Arch Capital Q2 Earnings Beat Estimates on Higher Premiums

Arch Capital Group Ltd. ACGL reported second-quarter 2025 operating income of $2.58 per share, beating the Zacks Consensus Estimate by 11.7%. The bottom line increased 0.49% year over year.

The quarterly results of ACGL benefited from higher premiums across its Insurance and Reinsurance segments and improved net investment income.

Behind the Headlines

Gross premiums written improved 15.1% year over year to $6.2 billion.

Net premiums written climbed 15% year over year to $4.3 billion on higher premiums written across its Insurance and Reinsurance segments.

Arch Capital Group Ltd. Price, Consensus and EPS Surprise

Arch Capital Group Ltd. price-consensus-eps-surprise-chart | Arch Capital Group Ltd. Quote

Pre-tax net investment income increased 11.3% year over year to $405 million. The uptick was driven by growth in average invested assets, due in part to strong operating cash flows.  The Zacks Consensus Estimate was pegged at $401 million. Our estimate was $411.5 million.

Operating revenues of $4.8 billion rose 20.9% year over year, driven by higher net premiums earned, net investment income and other income. It beat the Zacks Consensus Estimate by 2.62%.

Pre-tax current accident year catastrophic losses for the company’s insurance and reinsurance segments, net of reinsurance and reinstatement premiums, were $154 million, narrower than the year-ago period’s loss of $196 million.

Arch Capital’s underwriting income increased 7.3% year over year to $818 million.

The combined ratio, the percentage of premiums paid out as claims and expenses, deteriorated 250 basis points (bps) to 81.2. The Zacks Consensus Estimate was pegged at 82.

Segmental Results

Insurance: Gross premiums written increased 27.5% year over year to $2.7 billion.

Net premiums written climbed 30.7% year over year to $2 billion, driven by increases in most lines of business (1.7% excluding the MCE Acquisition).

Underwriting income of $129 million was 18.3% higher than the year-ago number. The combined ratio deteriorated 80 bps to 93.4. The Zacks Consensus Estimate was pegged at 95.

Reinsurance: Gross premiums written improved 8.7% year over year to $3.2 billion.

Net premiums written rose 5.8% year over year to $2.1 billion. The growth in net premiums written reflected increases in all lines of business, due in part to rate increases, new business opportunities and growth in existing accounts.

Underwriting income was $451 million, up 23.2% year over year.

The combined ratio improved 100 bps year over year to 78.5. The Zacks Consensus Estimate was pegged at 80.

Mortgage: Gross premiums written dipped 5% year over year to $323 million.

Net premiums written decreased 8.3% year over year to $253 million on account of a one-time expense related to the tender offer of certain Bellemeade Re mortgage insurance linked notes and a lower level of mortgage originations.

Underwriting income decreased 17.1% year over year to $238 million.

The combined ratio deteriorated 780 bps to 15.2. The Zacks Consensus Estimate was pegged at 22.8.

Financial Update

Arch Capital exited the quarter with cash of $983 million, which increased 0.4% from 2024-end.

Debt was $2.7 billion as of June 30, 2025, which remained unchanged from the end of 2024.

As of June 30, 2025, the book value per share was $59.17, up 11.4% from the 2024-end level.

Annualized operating return on average common equity contracted 230 bps year over year to 18.2%. Cash from operations of $1.1 billion declined 26% year over year.

ACGL repurchased $163 million worth of shares in the second quarter of 2025.

Zacks Rank

ACGL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

First American Financial FAF reported a second-quarter 2025 operating income per share of $1.53, which beat the Zacks Consensus Estimate by 9.3%. The bottom line increased 20.5% year over year. Operating revenues of $1.8 billion increased 14.2% year over year due to higher direct premiums and escrow fees, agent premiums, as well as information and other and net investment income. The top line beat the Zacks Consensus Estimate by 5%. Operating revenues of $1.8 billion increased 14.2% year over year due to higher direct premiums and escrow fees, agent premiums, as well as information and other and net investment income. The top line beat the Zacks Consensus Estimate by 5%.

Chubb Limited CB reported second-quarter 2025 core operating income of $6.14 per share, which outpaced the Zacks Consensus Estimate by 4.2%. The bottom line increased 14.1% year over year. Net premiums written improved 6.3% year over year to $14.2 billion in the quarter, which is in line with the Zacks Consensus Estimate. Our estimate was pegged at $14 billion. Net investment income was $1.5 billion, up 6.8 % year over year. The Zacks Consensus Estimate was pegged at $1.8 billion, while our estimate for the same was $1.9 billion. Revenues of $14.8 million missed the Zacks Consensus Estimate by a whisker but improved 6.9% year over year.

Cincinnati Financial Corporation CINF reported second-quarter 2025 operating income of $1.97 per share, which surpassed the Zacks Consensus Estimate by 41.7%. The bottom line increased 52.7% year over year. Total operating revenues in the quarter under review were $2.8 billion, which improved 15.3% year over year. However, the top line missed the consensus mark by 0.1%.  Investment income, net of expenses, increased 17.8% year over year to $285 million. Net written premiums climbed 11.1% year over year to $2.7 billion, driven by premium growth initiatives, price increases and a higher level of insured exposures, as well as contributions to growth from Cincinnati Re and Cincinnati Global.

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