In This Article:
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Net Premium Written: $3.8 billion in Q4, a 17% increase year-over-year.
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Underwriting Income: $625 million in Q4, down 14% from last year.
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After-Tax Operating Income: $3.5 billion for the full year.
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Operating Return on Average Common Equity: 18.9% for the full year.
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Book Value Per Share: $3.11 at year-end, a 13% increase for the year.
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Special Dividend: $5 per share paid in December.
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Share Repurchase: $24 million worth of shares repurchased in Q4.
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Reinsurance Underwriting Income: $328 million in Q4; $1.2 billion for the full year.
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Insurance Underwriting Income: $30 million in Q4; $345 million for the full year.
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Mortgage Underwriting Income: $267 million in Q4.
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Net Investment Income: Nearly $1.5 billion for the full year.
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Cash Flow from Operations: Approximately $6.7 billion for the full year, up 16% from 2023.
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Effective Tax Rate: 6.7% for Q4; 8.2% for the full year.
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Common Shareholders' Equity: $20 billion after the $1.9 billion dividend paid in December.
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Debt Plus Preferred to Capital Ratio: 15.1%.
Release Date: February 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Arch Capital Group Ltd (NASDAQ:ACGL) reported a 17% increase in net premium for the fourth quarter, reaching $3.8 billion.
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The company achieved a full-year after-tax operating income of $3.5 billion, with an operating return on average common equity of 18.9%.
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Book value per share increased by 13% for the year, and nearly 24% after adjusting for a special dividend.
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The reinsurance segment delivered a record $1.2 billion of underwriting income for the year.
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The investment group generated nearly $1.5 billion of annual net investment income, benefiting from rising investment yields and strong operating cash flows.
Negative Points
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Arch Capital Group Ltd (NASDAQ:ACGL) expects a net loss between $450 million and $550 million due to the California wildfires.
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Underwriting income for the fourth quarter decreased by 14% compared to the previous year, primarily due to catastrophe losses.
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The insurance segment's fourth-quarter underwriting income was limited to $30 million due to Hurricane Helene and Milton.
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The delinquency rates in the US mortgage insurance business increased modestly to just over 2% by the end of December.
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The company faces competitive pressures in certain lines of business, such as public D&O and cyber, which have seen significant rate decreases.
Q & A Highlights
Q: Can you provide clarity on the insurance underlying loss ratio, particularly with the impact of the Allianz deal? A: Francois Morin, CFO, explained that the impact of the mid-corp acquisition adds about 1 point to the loss ratio. The pre-acquisition run rate loss ratio has been stable, and the addition of the mid-corp business slightly increases it to around 58%.