Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

July 30, 2024

Date of Report (Date of earliest event reported)

Arch Capital Group Ltd.

(Exact name of registrant as specified in its charter)

Bermuda

001-16209

98-0374481

(State or other
jurisdiction of
incorporation or
organization)

(Commission File Number)

(I.R.S. Employer
Identification No.)

Waterloo House, Ground Floor, 100 Pitts Bay Road, Pembroke HM 08, Bermuda

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code:

(441) 278-9250

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class

Trading Symbol (s)

Name of each exchange on which registered

Common shares, $0.0011 par value per share

ACGL

NASDAQ

Stock Market

Depositary shares, each representing a 1/1,000th interest in a 5.45% Series F preferred share

ACGLO

NASDAQ

Stock Market

Depositary shares, each representing a 1/1,000th interest in a 4.55% Series G preferred share

ACGLN

NASDAQ

Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

ITEM 2.02 Results of Operations and Financial Condition.

On July 30, 2024 Arch Capital Group Ltd. issued a press release reporting its earnings and the availability of its financial supplement for the quarter ended June 30, 2024. The press release and financial supplement are attached to this Current Report on Form 8-K as Exhibit 99.1 and Exhibit 99.2, respectively, and are incorporated herein by reference.

The information in this Current Report on Form 8-K, including the information set forth in Exhibit 99.1 and Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

ITEM 9.01 Financial Statements and Exhibits.

(d): The following exhibits are being filed herewith.


EXHIBIT NO.						DESCRIPTION
99.1						Press Release dated July 30, 2024 announcing the earnings of Arch Capital Group Ltd. for the quarter ended June 30, 2024
99.2						2024 Second Quarter Financial Supplement
104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	ARCH CAPITAL GROUP LTD.


Date: July 30, 2024	By:	/s/ François Morin
		Name:	François Morin
		Title:	Executive Vice President, Chief Financial Officer and Treasurer


						EXHIBIT 99.1
			PRESS RELEASE			Arch Capital Group Ltd.
			NASDAQ Symbol: ACGL			Waterloo House, Ground Floor
			For Immediate Release			100 Pitts Bay Road
			July 30, 2024			Pembroke HM 08 Bermuda

ARCH CAPITAL GROUP LTD. REPORTS 2024 SECOND QUARTER RESULTS

PEMBROKE, BERMUDA--(BUSINESS WIRE)--Arch Capital Group Ltd. (NASDAQ: ACGL; “Arch,” “our” or “the Company”) announces its 2024 second quarter results. The results included:

•Net income available to Arch common shareholders of $1.3 billion, or $3.30 per share, representing a 26.3% annualized net income return on average common equity, compared to net income available to Arch common shareholders of $661 million, or $1.75 per share, for the 2023 second quarter.

•After-tax operating income available to Arch common shareholders(1) of $981 million, or $2.57 per share, representing a 20.5% annualized operating return on average common equity(1), compared to $726 million, or $1.92 per share, for the 2023 second quarter.

•Pre-tax current accident year catastrophic losses for the Company’s insurance and reinsurance segments, net of reinsurance and reinstatement premiums, of $196 million.

•Favorable development in prior year loss reserves, net of related adjustments, of $124 million.

•Combined ratio excluding catastrophic activity and prior year development(1) of 76.7%, compared to 79.7% for the 2023 second quarter.

•Book value per common share of $52.75 at June 30, 2024, a 6.9% increase from March 31, 2024.

Marc Grandisson, Chief Executive Officer of ACGL commented: “Our excellent results this quarter highlight the value of our ongoing commitment to bottom-line returns combined with disciplined execution throughout the underwriting cycle. We are pleased with the contributions made by our underwriting and investment teams, which are key to us being able to consistently generate returns above our target.”

All earnings per share amounts discussed in this release are on a diluted basis. The following table summarizes the Company’s underwriting results:



(U.S. Dollars in millions)	Three Months Ended June 30,
		2024			2023			% Change
Gross premiums written		$	5,382		$	4,845		11.1
Net premiums written		3,781			3,428			10.3
Net premiums earned		3,565			2,965			20.2
Underwriting income		762			606			25.7
Underwriting Ratios								% Point Change
Loss ratio		51.2		%	50.3		%	0.9
Underwriting expense ratio		27.5		%	29.5		%	(2.0)
Combined ratio		78.7		%	79.8		%	(1.1)

Combined ratio excluding catastrophic activity and prior year development (1)		76.7		%	79.7		%	(3.0)

(1) See ‘Comments on Non-GAAP Financial Measures’ for further details.

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 (see ‘Comments on Non-GAAP Financial Measures’ for further details):


(U.S. Dollars in millions, except per share data)	Three Months Ended
	June 30,
	2024			2023
Net income available to Arch common shareholders	$	1,259		$	661
Net realized (gains) losses (1)	(122)			123

Equity in net (income) loss of investment funds accounted for using the equity method	(167)			(69)
Net foreign exchange (gains) losses	(1)			6
Transaction costs and other	18			2

Income tax expense (benefit) (2)	(6)			3
After-tax operating income available to Arch common shareholders	$	981		$	726

Diluted per common share results:
Net income available to Arch common shareholders	$	3.30		$	1.75
Net realized (gains) losses (1)	(0.32)			0.33

Equity in net (income) loss of investment funds accounted for using the equity method	(0.44)			(0.18)
Net foreign exchange (gains) losses	0.00			0.01
Transaction costs and other	0.05			0.00

Income tax expense (benefit) (2)	(0.02)			0.01
After-tax operating income available to Arch common shareholders	$	2.57		$	1.92

Weighted average common shares and common share equivalents outstanding — diluted	381.6			378.4

Beginning common shareholders’ equity	$	18,525		$	13,158
Ending common shareholders’ equity	19,835			13,811
Average common shareholders’ equity	$	19,180		$	13,485

Annualized net income return on average common equity	26.3		%	19.6		%
Annualized operating return on average common equity	20.5		%	21.5		%

(1) Net realized gains or losses include realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains and losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains and losses realized from the acquisition or disposition of subsidiaries.

Segment Information

The following section provides analysis on the Company’s 2024 second quarter performance by operating segment. For additional details regarding the Company’s operating segments, please refer to the Company’s Financial Supplement dated June 30, 2024. The Company’s segment information includes the use of underwriting income (loss) and a combined ratio excluding catastrophic activity and prior year development (see ‘Comments on Non-GAAP Financial Measures’ for further details).

Insurance Segment


	Three Months Ended June 30,
(U.S. Dollars in millions)	2024			2023			% Change

Gross premiums written	$	2,102		$	1,955		7.5
Net premiums written	1,558			1,454			7.2
Net premiums earned	1,478			1,328			11.3

Underwriting income	$	109		$	108		0.9

Underwriting Ratios							% Point Change
Loss ratio	57.3		%	57.3		%	—
Underwriting expense ratio	35.3		%	34.6		%	0.7
Combined ratio	92.6		%	91.9		%	0.7

Catastrophic activity and prior year development:
Current accident year catastrophic events, net of reinsurance and reinstatement premiums	2.0		%	2.6		%	(0.6)
Net (favorable) adverse development in prior year loss reserves, net of related adjustments	(0.2)		%	(0.5)		%	0.3
Combined ratio excluding catastrophic activity and prior year development	90.8		%	89.8		%	1.0

Gross premiums written by the insurance segment in the 2024 second quarter were 7.5% higher than in the 2023 second quarter, while net premiums written were 7.2% higher than in the 2023 second quarter. Growth in net premiums written reflected increases in most lines of business, due in part to new business opportunities and rate changes. Net premiums earned in the 2024 second quarter were 11.3% higher than in the 2023 second quarter, and reflect changes in net premiums written over the previous five quarters.

The 2024 second quarter loss ratio reflected 2.0 points of current year catastrophic activity, spread across a series of global events, compared to 2.7 points of catastrophic activity in the 2023 second quarter. Estimated net favorable development of prior year loss reserves, before related adjustments, reduced the loss ratio by 0.3 points in the 2024 second quarter, compared to 0.9 points in the 2023 second quarter.

The underwriting expense ratio was 35.3% in the 2024 second quarter, compared to 34.6% in the 2023 second quarter, with the increase reflecting a higher level of aggregate operating expenses.

Reinsurance Segment


	Three Months Ended June 30,
(U.S. Dollars in millions)	2024			2023			% Change

Gross premiums written	$	2,941		$	2,544		15.6
Net premiums written	1,947			1,709			13.9
Net premiums earned	1,780			1,343			32.5
Other underwriting income	1			3			(66.7)

Underwriting income	$	366		$	245		49.4

Underwriting Ratios							% Point Change
Loss ratio	56.5		%	55.3		%	1.2
Underwriting expense ratio	23.0		%	26.6		%	(3.6)
Combined ratio	79.5		%	81.9		%	(2.4)

Catastrophic activity and prior year development:
Current accident year catastrophic events, net of reinsurance and reinstatement premiums	9.4		%	6.3		%	3.1
Net (favorable) adverse development in prior year loss reserves, net of related adjustments	(1.8)		%	(1.8)		%	—
Combined ratio excluding catastrophic activity and prior year development	71.9		%	77.4		%	(5.5)

Gross premiums written by the reinsurance segment in the 2024 second quarter were 15.6% higher than in the 2023 second quarter, while net premiums written were 13.9% higher than in the 2023 second quarter. The growth in net premiums written reflected increases in all lines of business, due in part to rate increases, new business opportunities and growth in existing accounts. Net premiums earned in the 2024 second quarter were 32.5% higher than in the 2023 second quarter, and reflect changes in net premiums written over the previous five quarters.

The 2024 second quarter loss ratio reflected 10.0 points of current year catastrophic activity, spread across a series of global events, compared to 6.7 points of catastrophic activity in the 2023 second quarter. Estimated net favorable development of prior year loss reserves, before related adjustments, reduced the loss ratio by 1.9 points in the 2024 second quarter, compared to 2.2 points in the 2023 second quarter. The balance of the change in the loss ratio resulted, in part, from the impact of rate increases, lower level of attritional losses and changes in the mix of business.

The underwriting expense ratio was 23.0% in the 2024 second quarter, compared to 26.6% in the 2023 second quarter, with the decrease primarily due to a lower acquisition expense ratio and the beneficial effect of growth in net premiums earned.

Mortgage Segment


	Three Months Ended June 30,
(U.S. Dollars in millions)	2024			2023			% Change

Gross premiums written	$	340		$	347		(2.0)
Net premiums written	276			265			4.2
Net premiums earned	307			294			4.4
Other underwriting income	2			3			(33.3)

Underwriting income	$	287		$	253		13.4

Underwriting Ratios							% Point Change
Loss ratio	(8.6)		%	(4.5)		%	(4.1)
Underwriting expense ratio	16.0		%	19.5		%	(3.5)
Combined ratio	7.4		%	15.0		%	(7.6)

Prior year development:
Net (favorable) adverse development in prior year loss reserves, net of related adjustments	(29.0)		%	(28.7)		%	(0.3)
Combined ratio excluding prior year development	36.4		%	43.7		%	(7.3)

Gross premiums written by the mortgage segment in the 2024 second quarter were 2.0% lower than in the 2023 second quarter, while net premiums written were 4.2% higher. The increase in net premiums written and earned in the 2024 second quarter primarily reflected a lower level of Bellemeade premiums ceded, due in part to the termination of certain Bellemeade agreements in the 2023 fourth quarter.

Estimated net favorable development of prior year loss reserves, before related adjustments, decreased the loss ratio by 26.9 points, compared to 27.2 points in the 2023 second quarter. Such amounts were primarily related to better than expected cure rates. The 2024 second quarter loss ratio, excluding net favorable development, was down compared to the 2023 second quarter, reflecting lower estimated claim rates partially offset by slightly higher new delinquencies.

The underwriting expense ratio was 16.0% in the 2024 second quarter, compared to 19.5% in the 2023 second quarter. The decrease was primarily due to higher level of ceding and profit commissions on U.S. primary business, along with a higher level of net premiums earned.

Corporate

The Company’s results include net investment income, net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains and losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains and losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investment funds accounted for using the equity method, other income (loss), corporate expenses, transaction costs and other, amortization of intangible assets, interest expense, net foreign exchange gains or losses, income tax items, income or loss from operating affiliates and items related to the Company’s non-cumulative preferred shares.

Investment returns were as follows:


(U.S. Dollars in millions, except per share data)	Three Months Ended
		June 30,			March 31,			June 30,
		2024			2024			2023
Pre-tax net investment income		$	364		$	327		$	242
Per share		$	0.95		$	0.86		$	0.64

Equity in net income (loss) of investment funds accounted for using the equity method		$	167		$	99		$	69
Per share		$	0.44		$	0.26		$	0.18

Pre-tax investment income yield, at amortized cost (1)		4.39		%	4.14		%	3.50		%

Total return on investments (2)		1.33		%	0.80		%	0.56		%

(1) Presented on an annualized basis and excluding the impact of investments for which returns are not included within investment income, such as investments accounted for using the equity method and certain equities.

(2) See ‘Comments on Non-GAAP Financial Measures’ for further details.

The growth in net investment income in the 2024 second quarter primarily reflected the effects of sustained higher interest rates available in the market, along with growth in invested assets due in part to strong operating cash flows. Net realized gains were $122 million for the 2024 second quarter, compared to net realized losses of $123 million in the 2023 second quarter, and reflected sales of investments as well as the impact of financial market movements on the Company’s derivatives, equity securities and investments accounted for under the fair value option method. Net realized gains for the 2024 second quarter also included a benefit on the sale of a subsidiary.

On a pre-tax basis, net foreign exchange gains for the 2024 second quarter were $1 million, compared to net foreign exchange losses of $5 million for the 2023 second quarter. For both periods, such amounts were primarily unrealized and resulted from the effects of revaluing the Company’s net insurance liabilities required to be settled in foreign currencies at each balance sheet date. Changes in the value of available-for-sale investments held in foreign currencies due to foreign currency rate movements are reflected as a direct increase or decrease to shareholders’ equity and are not included in the consolidated statements of income.

The Company’s effective tax rate on income before income taxes (based on the Company’s estimated annual effective tax rate) was 7.1% for the 2024 second quarter, compared to 9.2% for the 2023 second quarter. The Company’s effective tax rate on pre-tax operating income available to Arch common shareholders was 9.5% for the 2024 second quarter, compared to 8.0% for the 2023 second quarter. The effective tax rate may fluctuate from period to period based upon the relative mix of income or loss reported by jurisdiction, the level of catastrophic loss activity incurred, and the varying tax rates in each jurisdiction.

Income from operating affiliates for the 2024 second quarter was $45 million, or $0.12 per share, compared to $22 million, or $0.06 per share, for the 2023 second quarter, and primarily reflects amounts related to the Company’s investment in Somers Group Holdings Ltd. and Coface SA.

Conference Call

The Company will hold a conference call for investors and analysts at 11:00 a.m. Eastern Time on July 31, 2024. A live webcast of this call will be available via the Investors section of the Company’s website at http://www.archgroup.com/investors. A recording of the webcast will be available in the Investors section of the Company’s website approximately two hours after the event concludes and will be archived on the site for one year.

Please refer to the Company’s Financial Supplement dated June 30, 2024, which is available via the Investors section of the Company’s website at http://www.archgroup.com/investors. The Financial Supplement provides additional detail regarding the financial performance of the Company. From time to time, the Company posts additional financial information and presentations to its website, including information with respect to its subsidiaries. Investors and other recipients of this information are encouraged to check the Company’s website regularly for additional information regarding the Company.

Arch Capital Group Ltd., is a publicly listed Bermuda exempted company with approximately $23.4 billion in capital at June 30, 2024. Arch, which is part of the S&P 500 index, provides insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly owned subsidiaries.

