Arch Capital Group Ltd. · NASDAQ:ACGL
Arch Capital — Q3 2024 Earnings Presentation
18 slides from Arch Capital's earnings presentation, Oct 31, 2024
Slide 1: Investor Presentation 2024 Third Quarter
INVESTOR PRESENTATION 2024 Third Quarter ©2024 Arch Capital Group Ltd. All rights reserved. ©2024 Arch Capital Group Ltd. All rights reserved. 1
Slide 2: Informational Statements
Informational Statements 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 may include forward-looking state
Slide 3: Specialty Insurance Business
Specialty Insurance Business Arch Operates Leading Specialty Insurance Lines Across a Wide Range of Geographies and Products Gross Premiums Written Gross Premiums Written by Segment 12 Months Ending 9/30/24 ($B) From 2019 to 12 Months Ending 9/30/24 ($M)1 7% $21,006 53% Mortgage 1,370 Reinsurance $1
Slide 4: Creating Shareholder Value Throughout the Cycle
Creating Shareholder Value Throughout the Cycle Generate Superior Focus on Conservative Risk-Adjusted Underwriting Balance Sheet Returns Thorough risk assessment of Talent intensive, not Minimize investment underlying exposures people intensive risk Align executive compensation with Specialty lines
Slide 5: Consistently Superior Risk-Adjusted Returns
Consistently Superior Risk-Adjusted Returns Strong Track Record of Generating Higher, More Consistent Risk-Adjusted Returns Total Value Creation vs. Coefficient of Variation 12/31/2003 – 6/30/2024 Lower Volatility, Higher Returns Higher Volatility, Higher Returns Arch has 2x the average value 16% cr
Slide 6: Diversification Reduces Earnings Volatility
Diversification Reduces Earnings Volatility Property and Casualty Segments Insurance Net Premiums Written Reinsurance Net Premiums Written 12 Months Ending 9/30/24 ($B) 12 Months Ending 9/30/24 ($B) Property and short- Other, 2% Casualty and other tail specialty (Int), Marine and aviation, (Int), 14
Slide 7: Managed Catastrophe Risk
Managed Catastrophe Risk Property and Casualty Segments ACGL Peak Zone 1:250 PML 1:250 as a % of Tangible shareholders' equity available to Arch* 2,000 30% Hard Market Soft Market 25% 1,650 $1,691 $1,672 $1,627 19.4% $1,567 20% 17.0% 1:250 PML $M 1,300 14.4% 15% 950 9.1% $970 9.2% 9.0% $881 $867 8.1
Slide 8: Differentiated Multi-line Model
Differentiated Multi-line Model Mortgage CYCLE MANAGEMENT PROCESS ▪ Housing Markets Assess ▪ Mortgage Markets Attractiveness ▪ Jobs Markets of Landscape S U ▪ ▪ Credit Quality Competitors’ Pricing S TIL ASSE IZE ▪ RateStar® (Risk Based Pricing Portfolio Management) Utilize Tools ▪ Quota Share Reinsu
Slide 9: Market Leading Risk Portfolios
Market Leading Risk Portfolios Mortgage Insurance In Force ($B) $600 $513 $509 $511 $500 $461 14% 14% 14% $418 $424 15% $400 8% 9% 28% 29% 29% 23% 25% 24% $300 $200 69% 66% 61% 58% 57% 57% $100 $0 2019 2020 2021 2022 2023 As of 9/30/24 International mortgage insurance/reinsurance U.S. credit risk tr
Slide 10: Exceptional Credit Quality
Exceptional Credit Quality Mortgage Arch MI U.S. Delinquency Rate 5.5% GSEs announce COVID related 5.14% “Eviction Moratorium” 5.0% 4.69% 4.5% 4.19% 3.86% 4.0% 3.5% 3.11% Acquisition of RMIC 3.0% 2.67% legacy book 2.36% 2.5% 2.09% 1.96% 2.0% 1.77%1.73%1.77% 1.82% 1.65%1.61% 1.65% 1.74% 1.48%1.54%1.4
Slide 11: Consistent Strong Earnings
Consistent Strong Earnings Mortgage Underwriting Income ($M) $1,400 $1,200 $1,257 $1,113 $1,000 $1,041 $1,064 $953 $800 $600 $594 $400 $200 $0 2019 2020 2021 2022 2023 12 Months Ending 9/30/24 ©2024 Arch Capital Group Ltd. All rights reserved. 11
Slide 12: Our Investment Strategy
Our Investment Strategy Investments Conservative Portfolio Focused on Total Return Invested Assets ($B) Fixed Maturity by Rating ($B) September 30, 2024 September 30, 2024 Lower than B, U.S. Not Rated, U.S. Equity method funds & other, B, 1.8% 0.1% government, 2.4% government 16.7% 13.7% and BB, 3.7
Slide 13: Growing Investment Income
Growing Investment Income Investments Net Investment Income + Equity Method Investments ($M) $600 $570 $550 $531 $500 $171 $450 $415 $426 $167 $400 Equity Method Income or Loss $99 $328 $102 $350 $311 Net Investment Income $300 $59 $247 $69 $250 $221 $48 $200 $40 $399 $364 $110 $313 $327 $150 $269 $
Slide 14: Diversified Net Income Growth
Diversified Net Income Growth Net Income Available to Arch Common Shareholder ($M) $5,671 $1,517 256% Growth $1,403 Other 2 $1,594 $1,113 Net investment income $16 Mortgage underwriting income $4911 Reinsurance underrwriting income $1,224 Insurance underwriting income $1,041 $81 $414 $(35) 12 Months
Slide 15: Our ESG Focus Areas and 2023 Sustainability Highlights
Our ESG Focus Areas and 2023 Sustainability Highlights Our Environmental, Social and Governance (ESG) strategy is structured around five core impact areas that drive our ESG initiatives. By organizing our strategy under these pillars, we seek to encompass Arch’s collective ESG progress and achieveme
Slide 16: Links to ESG Documents
Links to ESG Documents We believe in the value of transparency of our ESG initiatives, and we are committed to communicating our progress to interested stakeholders on an annual basis though the following three reports: Annual Sustainability Report Sustainability Accounting Standards Task Force on C
Slide 17: Superior Value Creation
Superior Value Creation Book Value per Common Share1 $60 $50 15.8% Compound $40 Annual Growth Rate $30 $57.00 $46.94 $20 $33.56 $32.62 $30.31 $26.42 $10 $21.52 $18.40 $20.30 $15.88 $13.18 $15.09 $8.04 $9.91 $10.51 $11.98 $3.76 $4.89 $6.12 $5.71 $2.03 $2.36 $2.84 $3.45 $0 2001 2002 2003 2004 2005 200
Slide 18: Contact
Contact Investor Inquiries: Donald Watson Vinay Misquith Executive Vice President, Senior Vice President, Financial Services Finance _________ _________ (914) 872 3616 (914) 872 3666 DWatson@archgroup.com VMisquith@archgroup.com ▪ ESG Reports and additional governance documents are available at arch