Arch Capital Group Ltd., the name behind Arch Insurance, saw its insurance segment thrive during the final quarter of 2025.
The insurance segment reported underwriting income of $119 million (all figures in US$), compared with $30 million in the fourth quarter of 2024, while the reinsurance segment delivered underwriting income of $458 million, up from $328 million a year earlier. The mortgage segment generated underwriting income of $250 million, compared with $267 million in the prior-year quarter.
Overall, underwriting income for the quarter totalled $827 million, compared with $625 million in the prior-year period. The consolidated combined ratio improved to 80.6% from 85.0%. Excluding catastrophe activity and prior year reserve development, the combined ratio was 79.5%, compared with 79.0% a year earlier. Pre-tax current accident year catastrophic losses across the insurance and reinsurance segments amounted to $164 million, while favourable development in prior year loss reserves totalled $118m.
Gross premiums written increased 1.1% year on year to $4.81 billion, while net premiums written declined 4.5% to $3.65 billion. Net premiums earned rose 2.7% to $4.26 billion, broadly in line with analyst expectations published ahead of the results by Zacks Investment Research, which had projected net premiums earned of about $4.2 billion.
The company returned $798 million to shareholders through share repurchases in the fourth quarter of 2025, a period that also saw book value per common share increase 4.5% to $65.11.
The buybacks were supported by higher underwriting income and improved operating results across the group’s insurance and reinsurance businesses. Net income available to common shareholders for the quarter reached $1.2 billion, or $3.35 per diluted share, compared with $925 million, or $2.42 per share, in the same period a year earlier. After-tax operating income available to common shareholders totalled $1.1 billion, or $2.98 per diluted share, up from $866 million, or $2.26 per share.
The annualized net income return on average common equity was 21.2%, compared with 17.9% in the fourth quarter of 2024, while the annualized operating return on average common equity increased to 18.9% from 16.7%. Ending common shareholders’ equity stood at $23.38 billion at December 31, 2025, compared with $19.99 billion a year earlier.
Investment results also contributed to capital generation during the period. Net investment income rose to $434 million from $405 million a year earlier, while net realized gains were $22 million, compared with net realised losses of $161 million in the fourth quarter of 2024. Equity in net income of investments accounted for using the equity method increased to $155 million from $143 million.
Arch’s fourth-quarter results place it firmly among the strongest performers in the global specialty property and casualty insurance group, with underwriting profitability and capital generation metrics that compare favourably with most large peers.
The group’s consolidated combined ratio of 80.6% sits at the lower end of the range reported by diversified P&C insurers for the period. While companies such as Chubb and Travelers also delivered combined ratios comfortably below 90%, Arch’s results benefited from a heavier weighting toward specialty insurance and reinsurance lines, where pricing discipline and portfolio optimization have remained stronger than in more commoditized commercial segments. Pure-play reinsurers, such as RenaissanceRe and AXIS Capital, also reported solid underwriting profitability, but Arch’s diversified platform allowed it to combine reinsurance strength with robust insurance and mortgage results.
Return on equity further differentiates Arch from many peers. Its annualized net income return on average common equity of 21.2% exceeded the mid-teens returns posted by most large US commercial carriers and compared favourably with top-quartile specialty insurers. Even relative to high-performing peers such as Chubb, which continues to set the benchmark for underwriting consistency, Arch’s ROE reflects a more aggressive capital deployment profile and higher earnings volatility tolerance.
Capital management was another area where Arch stood out. The $798 million returned to shareholders through buybacks in the quarter represented a higher proportion of earnings than many peers, which have tended to prioritize balance sheet flexibility amid softening pricing conditions. By contrast, Arch’s willingness to repurchase shares alongside strong book value growth signals confidence in both reserve adequacy and forward underwriting margins.
Premium growth was more muted than at some competitors, with gross written premiums up just 1.1% year on year. However, this places Arch closer to peers that have deliberately moderated growth - including Chubb and AXIS - as market conditions normalise, rather than insurers pursuing top-line expansion at the expense of margin. In that context, Arch’s relatively flat premium trajectory appears consistent with a sector-wide shift toward capital preservation and underwriting discipline.
Overall, Arch’s fourth-quarter performance reinforces its positioning as a high-return specialty insurer with a diversified earnings base, strong capital generation and shareholder-friendly deployment, comparing favourably with both large diversified carriers and specialist peers as underwriting conditions become more challenging heading into 2026.
