Underwriting income up 83.3% for Arch Capital

Arch Capital Group Ltd. recently reported a seven-point improvement in its first-quarter combined ratio while net premiums written were up more than an eighth.

Hamilton, Bermuda-based Arch released April 25 its financial results for the three months ending March 31, reporting net premiums written increased 13.8%, from $1.12 billion in Q1 2016 to $1.276 billion in the latest quarter.

All figures are in United States dollars.

Underwriting income was up 83.3%, from $115.7 million in Q1 2016 to $212 million during the most recent quarter. The combined ratio improved 7 points from 88.4% in Q1 2016 to 81.4% in the latest quarter.

Arch’s combined ratio was 98% in insurance (up 3.8 points from 94.2% in Q1 2016) and 7.2% in reinsurance, down 0.4 points from 77.6% in Q1 2016.

In its insurance segment, Arch said its loss ratio in the first three months of this year “reflected 0.5 points of current year catastrophic activity, compared to 0.1 points in the 2016 first quarter.”

Also in the insurance segment, Arch estimates its net favourable development in prior year loss reserves, before related adjustments, “reduced the loss ratio by 0.4 points,” compared to 1.2 points in Q1 2016.

“The estimated net favourable development in the 2017 first quarter primarily resulted from better than expected claims emergence in longer-tail lines from earlier accident years,” Arch said in a release April 25. “The balance of the change in the 2017 first quarter loss ratio resulted, in part, from deteriorating market conditions and changes in the mix of business.”

Arch conducts its insurance operations in Bermuda, the United States, Europe, Canada, Australia and South Africa.

Its insurance operations in Canada are conducted through Toronto-based Arch Insurance Canada.

Arch Capital also provides insurance in the Lloyd’s market through Syndicate 2012 and Arch Underwriting at Lloyd’s Ltd, the managing agent of Arch Syndicate 2012.

Arch Capital’s property & casualty offerings include construction, excess casualty, professional lines, property, aviation, energy and marine among others

Arch also operates a mortgage segment, which includes Arch MI U.S, international mortgage insurance and reinsurance operations, plus government sponsored enterprise credit-risk sharing transactions.

Broken down by segment, Arch Capital’s net premiums written in the latest quarter were $782 million in insurance, $475.8 million in reinsurance, $348.6 million in mortgage and $154 million in other.