Arch Capital’s fourth-quarter profit falls on higher expenses

(Reuters) — Insurer Arch Capital Group posted a 60% fall in quarterly profit on Monday, as elevated costs dragged gains made in investment income.

Costs from higher expenses on investigating and settling claims led to its losses and loss adjustment expenses to jump 45.6% to $2.38 billion, compared with $1.64 billion a year earlier.

Arch Capital also forecast an insured market loss ranging from $35 billion to $45 billion due to the California wildfires, with its share of the losses estimated somewhere between $450 million and $550 million.

Profit available to common shareholders was $925 million, or $2.42 per share, for the three months ended Dec. 31, compared with $2.32 billion, or $6.12 per share, last year.

However, investment income was a bright spot for the company as higher interest rates have boosted returns on insurers’ bond investments while a stock rally, prompted by President Trump’s business-friendly comments, helped increase its equity portfolio.

The insurer’s pre-tax net investment income grew 29.4% to $405 million in the quarter.