Comments on Non-GAAP Financial Measures

Throughout this release, the Company presents its operations in the way it believes will be the most meaningful and useful to investors, analysts, rating agencies and others who use the Company’s financial information in evaluating the performance of the Company and that investors and such other persons benefit from having a consistent basis for comparison between quarters and for comparison with other companies within the industry. These measures may not, however, be comparable to similarly titled measures used by companies outside of the insurance industry. Investors are cautioned not to place undue reliance on these non-GAAP financial measures in assessing the Company’s overall financial performance.

This presentation includes the use of “after-tax operating income or loss available to Arch common shareholders,” which is defined as net income available to Arch common shareholders, excluding net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains and losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains and losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses, transaction costs and other, net of income taxes and the use of annualized operating return on average common equity. The presentation of after-tax operating income available to Arch common shareholders and annualized operating return on average common equity are non-GAAP financial measures as defined in Regulation G. The reconciliation of such measures to net income available to Arch common shareholders and annualized net income return on average common equity (the most directly comparable GAAP financial measures) in accordance with Regulation G is included on page 2 of this release.

The Company believes that net realized gains or losses, equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other, in any particular period are not indicative of the performance of, or trends in, the Company’s business performance. Although net realized gains or losses, equity in net income or loss of investment funds accounted for using the equity method and net foreign exchange gains or losses are an integral part of the Company’s operations, the decision to realize these items are independent of the insurance underwriting process and result, in large part, from general economic and financial market conditions. Furthermore, certain users of the Company’s financial information believe that, for many companies, the timing of the realization of investment gains or losses is largely opportunistic. In addition, changes in the allowance for credit losses and net impairment losses recognized in earnings on the Company’s investments represent other-than-temporary declines in expected recovery values on securities without actual realization.

The use of the equity method on certain of the Company’s investments in certain funds that invest in fixed maturity securities is driven by the ownership structure of such funds (either limited partnerships or limited liability companies). In applying the equity method, these investments are initially recorded at cost and are subsequently adjusted based on the Company’s proportionate share of the net income or loss of the funds (which include changes in the fair value of the underlying securities in the funds). This method of accounting is different from the way the Company accounts for its other fixed maturity securities and the timing of the recognition of equity in net income or loss of investment funds accounted for using the equity method may differ from gains or losses in the future upon sale or maturity of such investments.

Transaction costs and other include advisory, financing, legal, severance, incentive compensation and other costs related to acquisitions. The Company believes that transaction costs and other, due to their non-recurring nature, are not indicative of the performance of, or trends in, the Company’s business performance.

In the 2023 fourth quarter, the Company established a net deferred tax benefit of $1.18 billion consistent with the transition provisions specified in the Bermuda Corporate Income Tax Act of 2023. Due to the non-recurring nature of this one-time item, the Company believes that excluding this item from after-tax operating income or loss available to common shareholders provides the user with a better evaluation of the Company’s ongoing business performance.

The Company believes that showing net income available to Arch common shareholders exclusive of the items referred to above reflects the underlying fundamentals of the Company’s business since the Company evaluates the performance of and manages its business to produce an underwriting profit. In addition to presenting net income available to Arch common shareholders, the Company believes that this presentation enables investors and other users of the Company’s financial information to analyze the Company’s performance in a manner similar to how the Company’s management analyzes performance. The Company also believes that this measure follows industry practice and, therefore, allows the users of the Company’s financial information to compare the Company’s performance with its industry peer group. The Company believes that the equity analysts and certain rating agencies that follow the Company and the insurance industry as a whole generally exclude these items from their analyses for the same reasons.

The Company’s segment information includes the presentation of consolidated underwriting income or loss and a subtotal of underwriting income or loss. Such measures represent the pre-tax profitability of its underwriting operations and include net premiums earned plus other underwriting income, less losses and loss adjustment expenses, acquisition expenses and other operating expenses. Other operating expenses include those operating expenses that are incremental and/or directly attributable to the Company’s individual underwriting operations. Underwriting income or loss does not include certain income and expense items which are included in corporate. While these measures are presented in the Segment Information footnote to the Company’s Consolidated Financial Statements, they are considered non-GAAP financial measures when presented elsewhere on a consolidated basis. The reconciliations of underwriting income or loss to income before income taxes (the most directly comparable GAAP financial measure) on a consolidated basis, in accordance with Regulation G, is shown on the following pages.

Management measures segment performance for its three underwriting segments based on underwriting income or loss. The Company does not manage its assets by underwriting segment and, accordingly, investment income, income from operating affiliates and other items are not allocated to each underwriting segment.

In addition, the Company’s segment information includes the use of a combined ratio excluding catastrophic activity and prior year development, for the insurance and reinsurance segments, and a combined ratio excluding prior year development, for the mortgage segment. These ratios are non-GAAP financial measures as defined in Regulation G. The reconciliation of such measures to the combined ratio (the most directly comparable GAAP financial measure) in accordance with Regulation G are shown on the individual segment pages. The Company’s management utilizes the adjusted combined ratios excluding current accident year catastrophic events and favorable or adverse development in prior year loss reserves in its analysis of the underwriting performance of each of its underwriting segments.

Total return on investments includes investment income, equity in net income or loss of investment funds accounted for using the equity method, net realized gains and losses (excluding changes in the allowance for credit losses on non-investment related financial assets) and the change in unrealized gains and losses generated by Arch’s investment portfolio. Total return is calculated on a pre-tax basis and before investment expenses and reflects the effect of financial market conditions along with foreign currency fluctuations. Management uses total return on investments as a key measure of the return generated to Arch common shareholders, and compares the return generated by the Company’s investment portfolio against benchmark returns during the periods presented.

The following tables summarize the Company’s results by segment for the 2024 second quarter and 2023 second quarter and a reconciliation of underwriting income or loss to income or loss before income taxes and net income or loss available to Arch common shareholders:


(U.S. Dollars in millions)	Three Months Ended
	June 30, 2024
	Insurance			Reinsurance			Mortgage			Total
Gross premiums written (1)	$	2,102		$	2,941		$	340		$	5,382
Premiums ceded (1)	(544)			(994)			(64)			(1,601)
Net premiums written	1,558			1,947			276			3,781
Change in unearned premiums	(80)			(167)			31			(216)
Net premiums earned	1,478			1,780			307			3,565
Other underwriting income (loss)	—			1			2			3
Losses and loss adjustment expenses	(848)			(1,006)			27			(1,827)
Acquisition expenses	(288)			(345)			—			(633)
Other operating expenses	(233)			(64)			(49)			(346)
Underwriting income (loss)	$	109		$	366		$	287		762

Net investment income										364
Net realized gains (losses)										122

Equity in net income (loss) of investment funds accounted for using the equity method										167
Other income (loss)										8
Corporate expenses (2)										(23)
Transaction costs and other (2)										(18)
Amortization of intangible assets										(27)
Interest expense										(35)
Net foreign exchange gains (losses)										1
Income (loss) before income taxes and income (loss) from operating affiliates										1,321
Income tax benefit (expense)										(97)
Income (loss) from operating affiliates										45



Net income (loss) available to Arch										1,269
Preferred dividends										(10)

Net income (loss) available to Arch common shareholders										$	1,259

Underwriting Ratios
Loss ratio	57.3		%	56.5		%	(8.6)		%	51.2		%
Acquisition expense ratio	19.5		%	19.4		%	0.1		%	17.8		%
Other operating expense ratio	15.8		%	3.6		%	15.9		%	9.7		%
Combined ratio	92.6		%	79.5		%	7.4		%	78.7		%

Net premiums written to gross premiums written	74.1		%	66.2		%	81.2		%	70.3		%

(1) Certain assumed and ceded amounts related to intersegment transactions are included in individual segment results. Accordingly, the sum of such transactions for each segment does not agree to the total due to eliminations.

(2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘Transaction costs and other.’ See ‘Comments on Non-GAAP Financial Measures’ for a further discussion of such items.


(U.S. Dollars in millions)	Three Months Ended
	June 30, 2023
	Insurance			Reinsurance			Mortgage			Total
Gross premiums written (1)	$	1,955		$	2,544		$	347		$	4,845
Premiums ceded (1)	(501)			(835)			(82)			(1,417)
Net premiums written	1,454			1,709			265			3,428
Change in unearned premiums	(126)			(366)			29			(463)
Net premiums earned	1,328			1,343			294			2,965
Other underwriting income (loss)	—			3			3			6
Losses and loss adjustment expenses	(761)			(743)			13			(1,491)
Acquisition expenses	(264)			(290)			(7)			(561)
Other operating expenses	(195)			(68)			(50)			(313)
Underwriting income (loss)	$	108		$	245		$	253		606

Net investment income										242
Net realized gains (losses)										(123)

Equity in net income (loss) of investment funds accounted for using the equity method										69
Other income (loss)										3
Corporate expenses (2)										(20)
Transaction costs and other (2)										(1)
Amortization of intangible assets										(24)
Interest expense										(33)
Net foreign exchange gains (losses)										(5)
Income (loss) before income taxes and income (loss) from operating affiliates										714
Income tax benefit (expense)										(67)
Income (loss) from operating affiliates										22
Net income (loss)										669
Net (income) loss attributable to noncontrolling interests										2

Net income (loss) available to Arch										671
Preferred dividends										(10)

Net income (loss) available to Arch common shareholders										$	661

Underwriting Ratios
Loss ratio	57.3		%	55.3		%	(4.5)		%	50.3		%
Acquisition expense ratio	19.9		%	21.6		%	2.4		%	18.9		%
Other operating expense ratio	14.7		%	5.0		%	17.1		%	10.6		%
Combined ratio	91.9		%	81.9		%	15.0		%	79.8		%

Net premiums written to gross premiums written	74.4		%	67.2		%	76.4		%	70.8		%

Cautionary Note Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 (“PSLRA”) provides a “safe harbor” for forward-looking statements. This release or any other written or oral statements made by or on behalf of the Company may include forward-looking statements, which reflect the Company’s current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements. Forward-looking statements, for purposes of the PSLRA or otherwise, can generally be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” and similar statements of a future or forward-looking nature or their negative or variations or similar terminology.

Forward-looking statements involve the Company’s current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. Important factors that could cause actual events or results to differ materially from those indicated in such statements are discussed below and elsewhere in this release and in the Company’s periodic reports filed with the Securities and Exchange Commission (the “SEC”), and include:

•the Company’s ability to successfully implement its business strategy during “soft” as well as “hard” markets;

•acceptance of the Company’s business strategy, security and financial condition by rating agencies and regulators, as well as by brokers and its insureds and reinsureds;

•the Company’s ability to consummate acquisitions and integrate any businesses it has acquired or may acquire into its existing operations;

•the Company’s ability to maintain or improve its ratings, which may be affected by its ability to raise additional equity or debt financings, by ratings agencies’ existing or new policies and practices, as well as other factors described herein;

•general economic and market conditions (including inflation, interest rates, unemployment, housing prices, foreign currency exchange rates, prevailing credit terms and the depth and duration of a recession, including those resulting from COVID-19) and conditions specific to the reinsurance and insurance markets in which the Company operates;

•competition, including increased competition, on the basis of pricing, capacity (including alternative sources of capital), coverage terms or other factors;

•developments in the world’s financial and capital markets and the Company’s access to such markets;

•the Company’s ability to successfully enhance, integrate and maintain operating procedures (including information technology) to effectively support its current and new business;

•the loss and addition of key personnel;

•material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements;

•accuracy of those estimates and judgments utilized in the preparation of the Company’s financial statements, including those related to revenue recognition, insurance and other reserves, reinsurance recoverables, investment valuations, intangible assets, bad debts, income taxes, deferred tax assets, contingencies and litigation, and any determination to use the deposit method of accounting;

•greater than expected loss ratios on business written by the Company and adverse development on claim and/or claim expense liabilities related to business written by its insurance and reinsurance subsidiaries;

•the adequacy of the Company’s loss reserves;

•severity and/or frequency of losses;

•greater frequency or severity of unpredictable natural and man-made catastrophic events;

•claims resulting from natural or man-made catastrophic events or severe economic events in the Company’s insurance, reinsurance and mortgage businesses could cause large losses and substantial volatility in the Company’s results of operations;

•the effect of climate change on the Company’s business;

•the effect of contagious diseases (including COVID-19) on the Company’s business;

•acts of terrorism, geopolitical political unrest and other regional and global hostilities or other unforecasted and unpredictable events;

•availability to the Company of reinsurance to manage its gross and net exposures and the cost of such reinsurance;

•the failure of reinsurers, managing general agents, third party administrators or others to meet their obligations to the Company;

•the timing of loss payments being faster or the receipt of reinsurance recoverables being slower than anticipated by the Company;

•the Company’s investment performance, including legislative or regulatory developments that may adversely affect the fair value of the Company’s investments;

•changes in general economic conditions, including new or continued sovereign debt concerns or downgrades of U.S. securities by credit rating agencies, which could affect the Company’s business, financial condition and results of operations;

•the volatility of the Company’s shareholders’ equity from foreign currency fluctuations, which could increase due to us not matching portions of the Company’s projected liabilities in foreign currencies with investments in the same currencies;

•changes in accounting principles or policies or in the Company’s application of such accounting principles or policies;

•changes in the political environment of certain countries in which the Company operates, underwrites business or invests;

•an incident, disruption in operations or other cyber event caused by cyber attacks, the use of artificial intelligence technologies or other technology on the Company’s systems or those of the Company’s business partners and service providers, which could negatively impact the Company’s business and/or expose the Company to litigation;

•statutory or regulatory developments, including as to tax matters and insurance and other regulatory matters such as the adoption of legislation that affects Bermuda-headquartered companies and/or Bermuda-based insurers or reinsurers and/or changes in regulations or tax laws applicable to the Company, its subsidiaries, brokers or customers, including the implementation of the Organization for Economic Cooperation and Development (“OECD”) Pillar I and Pillar II initiative and the enactment of the Bermuda corporate income tax; and

•the other matters set forth under Item 1A “Risk Factors”, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of the Company’s Annual Report on Form 10-K, as well as the other factors set forth in the Company’s other documents on file with the SEC, and management’s response to any of the aforementioned factors.

All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein or elsewhere. The Company's forward-looking statements speak only as of the date of this press release or as of the date they are made, and the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.


Contacts
Arch Capital Group Ltd.			Investor Relations
François Morin: (441) 278-9250			Donald Watson: (914) 872-3616; dwatson@archgroup.com


Source - Arch Capital Group Ltd.
arch-corporate

EXHIBIT 99.2




			Arch Capital Group Ltd.
			Waterloo House, Ground Floor
			100 Pitts Bay Road
			Pembroke HM 08 Bermuda

Financial Supplement

June 30, 2024

The following financial supplement is provided to assist in your understanding of Arch Capital Group Ltd. (“Arch”) and its subsidiaries (collectively, the “Company”).

This report is for informational purposes only. It should be read in conjunction with documents filed by Arch with the U.S. Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and the Quarterly Reports on Form 10-Q. Please refer to the Company’s website at www.archgroup.com for further information describing Arch.




Arch Capital Group Ltd.			Investor Relations
François Morin: (441) 278-9250			Donald Watson: (914) 872-3616; dwatson@archgroup.com

Arch Capital Group Ltd. and Subsidiaries

Table of Contents


			Page

I.	Financial Highlights		3

II.	Consolidated Financial Statements
	a.	Consolidated Statements of Income	4

	b.	Consolidated Balance Sheets	5
	c.	Consolidated Statements of Changes in Shareholders’ Equity	6
	d.	Consolidated Statements of Cash Flows	7

III.	Segment Information
	a.	Overview	8
	b.	Consolidated Results	9
	c.	Insurance Segment Results	13
	d.	Reinsurance Segment Results	15
	e.	Mortgage Segment Results	17
	f.	Segment Consolidated Results	22
	g.	Selected Information on Losses and Loss Adjustment Expenses	23

IV.	Investment Information
	a.	Investable Asset Summary and Investment Portfolio Metrics	24
	b.	Composition of Net Investment Income, Yield and Total Return	25
	c.	Composition of Fixed Maturities	26
	d.	Credit Quality Distribution and Maturity Profile	27
	e.	Analysis of Corporate Exposures	28
	f.	Structured Securities	29

V.	Other
	a.	Comments on Non-GAAP Financial Measures	30
	b.	Operating Income Reconciliation and Annualized Operating Return on Average Common Equity	31
	c.	Operating Income and Effective Tax Rate Calculations	32
	d.	Capital Structure and Share Repurchase Activity	33


			1

Arch Capital Group Ltd. and Subsidiaries

Basis of Presentation

All financial information contained herein is unaudited, however, certain information relating to the consolidated balance sheet at December 31, 2023 is derived from or agrees to audited financial information. Unless otherwise noted, all amounts are in millions, except for per share amounts and ratio information. Amounts presented have been rounded for presentation purposes and may not reconcile due to rounding differences.

