 points in Q4’24.
In its mortgage business, Arch’s underwriting income fell by 6.4% to $250 million in Q4’25, with a relatively flat combined ratio of 13.7% on a lower expense ratio of 14.5%.
GPW in the mortgage business were down by 1.5% year-on-year to $326 million in Q4’25, while NPW also fell 3.6% to $267 million, and NPE fell by 5.2% to $290 million.
The reduction in the quarter’s NPW primarily reflected lower US monthly premium volume. Meanwhile, estimated net favourable development of prior year loss reserves, before related adjustments, decreased the loss ratio by 19.4 points, compared to 20.2 points in Q4’24.
On the asset side of the balance sheet, Arch has reported pre-tax net investment income of $434 million, which primarily reflected growth in average invested assets, due in part to strong operating cash flows.
Nicolas Papadopoulo, Chief Executive Officer, Arch, commented, “Our 2025 financial performance was outstanding, once again demonstrating the value of our diversified platform and our ability to effectively execute our cycle management strategy. I want to thank each of our 8,000+ employees for making these fantastic results possible. We enter 2026 with optimism in our ability to continue delivering superior results for our shareholders.”
