Guarantor Financial Information

The following tables present condensed financial information for ACGL, Arch-U.S., a 100% owned subsidiary of ACGL, and ACGL’s other subsidiaries.



		June 30, 2017
Condensed Consolidating Balance Sheet		ACGL (Parent Guarantor)		Arch-U.S. (Subsidiary Issuer)		Other ACGL Subsidiaries		Consolidating Adjustments and Eliminations			ACGL Consolidated
Assets
Total investments		$	258	$	69,569	$	20,644,025	$	(14,700	)	$	20,699,152
Cash		2,742		46,002		691,576		—			740,320
Investments in subsidiaries		9,292,102		3,967,022		—		(13,259,124		)	—
Due from subsidiaries and affiliates		27		248		1,888,499		(1,888,774		)	—
Premiums receivable		—		—		1,948,630		(634,066		)	1,314,564
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses		—		—		6,390,582		(4,235,475		)	2,155,107
Contractholder receivables		—		—		1,826,966		—			1,826,966
Ceded unearned premiums		—		—		2,218,529		(1,257,199		)	961,330
Deferred acquisition costs		—		—		651,295		(144,547		)	506,748
Goodwill and intangible assets		—		—		712,975		—			712,975
Other assets		14,101		65,626		2,042,421		(176,671		)	1,945,477
	Total assets	$	9,309,230	$	4,148,467	$	39,015,498	$	(21,610,556	)	$	30,862,639

Liabilities
Reserve for losses and loss adjustment expenses		$	—	$	—	$	14,728,976	$	(4,208,465	)	$	10,520,511
Unearned premiums		—		—		4,936,850		(1,257,199		)	3,679,651
Reinsurance balances payable		—		—		995,065		(634,065		)	361,000
Contractholder payables		—		—		1,826,966		—			1,826,966
Collateral held for insured obligations		—		—		338,737					338,737
Senior notes		297,007		494,572		940,991		—			1,732,570
Revolving credit agreement borrowings		100,000		—		586,452		—			686,452
Due to subsidiaries and affiliates		301		536,831		1,352,313		(1,889,445		)	—
Other liabilities		13,035		60,878		2,008,318		(347,558		)	1,734,673
	Total liabilities	410,343		1,092,281		27,714,668		(8,336,732		)	20,880,560

Redeemable noncontrolling interests		—		—		220,436		(14,700		)	205,736

Shareholders’ Equity
Total shareholders’ equity available to Arch		8,898,887		3,056,186		10,202,938		(13,259,124		)	8,898,887
Non-redeemable noncontrolling interests		—		—		877,456		—			877,456
	Total shareholders’ equity	8,898,887		3,056,186		11,080,394		(13,259,124		)	9,776,343

	Total liabilities, noncontrolling interests and shareholders’ equity	$	9,309,230	$	4,148,467	$	39,015,498	$	(21,610,556	)	$	30,862,639



		December 31, 2016
Condensed Consolidating Balance Sheet		ACGL (Parent Guarantor)		Arch-U.S. (Subsidiary Issuer)		Other ACGL Subsidiaries		Consolidating Adjustments and Eliminations			ACGL Consolidated
Assets
Total investments		$	2,612	$	41,672	$	19,690,067	$	(14,700	)	$	19,719,651
Cash		1,687		71,955		769,300		—			842,942
Investments in subsidiaries		8,660,586		3,716,681		—		(12,377,267		)	—
Due from subsidiaries and affiliates		14,297		51,298		1,866,681		(1,932,276		)	—
Premiums receivable		—		—		1,579,865		(507,430		)	1,072,435
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses		—		—		6,114,518		(4,000,380		)	2,114,138
Contractholder receivables		—		—		1,717,436		—			1,717,436
Ceded unearned premiums		—		—		1,985,311		(1,125,744		)	859,567
Deferred acquisition costs		—		—		577,461		(129,901		)	447,560
Goodwill and intangible assets		—		—		781,553		—			781,553
Other assets		15,725		49,244		1,901,786		(149,928		)	1,816,827
	Total assets	$	8,694,907	$	3,930,850	$	36,983,978	$	(20,237,626	)	$	29,372,109

