Arch Capital Group Ltd. · NASDAQ:ACGL
Arch Capital — Q1 2022 Earnings Presentation
22 slides from Arch Capital's earnings presentation, Apr 28, 2022
Slide 1: Investor Presentation 2022 First Quarter
Investor Presentation 2022 First 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: Book Value Per Common Share Growth
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 $32.18 $15.00 $30.31 $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 $0.00 Dec‐01 Dec‐02
Slide 4: Creating Shareholder Value Throughout The Cycle
Click to editShareholder Creating Master title style Value Throughout The Cycle Generate Superior Focus on Conservative Risk Adjusted Underwriting Balance Sheet Returns Thorough risk Talent intensive, assessment of Minimize not people underlying investment risk intensive exposures Align executive co
Slide 5: (Re)insurance Strategy
Specialty Click to edit (Re)insurance Master title styleStrategy Arch operates leading Specialty P&C and Mortgage Insurance businesses across a wide range of geographies and products providing meaningful diversification and earnings stability. Trailing Twelve Months Ended March 31, 2022 Gross premiu
Slide 6: Property Casualty Segments
Property Casualty Segments Improving underwriting conditions leading to growth Calendar Year Net Premiums Written Growth (y/y change) Insurance NPW Growth Reinsurance NPW Growth 35% 31% 31% 60% 53% 30% 50% 25% 20% 19% 40% 32% 20% 28% 30% 15% 17% 17% 10% 20% 11% 4% 5% 1% 2% 10% 1% 0% 0% 2016 2017 201
Slide 7: Specialty Insurance – Building on Market Opportunities
Specialty Click to editInsurance Master title– style Building on Market Opportunities Calendar Year Net Premiums Written by Line ($M) $5,000 Other $4,500 $4,000 Lenders products $3,500 Travel, accident and health $3,000 Excess and surplus casualty $2,500 Construction and national $2,000 accounts $1,
Slide 8: Reinsurance – Flexing into a Hard Market
Reinsurance Click – Flexing to edit Master into a Hard Market title style Calendar Year Net Premiums Written by Line ($M) $4,000 Other $3,500 Marine, aviation $3,000 and space $2,500 Specialty $2,000 Property catastrophe $1,500 Property excl. $1,000 property catastrophe $500 Casualty $0 2006 2007 20
Slide 9: Catastrophe Risk – Peak Zone 1:250
Click to edit Master Catastrophe Risktitle style Year Peak Zone – 1:250 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% 14.3% 1:250 PML $M $881 $867 800 $860 15% $801 $768 $748 9.0% 600 8.0% 10% $612 6.9% 6.6% 5.8% 6.4
Slide 10: Mortgage Segment – Differentiated Business Model
Mortgage Segment Differentiated Business Model Arch aggregates risk from diversified sources and then Arch MI RateStar® Bellemeade (ILNs) utilizes a variety of tools for risk‐based pricing and traditional managing mortgage and credit approach constructs reinsurance reduce risk portfolios risk expo
Slide 11: Mortgage Segment – Insurance In Force and Underwriting Income
Mortgage Segment Insurance In Force (IIF) and Underwriting Income *Underwriting income for 1Q22 is for the trailing 12 months ended March 31, 2022 © 2022 Arch Capital Group Ltd. All rights reserved. 11
Slide 12: Pandemic Led Rise In U.S. Delinquency Rate Is Declining
Pandemic Led Rise In U.S. Delinquency Rate Is Declining Arch MI US Delinquency Rate 5.5% 5.14% 5.0% 4.69% 4.5% 4.19% 3.86% 4.0% 3.5% 3.11% 3.0% 2.67% 2.57% 2.25% 2.36% 2.5% 2.02% 2.23% 1.98% 2.09% 1.98% 2.0% 1.70%1.60%1.60% 1.54%1.45%1.48%1.54% 1.42% 1.5% 1.0% 0.5% 0.0% 12/31/16 3/31/17 6/30/17 9/30
Slide 13: Private Mortgage Insurance vs FHA/VA Origination
Private Mortgage Insurance vs FHA/VA Origination PMIs’ share of insured originations has increased since the Great Recession, but recently declined slightly due to heavy refi activity. Market Shares of Insured Originations Source: Inside Mortgage Finance © 2022 Arch Capital Group Ltd. All rights res
Slide 14: Arch MI US – Bellemeade Reinsurance Coverage by Deal
Arch MI US – Bellemeade Reinsurance Coverage by Deal March 31, 2022 ($ 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) Coverage dates for policies issued b
Slide 15: Arch MI US – Bellemeade Reinsurance Coverage by Deal
Arch MI US – Bellemeade Reinsurance Coverage by Deal (1) Through March 31, 2022, including the initial coverage of $397M provided directly by a panel of reinsurers through traditional excess of loss agreements, Arch Mortgage Insurance Company ("AMIC") and United Guaranty Residential Insurance Compan
Slide 16: Arch MI US – Bellemeade Reinsurance Coverage by Vintage
Arch MI US – Bellemeade Reinsurance Coverage by Vintage As of March 31, 2022 ($ 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 $2,777 $‐ $2,777 69.3% $1,923 2013 1,033 ‐ 1,033 3.5% 36 2014
Slide 17: Key Terms of Bellemeade Re 2022-1
Key Terms of Bellemeade Re 2022‐1 Cedants United Guaranty Residential Insurance Co. and Arch Mortgage Insurance Co. Reinsurer Bellemeade Re 2022‐1 Ltd. (Bellemeade Re), a special purpose reinsurer domiciled in Bermuda Effective Date January 31 2022 Maturity January 26, 2032 (optional call on
Slide 18: 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 19: Our ESG Strategy – Impact Areas and Highlights
OurtoESG Click edit Strategy – Impact Master title style Areas and Highlights Our business is built on long-term thinking and an established history of delivering reliable risk management expertise to our markets. ESG thinking and processes are embedded across five core areas of Arch as we engage wi
Slide 20: 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 21: 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 – 12/31/2021 Coefficient of Variance (Standard Deviation of Annual TVC / Mean)
Slide 22: 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