ARCH CAPITAL GROUP LTD.ACGL

ARCH CAPITAL GROUP LTD. Segments Disclosure

10-KFiled Feb 26, 20268 min read
The Company classifies its businesses into three segments: insurance, reinsurance and mortgage. The Company determined its segments using the management approach described in accounting guidance regarding disclosures about segments of an enterprise and related information. The accounting policies of the segments are the same as those used for the preparation of the Company’s consolidated financial statements. Intersegment business is allocated to the segment accountable for the underwriting results.
The Company’s insurance, reinsurance and mortgage segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to the Company’s chief operating decision-makers (“CODMs”): the Chief Executive Officer of Arch Capital and the Chief Financial Officer and Treasurer of Arch Capital. The CODMs do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis. Management measures segment performance for its three segments based on underwriting income or loss. The Company does not manage its assets by segment, with the exception of goodwill and intangible assets and accordingly investment income is not allocated to each underwriting segment.
The Company’s insurance segment primarily consists of commercial insurance lines of business, with a focus on specialty insurance products. These products are mainly offered in North America, Bermuda, the United Kingdom, continental Europe and Australia. Products offered in North America include: commercial automobile; commercial multiperil; other liability—claims made, which includes financial and professional lines; other liability—occurrence, which includes admitted and excess and surplus casualty lines; property and short-tail specialty; workers compensation; and other. Products offered across the Company’s International units include: property and short-tail specialty; and casualty and other.
The Company’s reinsurance segment offers reinsurance products on a worldwide basis. Product lines of business include: casualty; marine and aviation; specialty; property catastrophe; property excluding property catastrophe; and other.
The Company’s mortgage segment consists of U.S. primary mortgage insurance business written predominantly on loans sold to the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), each a government sponsored entity (“GSE”) and also through non-GSE approved entities (combined “Arch MI U.S.”); reinsurance and underwriting services related to U.S. credit-risk transfer (“CRT”) business which are predominately with the GSEs and other U.S. mortgage reinsurance transactions; and international mortgage insurance and reinsurance business covering loans primarily in Australia and Europe.
The Company’s results also include net investment income, net realized gains or losses (which includes, but is not limited to, realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investment funds accounted for using the equity method, other income (loss), corporate expenses, transaction costs and other, amortization of intangible assets, interest expense, net foreign exchange gains or losses, income tax items, income or loss from operating affiliates and items related to the Company’s non-cumulative preferred shares.

