x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2017 | |
Or | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Bermuda | Not applicable |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Waterloo House, Ground Floor | |
100 Pitts Bay Road, Pembroke HM 08, Bermuda | (441) 278-9250 |
(Address of principal executive offices) | (Registrant’s telephone number, including area code) |
Page No. | |||
PART I | |||
Item 1. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
PART II | |||
Item 1. | |||
Item 1A. | |||
Item 2. | |||
Item 5. | |||
Item 6. | |||
ACGL 2017 THIRD QUARTER FORM 10-Q | 1 |
• | our ability to successfully implement our business strategy during “soft” as well as “hard” markets; |
• | acceptance of our business strategy, security and financial condition by rating agencies and regulators, as well as by brokers and our insureds and reinsureds; |
• | the integration of United Guaranty and any other businesses we have acquired or may acquire into our existing operations; |
• | our ability to maintain or improve our ratings, which may be affected by our ability to raise additional equity or debt financings, by ratings agencies’ existing or new policies and practices, as well as other factors described herein; |
• | general economic and market conditions (including inflation, interest rates, foreign currency exchange rates, prevailing credit terms and the depth and duration of a recession) and conditions specific to the reinsurance and insurance markets (including the length and magnitude of the current “soft” market) in which we operate; |
• | competition, including increased competition, on the basis of pricing, capacity (including alternative forms of capital), coverage terms or other factors; |
• | developments in the world’s financial and capital markets and our access to such markets; |
• | our ability to successfully enhance, integrate and maintain operating procedures (including information technology) to effectively support our current and new business; |
• | the loss of key personnel; |
• | accuracy of those estimates and judgments utilized in the preparation of our financial statements, including those related to revenue recognition, insurance and other reserves, reinsurance recoverables, investment valuations, intangible assets, bad debts, income taxes, contingencies and litigation, and any determination to use the deposit method of accounting, which for a relatively new insurance and reinsurance company, like our company, are even more difficult to make than those made in a mature company since relatively limited historical information has been reported to us through September 30, 2017; |
• | greater than expected loss ratios on business written by us and adverse development on claim and/or claim expense liabilities related to business written by our insurance and reinsurance subsidiaries; |
• | severity and/or frequency of losses; |
• | claims for natural or man-made catastrophic events in our insurance, reinsurance and mortgage businesses could cause large losses and substantial volatility in our results of operations; |
• | acts of terrorism, political unrest and other hostilities or other unforecasted and unpredictable events; |
• | availability to us of reinsurance to manage our gross and net exposures and the cost of such reinsurance; |
• | the failure of reinsurers, managing general agents, third party administrators or others to meet their obligations to us; |
• | the timing of loss payments being faster or the receipt of reinsurance recoverables being slower than anticipated by us; |
• | our investment performance, including legislative or regulatory developments that may adversely affect the fair value of our investments; |
ACGL 2017 THIRD QUARTER FORM 10-Q | 2 |
• | changes in general economic conditions, including new or continued sovereign debt concerns in Eurozone countries or downgrades of U.S. securities by credit rating agencies, which could affect our business, financial condition and results of operations; |
• | the volatility of our shareholders’ equity from foreign currency fluctuations, which could increase due to us not matching portions of our projected liabilities in foreign currencies with investments in the same currencies; |
• | losses relating to aviation business and business produced by a certain managing underwriting agency for which we may be liable to the purchaser of our prior reinsurance business or to others in connection with the May 5, 2000 asset sale described in our periodic reports filed with the SEC; |
• | changes in accounting principles or policies or in our application of such accounting principles or policies; |
• | changes in the political environment of certain countries in which we operate or underwrite business; |
• | statutory or regulatory developments, including as to tax policy and matters and insurance and other regulatory matters such as the adoption of proposed legislation that would affect Bermuda-headquartered companies and/or Bermuda-based insurers or reinsurers and/or changes in regulations or tax laws applicable to us, our subsidiaries, brokers or customers; and |