Cautionary Note Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This release or any other written or oral statements made by or on behalf of Arch and its subsidiaries may include forward-looking statements, which reflect the Company’s current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements.

Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or their negative or variations or similar terminology. Forward-looking statements involve the Company’s current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: adverse general economic and market conditions; increased competition; pricing and policy term trends; fluctuations in the actions of rating agencies and the Company’s ability to maintain and improve the Company’s ratings; investment performance; the loss and addition of key personnel; the adequacy of the Company’s loss reserves, severity and/or frequency of losses, greater than expected loss ratios and adverse development on claim and/or claim expense liabilities; greater frequency or severity of unpredictable natural and man-made catastrophic events, including pandemics such as COVID-19; the impact of acts of terrorism and acts of war; changes in regulations and/or tax laws in the United States or elsewhere; the Company’s ability to successfully integrate, establish and maintain operating procedures as well as integrate the businesses we have acquired or may acquire into the existing operations; changes in accounting principles or policies; material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements; availability and cost to the Company of reinsurance to manage gross and net exposures; the failure of others to meet their obligations to the Company; an incident, disruption in operations or other cyber event caused by cyber attacks, the use of artificial intelligence technologies or other technology on the Company’s systems or those of the Company’s business partners and service providers, which could negatively impact the Company’s business and/or expose the Company to litigation; and other factors identified in the Company’s filings with the U.S. Securities and Exchange Commission.


			2

Arch Capital Group Ltd. and Subsidiaries

Financial Highlights

The following table presents financial highlights:


(U.S. Dollars and shares in millions, except per share data)	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2024			2023			Change		2024			2023			Change
Underwriting results:
Gross premiums written	$	5,382		$	4,845		11.1	%	$	11,315		$	9,625		17.6	%
Net premiums written	3,781			3,428			10.3	%	7,866			6,852			14.8	%
Net premiums earned	3,565			2,965			20.2	%	6,987			5,848			19.5	%
Underwriting income (loss) (1)	762			606			25.7	%	1,498			1,176			27.4	%

Loss ratio	51.2		%	50.3		%	0.9		50.9		%	50.6		%	0.3
Acquisition expense ratio	17.8		%	18.9		%	(1.1)		17.7		%	18.7		%	(1.0)
Other operating expense ratio	9.7		%	10.6		%	(0.9)		10.1		%	10.8		%	(0.7)
Combined ratio	78.7		%	79.8		%	(1.1)		78.7		%	80.1		%	(1.4)

Net investment income	$	364		$	242		50.4	%	$	691		$	441		56.7	%
Per diluted share	$	0.95		$	0.64		48.4	%	$	1.81		$	1.17		54.7	%

Net income available to Arch common shareholders	$	1,259		$	661		90.5	%	$	2,369		$	1,366		73.4	%
Per diluted share	$	3.30		$	1.75		88.6	%	$	6.22		$	3.62		71.8	%

After-tax operating income available to Arch common shareholders (1)	$	981		$	726		35.1	%	$	1,914		$	1,380		38.7	%
Per diluted share	$	2.57		$	1.92		33.9	%	$	5.02		$	3.65		37.5	%

Comprehensive income (loss) available to Arch	$	1,280		$	649		97.2	%	$	2,255		$	1,713		31.6	%

Net cash provided by operating activities	$	1,518		$	1,151		31.9	%	$	3,082		$	2,114		45.8	%

Weighted average common shares and common share equivalents outstanding — diluted	381.6			378.4			0.8	%	380.9			377.8			0.8	%

Financial measures:
Change in book value per common share during period	6.9		%	4.8		%	2.1		12.4		%	13.5		%	(1.1)

Annualized net income return on average common equity	26.3		%	19.6		%	6.7		25.4		%	21.1		%	4.3
Annualized operating return on average common equity (1)	20.5		%	21.5		%	(1.0)		20.5		%	21.3		%	(0.8)

Total return on investments (2)	1.33		%	0.56		%	77 bps		2.14		%	3.10		%	-95 bps

(1)See ‘Comments on Non-GAAP Financial Measures’ for a further discussion of consolidated underwriting income or loss, after-tax operating income or loss available to Arch common shareholders and annualized operating return on average common equity.

(2)Total return on investments includes investment income, equity in net income (loss) of investment funds accounted for using the equity method, net realized gains and losses and the change in unrealized gains and losses and is calculated on a pre-tax basis and before investment expenses. See ‘Comments on Non-GAAP Financial Measures’ for a further discussion of the presentation of total return on investments.


			3

Arch Capital Group Ltd. and Subsidiaries

Consolidated Statements of Income


(U.S. Dollars and shares in millions, except per share data)	Three Months Ended										Six Months Ended
	June 30,		March 31,		December 31,		September 30,		June 30,		June 30,		June 30,
	2024		2024		2023		2023		2023		2024		2023
Revenues


Net premiums earned	$	3,565	$	3,422	$	3,344	$	3,248	$	2,965	$	6,987	$	5,848
Net investment income	364		327		313		269		242		691		441
Net realized gains (losses)	122		67		189		(248)		(123)		189		(106)

Other underwriting income	3		12		10		5		6		15		16
Equity in net income (loss) of investment funds accounted for using the equity method	167		99		102		59		69		266		117
Other income (loss)	8		14		17		(4)		3		22		14
Total revenues	4,229		3,941		3,975		3,329		3,162		8,170		6,330

Expenses
Losses and loss adjustment expenses	(1,827)		(1,728)		(1,637)		(1,647)		(1,491)		(3,555)		(2,962)
Acquisition expenses	(633)		(607)		(643)		(575)		(561)		(1,240)		(1,094)
Other operating expenses	(346)		(363)		(359)		(310)		(313)		(709)		(632)
Corporate expenses	(41)		(53)		(31)		(20)		(21)		(94)		(51)
Amortization of intangible assets	(27)		(21)		(24)		(24)		(24)		(48)		(47)
Interest expense	(35)		(34)		(34)		(34)		(33)		(69)		(65)
Net foreign exchange gains (losses)	1		31		(59)		22		(5)		32		(23)
Total expenses	(2,908)		(2,775)		(2,787)		(2,588)		(2,448)		(5,683)		(4,874)

Income (loss) before income taxes and income (loss) from operating affiliates	1,321		1,166		1,188		741		714		2,487		1,456
Income tax (expense) benefit	(97)		(101)		1,076		(72)		(67)		(198)		(131)
Income (loss) from operating affiliates	45		55		69		54		22		100		61
Net income (loss)	1,269		1,120		2,333		723		669		2,389		1,386
Net (income) loss attributable to noncontrolling interests	—		—		1		—		2		—		—
Net income (loss) attributable to Arch	1,269		1,120		2,334		723		671		2,389		1,386
Preferred dividends	(10)		(10)		(10)		(10)		(10)		(20)		(20)

Net income (loss) available to Arch common shareholders	$	1,259	$	1,110	$	2,324	$	713	$	661	$	2,369	$	1,366

Comprehensive income (loss) available to Arch	$	1,280	$	975	$	3,111	$	589	$	649	$	2,255	$	1,713

Net income (loss) per common share and common share equivalent
Basic	$	3.38	$	2.99	$	6.29	$	1.93	$	1.79	$	6.37	$	3.71
Diluted	$	3.30	$	2.92	$	6.12	$	1.88	$	1.75	$	6.22	$	3.62

Weighted average common shares and common share equivalents outstanding
Basic	372.7		370.9		369.6		369.2		368.7		371.8		368.0
Diluted	381.6		380.5		379.8		379.4		378.4		380.9		377.8


			4

Arch Capital Group Ltd. and Subsidiaries

Consolidated Balance Sheets


(U.S. Dollars and shares in millions, except per share data)	June 30,		March 31,		December 31,		September 30,		June 30,
	2024		2024		2023		2023		2023
Assets
Investments:
Fixed maturities available for sale, at fair value	$	25,202	$	23,628	$	23,553	$	22,485	$	21,434
Short-term investments available for sale, at fair value	2,297		2,142		2,063		1,682		1,702

Equity securities, at fair value	1,397		1,720		1,186		894		911

Other investments	3,206		2,886		2,488		2,068		1,846
Investments accounted for using the equity method	4,983		4,842		4,566		4,251		4,073
Total investments	37,085		35,218		33,856		31,380		29,966
Cash	1,020		993		917		859		904
Accrued investment income	287		236		236		217		233


Investment in operating affiliates	1,143		1,174		1,119		1,000		973
Premiums receivable	6,268		5,765		4,644		4,937		5,296
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses	7,473		7,509		7,064		6,821		6,717
Contractholder receivables	2,016		1,907		1,814		1,805		1,761
Ceded unearned premiums	2,981		2,717		2,170		2,444		2,459
Deferred acquisition costs	1,635		1,625		1,531		1,483		1,452
Receivable for securities sold	116		166		63		59		97
Goodwill and intangible assets	725		778		731		739		775

Other assets	4,716		4,680		4,761		3,483		3,223
Total assets	$	65,465	$	62,768	$	58,906	$	55,227	$	53,856

Liabilities
Reserve for losses and loss adjustment expenses	$	24,466	$	23,705	$	22,752	$	21,836	$	21,268
Unearned premiums	10,452		9,971		8,808		9,074		9,052
Reinsurance balances payable	2,591		2,497		2,000		2,215		2,191
Contractholder payables	2,020		1,910		1,817		1,807		1,764
Collateral held for insured obligations	263		263		259		274		275
Senior notes	2,727		2,727		2,726		2,726		2,726


Payable for securities purchased	410		433		247		417		526
Other liabilities	1,871		1,905		1,942		1,637		1,411
Total liabilities	44,800		43,411		40,551		39,986		39,213

Redeemable noncontrolling interests	—		2		2		2		2

Shareholders’ equity
Non-cumulative preferred shares	830		830		830		830		830

Common shares	1		1		1		1		1
Additional paid-in capital	2,443		2,401		2,327		2,297		2,278
Retained earnings	22,664		21,405		20,295		17,971		17,258
Accumulated other comprehensive income (loss), net of deferred income tax	(810)		(821)		(676)		(1,453)		(1,319)
Common shares held in treasury, at cost	(4,463)		(4,461)		(4,424)		(4,407)		(4,407)


Total shareholders’ equity	20,665		19,355		18,353		15,239		14,641
Total liabilities, noncontrolling interests and shareholders’ equity	$	65,465	$	62,768	$	58,906	$	55,227	$	53,856

Common shares and common share equivalents outstanding, net of treasury shares	376.0		375.3		373.3		373.1		372.9
Book value per common share (1)	$	52.75	$	49.36	$	46.94	$	38.62	$	37.04

(1) Excludes the effects of stock options and restricted stock units outstanding.


			5

Arch Capital Group Ltd. and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity


(U.S. Dollars in millions)	Three Months Ended										Six Months Ended
	June 30,		March 31,		December 31,		September 30,		June 30,		June 30,		June 30,
	2024		2024		2023		2023		2023		2024		2023
Non-cumulative preferred shares



Balance at beginning and end of period	$	830	$	830	$	830	$	830	$	830	$	830	$	830







Common shares


Balance at beginning and end of period	1		1		1		1		1		1		1

Additional paid-in capital
Balance at beginning of period	2,401		2,327		2,297		2,278		2,260		2,327		2,211





Amortization of share-based compensation	16		68		20		15		17		84		58



All other	26		6		10		4		1		32		9
Balance at end of period	2,443		2,401		2,327		2,297		2,278		2,443		2,278

Retained earnings
Balance at beginning of period	21,405		20,295		17,971		17,258		16,597		20,295		15,892


Net income	1,269		1,120		2,333		723		669		2,389		1,386
Amounts attributable to noncontrolling interests	—		—		1		—		2		—		—
Preferred share dividends	(10)		(10)		(10)		(10)		(10)		(20)		(20)

Balance at end of period	22,664		21,405		20,295		17,971		17,258		22,664		17,258

Accumulated other comprehensive income (loss), net of deferred income tax
Balance at beginning of period	(821)		(676)		(1,453)		(1,319)		(1,297)		(676)		(1,646)

Change in unrealized appreciation (decline) in value of available-for-sale investments	27		(112)		721		(94)		(24)		(85)		320
Change in foreign currency translation adjustments	(16)		(33)		56		(40)		2		(49)		7
Balance at end of period	(810)		(821)		(676)		(1,453)		(1,319)		(810)		(1,319)

Common shares held in treasury, at cost
Balance at beginning of period	(4,461)		(4,424)		(4,407)		(4,407)		(4,403)		(4,424)		(4,378)
Shares repurchased for treasury	(2)		(37)		(17)		—		(4)		(39)		(29)
Balance at end of period	(4,463)		(4,461)		(4,424)		(4,407)		(4,407)		(4,463)		(4,407)



Total shareholders’ equity	$	20,665	$	19,355	$	18,353	$	15,239	$	14,641	$	20,665	$	14,641


			6

Arch Capital Group Ltd. and Subsidiaries

Consolidated Statements of Cash Flows


(U.S. Dollars in millions)	Three Months Ended										Six Months Ended
	June 30,		March 31,		December 31,		September 30,		June 30,		June 30,		June 30,
	2024		2024		2023		2023		2023		2024		2023
Operating Activities
Net income (loss)	$	1,269	$	1,120	$	2,333	$	723	$	669	$	2,389	$	1,386
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized (gains) losses	(144)		(52)		(185)		257		127		(196)		110

Equity in net (income) or loss of investment funds accounted for using the equity method and other income or loss	(62)		(112)		(111)		(55)		17		(174)		(49)
Amortization of intangible assets	27		21		24		24		24		48		47
Share-based compensation	16		68		20		15		17		84		58
Changes in:
Reserve for losses and loss adjustment expenses, net	709		660		534		584		417		1,369		1,020
Unearned premiums, net	216		663		(83)		107		463		879		1,004
Premiums receivable	(523)		(1,159)		352		315		(777)		(1,682)		(1,648)
Deferred acquisition costs	2		(82)		(45)		(38)		(77)		(80)		(152)
Reinsurance balances payable	95		521		(237)		40		373		616		652
Deferred income tax assets, net	21		24		(1,201)		(18)		24		45		58
Other items, net	(108)		(108)		264		16		(126)		(216)		(372)
Net cash provided by operating activities	1,518		1,564		1,665		1,970		1,151		3,082		2,114
Investing Activities
Purchases of fixed maturity investments	(5,798)		(8,325)		(5,038)		(4,184)		(4,939)		(14,123)		(8,840)
Purchases of equity securities	(145)		(509)		(280)		(72)		(96)		(654)		(104)
Purchases of other investments	(875)		(494)		(1,059)		(555)		(291)		(1,369)		(557)
Proceeds from sales of fixed maturity investments	3,691		7,529		4,450		2,576		4,045		11,220		7,079
Proceeds from sales of equity securities	482		65		72		55		86		547		161
Proceeds from sales, redemptions and maturities of other investments	503		116		423		144		105		619		201
Proceeds from redemptions and maturities of fixed maturity investments	515		363		192		221		188		878		368
Net settlements of derivative instruments	7		5		119		(115)		32		12		46

Net (purchases) sales of short-term investments	65		(90)		(373)		10		(125)		(25)		(333)




Purchases of fixed assets	(11)		(15)		(15)		(11)		(15)		(26)		(26)
Other	57		(54)		(23)		(4)		5		3		4
Net cash provided by (used for) investing activities	(1,509)		(1,409)		(1,532)		(1,935)		(1,005)		(2,918)		(2,001)
Financing Activities



Proceeds from common shares issued, net	24		(32)		(7)		5		18		(8)		—




Change in third party investment in redeemable noncontrolling interests	—		—		—		—		(22)		—		(22)

Other	—		—		—		(2)		(1)		—		(3)
Preferred dividends paid	(10)		(10)		(10)		(10)		(10)		(20)		(20)
Net cash provided by (used for) financing activities	14		(42)		(17)		(7)		(15)		(28)		(45)
Effects of exchange rate changes on foreign currency cash and restricted cash	4		(11)		27		(26)		7		(7)		12
Increase (decrease) in cash and restricted cash	27		102		143		2		138		129		80
Cash and restricted cash, beginning of period	1,600		1,498		1,355		1,353		1,215		1,498		1,273
Cash and restricted cash, end of period	$	1,627	$	1,600	$	1,498	$	1,355	$	1,353	$	1,627	$	1,353
Income taxes paid (received)	$	151	$	(6)	$	140	$	54	$	69	$	145	$	73
Interest paid	$	63	$	—	$	64	$	—	$	63	$	63	$	63


			7

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Overview

The Company’s Insurance, Reinsurance and Mortgage segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to the Company’s chief operating decision makers, the Chief Executive Officer, the Chief Financial Officer and Treasurer and the President and Chief Underwriting Officer. The chief operating decision makers do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis. Management measures segment performance for its three underwriting segments based on underwriting income or loss. The Company does not manage its assets by underwriting segment and, accordingly, investment income is not allocated to each underwriting segment.