The following tables summarize the Company’s underwriting income or loss by segment, together with a reconciliation of underwriting income or loss to net income available to Arch common shareholders, summary information regarding net premiums written and earned by major line of business and net premiums written by location:
Year Ended December 31, 2025
InsuranceReinsuranceMortgageTotal
Gross premiums written (1)$10,435 $11,149 $1,305 $22,878 
Premiums ceded (1)(2,637)(3,531)(245)(6,402)
Net premiums written7,798 7,618 1,060 16,476 
Change in unearned premiums(27)504 112 589 
Net premiums earned7,771 8,122 1,172 17,065 
Other underwriting income (2)36 159 22 217 
Losses and loss adjustment expenses(4,764)(4,610)4 (9,370)
Acquisition expenses(1,496)(1,644)(13)(3,153)
Other operating expenses (3)(1,172)(469)(185)(1,826)
Underwriting income$375 $1,558 $1,000 2,933 
Net investment income1,625 
Net realized gains (losses)464 
Equity in net income (loss) of investments accounted for using the equity method504 
Other income (loss)54 
Corporate expenses (4)(57)
Transaction costs and other (4)(75)
Amortization of intangible assets(193)
Interest expense(148)
Net foreign exchange gains (losses)(128)
Income (loss) before income taxes and income (loss) from operating affiliates4,979 
Income tax (expense) benefit(760)
Income (loss) from operating affiliates180 
Net income (loss)4,399 
Amounts attributable to redeemable noncontrolling interests— 
Net income (loss) available to Arch4,399 
Preferred dividends(40)
Net income (loss) available to Arch common shareholders$4,359 
Underwriting Ratios
Loss ratio61.3 %56.8 %-0.4 %54.9 %
Acquisition expense ratio19.3 %20.2 %1.1 %18.5 %
Other operating expense ratio (5)14.6 %3.8 %13.9 %9.4 %
Combined ratio95.2 %80.8 %14.6 %82.8 %
Goodwill and intangible assets$793 $98 $331 $1,222 
Total investable assets$47,369 
Total assets79,241 
Total liabilities55,035 
(1)    Certain assumed and ceded amounts related to intersegment transactions are included in individual segment results. Accordingly, the sum of such transactions for each segment does not agree to the total due to eliminations.
(2)    ‘Other underwriting income’ includes revenue earned from underwriting-related activities covered under existing service contracts.
(3)    Other operating expenses primarily include expenses that are related to compensation and employee benefits, information technology and professional fees, reduced in part by substance based credits. See note 3(u).
(4)    Certain expenses have been excluded from ‘Corporate expenses’ and reflected in ‘Transaction costs and other.’ See note 3(u).
(5)    The ‘Other operating expense ratio’ for the 2025 period includes ‘Other underwriting income.’
Year Ended December 31, 2024
InsuranceReinsuranceMortgageTotal
Gross premiums written (1)$9,053 $11,112 $1,351 $21,511 
Premiums ceded (1)(2,179)(3,366)(239)(5,779)
Net premiums written6,874 7,746 1,112 15,732 
Change in unearned premiums(247)(504)119 (632)
Net premiums earned6,627 7,242 1,231 15,100 
Other underwriting income— 9 17 26 
Losses and loss adjustment expenses(4,070)(4,327)55 (8,342)
Acquisition expenses(1,217)(1,432)(2)(2,651)
Other operating expenses (2)(995)(270)(207)(1,472)
Underwriting income (loss)$345 $1,222 $1,094 2,661 
Net investment income1,495 
Net realized gains (losses)197 
Equity in net income (loss) of investments accounted for using the equity method580 
Other income (loss)42 
Corporate expenses (3)(119)
Transaction costs and other (3)(81)
Amortization of intangible assets(235)
Interest expense(141)
Net foreign exchange gains (losses)75 
Income (loss) before income taxes and income (loss) from operating affiliates4,474 
Income tax (expense) benefit(362)
Income (loss) from operating affiliates200 
Net income (loss)4,312 
Amounts attributable to redeemable noncontrolling interests— 
Net income (loss) available to Arch4,312 
Preferred dividends(40)
Net income (loss) available to Arch common shareholders$4,272 
Underwriting Ratios
Loss ratio61.4 %59.7 %-4.4 %55.2 %
Acquisition expense ratio18.4 %19.8 %0.2 %17.6 %
Other operating expense ratio15.0 %3.7 %16.8 %9.7 %
Combined ratio94.8 %83.2 %12.6 %82.5 %
Goodwill and intangible assets$916 $102 $333 $1,351 
Total investable assets$41,388 
Total assets70,906 
Total liabilities50,086 
(1)    Certain assumed and ceded amounts related to intersegment transactions are included in individual segment results. Accordingly, the sum of such transactions for each segment does not agree to the total due to eliminations.