Liabilities
Reserve for losses and loss adjustment expenses		$	—	$	—	$	14,164,191	$	(3,963,231	)	$	10,200,960
Unearned premiums		—		—		4,532,614		(1,125,744		)	3,406,870
Reinsurance balances payable		—		—		807,837		(507,430		)	300,407
Contractholder payables		—		—		1,717,436		—			1,717,436
Collateral held for insured obligations		—		—		301,406		—			301,406
Deposit accounting liabilities		—		—		22,150		—			22,150
Senior notes		296,957		494,525		940,776		—			1,732,258
Revolving credit agreement borrowings		100,000		—		656,650		—			756,650
Due to subsidiaries and affiliates		26,270		535,584		1,370,422		(1,932,276		)	—
Other liabilities		17,962		54,823		1,867,040		(316,978		)	1,622,847
	Total liabilities	441,189		1,084,932		26,380,522		(7,845,659		)	20,060,984

Redeemable noncontrolling interests		—		—		220,253		(14,700		)	205,553

Shareholders’ Equity
Total shareholders’ equity available to Arch		8,253,718		2,845,918		9,531,349		(12,377,267		)	8,253,718
Non-redeemable noncontrolling interests		—		—		851,854		—			851,854
	Total shareholders’ equity	8,253,718		2,845,918		10,383,203		(12,377,267		)	9,105,572

	Total liabilities, noncontrolling interests and shareholders’ equity	$	8,694,907	$	3,930,850	$	36,983,978	$	(20,237,626	)	$	29,372,109



		Three Months Ended June 30, 2017
Condensed Consolidating Statement of Income and Comprehensive Income		ACGL (Parent Guarantor)			Arch-U.S. (Subsidiary Issuer)			Other ACGL Subsidiaries			Consolidating Adjustments and Eliminations			ACGL Consolidated
Revenues
Net premiums earned		$	—		$	—		$	1,240,874		$	—		$	1,240,874
Net investment income		1			184			133,627			(22,688		)	111,124
Net realized gains (losses)		—			—			21,735			—			21,735
Net impairment losses recognized in earnings		—			—			(1,730		)	—			(1,730		)
Other underwriting income		—			—			4,822			—			4,822
Equity in net income (loss) of investment funds accounted for using the equity method		—			—			32,706			—			32,706
Other income (loss)		(437		)	—			(1,557		)	—			(1,994		)
	Total revenues	(436		)	184			1,430,477			(22,688		)	1,407,537

Expenses
Losses and loss adjustment expenses		—			—			689,860			—			689,860
Acquisition expenses		—			—			190,436			—			190,436
Other operating expenses		—			—			169,981			—			169,981
Corporate expenses		21,816			1,309			1,751			—			24,876
Amortization of intangible assets		—			—			30,824			—			30,824
Interest expense		6,075			11,989			33,050			(22,365		)	28,749
Net foreign exchange (gains) losses		—			—			29,843			9,700			39,543
	Total expenses	27,891			13,298			1,145,745			(12,665		)	1,174,269

Income (loss) before income taxes		(28,327		)	(13,114		)	284,732			(10,023		)	233,268
Income tax (expense) benefit		—			4,069			(38,238		)	—			(34,169		)
Income (loss) before equity in net income of subsidiaries		(28,327		)	(9,045		)	246,494			(10,023		)	199,099
Equity in net income of subsidiaries		213,494			86,156			—			(299,650		)	—
Net income		185,167			77,111			246,494			(309,673		)	199,099
Net (income) loss attributable to noncontrolling interests		—			—			(14,254		)	322			(13,932		)
Net income available to Arch		185,167			77,111			232,240			(309,351		)	185,167
Preferred dividends		(11,349		)	—			—			—			(11,349		)
Net income available to Arch common shareholders		$	173,818		$	77,111		$	232,240		$	(309,351	)	$	173,818

Comprehensive income (loss) available to Arch		$	279,285		$	105,302		$	475,747		$	(581,049	)	$	279,285



		Three Months Ended June 30, 2016
Condensed Consolidating Statement of Income and Comprehensive Income		ACGL (Parent Guarantor)			Arch-U.S. (Subsidiary Issuer)			Other ACGL Subsidiaries			Consolidating Adjustments and Eliminations			ACGL Consolidated
Revenues
Net premiums earned		$	—		$	—		$	1,005,985		$	—		$	1,005,985
Net investment income		—			775			94,097			(6,534		)	88,338
Net realized gains (losses)		—			—			68,218			—			68,218
Net impairment losses recognized in earnings		—			—			(5,343		)	—			(5,343		)
Other underwriting income		—			—			41,450			(16,226		)	25,224
Equity in net income (loss) of investment funds accounted for using the equity method		—			—			8,737			—			8,737
Other income (loss)		(7		)	—			—			—			(7		)
	Total revenues	(7		)	775			1,213,144			(22,760		)	1,191,152