The Company determined its reportable operating segments using the management approach described in accounting guidance regarding disclosures about segments of an enterprise and related information. The accounting policies of the segments are the same as those used for the preparation of the Company’s consolidated financial statements. Intersegment business is allocated to the segment accountable for the underwriting results.

Insurance Segment

The insurance segment consists of the Company’s insurance underwriting units which offer specialty product lines on a worldwide basis. Product lines include:

• Construction and national accounts: primary and excess casualty coverages for middle market and large construction accounts, a comprehensive range of products for middle market accounts in specialty industries and casualty solutions for large national accounts, including loss sensitive primary insurance programs (large deductible, self-insured retention and retrospectively rated programs).

• Excess and surplus casualty: primary and excess casualty insurance coverages written on a non-admitted basis.

• Professional lines: directors’ and officers’ liability, errors and omissions liability, employment practices liability, fiduciary liability, crime, professional indemnity and other financial related coverages for corporate, private equity, venture capital, real estate investment trust, limited partnership, financial institution and not-for-profit clients of all sizes, cyber insurance, and medical professional and general liability insurance coverages for the healthcare industry. The business is predominately written on a claims-made basis.

• Programs: primarily targeting program managers with unique expertise and niche products offering some combination of general liability, commercial automobile, property, inland marine, umbrella and workers’ compensation.

• Property, energy, marine and aviation: primary and excess general property insurance coverages, including catastrophe-exposed property coverage, for commercial clients. Coverages for marine include hull, cargo, war, specie and liability. Aviation, standalone terrorism and political risks are also offered. Coverage may be provided for operational and construction risk.

• Travel, accident and health: specialty travel and accident and related insurance products for individual, group travelers, travel agents and suppliers, as well as accident and health, which provides accident, disability and medical plan insurance coverages for employer groups, medical plan members, students and other participant groups.

•Warranty and lenders solutions: collateral protection, debt cancellation and service contract reimbursement products to banks, credit unions, automotive dealerships and original equipment manufacturers and other specialty programs that pertain to automotive lending and leasing.

• Other: includes alternative market risks (including captive insurance programs), excess workers’ compensation and employer’s liability insurance coverages for qualified self-insured groups, associations and trusts, and contract, commercial and transactional surety coverages.

Reinsurance Segment

The reinsurance segment consists of the Company’s reinsurance underwriting units which offer specialty product lines on a worldwide basis. Reinsurance agreements are typically offered on a proportional and/or excess of loss basis and provide coverage to ceding company clients for specific underlying written policies. Product lines include:

•Casualty: provides coverage on third party liability exposures including, among others, executive assurance, professional liability, excess and umbrella liability, excess motor and healthcare business, and workers’ compensation. Business is assumed primarily on a treaty basis, with some facultative coverages also offered.

•Marine and aviation: provides coverage for energy, hull, cargo, specie, liability and transit, and aviation business, including airline and general aviation risks. Business written may also include space business, which includes coverages for satellite assembly, launch and operation for commercial space programs.

•Other specialty: provides coverage for proportional motor reinsurance, whole account multi-line treaties, cyber, trade credit and surety, accident and health, workers’ compensation catastrophe, agriculture and political risk, among others.

•Property catastrophe: provides protection for most types of catastrophic losses, including hurricane, earthquake, flood, tornado, hail and fire, and for other perils on a case-by-case basis. Excess of loss coverages are triggered when aggregate losses and loss adjustment expense from a single occurrence of a covered peril exceed the retention specified in the contract.

•Property excluding property catastrophe: provides coverage for personal lines and/or commercial property exposures and principally covers buildings, structures, equipment and contents. The primary perils in this business include fire, explosion, collapse, riot, vandalism, wind, tornado, flood and earthquake. Business is assumed on either a treaty or facultative basis.

•Other: primarily includes life reinsurance business.

Mortgage Segment

The mortgage segment includes the Company’s underwriting units which offer mortgage insurance and reinsurance products on a worldwide basis. Underwriting units include:

•U.S. primary mortgage insurance: offers private mortgage insurance through Arch Mortgage Insurance Company and United Guaranty Residential Insurance Company (combined “Arch MI U.S.”), both approved eligible mortgage insurers by Fannie Mae and Freddie Mac. Arch MI U.S. also includes Arch Mortgage Guaranty Company, which is not a government sponsored enterprise (“GSE”) approved entity.

•U.S. credit risk transfer (“CRT”) and other: underwrites CRT transactions, which are predominantly with GSEs, and other U.S. reinsurance transactions.

•International mortgage insurance/reinsurance: underwrites mortgage insurance and reinsurance outside of the U.S.

The Company’s results also include net investment income, net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains and losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains and losses realized from acquisition or disposition of subsidiaries), equity in net income or loss of investment funds accounted for using the equity method, other income (loss), corporate expenses, transaction costs and other, amortization of intangible assets, interest expense, net foreign exchange gains or losses, income taxes items (which for the 2023 fourth quarter reflects the establishment of a net deferred tax asset related to the enactment of Bermuda’s new corporate income tax), income or loss from operating affiliates and items related to the Company’s non cumulative preferred shares.


			8

Arch Capital Group Ltd. and Subsidiaries

Segment Information


(U.S. Dollars in millions)	Three Months Ended
	June 30, 2024
	Insurance			Reinsurance			Mortgage			Total
Gross premiums written (1)	$	2,102		$	2,941		$	340		$	5,382
Premiums ceded (1)	(544)			(994)			(64)			(1,601)
Net premiums written	1,558			1,947			276			3,781
Change in unearned premiums	(80)			(167)			31			(216)
Net premiums earned	1,478			1,780			307			3,565
Other underwriting income (loss)	—			1			2			3
Losses and loss adjustment expenses	(848)			(1,006)			27			(1,827)
Acquisition expenses	(288)			(345)			—			(633)
Other operating expenses	(233)			(64)			(49)			(346)
Underwriting income (loss)	$	109		$	366		$	287		762

Net investment income										364
Net realized gains (losses)										122

Equity in net income (loss) of investment funds accounted for using the equity method										167
Other income (loss)										8
Corporate expenses (2)										(23)
Transaction costs and other (2)										(18)
Amortization of intangible assets										(27)
Interest expense										(35)
Net foreign exchange gains (losses)										1
Income (loss) before income taxes and income (loss) from operating affiliates										1,321
Income tax (expense) benefit										(97)
Income (loss) from operating affiliates										45



Net income (loss) available to Arch										1,269
Preferred dividends										(10)

Net income (loss) available to Arch common shareholders										$	1,259

Underwriting Ratios
Loss ratio	57.3		%	56.5		%	(8.6)		%	51.2		%
Acquisition expense ratio	19.5		%	19.4		%	0.1		%	17.8		%
Other operating expense ratio	15.8		%	3.6		%	15.9		%	9.7		%
Combined ratio	92.6		%	79.5		%	7.4		%	78.7		%

Net premiums written to gross premiums written	74.1		%	66.2		%	81.2		%	70.3		%

Total investable assets										$	37,811
Total assets										65,465
Total liabilities										44,800


			9

Arch Capital Group Ltd. and Subsidiaries

Segment Information


(U.S. Dollars in millions)	Three Months Ended
	June 30, 2023
	Insurance			Reinsurance			Mortgage			Total
Gross premiums written (1)	$	1,955		$	2,544		$	347		$	4,845
Premiums ceded (1)	(501)			(835)			(82)			(1,417)
Net premiums written	1,454			1,709			265			3,428
Change in unearned premiums	(126)			(366)			29			(463)
Net premiums earned	1,328			1,343			294			2,965
Other underwriting income (loss)	—			3			3			6
Losses and loss adjustment expenses	(761)			(743)			13			(1,491)
Acquisition expenses	(264)			(290)			(7)			(561)
Other operating expenses	(195)			(68)			(50)			(313)
Underwriting income (loss)	$	108		$	245		$	253		606

Net investment income										242
Net realized gains (losses)										(123)

Equity in net income (loss) of investment funds accounted for using the equity method										69
Other income (loss)										3
Corporate expenses (2)										(20)
Transaction costs and other (2)										(1)
Amortization of intangible assets										(24)
Interest expense										(33)
Net foreign exchange gains (losses)										(5)
Income (loss) before income taxes and income (loss) from operating affiliates										714
Income tax (expense) benefit										(67)
Income (loss) from operating affiliates										22
Net income (loss)										669
Net (income) loss attributable to noncontrolling interests										2

Net income (loss) available to Arch										671
Preferred dividends										(10)

Net income (loss) available to Arch common shareholders										$	661

Underwriting Ratios
Loss ratio	57.3		%	55.3		%	(4.5)		%	50.3		%
Acquisition expense ratio	19.9		%	21.6		%	2.4		%	18.9		%
Other operating expense ratio	14.7		%	5.0		%	17.1		%	10.6		%
Combined ratio	91.9		%	81.9		%	15.0		%	79.8		%

Net premiums written to gross premiums written	74.4		%	67.2		%	76.4		%	70.8		%

Total investable assets										$	30,441
Total assets										53,856
Total liabilities										39,213


			10

Arch Capital Group Ltd. and Subsidiaries

Segment Information


(U.S. Dollars in millions)	Six Months Ended
	June 30, 2024
	Insurance			Reinsurance			Mortgage			Total
Gross premiums written (1)	$	4,228		$	6,408		$	681		$	11,315
Premiums ceded (1)	(1,128)			(2,195)			(128)			(3,449)
Net premiums written	3,100			4,213			553			7,866
Change in unearned premiums	(171)			(767)			59			(879)
Net premiums earned	2,929			3,446			612			6,987
Other underwriting income (loss)	—			3			12			15
Losses and loss adjustment expenses	(1,702)			(1,889)			36			(3,555)
Acquisition expenses	(564)			(676)			—			(1,240)
Other operating expenses	(468)			(139)			(102)			(709)
Underwriting income (loss)	$	195		$	745		$	558		1,498

Net investment income										691
Net realized gains (losses)										189

Equity in net income (loss) of investment funds accounted for using the equity method										266
Other income (loss)										22
Corporate expenses (2)										(69)
Transaction costs and other (2)										(25)
Amortization of intangible assets										(48)
Interest expense										(69)
Net foreign exchange gains (losses)										32
Income (loss) before income taxes and income (loss) from operating affiliates										2,487
Income tax (expense) benefit										(198)
Income (loss) from operating affiliates										100



Net income (loss) available to Arch										2,389
Preferred dividends										(20)

Net income (loss) available to Arch common shareholders										$	2,369

Underwriting Ratios
Loss ratio	58.1		%	54.8		%	(5.8)		%	50.9		%
Acquisition expense ratio	19.2		%	19.6		%	0.1		%	17.7		%
Other operating expense ratio	16.0		%	4.0		%	16.7		%	10.1		%
Combined ratio	93.3		%	78.4		%	11.0		%	78.7		%

Net premiums written to gross premiums written	73.3		%	65.7		%	81.2		%	69.5		%


			11

Arch Capital Group Ltd. and Subsidiaries

Segment Information


(U.S. Dollars in millions)	Six Months Ended
	June 30, 2023
	Insurance			Reinsurance			Mortgage			Total
Gross premiums written (1)	$	3,934		$	5,004		$	690		$	9,625
Premiums ceded (1)	(1,043)			(1,569)			(164)			(2,773)
Net premiums written	2,891			3,435			526			6,852
Change in unearned premiums	(306)			(762)			64			(1,004)
Net premiums earned	2,585			2,673			590			5,848
Other underwriting income (loss)	—			7			9			16
Losses and loss adjustment expenses	(1,464)			(1,509)			11			(2,962)
Acquisition expenses	(509)			(571)			(14)			(1,094)
Other operating expenses	(390)			(142)			(100)			(632)
Underwriting income (loss)	$	222		$	458		$	496		1,176

Net investment income										441
Net realized gains (losses)										(106)

Equity in net income (loss) of investment funds accounted for using the equity method										117
Other income (loss)										14
Corporate expenses (2)										(49)
Transaction costs and other (2)										(2)
Amortization of intangible assets										(47)
Interest expense										(65)
Net foreign exchange gains (losses)										(23)
Income (loss) before income taxes and income (loss) from operating affiliates										1,456
Income tax (expense) benefit										(131)
Income (loss) from operating affiliates										61



Net income (loss) available to Arch										1,386
Preferred dividends										(20)

Net income (loss) available to Arch common shareholders										$	1,366

Underwriting Ratios
Loss ratio	56.6		%	56.5		%	(1.9)		%	50.6		%
Acquisition expense ratio	19.7		%	21.3		%	2.4		%	18.7		%
Other operating expense ratio	15.1		%	5.3		%	17.0		%	10.8		%
Combined ratio	91.4		%	83.1		%	17.5		%	80.1		%

Net premiums written to gross premiums written	73.5		%	68.6		%	76.2		%	71.2		%


			12

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Insurance Segment


(U.S. Dollars in millions)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2024			2024			2023			2023			2023			2024			2023
Gross premiums written	$	2,102		$	2,126		$	1,934		$	2,043		$	1,955		$	4,228		$	3,934
Premiums ceded	(544)			(584)			(485)			(521)			(501)			(1,128)			(1,043)
Net premiums written	1,558			1,542			1,449			1,522			1,454			3,100			2,891
Change in unearned premiums	(80)			(91)			—			(110)			(126)			(171)			(306)
Net premiums earned	1,478			1,451			1,449			1,412			1,328			2,929			2,585

Losses and loss adjustment expenses	(848)			(854)			(846)			(812)			(761)			(1,702)			(1,464)
Acquisition expenses	(288)			(276)			(277)			(269)			(264)			(564)			(509)
Other operating expenses	(233)			(235)			(227)			(202)			(195)			(468)			(390)
Underwriting income (loss)	$	109		$	86		$	99		$	129		$	108		$	195		$	222

Underwriting Ratios
Loss ratio	57.3		%	58.9		%	58.4		%	57.5		%	57.3		%	58.1		%	56.6		%
Acquisition expense ratio	19.5		%	19.0		%	19.1		%	19.1		%	19.9		%	19.2		%	19.7		%
Other operating expense ratio	15.8		%	16.2		%	15.6		%	14.3		%	14.7		%	16.0		%	15.1		%
Combined ratio	92.6		%	94.1		%	93.1		%	90.9		%	91.9		%	93.3		%	91.4		%

Catastrophic activity and prior year development:
Current accident year catastrophic events, net of reinsurance and reinstatement premiums	2.0		%	1.9		%	3.8		%	2.6		%	2.6		%	1.9		%	2.1		%
Net (favorable) adverse development in prior year loss reserves, net of related adjustments	(0.2)		%	(0.5)		%	(0.5)		%	(0.8)		%	(0.5)		%	(0.3)		%	(0.5)		%
Combined ratio excluding catastrophic activity and prior year development (1)	90.8		%	92.7		%	89.8		%	89.1		%	89.8		%	91.7		%	89.8		%





Net premiums written to gross premiums written	74.1		%	72.5		%	74.9		%	74.5		%	74.4		%	73.3		%	73.5		%

(1)See ‘Comments on Non-GAAP Financial Measures’ for further discussion.