(2)    Other operating expenses primarily include expenses that are related to compensation and employee benefits, information technology and professional fees.
(3)    Certain expenses have been excluded from ‘Corporate expenses’ and reflected in ‘Transaction costs and other.’
Year Ended December 31, 2023
InsuranceReinsuranceMortgageTotal
Gross premiums written (1)$7,911 $9,113 $1,387 $18,403 
Premiums ceded (1)(2,049)(2,559)(335)(4,935)
Net premiums written5,862 6,554 1,052 13,468 
Change in unearned premiums(416)(718)106 (1,028)
Net premiums earned5,446 5,836 1,158 12,440 
Other underwriting income— 17 14 31 
Losses and loss adjustment expenses(3,122)(3,227)103 (6,246)
Acquisition expenses(1,055)(1,240)(17)(2,312)
Other operating expenses (2)(819)(288)(194)(1,301)
Underwriting income (loss)$450 $1,098 $1,064 2,612 
Net investment income1,023 
Net realized gains (losses)(165)
Equity in net income (loss) of investments accounted for using the equity method278 
Other income (loss)27 
Corporate expenses (3)(96)
Transaction costs and other (3)(6)
Amortization of intangible assets(95)
Interest expense(133)
Net foreign exchange gains (losses)(60)
Income (loss) before income taxes and income (loss) from operating affiliates3,385 
Income tax (expense) benefit873 
Income (loss) from operating affiliates184 
Net income4,442 
Amounts attributable to redeemable noncontrolling interests1 
Net income (loss) available to Arch4,443 
Preferred dividends(40)
Net income (loss) available to Arch common shareholders$4,403 
Underwriting Ratios
Loss ratio57.3 %55.3 %-8.9 %50.2 %
Acquisition expense ratio19.4 %21.2 %1.4 %18.6 %
Other operating expense ratio15.0 %4.9 %16.8 %10.5 %
Combined ratio91.7 %81.4 %9.3 %79.3 %
Goodwill and intangible assets$224 $130 $377 $731 
Total investable assets$34,589 
Total assets58,906 
Total liabilities40,551 
(1)    Certain assumed and ceded amounts related to intersegment transactions are included in individual segment results. Accordingly, the sum of such transactions for each segment does not agree to the total due to eliminations.
(2)    Other operating expenses primarily include expenses that are related to compensation and employee benefits, information technology and professional fees.
(3)    Certain expenses have been excluded from ‘Corporate expenses’ and reflected in ‘Transaction costs and other.’
The following tables provide summary information regarding net premiums earned by major line of business and net premiums written by underwriting location:
INSURANCE SEGMENTYear Ended December 31,
202520242023
Net premiums earned
North America
Property and short-tail specialty$1,373 $1,165 $976 
Other liability - occurrence1,321942618
Other liability - claims made786843866
Commercial multi-peril792435193
Commercial automobile581459343
Workers compensation591549495
Other291309290
Total North America5,7354,7023,781
International
Property and short-tail specialty$1,099 $1,061 $885 
Casualty and other937864780
Total International 2,0361,9251,665
Total$7,771 $6,627 $5,446 
Net premiums written by underwriting location
North America$5,724 $4,869 $3,995 
International2,0742,0051,867
Total$7,798 $6,874 $5,862 
REINSURANCE SEGMENTYear Ended December 31,
202520242023
Net premiums earned
Specialty$2,906 $2,619 $2,097 
Property excluding property catastrophe2,2522,1481,645
Casualty1,4321,0881,005
Property catastrophe1,065959742
Marine and aviation317276229
Other150152118
Total$8,122 $7,242 $5,836 
Net premiums written by underwriting location
Bermuda$3,672 $3,425 $3,288 
United States1,7982,1351,756 
Europe and other2,1482,1861,510 
Total$7,618 $7,746 $6,554 
MORTGAGE SEGMENTYear Ended December 31,
202520242023
Net premiums earned
U.S. primary mortgage insurance$802 $845 $759 
U.S. credit risk transfer (CRT) and other207213220
International mortgage insurance/reinsurance163173179
Total$1,172 $1,231 $1,158 
Net premiums written by underwriting location
United States$780 $823 $743 
Other280 289 309 
Total$1,060 $1,112 $1,052 

Historical Timeline

Fiscal YearFiled
2025Feb 26, 2026Showing above
2024Feb 27, 2025
2023Feb 23, 2024
2022Feb 24, 2023
2021Feb 25, 2022
2020Feb 26, 2021
2019Feb 28, 2020
2017Feb 28, 2018
2016Mar 1, 2017

About Segments Disclosures

Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.

Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.

Other Available Disclosures

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