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Arch Capital Tops Q4 Earnings Estimates on Solid Underwriting
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Key Takeaways
Arch Capital posted Q4 operating income of $2.98, beating estimates by 19.7% and up 31.9%.
ACGL benefited from higher insurance premiums, underwriting gains, and a 7.2% jump in net investment income.
Arch Capital's underwriting income rose 32.3% to $827 million, with the combined ratio improving to 80.6.
Arch Capital Group Ltd. (ACGL - Free Report) reported fourth-quarter 2025 operating income of $2.98 per share, which beat the Zacks Consensus Estimate by 19.7%. The bottom line increased 31.9% year over year.
ACGL’s quarterly results benefited from higher premiums in its Insurance segment, improved net investment income, stronger underwriting performance and investment gains. These positives were partially offset by higher taxes.
Arch Capital Group Ltd. Price, Consensus and EPS Surprise
Gross premiums written increased 1.1% year over year to $4.8 billion.
Net premiums earned rose 2.7% year over year to $4.3 billion on higher premiums earned in its Insurance segment. The figure marginally missed the Zacks Consensus Estimate.
Pre-tax net investment income increased 7.2% year over year to $434 million, exceeding the Zacks Consensus Estimate of $416.6 million and our estimate of $398.5 million. The increase primarily reflected growth in average invested assets, partially driven by strong operating cash flows.
Operating revenues of $4.7 billion increased 4.4% year over year, driven by higher net premiums earned and net investment income. Revenues surpassed the Zacks Consensus Estimate by 2%.
Pre-tax current accident year catastrophic losses for the company’s insurance and reinsurance segments, net of reinsurance and reinstatement premiums, were $164 million.
Arch Capital’s underwriting income increased 32.3% year over year to $827 million. The combined ratio, representing the percentage of premiums paid out as claims and expenses, improved 440 basis points to 80.6, beating the Zacks Consensus Estimate of 83.0 and our model estimate of 84.5.
Segmental Results
Insurance: Gross premiums written increased 2.3% year over year to $2.5 billion. Net premiums written declined 4% year over year to $1.9 billion, primarily due to the timing of ceded written premium accruals related to the MCE acquisition in the prior-year quarter and changes in business mix reflecting different net-to-gross retention levels. Net premiums written also came in below our estimate of $2.2 billion.
Underwriting income of $119 million was nearly four times higher than the year-ago level, though it fell short of our estimate of $168.2 million. The combined ratio improved 450 basis points year over year to 94.0, marginally above the Zacks Consensus Estimate of 93.9.
Reinsurance: Gross premiums written increased marginally by 0.2% year over year to $1.9 billion. Net premiums written declined 5.2% year over year to $1.5 billion, primarily reflecting the non-renewal of a large transaction. The figure was below our estimate of $1.6 billion.
Underwriting income totaled $458 million, up 39.6% year over year. The combined ratio improved 600 basis points year over year to 77.0, significantly better than the Zacks Consensus Estimate of 80.4.
Mortgage: Gross premiums written declined 1.5% year over year to $326 million. Net premiums written decreased 3.6% year over year to $267 million, primarily reflecting lower U.S. monthly and single premium volume. Net premiums written exceeded our estimate of $261.7 million.
Underwriting income declined 6.4% year over year to $250 million. The combined ratio deteriorated 30 basis points year over year to 13.7, though it remained well below the Zacks Consensus Estimate of 21.2.
Financial Update
Arch Capital exited the quarter with cash and cash equivalents of $993 million, up 1.4% year over year.
Total debt was $2.7 billion as of Dec. 31, 2025, slightly higher than the 2024-end level.
Book value per share was $65.11 as of Dec. 31, 2025, reflecting an increase of 22.6% from the year-ago figure. Annualized operating return on average common equity expanded 220 basis points year over year to 18.9%.
Net cash provided by operating activities was $1.4 billion in 2025, down 10.7% year over year.
During the fourth quarter of 2025, ACGL repurchased $798 million worth of its common shares.
Full-Year Highlights
For 2025, Arch Capital reported an operating income of $9.84 per share, which beat the Zacks Consensus Estimate by 5%. The figure improved 6% year over year.
Total revenues of $18.8 billion beat the consensus mark by 0.5% and increased 12.9% year over year.
The combined ratio deteriorated 30 basis points to 82.8, though it was better than our model estimate of 84.8.
AXIS Capital Holdings Limited (AXS - Free Report) reported fourth-quarter 2025 operating income of $3.25 per share, which outpaced the Zacks Consensus Estimate by 9.4% and rose 9.4% year over year.
Total operating revenues of $1.7 billion beat the Zacks Consensus Estimate by 5.2%. The top line rose nearly 9% year over year on higher premiums earned. Net premiums written rose 13% to $1.4 billion, with an increase of 14% in the Insurance segment, and growth of 5% in the Reinsurance segment.
Chubb Limited (CB - Free Report) reported fourth-quarter 2025 core operating income of $7.52 per share, which beat the Zacks Consensus Estimate by 13.9%. The bottom line improved 24.9% year over year.
Total operating revenues also improved 7.4% year over year to $15.3 billion. The top line beat the Zacks Consensus Estimate by 1.7%. Chubb’s strong performance was driven by solid underwriting profit, robust premium growth and record investment income.
Cincinnati Financial Corporation (CINF - Free Report) reported fourth-quarter 2025 operating income of $3.37 per share, which surpassed the Zacks Consensus Estimate by 17.8%. The bottom line increased 7% year over year.