			13

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Insurance Segment


(U.S. Dollars in millions)	Three Months Ended																				Six Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
	2024				2024				2023				2023				2023				2024				2023
Net Premiums Written by Underwriting Unit
Professional lines	$	345	22.1	%	$	369	23.9	%	$	356	24.6	%	$	375	24.6	%	$	342	23.5	%	$	714	23.0	%	$	670	23.2	%
Property, energy, marine and aviation	342		22.0	%	311		20.2	%	282		19.5	%	342		22.5	%	320		22.0	%	653		21.1	%	595		20.6	%
Programs	242		15.5	%	187		12.1	%	189		13.0	%	202		13.3	%	210		14.4	%	429		13.8	%	351		12.1	%
Excess and surplus casualty	162		10.4	%	148		9.6	%	144		9.9	%	130		8.5	%	135		9.3	%	310		10.0	%	266		9.2	%
Construction and national accounts	160		10.3	%	179		11.6	%	182		12.6	%	129		8.5	%	144		9.9	%	339		10.9	%	317		11.0	%
Travel, accident and health	132		8.5	%	179		11.6	%	127		8.8	%	126		8.3	%	126		8.7	%	311		10.0	%	306		10.6	%
Warranty and lenders solutions	42		2.7	%	39		2.5	%	53		3.7	%	51		3.4	%	42		2.9	%	81		2.6	%	131		4.5	%
Other	133		8.5	%	130		8.4	%	116		8.0	%	167		11.0	%	135		9.3	%	263		8.5	%	255		8.8	%
Total	$	1,558	100.0	%	$	1,542	100.0	%	$	1,449	100.0	%	$	1,522	100.0	%	$	1,454	100.0	%	$	3,100	100.0	%	$	2,891	100.0	%








Net Premiums Written by Underwriting Location
United States	$	1,034	66.4	%	$	981	63.6	%	$	936	64.6	%	$	986	64.8	%	$	965	66.4	%	$	2,015	65.0	%	$	1,858	64.3	%
Europe	443		28.4	%	488		31.6	%	423		29.2	%	455		29.9	%	416		28.6	%	931		30.0	%	896		31.0	%
Other	81		5.2	%	73		4.7	%	90		6.2	%	81		5.3	%	73		5.0	%	154		5.0	%	137		4.7	%
Total	$	1,558	100.0	%	$	1,542	100.0	%	$	1,449	100.0	%	$	1,522	100.0	%	$	1,454	100.0	%	$	3,100	100.0	%	$	2,891	100.0	%

Net Premiums Earned by Underwriting Unit
Professional lines	$	347	23.5	%	$	347	23.9	%	$	352	24.3	%	$	363	25.7	%	$	355	26.7	%	$	694	23.7	%	$	704	27.2	%
Property, energy, marine and aviation	303		20.5	%	301		20.7	%	312		21.5	%	288		20.4	%	237		17.8	%	604		20.6	%	464		17.9	%
Programs	198		13.4	%	195		13.4	%	185		12.8	%	167		11.8	%	162		12.2	%	393		13.4	%	306		11.8	%
Excess and surplus casualty	134		9.1	%	134		9.2	%	133		9.2	%	126		8.9	%	116		8.7	%	268		9.1	%	227		8.8	%
Construction and national accounts	158		10.7	%	157		10.8	%	155		10.7	%	147		10.4	%	133		10.0	%	315		10.8	%	259		10.0	%
Travel, accident and health	153		10.4	%	133		9.2	%	134		9.2	%	148		10.5	%	147		11.1	%	286		9.8	%	275		10.6	%
Warranty and lenders solutions	47		3.2	%	49		3.4	%	43		3.0	%	43		3.0	%	49		3.7	%	96		3.3	%	99		3.8	%
Other	138		9.3	%	135		9.3	%	135		9.3	%	130		9.2	%	129		9.7	%	273		9.3	%	251		9.7	%
Total	$	1,478	100.0	%	$	1,451	100.0	%	$	1,449	100.0	%	$	1,412	100.0	%	$	1,328	100.0	%	$	2,929	100.0	%	$	2,585	100.0	%


			14

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Reinsurance Segment


(U.S. Dollars in millions)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2024			2024			2023			2023			2023			2024			2023
Gross premiums written	$	2,941		$	3,467		$	1,971		$	2,138		$	2,544		$	6,408		$	5,004
Premiums ceded	(994)			(1,201)			(414)			(576)			(835)			(2,195)			(1,569)
Net premiums written	1,947			2,266			1,557			1,562			1,709			4,213			3,435
Change in unearned premiums	(167)			(600)			63			(19)			(366)			(767)			(762)
Net premiums earned	1,780			1,666			1,620			1,543			1,343			3,446			2,673
Other underwriting income (loss)	1			2			8			2			3			3			7
Losses and loss adjustment expenses	(1,006)			(883)			(848)			(870)			(743)			(1,889)			(1,509)
Acquisition expenses	(345)			(331)			(365)			(304)			(290)			(676)			(571)
Other operating expenses	(64)			(75)			(85)			(61)			(68)			(139)			(142)
Underwriting income (loss)	$	366		$	379		$	330		$	310		$	245		$	745		$	458

Underwriting Ratios
Loss ratio	56.5		%	53.0		%	52.3		%	56.4		%	55.3		%	54.8		%	56.5		%
Acquisition expense ratio	19.4		%	19.9		%	22.5		%	19.7		%	21.6		%	19.6		%	21.3		%
Other operating expense ratio	3.6		%	4.5		%	5.2		%	3.9		%	5.0		%	4.0		%	5.3		%
Combined ratio	79.5		%	77.4		%	80.0		%	80.0		%	81.9		%	78.4		%	83.1		%

Catastrophic activity and prior year development:
Current accident year catastrophic events, net of reinsurance and reinstatement premiums	9.4		%	1.8		%	5.1		%	9.3		%	6.3		%	5.7		%	5.4		%
Net (favorable) adverse development in prior year loss reserves, net of related adjustments	(1.8)		%	(2.5)		%	(1.3)		%	(2.8)		%	(1.8)		%	(2.1)		%	(2.6)		%
Combined ratio excluding catastrophic activity and prior year development (1)	71.9		%	78.1		%	76.2		%	73.5		%	77.4		%	74.8		%	80.3		%





Net premiums written to gross premiums written	66.2		%	65.4		%	79.0		%	73.1		%	67.2		%	65.7		%	68.6		%

(1)See ‘Comments on Non-GAAP Financial Measures’ for further discussion.


			15

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Reinsurance Segment


(U.S. Dollars in millions)	Three Months Ended																				Six Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
	2024				2024				2023				2023				2023				2024				2023
Net Premiums Written by Underwriting Unit
Property excluding property catastrophe	$	585	30.0	%	$	567	25.0	%	$	414	26.6	%	$	593	38.0	%	$	457	26.7	%	$	1,152	27.3	%	$	903	26.3	%
Other specialty	539		27.7	%	840		37.1	%	787		50.5	%	527		33.7	%	479		28.0	%	1,379		32.7	%	1,098		32.0	%
Property catastrophe	472		24.2	%	350		15.4	%	63		4.0	%	76		4.9	%	469		27.4	%	822		19.5	%	726		21.1	%
Casualty	261		13.4	%	343		15.1	%	215		13.8	%	273		17.5	%	231		13.5	%	604		14.3	%	514		15.0	%
Marine and aviation	59		3.0	%	129		5.7	%	42		2.7	%	54		3.5	%	55		3.2	%	188		4.5	%	154		4.5	%
Other	31		1.6	%	37		1.6	%	36		2.3	%	39		2.5	%	18		1.1	%	68		1.6	%	40		1.2	%
Total	$	1,947	100.0	%	$	2,266	100.0	%	$	1,557	100.0	%	$	1,562	100.0	%	$	1,709	100.0	%	$	4,213	100.0	%	$	3,435	100.0	%













Net Premiums Written by Underwriting Location
Bermuda	$	1,043	53.6	%	$	1,039	45.9	%	$	723	46.4	%	$	708	45.3	%	$	958	56.1	%	$	2,082	49.4	%	$	1,857	54.1	%
United States	429		22.0	%	484		21.4	%	466		29.9	%	461		29.5	%	408		23.9	%	913		21.7	%	829		24.1	%
Europe and other	475		24.4	%	743		32.8	%	368		23.6	%	393		25.2	%	343		20.1	%	1,218		28.9	%	749		21.8	%
Total	$	1,947	100.0	%	$	2,266	100.0	%	$	1,557	100.0	%	$	1,562	100.0	%	$	1,709	100.0	%	$	4,213	100.0	%	$	3,435	100.0	%

Net Premiums Earned by Underwriting Unit
Property excluding property catastrophe	$	520	29.2	%	$	486	29.2	%	$	484	29.9	%	$	449	29.1	%	$	358	26.7	%	$	1,006	29.2	%	$	712	26.6	%
Other specialty	659		37.0	%	587		35.2	%	598		36.9	%	505		32.7	%	483		36.0	%	1,246		36.2	%	994		37.2	%
Property catastrophe	246		13.8	%	234		14.0	%	215		13.3	%	219		14.2	%	169		12.6	%	480		13.9	%	308		11.5	%
Casualty	269		15.1	%	247		14.8	%	230		14.2	%	264		17.1	%	258		19.2	%	516		15.0	%	511		19.1	%
Marine and aviation	60		3.4	%	74		4.4	%	56		3.5	%	66		4.3	%	56		4.2	%	134		3.9	%	107		4.0	%
Other	26		1.5	%	38		2.3	%	37		2.3	%	40		2.6	%	19		1.4	%	64		1.9	%	41		1.5	%
Total	$	1,780	100.0	%	$	1,666	100.0	%	$	1,620	100.0	%	$	1,543	100.0	%	$	1,343	100.0	%	$	3,446	100.0	%	$	2,673	100.0	%


			16

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Mortgage Segment


(U.S. Dollars in millions)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2024			2024			2023			2023			2023			2024			2023
Gross premiums written	$	340		$	341		$	350		$	347		$	347		$	681		$	690
Premiums ceded	(64)			(64)			(95)			(76)			(82)			(128)			(164)
Net premiums written	276			277			255			271			265			553			526
Change in unearned premiums	31			28			20			22			29			59			64
Net premiums earned	307			305			275			293			294			612			590
Other underwriting income	2			10			2			3			3			12			9
Losses and loss adjustment expenses	27			9			57			35			13			36			11
Acquisition expenses	—			—			(1)			(2)			(7)			—			(14)
Other operating expenses	(49)			(53)			(47)			(47)			(50)			(102)			(100)
Underwriting income	$	287		$	271		$	286		$	282		$	253		$	558		$	496

Underwriting Ratios
Loss ratio	(8.6)		%	(3.0)		%	(20.6)		%	(12.1)		%	(4.5)		%	(5.8)		%	(1.9)		%
Acquisition expense ratio	0.1		%	—		%	0.2		%	0.6		%	2.4		%	0.1		%	2.4		%
Other operating expense ratio	15.9		%	17.5		%	17.1		%	16.2		%	17.1		%	16.7		%	17.0		%
Combined ratio	7.4		%	14.5		%	(3.3)		%	4.7		%	15.0		%	11.0		%	17.5		%

Net (favorable) adverse development in prior year loss reserves, net of related adjustments	(29.0)		%	(25.7)		%	(39.0)		%	(33.5)		%	(28.7)		%	(27.4)		%	(26.6)		%
Combined ratio excluding prior year development (1)	36.4		%	40.2		%	35.7		%	38.2		%	43.7		%	38.4		%	44.1		%

Net premiums written to gross premiums written	81.2		%	81.2		%	72.9		%	78.1		%	76.4		%	81.2		%	76.2		%

(1) See ‘Comments on Non-GAAP Financial Measures’ for further discussion.


			17

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Mortgage Segment


(U.S. Dollars in millions)	Three Months Ended																				Six Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
	2024				2024				2023				2023				2023				2024				2023
Net Premiums Written by Underwriting Unit
U.S. primary mortgage insurance	$	201	72.8	%	$	202	72.9	%	$	175	68.6	%	$	190	70.1	%	$	186	70.2	%	$	403	72.9	%	$	372	70.7	%
U.S. credit risk transfer (CRT) and other	51		18.5	%	56		20.2	%	56		22.0	%	57		21.0	%	54		20.4	%	107		19.3	%	107		20.3	%
International mortgage insurance/reinsurance	24		8.7	%	19		6.9	%	24		9.4	%	24		8.9	%	25		9.4	%	43		7.8	%	47		8.9	%
Total	$	276	100.0	%	$	277	100.0	%	$	255	100.0	%	$	271	100.0	%	$	265	100.0	%	$	553	100.0	%	$	526	100.0	%

Net Premiums Written by Underwriting Location
United States	$	202	73.2	%	$	203	73.3	%	$	176	69.0	%	$	192	70.8	%	$	187	70.6	%	$	405	73.2	%	$	375	71.3	%
Other	74		26.8	%	74		26.7	%	79		31.0	%	79		29.2	%	78		29.4	%	148		26.8	%	151		28.7	%
Total	$	276	100.0	%	$	277	100.0	%	$	255	100.0	%	$	271	100.0	%	$	265	100.0	%	$	553	100.0	%	$	526	100.0	%

Net Premiums Earned by Underwriting Unit
U.S. primary mortgage insurance	$	209	68.1	%	$	206	67.5	%	$	177	64.4	%	$	192	65.5	%	$	194	66.0	%	$	415	67.8	%	$	390	66.1	%
U.S. credit risk transfer (CRT) and other	51		16.6	%	56		18.4	%	55		20.0	%	58		19.8	%	54		18.4	%	107		17.5	%	107		18.1	%
International mortgage insurance/reinsurance	47		15.3	%	43		14.1	%	43		15.6	%	43		14.7	%	46		15.6	%	90		14.7	%	93		15.8	%
Total	$	307	100.0	%	$	305	100.0	%	$	275	100.0	%	$	293	100.0	%	$	294	100.0	%	$	612	100.0	%	$	590	100.0	%


(U.S. Dollars in millions)
	June 30, 2024				March 31, 2024				December 31, 2023				September 30, 2023				June 30, 2023
Insurance In Force (IIF) (1)
U.S. primary mortgage insurance	$	292,512	57.0	%	$	288,385	56.9	%	$	290,764	57.1	%	$	292,903	57.4	%	$	293,902	56.6	%
U.S. credit risk transfer (CRT) and other	151,437		29.5	%	148,623		29.3	%	149,098		29.3	%	152,453		29.9	%	154,983		29.9	%
International mortgage insurance/reinsurance	68,986		13.4	%	69,811		13.8	%	69,473		13.6	%	65,107		12.8	%	70,117		13.5	%
Total	$	512,935	100.0	%	$	506,819	100.0	%	$	509,335	100.0	%	$	510,463	100.0	%	$	519,002	100.0	%

Risk In Force (RIF) (2)
U.S. primary mortgage insurance	$	76,351	84.6	%	$	75,194	84.7	%	$	75,527	84.6	%	$	75,850	84.9	%	$	75,941	84.5	%
U.S. credit risk transfer and other	6,206		6.9	%	6,112		6.9	%	6,156		6.9	%	6,478		7.2	%	6,556		7.3	%
International mortgage insurance/reinsurance	7,666		8.5	%	7,430		8.4	%	7,562		8.5	%	7,034		7.9	%	7,385		8.2	%
Total	$	90,223	100.0	%	$	88,736	100.0	%	$	89,245	100.0	%	$	89,362	100.0	%	$	89,882	100.0	%




(1) The aggregate dollar amount of each insured mortgage loan’s current principal balance. Such amounts are shown before external reinsurance.
(2) The aggregate dollar amount of each insured mortgage loan’s current principal balance multiplied by the insurance coverage percentage specified in the policy for insurance policies issued and after contract limits and/or loss ratio caps for risk-sharing or reinsurance transactions. Such amounts are shown before external reinsurance.


