Bermuda-based carrier Arch Capital Group Ltd. has released its results for the third quarter of 2022, which include an underwriting loss of $196.9 million within its reinsurance segment, largely due to the impact of Hurricane Ian.
Ian accounted for the bulk of Arch’s $550.8 million catastrophe bill for the quarter, which it warned ahead of last week, although US convective storms, Typhoon Nanmadol and the June French hailstorms also contributed to the total.
Overall, Arch reported net income of just $6.9 million for Q3, down from $388.8 million for the same period last year, with underwriting income dropping from $173.7 million to $68.8 million and its combined ratio deteriorating 5.9 percentage points to 97.3%.
For its primary insurance segment, Arch reported an underwriting loss of $33.7 million, compared with a loss of $21.4 million previously, with a slight deteriorated of 0.6 points in its combined ratio to 102.8%.
But it was the reinsurance segment where results really suffered, with the underwriting loss worsening from $38.9 million in Q3 2021 to $196.9 million in Q3 this year, and the combined ratio deteriorating by 13.5 points to 119.7%.
Arch explained that its reinsurance loss ratio reflected 42.8 points of current year catastrophic activity, related to Hurricane Ian and other global events, compared to 34.6 points of catastrophic activity in the 2021 third quarter, primarily related to Hurricane Ida and European floods.
Meanwhile, the company’s mortgage and corporate segments continued to offset losses and provide some stability, with underwriting income for the former improving by 27.9% to $299.4 million, and net investment income for the latter improving from $88.2 million last year to $128.6 million.
Arch did also report significant top line growth, with gross written premiums for the overall company increasing by 20.4% to $3.86 billion, helped by 16.6% growth in its primary insurance segment and by 30.9% growth in its reinsurance segment, where premiums totalled $1.64 billion for Q3.
The company explained that the growth in reinsurance premiums written reflected increases in all lines of business, primarily related to rate increases, new business opportunities and growth in existing accounts.
