Arch Cap Group — Financial Results
Book Value Per Share Grew 22.6%, Reflecting Strong Underwriting and Investment Returns
| Metric | 2025 | 2024 |
|---|---|---|
| Book value per share | $65.11 | $53.11 |
| Net income return on equity | 20.1% | 22.8% |
| Operating return on equity | 17.1% | 18.9% |
Book value per share — essentially what each share of the company is worth based on its assets minus liabilities — rose by $12 in a single year. That is a meaningful wealth creation signal. Returns on equity dipped slightly from 2024, but remain well above what most investors would consider healthy for a large insurer.
Allianz Acquisition Drove Insurance Segment to Nearly $7.8 Billion in Premiums Written
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Net premiums written | $7,798M | $6,874M | +13.4% |
| Underwriting income | $375M | $345M | +8.7% |
| Combined ratio | 95.2% | 94.8% | +0.4 pts |
The MCE Acquisition (U.S. MidCorp and Entertainment businesses purchased from Allianz in August 2024) was the primary engine of growth here. A combined ratio below 100% means the segment is earning more in premiums than it pays out in claims and expenses — 95.2% is solidly profitable. The ratio ticked up slightly, but remains well-controlled.
Reinsurance Segment Delivered Its Best Combined Ratio in Recent Years
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Underwriting income | $1,558M | $1,222M | +27.5% |
| Combined ratio | 80.8% | 83.2% | -2.4 pts |
| Catastrophe losses (current year) | 8.5 pts | 11.8 pts | -3.3 pts |
The reinsurance segment is Arch's most profitable division, and 2025 was an improvement over an already strong 2024. Fewer catastrophe losses — the California wildfires were the main 2025 event, versus multiple hurricanes in 2024 — plus favorable prior period reserve development (meaning earlier loss estimates came in better than expected) drove the improvement. Heading into 2026, property catastrophe rates are down 10–20%, which will be a headwind.
Mortgage Segment Delivered Over $1 Billion in Underwriting Income for Fourth Straight Year
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Underwriting income | $1,000M | $1,094M | -8.6% |
| Net premiums written | $1,060M | $1,112M | -4.7% |
| Delinquency rate | 2.17% | 2.09% | +0.08 pts |
Income fell modestly, largely because the insurance in force (the total value of mortgages Arch is guaranteeing) shrank slightly as high rates kept homeowners from moving. Delinquencies edged up a touch but remain low by historical standards. The in-force portfolio carries a weighted average credit score of 749 — a high-quality borrower base that limits downside risk.
$1.9 Billion in Share Buybacks Returned Capital to Shareholders
With strong cash generation — $6.2 billion from operating activities in 2025 — Arch repurchased $1.9 billion of its own shares, reducing the share count from 376 million to 359 million. Buying back shares at the right price increases the ownership stake of remaining shareholders. At year-end, $1.1 billion of buyback authorization remained available, suggesting the program is ongoing.
New Bermuda Corporate Tax Increases Effective Tax Rate to 14.7%
Bermuda, where Arch is headquartered, enacted a new 15% corporate income tax effective January 1, 2025. This pushed Arch's effective tax rate from 7.7% in 2024 to 14.7% in 2025 — nearly doubling the tax burden. The company did receive some retroactive tax credits in late 2025, which softened the blow. This is a structural change that will persist and reduce after-tax earnings going forward compared to the historical baseline.