• | the other matters set forth under Item 1A “Risk Factors”, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of our Annual Report on Form 10-K for the year ended December 31, 2016, as well as the other factors set forth in our other documents on file with the SEC, and management’s response to any of the aforementioned factors. |
ACGL 2017 THIRD QUARTER FORM 10-Q | 3 |
Page No. | ||
September 30, 2017 (unaudited) and December 31, 2016 | ||
For the three and nine month periods ended September 30, 2017 and 2016 (unaudited) | ||
For the three and nine month periods ended September 30, 2017 and 2016 (unaudited) | ||
For the nine month periods ended September 30, 2017 and 2016 (unaudited) | ||
For the nine month periods ended September 30, 2017 and 2016 (unaudited) | ||
Notes to Consolidated Financial Statements (unaudited) | ||
ACGL 2017 THIRD QUARTER FORM 10-Q | 4 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 5 |
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands, except share data) | |||||||
(Unaudited) | |||||||
September 30, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Investments: | |||||||
Fixed maturities available for sale, at fair value (amortized cost: $13,722,581 and $13,522,671) | $ | 13,792,903 | $ | 13,426,577 | |||
Short-term investments available for sale, at fair value (amortized cost: $1,645,873 and $611,878) | 1,646,036 | 612,005 | |||||
Collateral received under securities lending, at fair value (amortized cost: $543,243 and $762,554) | 543,252 | 762,565 | |||||
Equity securities available for sale, at fair value (cost: $401,674 and $475,085) | 477,143 | 518,041 | |||||
Other investments available for sale, at fair value (cost: $205,828 and $149,077) | 260,339 | 167,970 | |||||
Investments accounted for using the fair value option | 4,249,634 | 3,421,220 | |||||
Investments accounted for using the equity method | 962,574 | 811,273 | |||||
Total investments | 21,931,881 | 19,719,651 | |||||
Cash | 862,361 | 842,942 | |||||
Accrued investment income | 101,104 | 124,483 | |||||
Securities pledged under securities lending, at fair value (amortized cost: $529,700 and $746,409) | 528,212 | 744,980 | |||||
Premiums receivable | 1,269,678 | 1,072,435 | |||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 2,506,015 | 2,114,138 | |||||
Contractholder receivables | 1,864,348 | 1,717,436 | |||||
Ceded unearned premiums | 947,135 | 859,567 | |||||
Deferred acquisition costs | 531,196 | 447,560 | |||||
Receivable for securities sold | 385,952 | 58,284 | |||||
Goodwill and intangible assets | 684,405 | 781,553 | |||||
Other assets | 1,012,510 | 889,080 | |||||
Total assets | $ | 32,624,797 | $ | 29,372,109 | |||
Liabilities | |||||||
Reserve for losses and loss adjustment expenses | $ | 11,351,267 | $ | 10,200,960 | |||
Unearned premiums | 3,751,550 | 3,406,870 | |||||
Reinsurance balances payable | 352,006 | 300,407 | |||||
Contractholder payables | 1,864,348 | 1,717,436 | |||||
Collateral held for insured obligations | 345,726 | 301,406 | |||||
Senior notes | 1,732,726 | 1,732,258 | |||||
Revolving credit agreement borrowings | 826,242 | 756,650 | |||||
Securities lending payable | 543,243 | 762,554 | |||||
Payable for securities purchased | 1,091,464 | 76,183 | |||||
Other liabilities | 788,354 | 806,260 | |||||
Total liabilities | 22,646,926 | 20,060,984 | |||||
Commitments and Contingencies | |||||||
Redeemable noncontrolling interests | 205,829 | 205,553 | |||||
Shareholders' Equity | |||||||
Non-cumulative preferred shares | 772,555 | 772,555 | |||||
Convertible non-voting common equivalent preferred shares | 489,627 | 1,101,304 | |||||
Common shares ($0.0033 par, shares issued: 182,924,882 and 174,644,101) | 610 | 582 | |||||
Additional paid-in capital | 1,212,960 | 531,687 | |||||
Retained earnings | 8,359,354 | 7,996,701 | |||||
Accumulated other comprehensive income (loss), net of deferred income tax | 129,682 | (114,541 | ) | ||||
Common shares held in treasury, at cost (shares: 52,058,509 and 51,856,584) | (2,053,644 | ) | (2,034,570 | ) | |||
Total shareholders' equity available to Arch | 8,911,144 | 8,253,718 | |||||
Non-redeemable noncontrolling interests | 860,898 | 851,854 | |||||
Total shareholders' equity | 9,772,042 | 9,105,572 | |||||
Total liabilities, noncontrolling interests and shareholders' equity | $ | 32,624,797 | $ | 29,372,109 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 6 |
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (U.S. dollars in thousands, except share data) | |||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | |||||||||||||||
Net premiums written | $ | 1,325,403 | $ | 1,014,278 | $ | 3,850,358 | $ | 3,159,076 | |||||||
Change in unearned premiums | (63,517 | ) | (55,875 | ) | (230,581 | ) | (243,109 | ) | |||||||
Net premiums earned | 1,261,886 | 958,403 | 3,619,777 | 2,915,967 | |||||||||||
Net investment income | 116,459 | 93,618 | 345,457 | 275,691 | |||||||||||
