Arch Capital Group Ltd. Reports 2020 Fourth Quarter Results
Arch Capital Group Ltd. (NASDAQ: ACGL) reported strong fourth-quarter results for 2020, with net income available to common shareholders of $533.1 million, or $1.30 per share, reflecting a 17.8% annualized return on equity. This compares favorably to $316.0 million, or $0.76 per share, in Q4 2019. After-tax operating income was $230.4 million, or $0.56 per share. Gross premiums written increased by 16.2% to $2.26 billion. The combined ratio improved to 88.3%, though underwriting income decreased by 12.1%. Book value per share rose 5.4% to $30.31. Overall, the results showcased a solid operational performance amidst a challenging market.
- Net income increased by 68.9% year-over-year, from $316.0 million in Q4 2019 to $533.1 million in Q4 2020.
- Gross premiums written grew 16.2%, reaching $2.26 billion.
- Book value per share rose by 5.4% from Q3 2020 and 14.7% year-over-year, totaling $30.31.
- The combined ratio decreased to 88.3%, signifying improved underwriting efficiency.
- After-tax operating income decreased by 25.3% compared to Q4 2019, from $308.4 million to $230.4 million.
- Underwriting income declined by 12.1% from $251.4 million in Q4 2019 to $221.0 million in Q4 2020.
- Loss ratio increased to 62.3%, up from 55.7% in Q4 2019, indicating higher incurred losses.
Arch Capital Group Ltd. (NASDAQ: ACGL) announces its 2020 fourth quarter results. The results included:
-
Net income available to Arch common shareholders of
$533.1 million , or$1.30 per share, a17.8% annualized return on average common equity, compared to$316.0 million , or$0.76 per share, for the 2019 fourth quarter; -
After-tax operating income available to Arch common shareholders(1) of
$230.4 million , or$0.56 per share, a7.7% annualized return on average common equity, compared to$308.4 million , or$0.74 per share, for the 2019 fourth quarter; -
Pre-tax current accident year catastrophic losses for the Company’s insurance and reinsurance segments, net of reinsurance and reinstatement premiums(1) of
$156.4 million , including$0.4 million of COVID-19 related losses; -
Favorable development in prior year loss reserves, net of related adjustments(1) of
$49.8 million ; -
Combined ratio excluding catastrophic activity and prior year development(1) of
80.2% , compared to81.4% for the 2019 fourth quarter; -
The percentage of loans in default on U.S. primary mortgage business was
4.19% at December 31, 2020, compared to4.69% at September 30, 2020; -
Total return on investments(1) of
2.46% ; -
Book value per common share of
$30.31 at December 31, 2020, a5.4% increase from September 30, 2020 and a14.7% increase from December 31, 2019.
All earnings per share amounts discussed in this release are on a diluted basis. The following table summarizes the Company’s underwriting results, both (i) on a consolidated basis and (ii) on a consolidated basis excluding the ‘other’ segment (i.e., results of Watford):
(U.S. dollars in thousands) |
Consolidated |
|
Consolidated Excluding ‘Other’ Segment (1) |
|||||||||||||||||||
|
Three Months Ended December 31, |
|
Three Months Ended December 31, |
|||||||||||||||||||
|
2020 |
|
2019 |
|
% Change |
|
2020 |
|
2019 |
|
% Change |
|||||||||||
Gross premiums written |
$ |
2,256,514 |
|
|
$ |
1,942,151 |
|
|
16.2 |
|
|
$ |
2,170,831 |
|
|
$ |
1,842,071 |
|
|
17.8 |
|
|
Net premiums written |
1,758,015 |
|
|
1,455,453 |
|
|
20.8 |
|
|
1,660,298 |
|
|
1,343,100 |
|
|
23.6 |
|
|||||
Net premiums earned |
1,811,045 |
|
|
1,515,882 |
|
|
19.5 |
|
|
1,668,299 |
|
|
1,382,437 |
|
|
20.7 |
|
|||||
Underwriting income |
220,987 |
|
|
251,421 |
|
|
(12.1 |
) |
|
229,542 |
|
|
288,672 |
|
|
(20.5 |
) |
|||||
Underwriting Ratios |
|
|
|
|
% Point
|
|
|
|
|
|
% Point
|
|||||||||||
Loss ratio |
62.3 |
% |
|
55.7 |
% |
|
6.6 |
|
|
61.0 |
% |