			18

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Mortgage Segment

The following table provides supplemental disclosures for the Company’s U.S. primary mortgage insurance operations:


(U.S. Dollars in millions)
	June 30, 2024					March 31, 2024					December 31, 2023					September 30, 2023					June 30, 2023












Total RIF by credit quality (FICO score):
>=740	$	47,190		61.8	%	$	46,693		62.1	%	$	46,796		62.0	%	$	46,990		62.0	%	$	46,978		61.9	%
680-739	25,053			32.8	%	24,827			33.0	%	24,990			33.1	%	25,055			33.0	%	25,083			33.0	%
620-679	3,735			4.9	%	3,439			4.6	%	3,497			4.6	%	3,554			4.7	%	3,622			4.8	%
<620	373			0.5	%	235			0.3	%	244			0.3	%	251			0.3	%	258			0.3	%
Total	$	76,351		100.0	%	$	75,194		100.0	%	$	75,527		100.0	%	$	75,850		100.0	%	$	75,941		100.0	%
Weighted average FICO score	747					748					748					748					748
Total RIF by Loan-To-Value (LTV):
95.01% and above	$	7,384		9.7	%	$	7,005		9.3	%	$	7,067		9.4	%	$	7,113		9.4	%	$	7,151		9.4	%
90.01% to 95.00%	45,331			59.4	%	44,742			59.5	%	44,669			59.1	%	44,675			58.9	%	44,496			58.6	%
85.01% to 90.00%	20,668			27.1	%	20,352			27.1	%	20,490			27.1	%	20,565			27.1	%	20,627			27.2	%
85.00% and below	2,968			3.9	%	3,095			4.1	%	3,301			4.4	%	3,497			4.6	%	3,667			4.8	%
Total	$	76,351		100.0	%	$	75,194		100.0	%	$	75,527		100.0	%	$	75,850		100.0	%	$	75,941		100.0	%
Weighted average LTV	93.1		%			93.1		%			93.0		%			93.0		%			93.0		%
Total RIF by State:
California	$	6,110		8.0	%	$	6,105		8.1	%	$	6,162		8.2	%	$	6,235		8.2	%	$	6,317		8.3	%
Texas	5,803			7.6	%	5,859			7.8	%	5,972			7.9	%	6,081			8.0	%	6,159			8.1	%
North Carolina	3,320			4.3	%	3,245			4.3	%	3,248			4.3	%	3,258			4.3	%	3,239			4.3	%
Minnesota	3,110			4.1	%	3,056			4.1	%	3,069			4.1	%	3,060			4.0	%	3,023			4.0	%
Georgia	3,099			4.1	%	3,043			4.0	%	3,081			4.1	%	3,116			4.1	%	3,155			4.2	%
Illinois	3,086			4.0	%	2,979			4.0	%	2,986			4.0	%	2,994			3.9	%	3,010			4.0	%
Florida	2,943			3.9	%	2,929			3.9	%	3,007			4.0	%	3,086			4.1	%	3,167			4.2	%
Massachusetts	2,891			3.8	%	2,852			3.8	%	2,858			3.8	%	2,841			3.7	%	2,834			3.7	%
Michigan	2,852			3.7	%	2,796			3.7	%	2,773			3.7	%	2,722			3.6	%	2,661			3.5	%
Virginia	2,596			3.4	%	2,562			3.4	%	2,578			3.4	%	2,605			3.4	%	2,619			3.4	%
Other	40,541			53.1	%	39,768			52.9	%	39,793			52.7	%	39,852			52.5	%	39,757			52.4	%
Total	$	76,351		100.0	%	$	75,194		100.0	%	$	75,527		100.0	%	$	75,850		100.0	%	$	75,941		100.0	%
Weighted average coverage (end of period RIF divided by IIF)	26.1		%			26.1		%			26.0		%			25.9		%			25.8		%
U.S. mortgage insurance total RIF, net of reinsurance (1)	$	58,920				$	57,882				$	58,146				$	56,946				$	57,019
Analysts’ persistency (2)	83.3		%			83.6		%			83.6		%			83.9		%			83.0		%
Risk-to-capital ratio -- Arch MI U.S. (3)	7.4:1					7.0:1					7.3:1					6.6:1					6.9:1
PMIER sufficiency ratio -- Arch MI U.S. (4)	196		%			223		%			213		%			245		%			245		%


(1) Total RIF for the U.S. mortgage insurance operations after external reinsurance.
(2) Represents the % of IIF at the beginning of a 12-mo. period that remained in force at the end of the period.
(3) Represents current (non-delinquent) RIF, net of reinsurance, divided by statutory capital (estimate for June 30, 2024).
(4) Calculated as available assets divided by required assets as defined within PMIERs (estimate for June 30, 2024). There was approximately $1.8 billion of excess available assets at June 30, 2024.


			19

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Mortgage Segment

The following table provides supplemental disclosures for the Company’s U.S. primary mortgage insurance operations:


(U.S. Dollars in millions, except policy/loan/claim count)	Three Months Ended
	June 30, 2024					March 31, 2024					December 31, 2023					September 30, 2023					June 30, 2023
Total new insurance written (NIW) (1)	$	13,799				$	9,336				$	9,351				$	11,494				$	12,292

Total NIW by credit quality (FICO score):
>=740	$	9,726		70.5	%	$	6,364		68.2	%	$	6,058		64.8	%	$	7,646		66.5	%	$	8,151		66.3	%
680-739	3,641			26.4	%	2,660			28.5	%	2,990			32.0	%	3,520			30.6	%	3,832			31.2	%
620-679	430			3.1	%	311			3.3	%	301			3.2	%	326			2.8	%	308			2.5	%
<620	2			0.0	%	1			0.0	%	2			0.0	%	2			0.0	%	1			0.0	%
Total	$	13,799		100.0	%	$	9,336		100.0	%	$	9,351		100.0	%	$	11,494		100.0	%	$	12,292		100.0	%

Total NIW by LTV:
95.01% and above	$	1,014		7.3	%	$	542		5.8	%	$	548		5.9	%	$	880		7.7	%	$	635		5.2	%
90.01% to 95.00%	7,234			52.4	%	5,240			56.1	%	5,095			54.5	%	6,306			54.9	%	6,855			55.8	%
85.01% to 90.00%	4,047			29.3	%	2,624			28.1	%	2,746			29.4	%	3,126			27.2	%	3,516			28.6	%
85.00% and below	1,504			10.9	%	930			10.0	%	962			10.3	%	1,182			10.3	%	1,286			10.5	%
Total	$	13,799		100.0	%	$	9,336		100.0	%	$	9,351		100.0	%	$	11,494		100.0	%	$	12,292		100.0	%

Total NIW monthly vs. single:
Monthly	$	12,764		92.5	%	$	8,916		95.5	%	$	8,827		94.4	%	$	10,712		93.2	%	$	11,870		96.6	%
Single	1,035			7.5	%	420			4.5	%	524			5.6	%	782			6.8	%	422			3.4	%
Total	$	13,799		100.0	%	$	9,336		100.0	%	$	9,351		100.0	%	$	11,494		100.0	%	$	12,292		100.0	%

Total NIW purchase vs. refinance:
Purchase	$	13,588		98.5	%	$	9,167		98.2	%	$	9,224		98.6	%	$	11,334		98.6	%	$	12,063		98.1	%
Refinance	211			1.5	%	169			1.8	%	127			1.4	%	160			1.4	%	229			1.9	%
Total	$	13,799		100.0	%	$	9,336		100.0	%	$	9,351		100.0	%	$	11,494		100.0	%	$	12,292		100.0	%

Ending number of policies in force (PIF) (2)	1,123,698					1,104,746					1,117,480					1,129,351					1,138,681

Rollforward of insured loans in default:
Beginning delinquent number of loans	18,269					19,457					18,644					18,286					18,975
Plus: new notices	10,063					10,371					10,854					10,138					9,028
Less: cures	(10,170)					(11,253)					(9,801)					(9,545)					(9,505)
Less: paid claims	(265)					(306)					(240)					(235)					(212)

Plus: acquired delinquent loans	2,525					—					—					—					—
Ending delinquent number of loans (2)	20,422					18,269					19,457					18,644					18,286

Ending percentage of loans in default (2)	1.82		%			1.65		%			1.74		%			1.65		%			1.61		%

Losses:
Number of claims paid	265					306					240					235					212
Total paid claims (in thousands)	$	7,557				$	10,785				$	7,401				$	6,602				$	5,715
Average paid per claim (in thousands)	$	28.5				$	35.2				$	30.8				$	28.1				$	27.0
Severity (3)	56.6		%			78.6		%			77.8		%			64.0		%			61.5		%

Average case reserve per default (in thousands)	$	17.1				$	18.2				$	17.7				$	21.2				$	23.1

(1) The original principal balance of all loans that received coverage during the period.

(2) Includes first lien primary and pool policies.

(3) Represents total paid claims divided by RIF of loans for which claims were paid.


			20

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Mortgage Segment

The following table provides supplemental disclosures for the Company’s U.S. primary mortgage insurance operations:


(U.S. Dollars in millions)

	June 30, 2024												December 31, 2023
	Loss Reserves, Net (1)		Primary IIF (2)				Primary RIF (3)				Delinquency Rate		Loss Reserves, Net (1)		Primary IIF (2)				Primary RIF (3)				Delinquency Rate
	% of Total		Total		% of Total		Total		% of Total				% of Total		Total		% of Total		Total		% of Total
Policy year:
2014 and prior	40.0	%	$	16,018	5.5	%	$	4,072	5.3	%	6.49	%	31.0	%	$	13,301	4.6	%	$	3,387	4.5	%	6.01	%
2015	1.4	%	3,938		1.3	%	1,027		1.3	%	1.94	%	2.0	%	4,691		1.6	%	1,244		1.6	%	1.98	%
2016	3.7	%	6,589		2.3	%	1,759		2.3	%	2.40	%	4.8	%	7,525		2.6	%	2,025		2.7	%	2.50	%
2017	5.5	%	6,563		2.2	%	1,753		2.3	%	2.96	%	7.0	%	7,600		2.6	%	2,023		2.7	%	3.13	%
2018	7.4	%	7,814		2.7	%	2,030		2.7	%	3.66	%	9.0	%	8,512		2.9	%	2,207		2.9	%	4.04	%
2019	7.9	%	14,214		4.9	%	3,716		4.9	%	2.38	%	9.1	%	15,767		5.4	%	4,074		5.4	%	2.40	%
2020	10.1	%	45,090		15.4	%	11,998		15.7	%	1.17	%	12.1	%	51,349		17.7	%	13,357		17.7	%	1.17	%
2021	13.1	%	69,367		23.7	%	18,182		23.8	%	1.15	%	14.8	%	76,667		26.4	%	19,812		26.2	%	1.12	%
2022	8.6	%	60,873		20.8	%	16,015		21.0	%	1.04	%	8.8	%	63,899		22.0	%	16,755		22.2	%	0.89	%
2023	2.3	%	39,449		13.5	%	10,146		13.3	%	0.56	%	1.3	%	41,453		14.3	%	10,643		14.1	%	0.26	%
2024	0.2	%	22,597		7.7	%	5,653		7.4	%	0.08	%
Total	100.0	%	$	292,512	100.0	%	$	76,351	100.0	%	1.82	%	100.0	%	$	290,764	100.0	%	$	75,527	100.0	%	1.74	%

(1) Total reserves for losses and loss adjustment expenses, net of recoverables, was $330.4 million at June 30, 2024, compared to $323.6 million at December 31, 2023.

(2) The aggregate dollar amount of each insured mortgage loan’s current principal balance.

(3) The aggregate dollar amount of each insured mortgage loan’s current principal balance multiplied by the insurance coverage percentage specified in the policy for insurance policies issued and after contract limits and/or loss ratio caps for risk-sharing transactions.


			21

Arch Capital Group Ltd. and Subsidiaries

Segment Information - Consolidated


(U.S. Dollars in millions)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2024			2024			2023			2023			2023			2024			2023
Gross premiums written	$	5,382		$	5,933		$	4,251		$	4,527		$	4,845		$	11,315		$	9,625
Premiums ceded	(1,601)			(1,848)			(990)			(1,172)			(1,417)			(3,449)			(2,773)
Net premiums written	3,781			4,085			3,261			3,355			3,428			7,866			6,852
Change in unearned premiums	(216)			(663)			83			(107)			(463)			(879)			(1,004)
Net premiums earned	3,565			3,422			3,344			3,248			2,965			6,987			5,848
Other underwriting income (loss)	3			12			10			5			6			15			16
Losses and loss adjustment expenses	(1,827)			(1,728)			(1,637)			(1,647)			(1,491)			(3,555)			(2,962)
Acquisition expenses	(633)			(607)			(643)			(575)			(561)			(1,240)			(1,094)
Other operating expenses	(346)			(363)			(359)			(310)			(313)			(709)			(632)
Underwriting income (loss) (1)	$	762		$	736		$	715		$	721		$	606		$	1,498		$	1,176

Underwriting Ratios
Loss ratio	51.2		%	50.5		%	49.0		%	50.7		%	50.3		%	50.9		%	50.6		%
Acquisition expense ratio	17.8		%	17.7		%	19.2		%	17.7		%	18.9		%	17.8		%	18.7		%
Other operating expense ratio	9.7		%	10.6		%	10.7		%	9.5		%	10.6		%	10.1		%	10.8		%
Combined ratio	78.7		%	78.8		%	78.9		%	77.9		%	79.8		%	78.8		%	80.1		%

Catastrophic activity and prior year development:
Current accident year catastrophic events, net of reinsurance and reinstatement premiums	5.5		%	1.7		%	4.1		%	5.6		%	4.0		%	3.6		%	3.4		%
Net (favorable) adverse development in prior year loss reserves, net of related adjustments	(3.5)		%	(3.7)		%	(4.1)		%	(4.7)		%	(3.9)		%	(3.6)		%	(4.1)		%
Combined ratio excluding catastrophic activity and prior year development (1)	76.7		%	80.8		%	78.9		%	77.0		%	79.7		%	78.8		%	80.8		%





Components of losses and loss adjustment expenses incurred
Paid losses and loss adjustment expenses	$	1,120		$	1,070		$	1,096		$	1,058		$	1,072		$	2,190		$	1,939
Change in unpaid losses and loss adjustment expenses	707			658			541			589			419			1,365			1,023
Total losses and loss adjustment expenses	$	1,827		$	1,728		$	1,637		$	1,647		$	1,491		$	3,555		$	2,962

Net premiums written to gross premiums written	70.3		%	68.9		%	76.7		%	74.1		%	70.8		%	69.5		%	71.2		%

(1)See ‘Comments on Non-GAAP Financial Measures’ for further discussion.