Total operating revenues for the quarter were $2.9 billion, reflecting a 9.8% year-over-year increase. The figure missed the Zacks Consensus Estimate by 0.02% on premium growth initiatives, price increases, and higher interest income from fixed-maturity securities, partially offset by higher expenses
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Arch Capital Tops Q4 Earnings Estimates on Solid Underwriting
Key Takeaways
Arch Capital Group Ltd. (ACGL - Free Report) reported fourth-quarter 2025 operating income of $2.98 per share, which beat the Zacks Consensus Estimate by 19.7%. The bottom line increased 31.9% year over year.
ACGL’s quarterly results benefited from higher premiums in its Insurance segment, improved net investment income, stronger underwriting performance and investment gains. These positives were partially offset by higher taxes.
Arch Capital Group Ltd. Price, Consensus and EPS Surprise
Arch Capital Group Ltd. price-consensus-eps-surprise-chart | Arch Capital Group Ltd. Quote
Behind the Headlines
Gross premiums written increased 1.1% year over year to $4.8 billion.
Net premiums earned rose 2.7% year over year to $4.3 billion on higher premiums earned in its Insurance segment. The figure marginally missed the Zacks Consensus Estimate.
Pre-tax net investment income increased 7.2% year over year to $434 million, exceeding the Zacks Consensus Estimate of $416.6 million and our estimate of $398.5 million. The increase primarily reflected growth in average invested assets, partially driven by strong operating cash flows.
Operating revenues of $4.7 billion increased 4.4% year over year, driven by higher net premiums earned and net investment income. Revenues surpassed the Zacks Consensus Estimate by 2%.
Pre-tax current accident year catastrophic losses for the company’s insurance and reinsurance segments, net of reinsurance and reinstatement premiums, were $164 million.
Arch Capital’s underwriting income increased 32.3% year over year to $827 million. The combined ratio, representing the percentage of premiums paid out as claims and expenses, improved 440 basis points to 80.6, beating the Zacks Consensus Estimate of 83.0 and our model estimate of 84.5.
Segmental Results
Insurance: Gross premiums written increased 2.3% year over year to $2.5 billion. Net premiums written declined 4% year over year to $1.9 billion, primarily due to the timing of ceded written premium accruals related to the MCE acquisition in the prior-year quarter and changes in business mix reflecting different net-to-gross retention levels. Net premiums written also came in below our estimate of $2.2 billion.
Underwriting income of $119 million was nearly four times higher than the year-ago level, though it fell short of our estimate of $168.2 million. The combined ratio improved 450 basis points year over year to 94.0, marginally above the Zacks Consensus Estimate of 93.9.
Reinsurance: Gross premiums written increased marginally by 0.2% year over year to $1.9 billion. Net premiums written declined 5.2% year over year to $1.5 billion, primarily reflecting the non-renewal of a large transaction. The figure was below our estimate of $1.6 billion.
Underwriting income totaled $458 million, up 39.6% year over year. The combined ratio improved 600 basis points year over year to 77.0, significantly better than the Zacks Consensus Estimate of 80.4.
Mortgage: Gross premiums written declined 1.5% year over year to $326 million. Net premiums written decreased 3.6% year over year to $267 million, primarily reflecting lower U.S. monthly and single premium volume. Net premiums written exceeded our estimate of $261.7 million.
Underwriting income declined 6.4% year over year to $250 million. The combined ratio deteriorated 30 basis points year over year to 13.7, though it remained well below the Zacks Consensus Estimate of 21.2.
Financial Update
Arch Capital exited the quarter with cash and cash equivalents of $993 million, up 1.4% year over year.
Total debt was $2.7 billion as of Dec. 31, 2025, slightly higher than the 2024-end level.
Book value per share was $65.11 as of Dec. 31, 2025, reflecting an increase of 22.6% from the year-ago figure. Annualized operating return on average common equity expanded 220 basis points year over year to 18.9%.
Net cash provided by operating activities was $1.4 billion in 2025, down 10.7% year over year.
During the fourth quarter of 2025, ACGL repurchased $798 million worth of its common shares.
Full-Year Highlights
For 2025, Arch Capital reported an operating income of $9.84 per share, which beat the Zacks Consensus Estimate by 5%. The figure improved 6% year over year.
Total revenues of $18.8 billion beat the consensus mark by 0.5% and increased 12.9% year over year.
The combined ratio deteriorated 30 basis points to 82.8, though it was better than our model estimate of 84.8.
Zacks Rank
ACGL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
AXIS Capital Holdings Limited (AXS - Free Report) reported fourth-quarter 2025 operating income of $3.25 per share, which outpaced the Zacks Consensus Estimate by 9.4% and rose 9.4% year over year.
Total operating revenues of $1.7 billion beat the Zacks Consensus Estimate by 5.2%. The top line rose nearly 9% year over year on higher premiums earned. Net premiums written rose 13% to $1.4 billion, with an increase of 14% in the Insurance segment, and growth of 5% in the Reinsurance segment.
Chubb Limited (CB - Free Report) reported fourth-quarter 2025 core operating income of $7.52 per share, which beat the Zacks Consensus Estimate by 13.9%. The bottom line improved 24.9% year over year.
Total operating revenues also improved 7.4% year over year to $15.3 billion. The top line beat the Zacks Consensus Estimate by 1.7%. Chubb’s strong performance was driven by solid underwriting profit, robust premium growth and record investment income.
Cincinnati Financial Corporation (CINF - Free Report) reported fourth-quarter 2025 operating income of $3.37 per share, which surpassed the Zacks Consensus Estimate by 17.8%. The bottom line increased 7% year over year.
Total operating revenues for the quarter were $2.9 billion, reflecting a 9.8% year-over-year increase. The figure missed the Zacks Consensus Estimate by 0.02% on premium growth initiatives, price increases, and higher interest income from fixed-maturity securities, partially offset by higher expenses