Expenses
Losses and loss adjustment expenses		—			—			584,592			—			584,592
Acquisition expenses		—			—			172,677			—			172,677
Other operating expenses		—			—			157,314			—			157,314
Corporate expenses		17,441			359			(600		)	—			17,200
Amortization of intangible assets		—			—			4,880			—			4,880
Interest expense		5,929			6,647			25,527			(22,440		)	15,663
Net foreign exchange (gains) losses		—			—			(14,125		)	(10,537		)	(24,662		)
	Total expenses	23,370			7,006			930,265			(32,977		)	927,664

Income (loss) before income taxes		(23,377		)	(6,231		)	282,879			10,217			263,488
Income tax (expense) benefit		—			2,086			(16,217		)	—			(14,131		)
Income (loss) before equity in net income of subsidiaries		(23,377		)	(4,145		)	266,662			10,217			249,357
Equity in net income of subsidiaries		234,432			19,873			—			(254,305		)	—
Net income		211,055			15,728			266,662			(244,088		)	249,357
Net (income) loss attributable to noncontrolling interests		—			—			(38,623		)	321			(38,302		)
Net income available to Arch		211,055			15,728			228,039			(243,767		)	211,055
Preferred dividends		(5,485		)	—			—			—			(5,485		)
Net income available to Arch common shareholders		$	205,570		$	15,728		$	228,039		$	(243,767	)	$	205,570

Comprehensive income (loss) available to Arch		$	273,260		$	28,536		$	300,542		$	(329,078	)	$	273,260



		Six Months Ended June 30, 2017
Condensed Consolidating Statement of Income and Comprehensive Income		ACGL (Parent Guarantor)			Arch-U.S. (Subsidiary Issuer)			Other ACGL Subsidiaries			Consolidating Adjustments and Eliminations			ACGL Consolidated
Revenues
Net premiums earned		$	—		$	—		$	2,357,891		$	—		$	2,357,891
Net investment income		6			1,000			271,608			(43,616		)	228,998
Net realized gains (losses)		—			—			55,888			—			55,888
Net impairment losses recognized in earnings		—			—			(3,537		)	—			(3,537		)
Other underwriting income		—			—			9,455			—			9,455
Equity in net income of investment funds accounted for using the equity method		—			—			80,794			—			80,794
Other income (loss)		(266		)	—			(2,510		)	—			(2,776		)
	Total revenues	(260		)	1,000			2,769,589			(43,616		)	2,726,713

Expenses
Losses and loss adjustment expenses		—			—			1,242,430			—			1,242,430
Acquisition expenses		—			—			372,725			—			372,725
Other operating expenses		—			—			344,700			—			344,700
Corporate expenses		39,063			3,317			10,288			—			52,668
Amortization of intangible assets		—			—			62,118			—			62,118
Interest expense		12,090			23,919			64,386			(42,970		)	57,425
Net foreign exchange losses (gains)		—			—			45,191			13,756			58,947
	Total expenses	51,153			27,236			2,141,838			(29,214		)	2,191,013

Income (loss) before income taxes		(51,413		)	(26,236		)	627,751			(14,402		)	535,700
Income tax (expense) benefit		—			8,942			(71,508		)	—			(62,566		)
Income (loss) before equity in net income of subsidiaries		(51,413		)	(17,294		)	556,243			(14,402		)	473,134
Equity in net income of subsidiaries		489,707			163,529			—			(653,236		)	—
Net income		438,294			146,235			556,243			(667,638		)	473,134
Amounts attributable to noncontrolling interests		—			—			(35,485		)	645			(34,840		)
Net income available to Arch		438,294			146,235			520,758			(666,993		)	438,294
Preferred dividends		(22,567		)	—			—			—			(22,567		)
Net income available to Arch common shareholders		$	415,727		$	146,235		$	520,758		$	(666,993	)	$	415,727

Comprehensive income (loss) available to Arch		$	631,276		$	193,083		$	699,920		$	(893,003	)	$	631,276