			22

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Selected Information on Losses and Loss Adjustment Expenses


(U.S. Dollars in millions)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2024			2024			2023			2023			2023			2024			2023





Estimated net (favorable) adverse development in prior year loss reserves, net of related adjustments
Net impact on underwriting results:
Insurance	$	(4)		$	(7)		$	(7)		$	(11)		$	(7)		$	(11)		$	(14)
Reinsurance	(31)			(41)			(21)			(43)			(25)			(72)			(71)
Mortgage	(89)			(78)			(107)			(98)			(84)			(167)			(157)
Total	$	(124)		$	(126)		$	(135)		$	(152)		$	(116)		$	(250)		$	(242)
Impact on losses and loss adjustment expenses:
Insurance	$	(5)		$	(10)		$	(8)		$	(10)		$	(12)		$	(15)		$	(24)
Reinsurance	(34)			(40)			(26)			(44)			(29)			(74)			(82)
Mortgage	(82)			(74)			(101)			(92)			(80)			(156)			(151)
Total	$	(121)		$	(124)		$	(135)		$	(146)		$	(121)		$	(245)		$	(257)
Impact on acquisition expenses:
Insurance	$	1		$	3		$	1		$	(1)		$	5		$	4		$	10
Reinsurance	3			(1)			5			1			4			2			11
Mortgage	(7)			(4)			(6)			(6)			(4)			(11)			(6)
Total	$	(3)		$	(2)		$	—		$	(6)		$	5		$	(5)		$	15
Impact on combined ratio:
Insurance	(0.2)		%	(0.5)		%	(0.5)		%	(0.8)		%	(0.5)		%	(0.3)		%	(0.5)		%
Reinsurance	(1.8)		%	(2.5)		%	(1.3)		%	(2.8)		%	(1.8)		%	(2.1)		%	(2.6)		%
Mortgage	(29.0)		%	(25.7)		%	(39.0)		%	(33.5)		%	(28.7)		%	(27.4)		%	(26.6)		%
Total	(3.5)		%	(3.7)		%	(4.1)		%	(4.7)		%	(3.9)		%	(3.6)		%	(4.1)		%
Impact on loss ratio:
Insurance	(0.3)		%	(0.7)		%	(0.6)		%	(0.7)		%	(0.9)		%	(0.5)		%	(0.9)		%
Reinsurance	(1.9)		%	(2.4)		%	(1.6)		%	(2.8)		%	(2.2)		%	(2.2)		%	(3.0)		%
Mortgage	(26.9)		%	(24.4)		%	(36.6)		%	(31.4)		%	(27.2)		%	(25.6)		%	(25.6)		%
Total	(3.4)		%	(3.6)		%	(4.0)		%	(4.5)		%	(4.1)		%	(3.5)		%	(4.4)		%
Impact on acquisition expense ratio:
Insurance	0.1		%	0.2		%	0.1		%	(0.1)		%	0.4		%	0.2		%	0.4		%
Reinsurance	0.1		%	(0.1)		%	0.3		%	0.0		%	0.4		%	0.1		%	0.4		%
Mortgage	(2.1)		%	(1.3)		%	(2.4)		%	(2.1)		%	(1.5)		%	(1.8)		%	(1.0)		%
Total	(0.1)		%	(0.1)		%	(0.1)		%	(0.2)		%	0.2		%	(0.1)		%	0.3		%
Estimated net losses incurred from current accident year catastrophic events (1)
Insurance	$	30		$	27		$	55		$	37		$	35		$	57		$	55
Reinsurance	166			31			82			143			84			197			143
Total	$	196		$	58		$	137		$	180		$	119		$	254		$	198
Impact on combined ratio:
Insurance	2.0		%	1.9		%	3.8		%	2.6		%	2.6		%	1.9		%	2.1		%
Reinsurance	9.4		%	1.8		%	5.1		%	9.3		%	6.3		%	5.7		%	5.4		%
Total	5.5		%	1.7		%	4.1		%	5.6		%	4.0		%	3.6		%	3.4		%

(1)Equals estimated losses from catastrophic events occurring in the current accident year (e.g. natural catastrophes, man-made events, pandemic events), net of reinsurance and reinstatement premiums. As regards the natural catastrophe estimates included within, amounts shown for the insurance segment are for named catastrophic events only, while amounts shown for the reinsurance segment include (i) named events with over $5 million of losses incurred by its Bermuda and Europe operations and (ii) all catastrophe losses incurred by its U.S. operations. Amounts not applicable for the mortgage segment.


			23

Arch Capital Group Ltd. and Subsidiaries

Investment Information — Investable Asset Summary and Investment Portfolio Metrics

The following table summarizes the Company’s investable assets and portfolio metrics:


(U.S. Dollars in millions)	June 30,				March 31,				December 31,				September 30,				June 30,
	2024				2024				2023				2023				2023
Investable assets:
Fixed maturities available for sale, at fair value	$	25,202	66.7	%	$	23,628	65.7	%	$	23,553	68.1	%	$	22,485	70.5	%	$	21,434	70.4	%
Fixed maturities—fair value option (1)	973		2.6	%	930		2.6	%	683		2.0	%	644		2.0	%	659		2.2	%

Total fixed maturities	26,175		69.2	%	24,558		68.3	%	24,236		70.1	%	23,129		72.5	%	22,093		72.6	%

Equity securities, at fair value	1,397		3.7	%	1,720		4.8	%	1,186		3.4	%	894		2.8	%	911		3.0	%
Equity securities—fair value option (1)	7		0.0	%	7		0.0	%	7		0.0	%	7		0.0	%	7		0.0	%

Total equity securities	1,404		3.7	%	1,727		4.8	%	1,193		3.4	%	901		2.8	%	918		3.0	%

Other investments—fair value option (1)	2,189		5.8	%	1,914		5.3	%	1,777		5.1	%	1,404		4.4	%	1,172		3.9	%



Investments accounted for using the equity method (2)	4,983		13.2	%	4,842		13.5	%	4,566		13.2	%	4,251		13.3	%	4,073		13.4	%

Short-term investments available for sale, at fair value	2,297		6.1	%	2,142		6.0	%	2,063		6.0	%	1,682		5.3	%	1,702		5.6	%
Short-term investments—fair value option (1)	37		0.1	%	35		0.1	%	21		0.1	%	13		0.0	%	8		0.0	%

Total short-term investments	2,334		6.2	%	2,177		6.1	%	2,084		6.0	%	1,695		5.3	%	1,710		5.6	%

Cash	1,020		2.7	%	993		2.8	%	917		2.7	%	859		2.7	%	904		3.0	%


Securities transactions entered into but not settled at the balance sheet date	(294)		(0.8)	%	(267)		(0.7)	%	(184)		(0.5)	%	(358)		(1.1)	%	(429)		(1.4)	%
Total investable assets held by the Company	$	37,811	100.0	%	$	35,944	100.0	%	$	34,589	100.0	%	$	31,881	100.0	%	$	30,441	100.0	%

Average effective duration (in years)	2.83				2.70				2.91				2.97				3.03

Average S&P/Moody’s credit ratings (3)	AA-/Aa3				AA-/Aa3				AA-/Aa3				AA-/Aa3				AA-/Aa3

(1) Included in “other investments” on the balance sheet.

(2) Changes in the carrying value of investment funds accounted for using the equity method are recorded as “equity in net income (loss) of investment funds accounted for using the equity method” rather than as an unrealized gain or loss component of accumulated other comprehensive income.

(3) Average credit ratings on the Company’s investment portfolio on securities with ratings assigned by Standard & Poor’s (“S&P”) and Moody’s Investors Service (“Moody’s”).


			24

Arch Capital Group Ltd. and Subsidiaries

Investment Information — Composition of Net Investment Income, Yield and Total Return

The following table summarizes the Company’s net investment income, yield and total return:


(U.S. Dollars in millions, except per share data)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2024			2024			2023			2023			2023			2024			2023
Composition of net investment income:
Fixed maturities	$	306		$	280		$	272		$	243		$	214		$	586		$	402
Short-term investments	35			29			20			19			15			64			29
Equity securities (dividends)	10			8			7			5			6			18			10
Other (1)	35			33			33			22			25			68			38
Gross investment income	386			350			332			289			260			736			479
Investment expenses	(22)			(23)			(19)			(20)			(18)			(45)			(38)
Net investment income	$	364		$	327		$	313		$	269		$	242		$	691		$	441
Per share	$	0.95		$	0.86		$	0.82		$	0.71		$	0.64		$	1.81		$	1.17

Equity in net income (loss) of investment funds accounted for using the equity method	167			99			102			59			69			266			117
Per share	$	0.44		$	0.26		$	0.27		$	0.16		$	0.18		$	0.70		$	0.31


Investment income yield, at amortized cost (2):
Pre-tax	4.39		%	4.14		%	4.11		%	3.68		%	3.50		%	4.36		%	3.33		%
After-tax	3.87		%	3.61		%	3.59		%	3.18		%	3.05		%	3.83		%	2.87		%

Total return on investments (3)	1.33		%	0.80		%	4.76		%	(0.40)		%	0.56		%	2.14		%	3.10		%

(1)Amounts include dividends and other distributions on investment funds, term loan investments, funds held balances, cash balances and other.

(2)Presented on an annualized basis and excluding the impact of investments for which returns are not included within investment income, such as investments accounted for using the equity method and certain equities.

(3)Total return on investments includes investment income, equity in net income or loss of investment funds accounted for using the equity method, net realized gains and losses (excluding changes in allowance for credit losses on non-investment related financial assets) and the change in unrealized gains or losses and is calculated on a pre-tax basis and before investment expenses. See ‘Comments on Non-GAAP Financial Measures’ for a further discussion of the presentation of total return on investments.


			25

Arch Capital Group Ltd. and Subsidiaries

Investment Information — Composition of Fixed Maturities

The following table summarizes the Company’s fixed maturities:


(U.S. Dollars in millions)	Fair Value		Gross Unrealized Gains		Gross Unrealized Losses		Net Unrealized Gains (Losses)		Allowance for Credit Losses		Amortized Cost		Fair Value / Amortized Cost		Fair Value % of Total
At June 30, 2024
Corporates	$	12,995	$	84	$	(430)	$	(346)	$	(16)	$	13,357	97.3	%	49.6	%
U.S. government and government agencies	5,298		10		(106)		(96)		—		5,394		98.2	%	20.2	%
Asset-backed securities	2,800		20		(35)		(15)		(8)		2,823		99.2	%	10.7	%
Non-U.S. government securities	2,497		21		(110)		(89)		(1)		2,587		96.5	%	9.5	%
Commercial mortgage-backed securities	1,160		3		(26)		(23)		(2)		1,185		97.9	%	4.4	%
Residential mortgage-backed securities	1,186		4		(71)		(67)		—		1,253		94.7	%	4.5	%
Municipal bonds	239		1		(18)		(17)		—		256		93.4	%	0.9	%
Total	$	26,175	$	143	$	(796)	$	(653)	$	(27)	$	26,855	97.5	%	100.0	%

At December 31, 2023
Corporates	$	11,517	$	157	$	(464)	$	(307)	$	(20)	$	11,844	97.2	%	47.5	%
U.S. government and government agencies	5,827		63		(86)		(23)		—		5,850		99.6	%	24.0	%
Asset-backed securities	2,252		11		(55)		(44)		(5)		2,301		97.9	%	9.3	%
Non-U.S. government securities	2,068		33		(100)		(67)		(1)		2,136		96.8	%	8.5	%
Commercial mortgage-backed securities	1,213		3		(34)		(31)		(2)		1,246		97.4	%	5.0	%
Residential mortgage-backed securities	1,103		7		(66)		(59)		—		1,162		94.9	%	4.6	%
Municipal bonds	256		1		(20)		(19)		—		275		93.1	%	1.1	%
Total	$	24,236	$	275	$	(825)	$	(550)	$	(28)	$	24,814	97.7	%	100.0	%


			26

Arch Capital Group Ltd. and Subsidiaries

Investment Information — Credit Quality Distribution and Maturity Profile

The following table summarizes the credit quality distribution and maturity profile of the Company’s fixed maturities:


(U.S. Dollars in millions)	June 30,				March 31,				December 31,				September 30,				June 30,
	2024				2024				2023				2023				2023
Credit quality distribution of total fixed maturities (1):
U.S. government and government agencies (2)	$	6,041	23.1	%	$	5,106	20.8	%	$	6,493	26.8	%	$	6,359	27.5	%	$	5,282	23.9	%
AAA	4,599		17.6	%	4,495		18.3	%	4,305		17.8	%	4,164		18.0	%	3,985		18.0	%
AA	2,507		9.6	%	2,405		9.8	%	2,165		8.9	%	2,061		8.9	%	2,285		10.3	%
A	4,854		18.5	%	4,912		20.0	%	4,629		19.1	%	4,523		19.6	%	4,810		21.8	%
BBB	6,144		23.5	%	5,672		23.1	%	5,058		20.9	%	4,390		19.0	%	4,165		18.9	%
BB	979		3.7	%	920		3.7	%	698		2.9	%	773		3.3	%	770		3.5	%
B	521		2.0	%	484		2.0	%	389		1.6	%	352		1.5	%	366		1.7	%
Lower than B	29		0.1	%	30		0.1	%	15		0.1	%	16		0.1	%	16		0.1	%
Not rated	501		1.9	%	534		2.2	%	484		2.0	%	491		2.1	%	414		1.9	%
Total fixed maturities, at fair value	$	26,175	100.0	%	$	24,558	100.0	%	$	24,236	100.0	%	$	23,129	100.0	%	$	22,093	100.0	%

Maturity profile of total fixed maturities:
Due in one year or less	$	672	2.6	%	$	580	2.4	%	$	516	2.1	%	$	706	3.1	%	$	594	2.7	%
Due after one year through five years	14,036		53.6	%	13,582		55.3	%	13,279		54.8	%	13,272		57.4	%	12,399		56.1	%
Due after five years through ten years	5,852		22.4	%	4,816		19.6	%	5,420		22.4	%	4,679		20.2	%	4,630		21.0	%
Due after 10 years	469		1.8	%	440		1.8	%	453		1.9	%	61		0.3	%	123		0.6	%
	21,029		80.3	%	19,418		79.1	%	19,668		81.2	%	18,718		80.9	%	17,746		80.3	%
Residential mortgage-backed securities	1,186		4.5	%	1,179		4.8	%	1,103		4.6	%	965		4.2	%	860		3.9	%
Commercial mortgage-backed securities	1,160		4.4	%	1,197		4.9	%	1,213		5.0	%	1,102		4.8	%	1,082		4.9	%
Asset-backed securities	2,800		10.7	%	2,764		11.3	%	2,252		9.3	%	2,344		10.1	%	2,405		10.9	%
Total fixed maturities, at fair value	$	26,175	100.0	%	$	24,558	100.0	%	$	24,236	100.0	%	$	23,129	100.0	%	$	22,093	100.0	%

(1) For individual fixed maturities, S&P ratings are used. In the absence of an S&P rating, ratings from Moody’s are used, followed by ratings from Fitch Ratings.

(2) Includes U.S. government-sponsored agency mortgage backed securities and agency commercial mortgage backed securities.


			27

Arch Capital Group Ltd. and Subsidiaries

Investment Information — Analysis of Corporate Exposures

The following table summarizes the Company’s corporate bonds by sector:


(U.S. Dollars in millions)	June 30,				March 31,				December 31,				September 30,				June 30,
	2024				2024				2023				2023				2023
Sector:
Industrials	$	6,886	53.0	%	$	6,691	53.1	%	$	5,525	48.0	%	$	4,918	46.0	%	$	4,988	47.0	%
Financials	4,573		35.2	%	4,477		35.5	%	4,523		39.3	%	4,326		40.5	%	4,334		40.8	%
Utilities	1,135		8.7	%	1,065		8.4	%	1,039		9.0	%	962		9.0	%	927		8.7	%

All other (1)	401		3.1	%	375		3.0	%	430		3.7	%	478		4.5	%	367		3.5	%
Total	$	12,995	100.0	%	$	12,608	100.0	%	$	11,517	100.0	%	$	10,684	100.0	%	$	10,616	100.0	%

Credit quality distribution (2):
AAA	$	213	1.6	%	$	229	1.8	%	$	295	2.6	%	$	297	2.8	%	$	227	2.1	%
AA	1,061		8.2	%	1,067		8.5	%	1,038		9.0	%	938		8.8	%	913		8.6	%
A	4,092		31.5	%	4,217		33.4	%	4,043		35.1	%	3,936		36.8	%	4,197		39.5	%
BBB	5,819		44.8	%	5,362		42.5	%	4,744		41.2	%	4,118		38.5	%	3,885		36.6	%
BB	909		7.0	%	856		6.8	%	634		5.5	%	715		6.7	%	714		6.7	%
B	516		4.0	%	481		3.8	%	389		3.4	%	351		3.3	%	365		3.4	%
Lower than B	29		0.2	%	30		0.2	%	15		0.1	%	16		0.1	%	16		0.2	%
Not rated	356		2.7	%	366		2.9	%	359		3.1	%	313		2.9	%	299		2.8	%
Total	$	12,995	100.0	%	$	12,608	100.0	%	$	11,517	100.0	%	$	10,684	100.0	%	$	10,616	100.0	%

(1) Includes sovereign securities, supranational securities and other.

