It has been about a month since the last earnings report for Arch Capital Group (ACGL Quick QuoteACGL - Free Report) . Shares have lost about 1.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Arch Capital due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts.

Arch Capital Q1 Earnings Beat Estimates, Premiums Fall Y/Y

Arch Capital Group Ltd. reported first-quarter 2026 operating income of $2.50 per share, which beat the Zacks Consensus Estimate by 2.4%. The bottom line increased 15.4% year over year. ACGL’s quarterly results benefited from improved net investment income, stronger underwriting performance and lower catastrophe losses. These positives were partially offset by declining premium volumes and weakness in the mortgage segment.

Behind the Headlines

Operating revenues of $4.4 billion decreased 3.8% year over year, primarily due to lower net premiums earned. Revenues missed the Zacks Consensus Estimate by 6.1%. Gross premiums written decreased 0.6% year over year to $6.4 billion.

Net premiums earned declined 4.8% year over year to $3.9 billion, mainly due to lower premiums earned in its Reinsurance segment. The figure missed the Zacks Consensus Estimate by 6%.

Pre-tax net investment income increased 7.9% year over year to $408 million, missing the Zacks Consensus Estimate of $417 million. The figure was higher than our estimate of $378.2 million.

Pre-tax current accident year catastrophic losses for the company’s insurance and reinsurance segments, net of reinsurance and reinstatement premiums, totaled $174 million.

Arch Capital Group’s underwriting income increased 74.6% year over year to $728 million. The combined ratio, representing the percentage of premiums paid out as claims and expenses, improved 440 basis points to 81.7 year over year, beating the Zacks Consensus Estimate of 83.1 and our model estimate of 83.2.

Q1 Segmental Results

Insurance: Gross premiums written increased 2% year over year to $2.7 billion. Net premiums written declined 1.4% year over year to $1.9 billion, primarily due to the non-renewal of select MCE-related programs. Net premiums written also came in below our estimate of $2.1 billion.
Underwriting income was $66 million, rebounding from a year-ago loss of $2 million, though it fell short of our estimate of $155.4 million. The combined ratio improved 360 basis points year over year to 96.5, marginally above the Zacks Consensus Estimate of 94.4.

Reinsurance: Gross premiums written decreased 2.3% year over year to $3.4 billion. Net premiums written declined 6% year over year to $2.1 billion, primarily reflecting a reduction in property catastrophe business. The figure was on par with our estimate.

Underwriting income totaled $441 million, up 164% year over year. The combined ratio improved 1590 basis points year over year to 75.9, significantly better than the Zacks Consensus Estimate of 80.7.

Mortgage: Gross premiums written declined 3.1% year over year to $316 million, primarily due to lower U.S. monthly premium business. Net premiums written remained flat year over year to $266 million. Net premiums written exceeded our estimate of $254.7 million.

Underwriting income declined 12.3% year over year to $221 million. The combined ratio deteriorated 620 basis points year over year to 22.3, and it remained well below the Zacks Consensus Estimate of 22.8.

Financial Update

Arch Capital Group exited the first quarter with cash and cash equivalents of $914 million, down 8% from the 2025-end level. Total debt was $2.7 billion as of March 31, 2026, and remained flat from the 2025-end level. Book value per share was $66.19 as of March 31, 2026, reflecting an increase of 1.7% from the 2025-end level.

Annualized operating return on average common equity expanded 240 basis points year over year to 15.4%. Net cash provided by operating activities was $1.2 billion, down 18.5% year over year. During the first quarter of 2026, ACGL repurchased common shares worth of $783 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

At this time, Arch Capital has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Arch Capital has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Arch Capital belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, Selective Insurance (SIGI Quick QuoteSIGI - Free Report) , has gained 5.1% over the past month. More than a month has passed since the company reported results for the quarter ended March 2026.

Selective Insurance reported revenues of $1.37 billion in the last reported quarter, representing a year-over-year change of +6.4%. EPS of $1.69 for the same period compares with $1.76 a year ago.

Selective Insurance is expected to post earnings of $1.69 per share for the current quarter, representing a year-over-year change of +29%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.7%.

Selective Insurance has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.