Arch Capital Group Ltd. · NASDAQ:ACGL
Arch Capital — Q4 2021 Earnings Presentation
19 slides from Arch Capital's earnings presentation, Feb 10, 2022
Slide 1: Investor Presentation 2021 Fourth Quarter
Investor Presentation 2021 Fourth Quarter © 2022 Arch Capital Group Ltd. All rights reserved.
Slide 2: Informational Statements
Informational Click Statements to edit Master title style 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 Arch Capital Group Ltd. and its subsidiaries
Slide 3: Growth in Book Value
Growth Click to editand Book Master Value title style Book value per common share1 $40.00 $35.00 $30.00 $25.00 $20.00 $33.56 $15.00 $30.31 $26.42 $10.00 $20.30 $21.52 $18.40 $15.09 $15.88 $13.18 $5.00 $9.91 $10.51 $11.98 $6.12 $5.71 $8.04 $4.89 $2.36 $2.84 $3.45 $3.76 $2.03 $0.00 Dec-01 Dec-02 Dec-0
Slide 4: Creating Shareholder Value Throughout The Cycle
Creating Click to editShareholder Value Throughout The Cycle Master title style Generate Superior Focus on Conservative Risk Adjusted Underwriting Balance Sheet Returns Thorough risk Talent intensive, assessment of Minimize not people underlying investment risk intensive exposures Align executive co
Slide 5: Specialty (Re)insurance Strategy
Specialty Click (Re)insurance to edit Master title styleStrategy Arch operates leading Specialty P&C and Mortgage Insurance businesses across a wide range of geographies and products providing meaningful diversification and earnings stability. FY 2021 Gross premiums written ($12.5B) 47% insurance 41
Slide 6: Property Casualty Segments
Property Casualty Segments Improving underwriting conditions leading to growth Calendar Year Net Premiums Written Growth (y/y change) Insurance NPW Growth Reinsurance NPW Growth 35% 31% 60% 53% 30% 50% 25% 19% 20% 40% 32% 20% 30% 15% 17% 17% 10% 20% 11% 4% 5% 1% 2% 10% 1% 0% 0% 2016 2017 2018 2019 2
Slide 7: Specialty Insurance
Specialty Click to editInsurance Master title– style Building on Market Opportunities Calendar Year Net Premiums Written by Line ($M) $4,500 Other $4,000 Lenders products $3,500 Travel, accident and health $3,000 $2,500 Excess and surplus casualty $2,000 Construction and national accounts $1,500 Pro
Slide 8: Reinsurance – Flexing into a Hard Market
Reinsurance Click – Flexing to edit Master into a Hard Market title style Calendar Year Net Premiums Written by Line ($M) $3,500 Other $3,000 Marine, $2,500 aviation and space Specialty $2,000 $1,500 Property catastrophe $1,000 Property excl. property catastrophe $500 Casualty $0 2006 2007 2008 2009
Slide 9: Catastrophe Risk – 1:250 Year Peak Zone
Catastrophe Click Risktitle to edit Master – 1:250 style Year Peak Zone ACGL Peak Zone 1:250 PML ACGL Peak Zone 1:250 PML 1,200 25% 1:250 as a % of Tangible Shareholders' Equity * 19.1% 1,000 20% 16.9% $881 $867 14.3% 1:250 PML $M 800 $860 15% $801 $748 9.0% 600 8.0% 10% $612 6.6% 5.8% 6.9% $544 5.7
Slide 10: Mortgage Segment: Differentiated Business Model
Mortgage Segment Differentiated Business Model Arch aggregates risk from diversified sources and then Arch MI RateStar® Bellemeade (ILNs) utilizes a variety of tools for risk-based pricing and traditional managing mortgage and credit approach constructs reinsurance reduce risk portfolios risk expo
Slide 11: Mortgage Segment
Mortgage Segment Insurance In Force (IIF) and Underwriting Income © 2022 Arch Capital Group Ltd. All rights reserved. 11
Slide 12: Pandemic Led Rise In U.S. Delinquency Rate Is Declining
Pandemic Led Rise In U.S. Delinquency Rate Is Declining Arch MI US Delinquency Rate 5.5% 5.14% 5.0% 4.69% 4.5% 4.19% 3.86% 4.0% 3.5% 3.11% 3.0% 2.67% 2.57% 2.25% 2.36% 2.5% 2.23% 2.02%1.98% 1.98% 2.0% 1.70%1.60%1.60% 1.54%1.45%1.48%1.54% 1.42% 1.5% 1.0% 0.5% 0.0% 12/31/16 3/31/17 6/30/17 9/30/17 12/
Slide 13: Private Mortgage Insurance vs FHA/VA Origination
Private Mortgage Insurance vs FHA/VA Origination PMIs’ share of insured originations has increased since the Great Recession, but recently declined slightly due to heavy refi activity. Market Shares of Insured Originations Source: Inside Mortgage Finance © 2022 Arch Capital Group Ltd. All rights res
Slide 14: Arch MI U.S. – Bellemeade Reinsurance Coverage by Vintage
Arch MI U.S. – Bellemeade Reinsurance Coverage by Vintage As of December 31, 2021 ($ in millions) Est. Bellemeade Est. RIF Ceded to Coverage as % of Bellemeade Vintage Gross RIF QS RIF net of QS (1) RIF net of QS Reference Pool 2011 and prior $2,510 $- $2,510 78.0% $1,957 2012 451 - 451 22.2% 100 20
Slide 15: Our Investment Strategy
Our Investment Strategy Arch manages the portfolio conservatively to protect our reserves on an economic basis and ensure our ongoing ability to pay claims. Arch’s investment approach is to improve the Company’s Return on Equity while avoiding undue risk. We do this by focusing on total return w
Slide 16: Our ESG Impact Areas and Material ESG Topics
OurtoEnvironmental, Click edit Master title Social style & Governance Strategy Our ESG Impact Areas and Material ESG Topics We focus our ESG efforts around integrating sustainability-driven thinking and decision-making into five core impact areas of our company. By organizing our strategy around the
Slide 17: Our ESG Reporting
OurtoEnvironmental, Click edit Master title Social style & Governance Strategy Our ESG Reporting A major element of our ESG strategy is our annual reporting. We believe in the value of transparency around our sustainability initiatives, and we are committed to sharing our progress to relevant stakeh
Slide 18: Superior Risk-Adjusted Returns
Superior Click to editRisk-Adjusted Master title styleReturns Strong track record of generating higher, more consistent risk-adjusted returns Total Value Creation vs. Coefficient of Variation – Total Composite 12/31/2002 – 09/30/2021 Lower Volatility, Higher Returns Higher Volatility, Higher Returns
Slide 19: Contact
Contact Click to edit Master title style Investor Inquiries: Donald Watson Vinay Misquith Executive Vice President, Vice President, Financial Services Financial Services (914) 872 3616 (914) 872 3666 DWatson@archgroup.com VMisquith@archgroup.com ©©2017 Arch Capital Group Ltd. All rights reserved. 20