Net realized gains (losses) | 66,275 | 125,105 | 122,163 | 230,647 | |||||||||||
Other-than-temporary impairment losses | (1,878 | ) | (3,867 | ) | (5,415 | ) | (16,999 | ) | |||||||
Less investment impairments recognized in other comprehensive income, before taxes | — | — | — | 150 | |||||||||||
Net impairment losses recognized in earnings | (1,878 | ) | (3,867 | ) | (5,415 | ) | (16,849 | ) | |||||||
Other underwriting income | 6,064 | 7,980 | 15,519 | 38,251 | |||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 31,090 | 16,662 | 111,884 | 32,054 | |||||||||||
Other income (loss) | (342 | ) | (400 | ) | (3,118 | ) | (432 | ) | |||||||
Total revenues | 1,479,554 | 1,197,501 | 4,206,267 | 3,475,329 | |||||||||||
Expenses | |||||||||||||||
Losses and loss adjustment expenses | 1,046,141 | 524,183 | 2,288,571 | 1,631,724 | |||||||||||
Acquisition expenses | 193,854 | 161,267 | 566,579 | 501,782 | |||||||||||
Other operating expenses | 170,127 | 153,286 | 514,827 | 460,748 | |||||||||||
Corporate expenses | 17,098 | 18,485 | 69,766 | 45,068 | |||||||||||
Amortization of intangible assets | 31,824 | 4,865 | 93,942 | 14,493 | |||||||||||
Interest expense | 29,510 | 15,943 | 86,935 | 47,713 | |||||||||||
Net foreign exchange losses (gains) | 28,028 | 2,621 | 86,975 | 1,525 | |||||||||||
Total expenses | 1,516,582 | 880,650 | 3,707,595 | 2,703,053 | |||||||||||
Income (loss) before income taxes | (37,028 | ) | 316,851 | 498,672 | 772,276 | ||||||||||
Income tax expense | (8,189 | ) | (13,231 | ) | (70,755 | ) | (43,672 | ) | |||||||
Net income (loss) | $ | (45,217 | ) | $ | 303,620 | $ | 427,917 | $ | 728,604 | ||||||
Net (income) loss attributable to noncontrolling interests | 11,561 | (50,748 | ) | (23,279 | ) | (109,879 | ) | ||||||||
Net income (loss) available to Arch | (33,656 | ) | 252,872 | 404,638 | 618,725 | ||||||||||
Preferred dividends | (12,369 | ) | (5,484 | ) | (34,936 | ) | (16,453 | ) | |||||||
Loss on redemption of preferred shares | (6,735 | ) | — | (6,735 | ) | — | |||||||||
Net income (loss) available to Arch common shareholders | $ | (52,760 | ) | $ | 247,388 | $ | 362,967 | $ | 602,272 | ||||||
Net income (loss) per common share and common share equivalent | |||||||||||||||
Basic | $ | (0.39 | ) | $ | 2.05 | $ | 2.70 | $ | 4.99 | ||||||
Diluted | $ | (0.39 | ) | $ | 1.98 | $ | 2.61 | $ | 4.84 | ||||||
Weighted average common shares and common share equivalents outstanding | |||||||||||||||
Basic | 134,885,451 | 120,938,916 | 134,472,129 | 120,656,420 | |||||||||||
Diluted | 134,885,451 | 124,931,653 | 139,222,324 | 124,528,174 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 7 |
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (U.S. dollars in thousands) | |||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Comprehensive Income | |||||||||||||||
Net income (loss) | $ | (45,217 | ) | $ | 303,620 | $ | 427,917 | $ | 728,604 | ||||||
Other comprehensive income (loss), net of deferred income tax | |||||||||||||||
Unrealized appreciation (decline) in value of available-for-sale investments: | |||||||||||||||
Unrealized holding gains (losses) arising during period | 66,462 | 16,281 | 260,223 | 251,722 | |||||||||||
Portion of other-than-temporary impairment losses recognized in other comprehensive income, net of deferred income tax | — | — | — | (150 | ) | ||||||||||
Reclassification of net realized (gains) losses, net of income taxes, included in net income (loss) | (23,912 | ) | (54,992 | ) | (46,180 | ) | (109,309 | ) | |||||||
Foreign currency translation adjustments | 8,280 | (5,312 | ) | 29,701 | (6,150 | ) | |||||||||
Comprehensive income | 5,613 | 259,597 | 671,661 | 864,717 | |||||||||||
Net (income) loss attributable to noncontrolling interests | 11,561 | (50,748 | ) | (23,279 | ) | (109,879 | ) | ||||||||
Foreign currency translation adjustments attributable to noncontrolling interests | 411 | (59 | ) | 479 | 141 | ||||||||||
Comprehensive income available to Arch | $ | 17,585 | $ | 208,790 | $ | 648,861 | $ | 754,979 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 8 |
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (U.S. dollars in thousands) | |||||||
(Unaudited) | |||||||
Nine Months Ended | |||||||
September 30, | |||||||
2017 | 2016 | ||||||
Non-cumulative preferred shares | |||||||
Balance at beginning of year | $ | 772,555 | $ | 325,000 | |||
Preferred shares issued | 230,000 | 450,000 | |||||
Preferred shares redeemed | (230,000 | ) | — | ||||
Balance at end of period | 772,555 | 775,000 | |||||
Convertible non-voting common equivalent preferred shares | |||||||
Balance at beginning of year | 1,101,304 | — | |||||
Preferred shares converted to common shares | (611,677 | ) | — | ||||
Balance at end of period | 489,627 | — | |||||
Common shares | |||||||
Balance at beginning of year | 582 | 577 | |||||
Common shares issued, net | 28 | 5 | |||||
Balance at end of period | 610 | 582 | |||||
Additional paid-in capital | |||||||
Balance at beginning of year | 531,687 | 467,339 | |||||
