Arch Capital posts strong Q4, full-year results

Arch Capital Group Ltd. reported fourth-quarter net income of $613.1 million, up 15% from $533.1 million for the final quarter of 2020.

Net premiums written grew 15.7% to $2.034 billion, and the company’s combined ratio improved to 77.6% from 88.3% in the fourth quarter of 2020, the insurer and reinsurer reported Wednesday after markets closed.

Net investment income rose 2.8% to $90.5 million, from $88.0 million in the fourth quarter of 2020.

In the insurance segment, net premiums written grew 23.7% to $1.036 billion, from $837.7 million. The growth resulted from a mix of rate increases, new business and growth in existing accounts.

Growth occurred across many lines “as we earned in the rate increases of the past several quarters,” Arch CEO Marc Grandisson said Thursday on an earnings call with analysts. Professional lines and travel showed the strongest advances, he said.

François Morin, chief financial officer and treasurer, said on the call that growth was particularly strong in North America due to a combination of rate increases and new business.

Overall submission activity and rate momentum remains healthy, and rate increases were above loss trends, Mr. Grandisson said.

Reinsurance net premiums written grew 44.5% to $709.1 million, from $490.9 million in fourth-quarter 2020. Arch attributed the increase to new business and growth in existing accounts, including casualty, property excluding property catastrophe, and other specialty lines, as well as rate increases.

Property/catastrophe reinsurance rates were up “broadly” at Jan. 1 renewals, and Arch saw growth across most lines, Mr. Grandisson said.

Net income for all of 2021 totaled $2.093 billion, up 53.6% from $1.363 billion the previous year.

Net premiums written for 2021 rose 25.6% to $8.663 billion, while net investment income slid 13.7% to $346.8 million.

Arch’s combined ratio for 2021 improved to 84.3% from 92.9% in 2020.

Mr. Grandisson said Arch’s property/casualty pricing has more room to grow.

Mr. Morin added that Arch remains positive about the current pricing environment and opportunities this year.

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