Bermuda-based insurer and reinsurer Arch Capital Group Ltd. reported fourth-quarter 2025 underwriting revenue increased 32.3% year-over-year to $827 million, with both insurance and reinsurance businesses performing strongly.
For the group as a whole, the combined ratio improved by 4.4 percentage points, down from 85% in the fourth quarter of 2024, and the loss ratio fell to 53.6% from 57.5% in the fourth quarter of 2024. Overall gross written premiums (GPW) were relatively flat at $4.8 billion, compared with $4.76 billion in the fourth quarter of 2024.
The Insurance and Reinsurance segment’s pre-tax catastrophic losses (net of reinsurance and recovery premiums) for the current accident year were $164 million. The reinsurer also reported good development in loss reserves of $118 million last year, net of related adjustments.
Group net written premiums (NPW) for the quarter fell to $3.7 billion, compared with $3.8 billion in 4Q24, while net premiums earned (NPE) edged up to $4.3 billion, compared with $4.1 billion in 4Q24.
Finally, Arch reported group net profit of US$1.2 billion in 4Q25, with an average annualized return on common equity of 21.2%, compared to US$925 million in 4Q24.
Arch’s after-tax operating income was $1.1 billion, with an annualized operating return on average common equity of 18.9%, compared with $866 million in the fourth quarter of 2024.
In Arch’s reinsurance division, underwriting revenue increased by 39.6% year-on-year from US$328 million to US$458 million, the combined ratio increased by 6 percentage points to 77%, the loss rate improved by 4.4 percentage points to 54.5%, and the expense ratio decreased to 22.5%.
Arch explained that the current quarter’s loss rate reflects 5.4 percentage points of catastrophic activity for the year, compared with a loss rate of 12.9 percentage points in Q4 2024.
Before related adjustments, net favorable developments in loss reserves in the prior year are expected to reduce the loss ratio by 3.5 percentage points in the fourth quarter of 2025, compared with 3.8 percentage points in the previous quarter. The balance of changes in loss ratios was affected by higher levels of attrition and changes in business mix.
Within this segment, GPW increased 0.2% to $1.9 billion, NPW fell 5.2% to $1.5 billion, and NPE increased 4.6% to $1.9 billion.
Arch said NPW changes in 4Q25 were in a similar direction to GPW, with the exception of real estate catastrophes, which were affected by changes in the timing of certain retrocession purchases.
In the insurance field, underwriting revenue increased by 296.7% year-on-year to US$119 million, and the combined ratio improved to 94% in the fourth quarter of 2025. The loss rate dropped by 5.7 percentage points to 60.6%, and the expense ratio increased to 33.4%.
The insurance segment generated GPW of $2.5 billion in Q4 2025, up 2.3% year-on-year, with NPW falling 4% to $1.8 billion and NPE growing 2.1% to $1.9 billion.
Arch noted that the impact on NPW was due to the timing of ceded premium accruals related to the MCE acquisition in the prior year quarter, as well as business mix changes resulting from varying levels of net versus gross retention.
The segment’s 4Q25 loss rate reflects 3.3 percentage points of catastrophic activity this year compared to 8.3 percentage points of catastrophic activity last year. Before related adjustments, the net favorable development in loss reserves in the prior year is expected to reduce the loss rate in Q4 2025 by 0.2 percentage points from the loss rate in Q4 2024 by 0.3 percentage points.
In its mortgage business, Arch’s underwriting revenue fell 6.4% to $250 million in the fourth quarter of 2025, with a relatively flat combined ratio of 13.7% and a lower expense ratio of 14.5%.
In the fourth quarter of 2025, GPW of the mortgage business fell by 1.5% year-on-year to US$326 million, NPW also fell by 3.6% to US$267 million, and NPE fell by 5.2% to US$290 million.
The decrease in net premiums during the quarter primarily reflected lower U.S. monthly premium volumes. At the same time, net favorable developments in loss provisions for the prior year (before related adjustments) are expected to reduce the loss ratio by 19.4 percentage points compared with 20.2 percentage points in the fourth quarter of 2024.
On the asset side of the balance sheet, Arch reported pre-tax net investment income of $434 million, which primarily reflected growth in average invested assets, in part due to strong operating cash flow.
Nicolas Papadopoulo, Chief Executive Officer of Arch, commented: “Our 2025 financial results were outstanding and once again demonstrated the value of our diverse platform and our ability to effectively execute our cycle management strategy. I would like to thank each of our more than 8,000 employees for making these outstanding results possible. We enter 2026 with optimism about our ability to continue to deliver outstanding results for our shareholders.”
