Arch Capital Group has reported net income available to common shareholders of $713 million for Q3 of 2023, a massive increase compared to the $7 million recorded in the same quarter last year, driven by strong growth in the firm’s reinsurance segment.
Arch’s total underwriting income in Q3 was $721 million, representing a surge of 960.3% compared to the $68 million recorded in Q3 of 2022.
Looking at all three segments separately, Arch’s reinsurance underwriting income was $310 million compared to a loss of $197 million in Q3 of 2022. The insurance segment saw a profit of $129 million compared to a loss of $34 million in Q3 2022.
The underwriting income of Arch’s mortgage segment in Q3 was $282 million, down slightly from $299 million last year.
The firm’s total after-tax operating income available to common shareholders in Q3 2023 was $876 million, a 24.8% annualised operating return on average common equity, compared to $106 million in Q3 of 2022.
Meanwhile, pre-tax current accident year catastrophic losses for the firm’s insurance and reinsurance segments, net of reinsurance and reinstatement premiums, were $180 million.
The total combined ratio also improved, dropping to 77.9% compared with Q3 2022’s 97.3%. Elsewhere, Arch’s total Q3 2023 gross premiums written increased by 17.2% to $4,527 million.
Gross premiums written by the firm’s insurance segment in Q3 of 2023 were 9.7% higher than the previous year, while net premiums written were 11.2% higher than in the 2022 third quarter.
Arch said that growth in net premiums written reflected increases in most lines of business, due in part to new business opportunities, increases in existing accounts and rate changes.
Gross premiums written in the reinsurance segment in Q3 2023 were 30.4% higher than in Q3 2022, while net premiums written were 44.8% higher.
The firm explained that growth in net premiums written primarily reflected increases in property excluding property catastrophe and other specialty lines, due in part to rate increases, new business opportunities and growth in existing accounts.
Marc Grandisson, Chief Executive Officer of Arch Capital Group, commented, “Excellent underwriting performance from all three of our segments, along with improved investment returns, helped us achieve an impressive 24.8% operating return on equity in the third quarter.
“Growth in net premiums written across our insurance and reinsurance segments was especially strong as hard market rates and rising inflation drove client demand for many of our property and casualty products, resulting in an overall 26.0% year-over-year increase across both segments.”