Preferred shares converted to common shares | 611,653 | — | |||||
Issue costs on preferred shares | (7,946 | ) | (15,101 | ) | |||
Reversal of original issue costs on redeemed preferred shares | 6,735 | — | |||||
All other | 70,831 | 63,966 | |||||
Balance at end of period | 1,212,960 | 516,204 | |||||
Retained earnings | |||||||
Balance at beginning of year | 7,996,701 | 7,332,032 | |||||
Cumulative effect of an accounting change | (314 | ) | — | ||||
Balance at beginning of year, as adjusted | 7,996,387 | 7,332,032 | |||||
Net income | 427,917 | 728,604 | |||||
Net (income) loss attributable to noncontrolling interests | (23,279 | ) | (109,879 | ) | |||
Preferred share dividends | (34,936 | ) | (16,453 | ) | |||
Loss on redemption of preferred shares | (6,735 | ) | — | ||||
Balance at end of period | 8,359,354 | 7,934,304 | |||||
Accumulated other comprehensive income (loss), net of deferred income tax | |||||||
Balance at beginning of year | (114,541 | ) | (16,502 | ) | |||
Unrealized appreciation (decline) in value of available-for-sale investments, net of deferred income tax: | |||||||
Balance at beginning of year | (27,641 | ) | 50,085 | ||||
Unrealized holding gains (losses) arising during period, net of reclassification adjustment | 214,043 | 142,413 | |||||
Portion of other-than-temporary impairment losses recognized in other comprehensive income, net of deferred income tax | — | (150 | ) | ||||
Balance at end of period | 186,402 | 192,348 | |||||
Foreign currency translation adjustments: | |||||||
Balance at beginning of year | (86,900 | ) | (66,587 | ) | |||
Foreign currency translation adjustments | 29,701 | (6,150 | ) | ||||
Foreign currency translation adjustments attributable to noncontrolling interests | 479 | 141 | |||||
Balance at end of period | (56,720 | ) | (72,596 | ) | |||
Balance at end of period | 129,682 | 119,752 | |||||
Common shares held in treasury, at cost | |||||||
Balance at beginning of year | (2,034,570 | ) | (1,941,904 | ) | |||
Shares repurchased for treasury | (19,074 | ) | (89,955 | ) | |||
Balance at end of period | (2,053,644 | ) | (2,031,859 | ) | |||
Total shareholders’ equity available to Arch | 8,911,144 | 7,313,983 | |||||
Non-redeemable noncontrolling interests | 860,898 | 834,808 | |||||
Total shareholders’ equity | $ | 9,772,042 | $ | 8,148,791 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 9 |
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. dollars in thousands) | |||||||
(Unaudited) | |||||||
Nine Months Ended | |||||||
September 30, | |||||||
2017 | 2016 | ||||||
Operating Activities | |||||||
Net income | $ | 427,917 | $ | 728,604 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Net realized (gains) losses | (141,944 | ) | (262,112 | ) | |||
Net impairment losses recognized in earnings | 5,415 | 16,849 | |||||
Equity in net income or loss of investment funds accounted for using the equity method and other income or loss | (63,784 | ) | 8,157 | ||||
Amortization of intangible assets | 93,942 | 14,493 | |||||
Share-based compensation | 58,308 | 46,311 | |||||
Changes in: | |||||||
Reserve for losses and loss adjustment expenses, net of unpaid losses and loss adjustment expenses recoverable | 602,652 | 277,277 | |||||
Unearned premiums, net of ceded unearned premiums | 230,581 | 243,109 | |||||
Premiums receivable | (167,143 | ) | (198,909 | ) | |||
Deferred acquisition costs | (73,631 | ) | (40,906 | ) | |||
Reinsurance balances payable | 37,528 | 49,198 | |||||
Other items, net | 71,293 | 155,068 | |||||
Net Cash Provided By Operating Activities | 1,081,134 | 1,037,139 | |||||
Investing Activities | |||||||
Purchases of fixed maturity investments | (28,079,129 | ) | (27,840,555 | ) | |||
Purchases of equity securities | (667,135 | ) | (377,767 | ) | |||
Purchases of other investments | (1,406,528 | ) | (1,008,774 | ) | |||
Proceeds from sales of fixed maturity investments | 27,629,474 | 26,731,924 | |||||
Proceeds from sales of equity securities | 751,873 | 464,904 | |||||
Proceeds from sales, redemptions and maturities of other investments | 938,581 | 879,330 | |||||
Proceeds from redemptions and maturities of fixed maturity investments | 747,621 | 540,823 | |||||
Net settlements of derivative instruments | (20,952 | ) | 23,396 | ||||
Net (purchases) sales of short-term investments | (964,653 | ) | (604,162 | ) | |||
Change in cash collateral related to securities lending | 148,692 | (27,935 | ) | ||||
Acquisitions, net of cash | (27,709 | ) | (20,911 | ) | |||
Purchases of fixed assets | (16,862 | ) | (11,565 | ) | |||
Other | 86,145 | (3,816 | ) | ||||
Net Cash Provided By (Used For) Investing Activities | (880,582 | ) | (1,255,108 | ) | |||
Financing Activities | |||||||
Proceeds from issuance of preferred shares, net | 222,054 | 434,899 | |||||
Redemption of preferred shares | (230,000 | ) | — | ||||
Purchases of common shares under share repurchase program | — | (75,256 | ) | ||||
Proceeds from common shares issued, net | (7,484 | ) | (3,785 | ) | |||
