Arch Capital Group Ltd. · NASDAQ:ACGL
Arch Capital — Q3 2022 Earnings Presentation
21 slides from Arch Capital's earnings presentation, Oct 26, 2022
Slide 1: Investor Presentation 2022 Third Quarter
Investor Presentation 2022 Third 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: Specialty Insurance
Specialty Click Insurance to edit Master title style Arch operates leading insurance businesses across a wide range of geographies and products providing meaningful diversification and earnings stability. Total Net Premiums Written $10.1B1,5 Line of Business1 Construction and Other (inc lenders)3, 7
Slide 4: Creating Shareholder Value Throughout The Cycle
Click to editShareholder Creating Master title style Value Throughout The Cycle 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: Property Casualty Segments
Property Casualty Segments Diversified book of business across products and geographies Insurance Net Premiums Written $4.8B* Reinsurance Net Premiums Written $4.1B* Other, 10% Other, 2% Professional Lenders Marine, aviation lines, 31% products, 3% and space, 4% Specialty, 34% Construction Property
Slide 6: Specialty Insurance: Building on Market Opportunities
Specialty Click to editInsurance Master title– style Building on Market Opportunities Calendar Year Net Premiums Written by Line ($M) 5,000 $4,840 4,000 Other Lenders products 3,000 Travel, accident and health Excess and surplus casualty $2,212 Construction and national accounts 2,000 Programs Profe
Slide 7: Reinsurance – Flexing into a Hard Market
Reinsurance Click – Flexing to edit Master into a Hard Market title style Calendar Year Net Premiums Written by Line ($M) 5,000 $4,090 4,000 Other 3,000 Marine, aviation and space Specialty Property catastrophe 2,000 Property excl. property catastrophe Casualty $1,373 1,000 - 2018 TTM 3Q22 Reinsuran
Slide 8: Managed Catastrophe Risk
Click to edit Master Managed title style Catastrophe Risk ACGL Peak Zone 1:250 PML 1,200 25% 1:250 as a % of Tangible shareholders' equity available to Arch 19.1% 1,000 20% 16.9% $881 $867 14.3% $860 1:250 PML $M 800 $851 15% $801 $748 600 9.0% 10% 8.0% $612 7.7% 6.6% 5.8% 6.9% $544 5.9% 5.7% $489 $
Slide 9: Mortgage Segment: Differentiated Business Model
Mortgage Segment: Differentiated Business Model Arch MI manages the industry’s cycles by shaping our net exposure to maximize our risk adjusted return given our assessment of the landscape. © 2022 Arch Capital Group Ltd. All rights reserved. 9
Slide 10: Mortgage Segment
Mortgage Segment Insurance In Force (IIF) $B © 2022 Arch Capital Group Ltd. All rights reserved. 10
Slide 11: Low U.S. Delinquency Rate
Low U.S. Delinquency Rate Arch MI U.S. Delinquency Rate 5.5% 5.14% March 18, 2020 5.0% GSEs announce COVID related 4.69% “Eviction Moratorium” 4.5% 4.19% 3.86% 4.0% 3.5% 3.11% 3.0% 2.67% 2.57% 2.25% 2.36% 2.5% 2.23% 2.02% 2.09% 1.98% 1.98% 1.70% 1.77% 2.0% 1.60% 1.54% 1.73% 1.60% 1.54% 1.48% 1.45% 1
Slide 12: Mortgage Segment: Earnings Power
Mortgage Segment: Earnings Power Underwriting Income ($M)* $1,400 $1,200 $1,151 $1,000 $1,041 $953 $800 $858 $600 $691 $594 $400 $200 $0 2017 2018 2019 2020 2021 3Q22* *TTM ended September 30, 2022 for 3Q22. © 2022 Arch Capital Group Ltd. All rights reserved. 12
Slide 13: Reinsurance Coverage by Vintage
Reinsurance Coverage by Vintage As of September 30, 2022 ($ 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 2012 and prior $2,508 $- $2,508 68.1% $1,707 2013 855 - 855 3.3% 29 2014 1,071 492 579 1.0% 6 201
Slide 14: Bellemeade Reinsurance Coverage
Bellemeade Reinsurance Coverage September 30, 2022 ($ in millions) Bellemeade Re Insurance-Linked Notes Key Metrics (1)* 2017-1 2018-1 2018-3 2019-1 2019-2 2019-3 2019-4 2020-2 (8) 2020-3 (8) 2020-4 (8) 2021-1 (8) 2021-2 (8) 2021-3 (8) 2022-1 (8) 2022-2 (8) (10) Coverage dates for policies issued be
Slide 15: Bellemeade Reinsurance Coverage (Notes)
Bellemeade Reinsurance Coverage (1) Through September 30, 2022, including the initial coverage of $523M provided directly by a panel of reinsurers through traditional excess of loss agreements, Arch Mortgage Insurance Company ("AMIC") and United Guaranty Residential Insurance Company ("UGRIC") (toge
Slide 16: 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 focus on total return with thoughtful target allocation and periodic rebalancing. Invested Assets - $26.7B
Slide 17: Investment Income
Investment Income Net Investment Income 1 and Equity Method Income or Loss2 ($M) $300.0 $250.0 $226.6 $211.6 $193.6 $200.0 $177.3 $164.5 $157.6 $126.7 $150.4 $150.0 $122.2 $105.4 $109.7 $89.3 $116.7 $58.1 $67.1 $71.7 $100.0 $36.3 $128.6 $50.0 $99.9 $106.4 $88.0 $78.7 $89.4 $88.2 $90.5 $80.4 $- $(18.
Slide 18: Our ESG Strategy – Transparency and Disclosures
OurtoESG Click edit Strategy – Transparency Master title style and Disclosures We take a measured approach to identifying existing and emerging ESG topics material to Arch and our wider industry and to working with internal groups to ensure appropriate integration of ESG risks and opportunities. Ann
Slide 19: Value and Growth: Book Value per Common Share
Click to editand Growth Master Booktitle style Value Book value per common share1 $40.00 $35.00 $30.00 $25.00 $20.00 $33.56 $15.00 $30.31 $29.69 $26.42 $10.00 $20.30 $21.52 $18.40 $15.09 $15.88 $11.98 $13.18 $5.00 $8.04 $9.91 $10.51 $6.12 $5.71 $4.89 $2.36 $2.84 $3.45 $3.76 $2.03 $0.00 Dec-01 Dec-02
Slide 20: Superior Risk-Adjusted Returns
Superior Click to editRisk-Adjusted Master title styleReturns Strong track record of generating higher, more consistent risk-adjusted returns Value Creation vs. Coefficient of Variation – Insurance Peers 12/31/2002 – 12/31/2021 Coefficient of Variance (Standard Deviation of Annual TVC / Mean) Source
Slide 21: Contact
Click to edit Master title style Contact Investor Inquiries: Donald Watson Vinay Misquith Executive Vice President, Senior 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 reser