		Six Months Ended June 30, 2016
Condensed Consolidating Statement of Income and Comprehensive Income		ACGL (Parent Guarantor)			Arch-U.S. (Subsidiary Issuer)			Other ACGL Subsidiaries			Consolidating Adjustments and Eliminations			ACGL Consolidated
Revenues
Net premiums earned		$	—		$	—		$	1,957,564		$	—		$	1,957,564
Net investment income		1			1,548			194,358			(13,834		)	182,073
Net realized gains (losses)		—			—			105,542			—			105,542
Net impairment losses recognized in earnings		—			—			(12,982		)	—			(12,982		)
Other underwriting income		—			—			46,769			(16,498		)	30,271
Equity in net income of investment funds accounted for using the equity method		—			—			15,392			—			15,392
Other income (loss)		199			—			(231		)	—			(32		)
	Total revenues	200			1,548			2,306,412			(30,332		)	2,277,828

Expenses
Losses and loss adjustment expenses		—			—			1,107,541			—			1,107,541
Acquisition expenses		—			—			340,515			—			340,515
Other operating expenses		—			—			307,462			—			307,462
Corporate expenses		26,796			941			(1,154		)	—			26,583
Amortization of intangible assets		—			—			9,628			—			9,628
Interest expense		11,863			13,319			36,279			(29,691		)	31,770
Net foreign exchange losses (gains)		—			—			2,370			(3,466		)	(1,096		)
	Total expenses	38,659			14,260			1,802,641			(33,157		)	1,822,403

Income (loss) before income taxes		(38,459		)	(12,712		)	503,771			2,825			455,425
Income tax (expense) benefit		—			4,330			(34,771		)	—			(30,441		)
Income (loss) before equity in net income of subsidiaries		(38,459		)	(8,382		)	469,000			2,825			424,984
Equity in net income of subsidiaries		404,312			42,739			—			(447,051		)	—
Net income		365,853			34,357			469,000			(444,226		)	424,984
Amounts attributable to noncontrolling interests		—			—			(59,773		)	642			(59,131		)
Net income available to Arch		365,853			34,357			409,227			(443,584		)	365,853
Preferred dividends		(10,969		)	—			—			—			(10,969		)
Net income available to Arch common shareholders		$	354,884		$	34,357		$	409,227		$	(443,584	)	$	354,884

Comprehensive income (loss) available to Arch		$	546,189		$	87,185		$	592,793		$	(679,978	)	$	546,189



		Six Months Ended June 30, 2017
Condensed Consolidating Statement of Cash Flows		ACGL (Parent Guarantor)			Arch-U.S. (Subsidiary Issuer)			Other ACGL Subsidiaries			Consolidating Adjustments and Eliminations			ACGL Consolidated
Operating Activities
	Net Cash Provided By (Used For) Operating Activities	$	7,483		$	27,853		$	976,969		$	(458,238	)	$	554,067
Investing Activities
Purchases of fixed maturity investments		—			—			(19,899,326		)	—			(19,899,326		)
Purchases of equity securities		—			—			(400,155		)	—			(400,155		)
Purchases of other investments		—			—			(883,704		)	—			(883,704		)
Proceeds from the sales of fixed maturity investments		—			—			19,611,680			—			19,611,680
Proceeds from the sales of equity securities		—			—			473,064			—			473,064
Proceeds from the sales, redemptions and maturities of other investments		—			—			614,494			—			614,494
Proceeds from redemptions and maturities of fixed maturity investments		—			—			447,941			—			447,941
Net settlements of derivative instruments		—			—			(5,984		)	—			(5,984		)
Net (purchases) sales of short-term investments		2,354			(27,896		)	(419,661		)	—			(445,203		)
Change in cash collateral related to securities lending		—			—			175,693			—			175,693
Contributions to subsidiaries		20,641			(72,900		)	(342,950		)	395,209			—
Issuance of intercompany loans		—			—			(47,000		)	47,000			—
Repayment of intercompany loans		—			47,000			—			(47,000		)	—
Purchases of fixed assets		(18		)	(10		)	(11,075		)	—			(11,103		)
Other		—			—			6,849			(20,641		)	(13,792		)
	Net Cash Provided By (Used For) Investing Activities	22,977			(53,806		)	(680,134		)	374,568			(336,395		)
Financing Activities
Proceeds from common shares issued, net		(6,838		)	—			395,209			(395,209		)	(6,838		)
Proceeds from intercompany borrowings		—			—			47,000			(47,000		)	—
Repayments of intercompany borrowings		—			—			(47,000		)	47,000			—
Repayments of borrowings		—			—			(72,000		)	—			(72,000		)
Change in cash collateral related to securities lending		—			—			(175,693		)	—			(175,693		)
Dividends paid to redeemable noncontrolling interests		—			—			(9,632		)	638			(8,994		)
Dividends paid to parent (1)		—			—			(457,600		)	457,600			—
Other		—			—			(62,339		)	20,641			(41,698		)
Preferred dividends paid		(22,567		)	—			—			—			(22,567		)
	Net Cash Provided By (Used For) Financing Activities	(29,405		)	—			(382,055		)	83,670			(327,790		)
Effects of exchange rates changes on foreign currency cash		—			—			7,496			—			7,496
Increase (decrease) in cash		1,055			(25,953		)	(77,724		)	—			(102,622		)
Cash beginning of year		1,687			71,955			769,300			—			842,942
Cash end of period		$	2,742		$	46,002		$	691,576		$	—		$	740,320