Proceeds from borrowings | 238,915 | 46,000 | |||||
Repayments of borrowings | (172,000 | ) | (179,171 | ) | |||
Change in cash collateral related to securities lending | (148,692 | ) | 27,935 | ||||
Dividends paid to redeemable noncontrolling interests | (13,491 | ) | (13,491 | ) | |||
Other | (49,280 | ) | 33,113 | ||||
Preferred dividends paid | (34,936 | ) | (16,453 | ) | |||
Net Cash Provided By (Used For) Financing Activities | (194,914 | ) | 253,791 | ||||
Effects of exchange rate changes on foreign currency cash | 13,781 | (10,332 | ) | ||||
Increase (decrease) in cash | 19,419 | 25,490 | |||||
Cash beginning of year | 842,942 | 553,326 | |||||
Cash end of period | $ | 862,361 | $ | 578,816 | |||
Income taxes paid | $ | 47,907 | $ | 40,742 | |||
Interest paid | $ | 64,613 | $ | 35,234 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 10 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 11 |
3. | Variable Interest Entities and Noncontrolling Interests |
ACGL 2017 THIRD QUARTER FORM 10-Q | 12 |
September 30, | December 31, | ||||||
2017 | 2016 | ||||||
Assets | |||||||
Investments accounted for using the fair value option | $ | 2,457,365 | $ | 1,857,623 | |||
Cash | 57,151 | 74,893 | |||||
Accrued investment income | 13,718 | 17,017 | |||||
Premiums receivable | 209,985 | 189,911 | |||||
Reinsurance recoverable on unpaid and paid losses and LAE | 37,575 | 24,420 | |||||
Ceded unearned premiums | 23,538 | 12,145 | |||||
Deferred acquisition costs | 87,692 | 86,379 | |||||
Receivable for securities sold | 74,051 | 1,326 | |||||
Goodwill and intangible assets | 7,650 | 7,650 | |||||
Other assets | 132,796 | 111,386 | |||||
Total assets of consolidated VIE | $ | 3,101,521 | $ | 2,382,750 | |||
Liabilities | |||||||
Reserves for losses and loss adjustment expenses | $ | 735,132 | $ | 510,809 | |||
Unearned premiums | 344,060 | 293,480 | |||||
Reinsurance balances payable | 22,487 | 12,289 | |||||
Revolving credit agreement borrowings | 426,242 | 256,650 | |||||
Payable for securities purchased | 211,065 | 42,922 | |||||
Other liabilities | 174,472 | 88,976 | |||||
Total liabilities of consolidated VIE | $ | 1,913,458 | $ | 1,205,126 | |||
Redeemable noncontrolling interests | $ | 220,529 | $ | 220,253 |
September 30, | |||||||
2017 | 2016 | ||||||
Three Months Ended | |||||||
Balance, beginning of period | $ | 877,456 | $ | 788,589 | |||
Amounts attributable to noncontrolling interests | (16,147 | ) | 46,160 | ||||
Foreign currency translation adjustments attributable to noncontrolling interests | (411 | ) | 59 | ||||
Balance, end of period | $ | 860,898 | $ | 834,808 | |||
Nine Months Ended | |||||||
Balance, beginning of year | $ | 851,854 | $ | 738,831 | |||
Amounts attributable to noncontrolling interests | 9,523 | 96,118 | |||||
Foreign currency translation adjustments attributable to noncontrolling interests | (479 | ) | (141 | ) | |||
Balance, end of period | $ | 860,898 | $ | 834,808 |
September 30, | |||||||
2017 | 2016 | ||||||
Three Months Ended | |||||||
Balance, beginning of period | $ | 205,736 | $ | 205,366 | |||
Accretion of preference share issuance costs | 93 | 93 | |||||
Balance, end of period | $ | 205,829 | $ | 205,459 | |||
Nine Months Ended | |||||||
Balance, beginning of year | $ | 205,553 | $ | 205,182 | |||
Accretion of preference share issuance costs | 276 | 277 | |||||
Balance, end of period | $ | 205,829 | $ | 205,459 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 13 |
September 30, | |||||||
2017 | 2016 | ||||||
Three Months Ended | |||||||
Amounts attributable to non-redeemable noncontrolling interests | $ | 16,147 | $ | (46,160 | ) | ||
Dividends attributable to redeemable noncontrolling interests | (4,586 | ) | (4,588 | ) | |||
Net (income) loss attributable to noncontrolling interests | $ | 11,561 | $ | (50,748 | ) | ||
Nine Months Ended | |||||||
Amounts attributable to non-redeemable noncontrolling interests | $ | (9,523 | ) | $ | (96,118 | ) | |
Dividends attributable to redeemable noncontrolling interests | (13,756 | ) | (13,761 | ) | |||
Net (income) loss attributable to noncontrolling interests | $ | (23,279 | ) | $ | (109,879 | ) |
Maximum Exposure to Loss | |||||||||||||||
Total VIE Assets | On-Balance Sheet | Off-Balance Sheet | Total | ||||||||||||
Bellemeade I | $ | 112,090 | $ | 533 | $ | 1,009 | $ | 1,542 | |||||||
Bellemeade II | 191,387 | (53 | ) | 746 | 693 | ||||||||||
Total | $ | 303,477 | $ | 480 | $ | 1,755 | $ | 2,235 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 14 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Numerator: | |||||||||||||||
Net income (loss) | $ | (45,217 | ) | $ | 303,620 | $ | 427,917 | $ | 728,604 | ||||||
Amounts attributable to noncontrolling interests | 11,561 | (50,748 | ) | (23,279 | ) | (109,879 | ) | ||||||||
Net income (loss) available to Arch | (33,656 | ) | 252,872 | 404,638 | 618,725 | ||||||||||
Preferred dividends | (12,369 | ) | (5,484 | ) | (34,936 | ) | (16,453 | ) | |||||||
Loss on redemption of preferred shares | (6,735 | ) | — | (6,735 | ) | — | |||||||||
