Bermuda-based insurer and reinsurer Arch Capital Group Ltd. reported underwriting revenue increased 74.6% year-over-year to $728 million in the first quarter of 2026, compared with $417 million in the first quarter of 2025.
This was driven by strong growth in underwriting performance in the Insurance and Reinsurance segment. The reinsurance/insurance company’s group-wide combined ratio improved by 8.4 percentage points to 81.7% in the first quarter of 2026, compared with 90.1% in the same period last year.
This was due to a 9.4 percentage point improvement in the quarter’s loss ratio to 52.4%, compared with a loss ratio of 61.8% in the first quarter of 2025.
Arch’s pre-tax catastrophic losses (net of reinsurance and recovery premiums) for the current accident year in insurance and reinsurance during the quarter were $174 million. Meanwhile, the first quarter of 2026 benefited from good development in loss provisions (net of related adjustments) last year, which amounted to $200 million.
Arch’s combined ratio (excluding catastrophic activities and prior year developments) was 82.3% in 1Q26 compared to 81% in 1Q25.
Gross written premiums (GPW) for the entire business fell 0.6% to $6.4 billion, net written premiums (NPW) fell 3.7% to $4.4 billion, and net written premiums also fell 4.8% to $4.0 billion.
In the first quarter of 2026, group-wide net profit available to Arch ordinary shareholders totaled US$1 billion, a significant increase from US$564 million in the previous year.
In Arch’s reinsurance division, underwriting revenue increased 164% year-on-year from US$167 million to US$441 million, the combined ratio increased by 15.9 percentage points to 75.9%, the loss rate improved by 15.2 percentage points to 51.7%, and the fixed expense ratio was 24.2%.
Arch explained that the loss rate for the first quarter of 2026 reflected 5.4 percentage points of catastrophic activity that year, compared with the 21.7 percentage point loss rate for the first quarter of 2025, primarily related to the California wildfires.
Before related adjustments, the net favorable development in loss reserves in the prior year is expected to reduce the loss ratio by 8.3 percentage points in the first quarter of 2026 compared with 5.9 percentage points in the first quarter of 2025.
In the first quarter of 2025, the reinsurance division’s gross premiums fell 2.3% year-on-year to US$3.4 billion, net premiums fell 6% to US$2.2 billion, and net premiums fell 9.7% to US$1.8 billion.
The lower level of NPW in the quarter was primarily due to lower real estate catastrophe business written on January 1, while recovery premiums were further amplified relative to lower levels in 1Q25 (which included recovery premiums related to the California wildfires).
Arch’s insurance business underwriting revenue increased 3,400% year-on-year to US$66 million, and the combined ratio increased to 96.5% in the first quarter of 2026. The loss rate decreased by 5.8 percentage points to 60.2%, and the expense ratio increased by 2.2 percentage points to 36.3%.
The insurance unit’s gross premiums in the first quarter of 2026 were $2.7 billion, up 2% year-over-year, while net premiums fell 1.4% to $1.9 billion, with net premiums remaining unchanged at $1.9 billion.
Arch noted that the decrease in NPW during the quarter primarily reflected adjustments to certain planned non-renewals related to the MCE acquisition in August 2024.
As for Arch’s mortgage business, underwriting revenue fell 12% to $221 million in 1Q26, although the combined ratio rose 6.2 percentage points to 22.3% due to a high loss rate of 5.3% and an expense ratio of 17%.
In the first quarter of 2026, GPW of the mortgage business fell 3.1% year-on-year to US$316 million, while NPW was flat at US$266 million, and net premiums fell 5.3% to US$284 million.
The company said the decrease in net premiums in the third quarter of 2025 primarily reflected lower U.S. monthly premium and single premium volumes.
On the asset side of the balance sheet, Arch reported pre-tax net investment income of $408 million, which primarily reflected growth in average invested assets, in part due to strong operating cash flow.
Arch CEO Nicolas Papadopoulo commented: “We are off to an excellent start, delivering a 15.4% annualized operating return on average common equity, reflecting our disciplined approach to underwriting and capital allocation. Our underwriting and cycle management expertise, supported by a strong balance sheet, will continue to differentiate Arch and enable us to generate best-in-class returns throughout the cycle.”