(1) Dividends received by parent are included in net cash provided by (used for) operating activities.



		Six Months Ended June 30, 2016
Condensed Consolidating Statement of Cash Flows		ACGL (Parent Guarantor)			Arch-U.S. (Subsidiary Issuer)			Other ACGL Subsidiaries			Consolidating Adjustments and Eliminations			ACGL Consolidated
Operating Activities
	Net Cash Provided By (Used For) Operating Activities	$	89,499		$	10,732		$	588,067		$	(147,074	)	$	541,224
Investing Activities
Purchases of fixed maturity investments		—			—			(17,541,731		)	—			(17,541,731		)
Purchases of equity securities		—			—			(212,678		)	—			(212,678		)
Purchases of other investments		—			—			(650,613		)	—			(650,613		)
Proceeds from the sales of fixed maturity investments		—			—			16,978,549			—			16,978,549
Proceeds from the sales of equity securities		—			—			337,619			—			337,619
Proceeds from the sales, redemptions and maturities of other investments		—			—			636,535			—			636,535
Proceeds from redemptions and maturities of fixed maturity investments		—			41,500			329,480			—			370,980
Net settlements of derivative instruments		—			—			45,174			—			45,174
Net (purchases) sales of short-term investments		(76		)	(53,729		)	(250,655		)	—			(304,460		)
Change in cash collateral related to securities lending		—			—			(18,715		)	—			(18,715		)
Contributions to subsidiaries		(3,300		)	—			(2,779		)	6,079			—
Acquisitions, net of cash		—			—			(1,460		)	—			(1,460		)
Purchases of fixed assets		(8		)	—			(8,276		)	—			(8,284		)
Other		2,000			—			11,416			—			13,416
	Net Cash Provided By (Used For) Investing Activities	(1,384		)	(12,229		)	(348,134		)	6,079			(355,668		)
Financing Activities
Purchases of common shares under share repurchase program		(75,256		)	—			—			—			(75,256		)
Proceeds from common shares issued, net		(1,487		)	—			6,079			(6,079		)	(1,487		)
Proceeds from borrowings		—			—			46,000			—			46,000
Repayments of borrowings		—			—			(179,171		)	—			(179,171		)
Change in cash collateral related to securities lending		—			—			18,715			—			18,715
Dividends paid to redeemable noncontrolling interests		—			—			(9,632		)	638			(8,994		)
Dividends paid to parent (1)		—			—			(146,436		)	146,436			—
Other		—			200			(2,423		)	—			(2,223		)
Preferred dividends paid		(10,969		)	—			—			—			(10,969		)
	Net Cash Provided By (Used For) Financing Activities	(87,712		)	200			(266,868		)	140,995			(213,385		)
Effects of exchange rates changes on foreign currency cash		—			—			(8,906		)	—			(8,906		)
Increase (decrease) in cash		403			(1,297		)	(35,841		)	—			(36,735		)
Cash beginning of year		6,809			17,023			529,494			—			553,326
Cash end of period		$	7,212		$	15,726		$	493,653		$	—		$	516,591

(1) Dividends received by parent are included in net cash provided by (used for) operating activities.