|
51.4 |
% |
|
9.6 |
|
|||||
Underwriting expense ratio |
26.0 |
% |
|
28.1 |
% |
|
(2.1 |
) |
|
25.6 |
% |
|
28.2 |
% |
|
(2.6 |
) |
|||||
Combined ratio |
88.3 |
% |
|
83.8 |
% |
|
4.5 |
|
|
86.6 |
% |
|
79.6 |
% |
|
7.0 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Combined ratio excluding catastrophic activity and prior year development (1) |
|
|
|
|
|
|
80.2 |
% |
|
81.4 |
% |
|
(1.2 |
) |
||||||||
(1) |
Presentation represents a “non-GAAP” financial measure as defined in Regulation G. Such presentation excludes the results of Watford Holdings Ltd. (“Watford”). Pursuant to GAAP, the Company consolidates the results of Watford in its financial statements, although it only owns approximately |
The following table summarizes the Company’s consolidated financial data, including a reconciliation of net income or loss available to Arch common shareholders to after-tax operating income or loss available to Arch common shareholders and related diluted per share results:
(U.S. dollars in thousands, except share data) |
Three Months Ended |
|
Year Ended |
|||||||||||||
|
December 31, |
|
December 31, |
|||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||||||
Net income available to Arch common shareholders |
$ |
533,141 |
|
|
$ |
315,981 |
|
|
$ |
1,363,909 |
|
|
$ |
1,594,707 |
|
|
Net realized (gains) losses |
(297,801 |
) |
|
(32,966 |
) |
|
(814,808 |
) |
|
(349,848 |
) |
|||||
Equity in net (income) loss of investment funds accounted for using the equity method |
(89,286 |
) |
|
(27,139 |
) |
|
(146,693 |
) |
|
(123,672 |
) |
|||||
Net foreign exchange (gains) losses |
63,588 |
|
|
39,832 |
|
|
80,591 |
|
|
10,732 |
|
|||||
{
"@context": "https://schema.org",
"@type": "FAQPage",
"name": "Arch Capital Group Ltd. Reports 2020 Fourth Quarter Results FAQs",
"mainEntity": [
{
"@type": "Question",
"name": "What were Arch Capital Group's Q4 2020 earnings per share?",
"acceptedAnswer": {
"@type": "Answer",
"text": "Arch Capital Group reported earnings of $1.30 per share for Q4 2020."
}
},
{
"@type": "Question",
"name": "How did Arch Capital Group's net income change in Q4 2020?",
"acceptedAnswer": {
"@type": "Answer",
"text": "Net income for Q4 2020 was $533.1 million, up from $316.0 million in Q4 2019."
}
},
{
"@type": "Question",
"name": "What was the trend in gross premiums written by Arch Capital Group in Q4 2020?",
"acceptedAnswer": {
"@type": "Answer",
"text": "Gross premiums written increased by 16.2%, reaching $2.26 billion in Q4 2020."
}
},
{
"@type": "Question",
"name": "What was Arch Capital Group's combined ratio in Q4 2020?",
"acceptedAnswer": {
"@type": "Answer",
"text": "The combined ratio improved to 88.3% in Q4 2020."
}
},
{
"@type": "Question",
"name": "Did Arch Capital Group experience any changes in underwriting income in Q4 2020?",
"acceptedAnswer": {
"@type": "Answer",
"text": "Yes, underwriting income decreased by 12.1% to $220.9 million in Q4 2020."
}
}
]
}
FAQ
What were Arch Capital Group's Q4 2020 earnings per share?
Arch Capital Group reported earnings of $1.30 per share for Q4 2020.
How did Arch Capital Group's net income change in Q4 2020?
Net income for Q4 2020 was $533.1 million, up from $316.0 million in Q4 2019.
What was the trend in gross premiums written by Arch Capital Group in Q4 2020?
Gross premiums written increased by 16.2%, reaching $2.26 billion in Q4 2020.
What was Arch Capital Group's combined ratio in Q4 2020?
The combined ratio improved to 88.3% in Q4 2020.
Did Arch Capital Group experience any changes in underwriting income in Q4 2020?
Yes, underwriting income decreased by 12.1% to $220.9 million in Q4 2020.
Arch Capital Group Ltd
NASDAQ:ACGLACGL RankingsACGL Latest NewsACGL Stock Data
37.13B
364.80M
2.99%
89.88%
1.2%
Insurance - Diversified
Fire, Marine & Casualty Insurance
United States of America
PEMBROKE
| ||||||||||||||||