Net income (loss) available to Arch common shareholders | $ | (52,760 | ) | $ | 247,388 | $ | 362,967 | $ | 602,272 | ||||||
Denominator: | |||||||||||||||
Weighted average common shares outstanding | 129,211,251 | 120,938,916 | 124,526,611 | 120,656,420 | |||||||||||
Series D preferred shares (1) | 5,674,200 | — | 9,945,518 | — | |||||||||||
Weighted average common shares and common share equivalents outstanding — basic | 134,885,451 | 120,938,916 | 134,472,129 | 120,656,420 | |||||||||||
Effect of dilutive common share equivalents: | |||||||||||||||
Nonvested restricted shares | — | 1,313,025 | 1,459,879 | 1,295,825 | |||||||||||
Stock options (2) | — | 2,679,712 | 3,290,316 | 2,575,929 | |||||||||||
Weighted average common shares and common share equivalents outstanding — diluted (3) | 134,885,451 | 124,931,653 | 139,222,324 | 124,528,174 | |||||||||||
Earnings (loss) per common share: | |||||||||||||||
Basic | $ | (0.39 | ) | $ | 2.05 | $ | 2.70 | $ | 4.99 | ||||||
Diluted | $ | (0.39 | ) | $ | 1.98 | $ | 2.61 | $ | 4.84 |
(1) | Such shares are convertible non-voting common equivalent preferred shares issued in connection with the UGC acquisition. |
(2) | Certain stock options were not included in the computation of diluted earnings per share where the exercise price of the stock options exceeded the average market price and would have been anti-dilutive or where, when applying the treasury stock method to in-the-money options, the sum of the proceeds, including unrecognized compensation, exceeded the average market price and would have been anti-dilutive. For the 2017 third quarter and 2016 third quarter, the number of stock options excluded were nil and 334,203, respectively. For the nine months ended September 30, 2017 and 2016, the number of stock options excluded were 838,868 and 842,105, respectively. |
ACGL 2017 THIRD QUARTER FORM 10-Q | 15 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 16 |
Three Months Ended | |||||||||||||||||||||||
September 30, 2017 | |||||||||||||||||||||||
Insurance | Reinsurance | Mortgage | Sub-Total | Other | Total | ||||||||||||||||||
Gross premiums written (1) | $ | 787,447 | $ | 422,083 | $ | 347,951 | $ | 1,557,179 | $ | 166,198 | $ | 1,648,246 | |||||||||||
Premiums ceded | (222,516 | ) | (105,389 | ) | (57,900 | ) | (385,503 | ) | (12,471 | ) | (322,843 | ) | |||||||||||
Net premiums written | 564,931 | 316,694 | 290,051 | 1,171,676 | 153,727 | 1,325,403 | |||||||||||||||||
Change in unearned premiums | (29,766 | ) | 6,879 | (15,533 | ) | (38,420 | ) | (25,097 | ) | (63,517 | ) | ||||||||||||
Net premiums earned | 535,165 | 323,573 | 274,518 | 1,133,256 | 128,630 | 1,261,886 | |||||||||||||||||
Other underwriting income (loss) | — | 1,728 | 3,599 | 5,327 | 737 | 6,064 | |||||||||||||||||
Losses and loss adjustment expenses | (568,795 | ) | (318,609 | ) | (35,156 | ) | (922,560 | ) | (123,581 | ) | (1,046,141 | ) | |||||||||||
Acquisition expenses | (82,638 | ) | (57,340 | ) | (21,803 | ) | (161,781 | ) | (32,073 | ) | (193,854 | ) | |||||||||||
Other operating expenses | (90,875 | ) | (36,214 | ) | (34,770 | ) | (161,859 | ) | (8,268 | ) | (170,127 | ) | |||||||||||
Underwriting income (loss) | $ | (207,143 | ) | $ | (86,862 | ) | $ | 186,388 | (107,617 | ) | (34,555 | ) | (142,172 | ) | |||||||||
Net investment income | 94,127 | 22,332 | 116,459 | ||||||||||||||||||||
Net realized gains (losses) | 64,104 | 2,171 | 66,275 | ||||||||||||||||||||
Net impairment losses recognized in earnings | (1,878 | ) | — | (1,878 | ) | ||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 31,090 | — | 31,090 | ||||||||||||||||||||
Other income (loss) | (342 | ) | — | (342 | ) | ||||||||||||||||||
Corporate expenses (2) | (14,108 | ) | — | (14,108 | ) | ||||||||||||||||||
UGC transaction costs and other (2) | (2,990 | ) | — | (2,990 | ) | ||||||||||||||||||
Amortization of intangible assets | (31,824 | ) | — | (31,824 | ) | ||||||||||||||||||
Interest expense | (26,264 | ) | (3,246 | ) | (29,510 | ) | |||||||||||||||||
Net foreign exchange gains (losses) | (27,785 | ) | (243 | ) | (28,028 | ) | |||||||||||||||||
Income (loss) before income taxes | (23,487 | ) | (13,541 | ) | (37,028 | ) | |||||||||||||||||
Income tax (expense) benefit | (8,168 | ) | (21 | ) | (8,189 | ) | |||||||||||||||||
Net income (loss) | (31,655 | ) | (13,562 | ) | (45,217 | ) | |||||||||||||||||
Dividends attributable to redeemable noncontrolling interests | — | (4,586 | ) | (4,586 | ) | ||||||||||||||||||
Amounts attributable to nonredeemable noncontrolling interests | — | 16,147 | 16,147 | ||||||||||||||||||||
Net income (loss) available to Arch | (31,655 | ) | (2,001 | ) | (33,656 | ) | |||||||||||||||||
Preferred dividends | (12,369 | ) | — | (12,369 | ) | ||||||||||||||||||
Loss on redemption of preferred shares | (6,735 | ) | — | (6,735 | ) | ||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | (50,759 | ) | $ | (2,001 | ) | $ | (52,760 | ) | ||||||||||||||
Underwriting Ratios | |||||||||||||||||||||||
