Bermuda-based re/insurer Arch Capital Group has announced a mild improvement in net income over the third quarter of 2020, helped by a recovery in its reinsurance business.
Net income totaled $408.6 million in Q3, up from $382.1 million in for the same period in 2019.
The result was helped by $5.5 million underwriting income from Arch’s reinsurance business, which had previously reported an underwriting loss of $2.7 million.
This was despite the company incurring catastrophe losses of $203.3 million across its insurance and reinsurance segments, including $11.9 million of COVID-19 related losses.
Losses primarily related to Hurricanes Isaias, Laura and Sally along with losses related to the Derecho Windstorm, California wildfires and other events.
Arch’s combined ratio for the quarter came to 94.9%, which was a 10.7 percentage point increase from the 84.2% it reported in Q3 2019.
This increase was evidenced in Arch’s primary insurance segment, which turned an underwriting loss of $31.2 million and a combined ratio of 104.2%, compared with a loss of $24.1 million and 104.0% last year.
Net premiums written by the insurance segment were 17.1% higher than in Q3 2019, reflecting increases across most lines of business due to new business opportunities, rate increases and growth in existing accounts.
This increase was partially offset by a decrease in travel business, reflecting the ongoing impact of the COVID-19 global pandemic.
The primary segment loss ratio reflected 10.3 points of current year catastrophic activity, primarily related to Hurricanes Isaias, Laura and Sally, including 0.5 points related to COVID-19.
Looking at the reinsurance segment, net premiums written were 38.4% higher than in Q3 2019, reflecting a higher level of retrocessions on certain property and casualty business.
The loss ratio reflected 26.1 points of catastrophic activity, primarily related to Hurricanes Laura and Sally and the Derecho Windstorm, including 1.5 points related to COVID-19.
The third quarter last year included 12.2 points of catastrophic activity, primarily related to Hurricane Dorian and Typhoon Faxai.
Arch’s pre-tax net investment income for Q3 was $99.9 million, compared to $126.9 million for the same period last year.