(2) For individual fixed maturities, S&P ratings are used. In the absence of an S&P rating, ratings from Moody’s are used, followed by ratings from Fitch Ratings.

The following table summarizes the Company’s top ten exposures to fixed income corporate issuers by fair value at June 30, 2024:


(U.S. Dollars in millions)	Fair Value		% of Asset Class		% of Investable Assets		Credit Quality (1)
Issuer:
JPMorgan Chase & Co.	$	373	2.9	%	1.0	%	A-/A1
Morgan Stanley	341		2.6	%	0.9	%	A-/A1
Bank of America Corporation	296		2.3	%	0.8	%	A-/A1
The Goldman Sachs Group, Inc.	276		2.1	%	0.7	%	A-/A2
Citigroup Inc.	242		1.9	%	0.6	%	BBB+/A3
Blue Owl Capital Inc.	208		1.6	%	0.6	%	BBB-/Baa3
Ford Motor Company	203		1.6	%	0.5	%	BBB-/Ba1
Blackstone Inc.	180		1.4	%	0.5	%	BBB/Baa3
Hyundai Motor Company	178		1.4	%	0.5	%	BBB+/A3
General Motors Company	135		1.0	%	0.4	%	BBB/Baa2
Total	$	2,432	18.7	%	6.4	%

(1) Average credit ratings assigned by S&P and Moody’s, respectively.


			28

Arch Capital Group Ltd. and Subsidiaries

Investment Information — Structured Securities

The following table provides the composition of the Company’s structured securities:


(U.S. Dollars in millions)	Agencies		AAA		AA		A		BBB		Non-Investment Grade		Total
At June 30, 2024
Residential mortgage-backed securities	$	736	$	429	$	20	$	1	$	—	$	—	$	1,186
Commercial mortgage-backed securities	7		662		199		67		151		74		1,160
Asset-backed securities	—		1,553		341		598		162		146		2,800
Total	$	743	$	2,644	$	560	$	666	$	313	$	220	$	5,146

At December 31, 2023
Residential mortgage-backed securities	$	658	$	416	$	29	$	—	$	—	$	—	$	1,103
Commercial mortgage-backed securities	7		757		198		45		126		80		1,213
Asset-backed securities	—		1,302		231		440		170		109		2,252
Total	$	665	$	2,475	$	458	$	485	$	296	$	189	$	4,568


			29

Arch Capital Group Ltd. and Subsidiaries

Comments on Non-GAAP Financial Measures

Throughout this financial supplement, the Company presents its operations in the way it believes will be the most meaningful and useful to investors, analysts, rating agencies and others who use the Company’s financial information in evaluating the performance of the Company. This presentation includes the use of after-tax operating income available to Arch common shareholders, which is defined as net income available to Arch common shareholders, excluding net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains and losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains and losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses, transaction costs and other, net of income taxes and the use of annualized operating return on average common equity. The presentation of after-tax operating income available to Arch common shareholders and annualized operating return on average common equity are non-GAAP financial measures as defined in Regulation G. The reconciliation of such measures to net income available to Arch common shareholders and annualized net income return on average common equity (the most directly comparable GAAP financial measures) in accordance with Regulation G is included on the following page.

The Company believes that net realized gains or losses, equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other, in any particular period are not indicative of the performance of, or trends in, the Company’s business. Although net realized gains or losses, equity in net income or loss of investment funds accounted for using the equity method and net foreign exchange gains or losses are an integral part of the Company’s operations, the decision to realize these items are independent of the insurance underwriting process and result, in large part, from general economic and financial market conditions. Furthermore, certain users of the Company’s financial information believe that, for many companies, the timing of the realization of investment gains or losses is largely opportunistic. In addition, changes in the allowance for credit losses and net impairment losses recognized in earnings on the Company’s investments represent other-than-temporary declines in expected recovery values on securities without actual realization.

Transaction costs and other include advisory, financing, legal, severance, incentive compensation and other transaction costs related to acquisitions. The Company believes that transaction costs and other, due to their non-recurring nature, are not indicative of the performance of, or trends in, the Company’s business performance.

The Company’s segment information includes the presentation of consolidated underwriting income or loss and a subtotal of underwriting income or loss. Such measures represent the pre-tax profitability of the Company’s underwriting operations and include net premiums earned plus other underwriting income, less losses and loss adjustment expenses, acquisition expenses and other operating expenses. Other operating expenses include those operating expenses that are incremental and/or directly attributable to the Company’s individual underwriting operations. Underwriting income or loss does not include certain income and expense items which are included in corporate. While these measures are presented in the Segment Information footnote to the Company’s Consolidated Financial Statements, they are considered non-GAAP financial measures when presented elsewhere on a consolidated basis. The reconciliations of underwriting income or loss to income before income taxes (the most directly comparable GAAP financial measure) on a consolidated basis, in accordance with Regulation G, is shown on pages 9 to 12.

Total return on investments includes investment income, equity in net income or loss of investment funds accounted for using the equity method, net realized gains and losses (excluding changes in the allowance for credit losses on non-investment related financial assets) and the change in unrealized gains and losses generated by the Company’s investment portfolio. Total return is calculated on a pre-tax basis and before investment expenses, and reflects the effect of financial market conditions along with foreign currency fluctuations. Management uses total return on investments as a key measure of the return generated to Arch common shareholders, and compares the return generated by the Company’s investment portfolio against benchmark returns during the periods presented.


			30

Arch Capital Group Ltd. and Subsidiaries

Operating Income Reconciliation and Annualized Operating Return on Average Common Equity

The following table summarizes the Company’s consolidated financial data, including a reconciliation of net income (loss) available to Arch common shareholders to after-tax operating income (loss) available to Arch common shareholders and related diluted per share results:


(U.S. Dollars and shares in millions, except per share data)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2024			2024			2023			2023			2023			2024			2023
Net income available to Arch common shareholders	$	1,259		$	1,110		$	2,324		$	713		$	661		$	2,369		$	1,366
Net realized (gains) losses (1)	(122)			(67)			(189)			248			123			(189)			106

Equity in net (income) loss of investment funds accounted for using the equity method	(167)			(99)			(102)			(59)			(69)			(266)			(117)
Net foreign exchange (gains) losses	(1)			(31)			60			(22)			6			(32)			24
Transaction costs and other	18			7			4			1			2			25			1

Income tax expense (benefit) (2)	(6)			13			(1,152)			(5)			3			7			—
After-tax operating income available to Arch common shareholders	$	981		$	933		$	945		$	876		$	726		$	1,914		$	1,380

Diluted per common share results:
Net income available to Arch common shareholders	$	3.30		$	2.92		$	6.12		$	1.88		$	1.75		$	6.22		$	3.62
Net realized (gains) losses (1)	(0.32)			(0.18)			(0.50)			0.65			0.33			(0.50)			0.28

Equity in net (income) loss of investment funds accounted for using the equity method	(0.44)			(0.26)			(0.27)			(0.16)			(0.18)			(0.70)			(0.31)
Net foreign exchange (gains) losses	0.00			(0.08)			0.16			(0.05)			0.01			(0.09)			0.06
Transaction costs and other	0.05			0.02			0.01			0.00			0.00			0.07			0.00

Income tax expense (benefit) (2)	(0.02)			0.03			(3.03)			(0.01)			0.01			0.02			0.00
After-tax operating income available to Arch common shareholders	$	2.57		$	2.45		$	2.49		$	2.31		$	1.92		$	5.02		$	3.65

Weighted average common shares and common share equivalents outstanding - diluted	381.6			380.5			379.8			379.4			378.4			380.9			377.8

Beginning common shareholders’ equity	$	18,525		$	17,523		$	14,409		$	13,811		$	13,158		$	17,523		$	12,080
Ending common shareholders’ equity	19,835			18,525			17,523			14,409			13,811			19,835			13,811
Average common shareholders’ equity	$	19,180		$	18,024		$	15,966		$	14,110		$	13,485		$	18,679		$	12,946

Annualized net income return on average common equity	26.3		%	24.6		%	58.2		%	20.2		%	19.6		%	25.4		%	21.1		%
Annualized operating return on average common equity	20.5		%	20.7		%	23.7		%	24.8		%	21.5		%	20.5		%	21.3		%

(2) Income tax expense (benefit) on net realized gains or losses, equity in net income (loss) of investment funds accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other reflects the relative mix reported by jurisdiction and the varying tax rates in each jurisdiction. The 2023 fourth quarter results were impacted by the establishment of a net deferred tax asset of $1.18 billion, or $3.10 per share, related to the enactment of Bermuda’s new corporate income tax.


			31

Arch Capital Group Ltd. and Subsidiaries

Operating Income and Effective Tax Rate Calculations

The following table provides a reconciliation of income (loss) before income taxes to after-tax operating income (loss) available to Arch common shareholders and an analysis of the effective tax rate on pre-tax operating income (loss) available to Arch common shareholders:


(U.S. Dollars in millions)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2024			2024			2023			2023			2023			2024			2023
Arch Operating Income Components:
Income (loss) before income taxes and income (loss) from operating affiliates	$	1,321		$	1,166		$	1,188		$	741		$	714		$	2,487		$	1,456
Net realized (gains) losses	(122)			(67)			(189)			248			123			(189)			106

Equity in net (income) loss of investment funds accounted for using the equity method	(167)			(99)			(102)			(59)			(69)			(266)			(117)
Net foreign exchange (gains) losses	—			(31)			60			(22)			8			(31)			24
Transaction costs and other	18			7			4			1			2			25			1
Income (loss) from operating affiliates	45			55			69			54			22			100			61


Pre-tax operating income available to Arch (b)	1,095			1,031			1,030			963			800			2,126			1,531
Income tax (expense) benefit (a)	(104)			(88)			(75)			(77)			(64)			(192)			(131)
After-tax operating income available to Arch	991			943			955			886			736			1,934			1,400
Preferred dividends	(10)			(10)			(10)			(10)			(10)			(20)			(20)
After-tax operating income available to Arch common shareholders	$	981		$	933		$	945		$	876		$	726		$	1,914		$	1,380

Effective tax rate on pre-tax operating income (loss) available to Arch (a)/(b)	9.5		%	8.5		%	7.3		%	8.0		%	8.0		%	9.0		%	8.5		%


			32

Arch Capital Group Ltd. and Subsidiaries

Capital Structure and Share Repurchase Activity

The following table provides an analysis of the Company’s capital structure:


(U.S. Dollars and shares in millions, except per share data)	June 30,			March 31,			December 31,			September 30,			June 30,
	2024			2024			2023			2023			2023
Debt:
Arch senior notes, due May 1, 2034 ($300 principal, 7.35%)	$	300		$	300		$	300		$	300		$	300
Arch-U.S. senior notes, due Nov. 1, 2043 ($500 principal, 5.144%) (1)	500			500			500			500			500
Arch Finance senior notes, due December 15, 2026 ($500 principal, 4.011%) (2)	500			500			500			500			500
Arch Finance senior notes, due December 15, 2046 ($450 principal, 5.031%) (2)	450			450			450			450			450
Arch senior notes, due June 30, 2050 ($1,000 principal, 3.635%)	1,000			1,000			1,000			1,000			1,000
Deferred debt costs on senior notes	(23)			(23)			(24)			(24)			(24)
Revolving credit agreement borrowings, due August 23, 2028	—			—			—			—			—
Total debt	$	2,727		$	2,727		$	2,726		$	2,726		$	2,726

Shareholders’ equity available to Arch:


Series F non-cumulative preferred shares (5.45%)	330			330			330			330			330
Series G non-cumulative preferred shares (4.55%)	500			500			500			500			500
Common shareholders’ equity (a)	19,835			18,525			17,523			14,409			13,811
Total shareholders’ equity available to Arch	$	20,665		$	19,355		$	18,353		$	15,239		$	14,641

Total capital available to Arch	$	23,392		$	22,082		$	21,079		$	17,965		$	17,367

Common shares outstanding, net of treasury shares (b)	376.0			375.3			373.3			373.1			372.9

Book value per common share (3) (a)/(b)	$	52.75		$	49.36		$	46.94		$	38.62		$	37.04

Leverage ratios:
Senior notes/total capital available to Arch	11.7		%	12.3		%	12.9		%	15.2		%	15.7		%
Revolving credit agreement borrowings/total capital available to Arch	—		%	—		%	—		%	—		%	—		%
Debt/total capital available to Arch	11.7		%	12.3		%	12.9		%	15.2		%	15.7		%
Preferred/total capital available to Arch	3.5		%	3.8		%	3.9		%	4.6		%	4.8		%
Debt and preferred/total capital available to Arch	15.2		%	16.1		%	16.9		%	19.8		%	20.5		%

(1) Issued by Arch Capital Group (U.S.) Inc. (“Arch-U.S.”), a wholly owned subsidiary of Arch, and fully and unconditionally guaranteed by Arch.

(2) Issued by Arch Capital Finance LLC (“Arch Finance”), a wholly owned subsidiary of Arch U.S. MI Holdings Inc., and fully and unconditionally guaranteed by Arch.

(3) Excludes the effects of stock options, restricted and performance stock units outstanding.

The following table provides the impact of share repurchases under the Company’s share repurchase program:


(U.S. Dollars and shares in millions, except per share data)	Three Months Ended										Cumulative
	June 30,		March 31,		December 31,		September 30,		June 30,		June 30,
	2024		2024		2023		2023		2023		2024
Effect of share repurchases:
Aggregate cost of shares repurchased	$	—	$	—	$	—	$	—	$	—	$	5,872
Shares repurchased	—		—		—		—		—		433.6
Average price per share repurchased	$	—	$	—	$	—	$	—	$	—	$	13.54




Remaining share repurchase authorization (1)											$	1,000

(1) Repurchases under the share repurchase authorization may be effected from time to time in open market or privately negotiated transactions through December 31, 2024.


			33

Document and Entity Information Cover	Jul. 30, 2024
Document and Entity Information [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jul. 30, 2024
Entity Registrant Name	Arch Capital Group Ltd.
Entity Central Index Key	0000947484
Entity Incorporation, State or Country Code	D0
Entity File Number	001-16209
Entity Tax Identification Number	98-0374481
Entity Address, Address Line One	Waterloo House, Ground Floor
Entity Address, Address Line Two	100 Pitts Bay Road
Entity Address, City or Town	Pembroke
Entity Address, Postal Zip Code	HM 08
Entity Address, Country	BM
City Area Code	441
Local Phone Number	278-9250
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common shares
Entity Listings [Line Items]
Title of 12(b) Security	Common shares, $0.0011 par value per share
Trading Symbol	ACGL
Security Exchange Name	NASDAQ
Series F Depositary Share Equivalent
Entity Listings [Line Items]
Title of 12(b) Security	Depositary shares, each representing a 1/1,000th interest in a 5.45% Series F preferred share
Trading Symbol	ACGLO
Security Exchange Name	NASDAQ
Series G Depositary Share Equivalent
Entity Listings [Line Items]
Title of 12(b) Security	Depositary shares, each representing a 1/1,000th interest in a 4.55% Series G preferred share
Trading Symbol	ACGLN
Security Exchange Name	NASDAQ