Loss ratio | 106.3 | % | 98.5 | % | 12.8 | % | 81.4 | % | 96.1 | % | 82.9 | % | |||||||||||
Acquisition expense ratio | 15.4 | % | 17.7 | % | 7.9 | % | 14.3 | % | 24.9 | % | 15.4 | % | |||||||||||
Other operating expense ratio | 17.0 | % | 11.2 | % | 12.7 | % | 14.3 | % | 6.4 | % | 13.5 | % | |||||||||||
Combined ratio | 138.7 | % | 127.4 | % | 33.4 | % | 110.0 | % | 127.4 | % | 111.8 | % | |||||||||||
Goodwill and intangible assets | $ | 23,445 | $ | 417 | $ | 652,893 | $ | 676,755 | $ | 7,650 | $ | 684,405 |
(1) | Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. |
(2) | Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘UGC transaction costs and other.’ |
ACGL 2017 THIRD QUARTER FORM 10-Q | 17 |
Three Months Ended | |||||||||||||||||||||||
September 30, 2016 | |||||||||||||||||||||||
Insurance | Reinsurance | Mortgage | Sub-Total | Other | Total | ||||||||||||||||||
Gross premiums written (1) | $ | 758,934 | $ | 324,361 | $ | 131,726 | $ | 1,214,765 | $ | 163,736 | $ | 1,278,765 | |||||||||||
Premiums ceded | (217,446 | ) | (89,551 | ) | (51,182 | ) | (357,923 | ) | (6,300 | ) | (264,487 | ) | |||||||||||
Net premiums written | 541,488 | 234,810 | 80,544 | 856,842 | 157,436 | 1,014,278 | |||||||||||||||||
Change in unearned premiums | (22,410 | ) | 17,117 | (3,582 | ) | (8,875 | ) | (47,000 | ) | (55,875 | ) | ||||||||||||
Net premiums earned | 519,078 | 251,927 | 76,962 | 847,967 | 110,436 | 958,403 | |||||||||||||||||
Other underwriting income (loss) | — | 2,216 | 4,740 | 6,956 | 1,024 | 7,980 | |||||||||||||||||
Losses and loss adjustment expenses | (332,845 | ) | (105,924 | ) | (11,107 | ) | (449,876 | ) | (74,307 | ) | (524,183 | ) | |||||||||||
Acquisition expenses | (77,146 | ) | (50,192 | ) | (5,190 | ) | (132,528 | ) | (28,739 | ) | (161,267 | ) | |||||||||||
Other operating expenses | (86,613 | ) | (35,389 | ) | (24,249 | ) | (146,251 | ) | (7,035 | ) | (153,286 | ) | |||||||||||
Underwriting income (loss) | $ | 22,474 | $ | 62,638 | $ | 41,156 | 126,268 | 1,379 | 127,647 | ||||||||||||||
Net investment income | 66,282 | 27,336 | 93,618 | ||||||||||||||||||||
Net realized gains (losses) | 95,946 | 29,159 | 125,105 | ||||||||||||||||||||
Net impairment losses recognized in earnings | (3,867 | ) | — | (3,867 | ) | ||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 16,662 | — | 16,662 | ||||||||||||||||||||
Other income (loss) | (400 | ) | — | (400 | ) | ||||||||||||||||||
Corporate expenses (2) | (11,343 | ) | — | (11,343 | ) | ||||||||||||||||||
UGC transaction costs and other (2) | (7,142 | ) | — | (7,142 | ) | ||||||||||||||||||
Amortization of intangible assets | (4,865 | ) | — | (4,865 | ) | ||||||||||||||||||
Interest expense | (12,924 | ) | (3,019 | ) | (15,943 | ) | |||||||||||||||||
Net foreign exchange gains (losses) | (4,232 | ) | 1,611 | (2,621 | ) | ||||||||||||||||||
Income (loss) before income taxes | 260,385 | 56,466 | 316,851 | ||||||||||||||||||||
Income tax (expense) benefit | (13,232 | ) | 1 | (13,231 | ) | ||||||||||||||||||
Net income (loss) | 247,153 | 56,467 | 303,620 | ||||||||||||||||||||
Dividends attributable to redeemable noncontrolling interests | — | (4,588 | ) | (4,588 | ) | ||||||||||||||||||
Amounts attributable to nonredeemable noncontrolling interests | — | (46,160 | ) | (46,160 | ) | ||||||||||||||||||
Net income (loss) available to Arch | 247,153 | 5,719 | 252,872 | ||||||||||||||||||||
Preferred dividends | (5,484 | ) | — | (5,484 | ) | ||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 241,669 | $ | 5,719 | $ | 247,388 | |||||||||||||||||
Underwriting Ratios | |||||||||||||||||||||||
Loss ratio | 64.1 | % | 42.0 | % | 14.4 | % | 53.1 | % | 67.3 | % | 54.7 | % | |||||||||||
Acquisition expense ratio | 14.9 | % | 19.9 | % | 6.7 | % | 15.6 | % | 26.0 | % | 16.8 | % | |||||||||||
Other operating expense ratio | 16.7 | % | 14.0 | % | 31.5 | % | 17.2 | % | 6.4 | % | 16.0 | % | |||||||||||
Combined ratio | 95.7 | % | 75.9 | % | 52.6 | % | 85.9 | % | 99.7 | % | 87.5 | % | |||||||||||
Goodwill and intangible assets | $ | 26,367 | $ | 1,228 | $ | 55,696 | $ | 83,291 | $ | 7,650 | $ | 90,941 |
(1) | Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. |
(2) | Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘UGC transaction costs and other.’ |
ACGL 2017 THIRD QUARTER FORM 10-Q | 18 |
Nine Months Ended | |||||||||||||||||||||||
September 30, 2017 | |||||||||||||||||||||||
Insurance | Reinsurance | Mortgage | Sub-Total | Other | Total | ||||||||||||||||||
Gross premiums written (1) | $ | 2,313,630 | $ | 1,351,051 | $ | 1,032,800 | $ | 4,697,007 | $ | 473,131 | $ | 4,915,895 | |||||||||||
Premiums ceded | (704,057 | ) | (386,743 | ) | (194,139 | ) | (1,284,465 | ) | (35,315 | ) | (1,065,537 | ) | |||||||||||
Net premiums written | 1,609,573 | 964,308 | 838,661 | 3,412,542 | 437,816 | 3,850,358 | |||||||||||||||||
Change in unearned premiums | (51,188 | ) | (81,182 | ) | (61,776 | ) | (194,146 | ) | (36,435 | ) | (230,581 | ) | |||||||||||
