Arch Capital Q1 2020 Earnings Report
Key Takeaways
Arch Capital Group reported a net income of $133.7 million, or $0.32 per share, and an after-tax operating income of $189.8 million, or $0.46 per share. The company's results were impacted by $118.4 million in pre-tax current accident year catastrophic losses, including $86.6 million related to the COVID-19 global pandemic.
Net income available to Arch common shareholders was $133.7 million, or $0.32 per share.
After-tax operating income available to Arch common shareholders was $189.8 million, or $0.46 per share.
Pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums, totaled $118.4 million, including $86.6 million related to COVID-19.
The combined ratio excluding catastrophic activity and prior year development was 84.2%.
Arch Capital
Arch Capital
Arch Capital Revenue by Segment
Forward Guidance
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.
Positive Outlook
- 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 integration of any businesses the Company 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
- developments in the world’s financial and capital markets and the Company’s access to such markets
Challenges Ahead
- 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) and conditions specific to the reinsurance and insurance markets (including the length and magnitude of the current “soft” market) 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
- the loss of key personnel
- 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, 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
Revenue & Expenses
Visualization of income flow from segment revenue to net income