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Arch reports decline in net income as CR deteriorates to 101.8% in Q2

30th July 2020 - Author: Luke Gallin

Arch Capital Group Ltd. has announced net income of $288.4 million for the second-quarter of 2020, while the insurer and reinsurer’s combined ratio deteriorated year-on-year to 101.8%.

ArchNet income declined from the $458.6 million posted in the second-quarter of 2019, while the combined ratio jumped by more than 21 percentage points as Arch booked elevated catastrophe losses in the period.

The Q2 combined ratio is comprised of a 73.9% loss ratio and a 27.9% underwriting expense ratio, compared with a loss ratio of 52.4% and an underwriting expense ratio of 28% in Q2 2019.

In total, Arch has recorded pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums of $207.2 million in Q2 2020, of which $173.1 million is related to the impacts of the COVID-19 pandemic.

In addition, the re/insurer also booked $31.4 million of favourable development in prior year loss reserves, net of related adjustments.

Overall, Arch has reported an underwriting loss across its operations of $22.6 million for Q2 2020, compared with an underwriting gain of more than $293 million in Q2 2019. Arch fell to an underwriting loss of more than $56 million in its Insurance segment, with the unit reporting a combined ratio of 108.3%. In its reinsurance unit, Arch recorded a Q2 underwriting loss of more than $33 million, and a combined ratio of 106.8%.

Turning to premiums, and Arch’s gross written premiums jumped 19.6% to more than $2.3 billion. Net premiums written increased by 15.5% to $1.67 billion, while net premiums earned increased by almost 14% to $1.66 billion.

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