Net premiums earned | 1,558,385 | 883,126 | 776,885 | 3,218,396 | 401,381 | 3,619,777 | |||||||||||||||||
Other underwriting income (loss) | — | 1,143 | 11,999 | 13,142 | 2,377 | 15,519 | |||||||||||||||||
Losses and loss adjustment expenses | (1,252,375 | ) | (631,669 | ) | (84,915 | ) | (1,968,959 | ) | (319,612 | ) | (2,288,571 | ) | |||||||||||
Acquisition expenses | (236,378 | ) | (154,638 | ) | (76,235 | ) | (467,251 | ) | (99,328 | ) | (566,579 | ) | |||||||||||
Other operating expenses | (271,268 | ) | (110,458 | ) | (108,790 | ) | (490,516 | ) | (24,311 | ) | (514,827 | ) | |||||||||||
Underwriting income (loss) | $ | (201,636 | ) | $ | (12,496 | ) | $ | 518,944 | 304,812 | (39,493 | ) | 265,319 | |||||||||||
Net investment income | 282,459 | 62,998 | 345,457 | ||||||||||||||||||||
Net realized gains (losses) | 110,662 | 11,501 | 122,163 | ||||||||||||||||||||
Net impairment losses recognized in earnings | (5,415 | ) | — | (5,415 | ) | ||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 111,884 | — | 111,884 | ||||||||||||||||||||
Other income (loss) | (3,118 | ) | — | (3,118 | ) | ||||||||||||||||||
Corporate expenses (2) | (48,517 | ) | — | (48,517 | ) | ||||||||||||||||||
UGC transaction costs and other (2) | (21,249 | ) | — | (21,249 | ) | ||||||||||||||||||
Amortization of intangible assets | (93,942 | ) | — | (93,942 | ) | ||||||||||||||||||
Interest expense | (77,932 | ) | (9,003 | ) | (86,935 | ) | |||||||||||||||||
Net foreign exchange gains (losses) | (85,451 | ) | (1,524 | ) | (86,975 | ) | |||||||||||||||||
Income (loss) before income taxes | 474,193 | 24,479 | 498,672 | ||||||||||||||||||||
Income tax (expense) benefit | (70,734 | ) | (21 | ) | (70,755 | ) | |||||||||||||||||
Net income (loss) | 403,459 | 24,458 | 427,917 | ||||||||||||||||||||
Dividends attributable to redeemable noncontrolling interests | — | (13,756 | ) | (13,756 | ) | ||||||||||||||||||
Amounts attributable to nonredeemable noncontrolling interests | — | (9,523 | ) | (9,523 | ) | ||||||||||||||||||
Net income (loss) available to Arch | 403,459 | 1,179 | 404,638 | ||||||||||||||||||||
Preferred dividends | (34,936 | ) | — | (34,936 | ) | ||||||||||||||||||
Loss on redemption of preferred shares | (6,735 | ) | — | (6,735 | ) | ||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 361,788 | $ | 1,179 | $ | 362,967 | |||||||||||||||||
Underwriting Ratios | |||||||||||||||||||||||
Loss ratio | 80.4 | % | 71.5 | % | 10.9 | % | 61.2 | % | 79.6 | % | 63.2 | % | |||||||||||
Acquisition expense ratio | 15.2 | % | 17.5 | % | 9.8 | % | 14.5 | % | 24.7 | % | 15.7 | % | |||||||||||
Other operating expense ratio | 17.4 | % | 12.5 | % | 14.0 | % | 15.2 | % | 6.1 | % | 14.2 | % | |||||||||||
Combined ratio | 113.0 | % | 101.5 | % | 34.7 | % | 90.9 | % | 110.4 | % | 93.1 | % |
(1) | Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. |
(2) | Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘UGC transaction costs and other.’ |
ACGL 2017 THIRD QUARTER FORM 10-Q | 19 |
Nine Months Ended | |||||||||||||||||||||||
September 30, 2016 | |||||||||||||||||||||||
Insurance | Reinsurance | Mortgage | Sub-Total | Other | Total | ||||||||||||||||||
Gross premiums written (1) | $ | 2,319,530 | $ | 1,217,804 | $ | 361,440 | $ | 3,898,025 | $ | 421,627 | $ | 4,046,667 | |||||||||||
Premiums ceded | (713,110 | ) | (370,068 | ) | (62,918 | ) | (1,145,347 | ) | (15,229 | ) | (887,591 | ) | |||||||||||
Net premiums written | 1,606,420 | 847,736 | 298,522 | 2,752,678 | 406,398 | 3,159,076 | |||||||||||||||||
Change in unearned premiums | (46,603 | ) | (43,345 | ) | (93,283 | ) | (183,231 | ) | (59,878 | ) | (243,109 | ) | |||||||||||
Net premiums earned | 1,559,817 | 804,391 | 205,239 | 2,569,447 | 346,520 | 2,915,967 | |||||||||||||||||
Other underwriting income (loss) | — | 22,659 | 12,670 | 35,329 | 2,922 | 38,251 | |||||||||||||||||
Losses and loss adjustment expenses | (1,011,087 | ) | (363,613 | ) | (20,102 | ) | (1,394,802 | ) | (236,922 | ) | (1,631,724 | ) | |||||||||||
Acquisition expenses | (228,806 | ) | (160,706 | ) | (16,947 | ) | (406,459 | ) | (95,323 | ) | (501,782 | ) | |||||||||||
Other operating expenses | (263,111 | ) | (108,561 | ) | (70,590 | ) | (442,262 | ) | (18,486 | ) | (460,748 | ) | |||||||||||
Underwriting income (loss) | $ | 56,813 | $ | 194,170 | $ | 110,270 | 361,253 | (1,289 | ) | 359,964 | |||||||||||||
Net investment income | 207,088 | 68,603 | 275,691 | ||||||||||||||||||||
Net realized gains (losses) | 168,735 | 61,912 | 230,647 | ||||||||||||||||||||
Net impairment losses recognized in earnings | (16,849 | ) | — | (16,849 | ) | ||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 32,054 | — | 32,054 | ||||||||||||||||||||
Other income (loss) | (432 | ) | — | (432 | ) | ||||||||||||||||||
Corporate expenses (2) | (37,926 | ) | — | (37,926 | ) | ||||||||||||||||||
UGC transaction costs and other (2) | (7,142 | ) | — | (7,142 | ) | ||||||||||||||||||
Amortization of intangible assets | (14,493 | ) | — | (14,493 | ) | ||||||||||||||||||
Interest expense | (37,983 | ) | (9,730 | ) | (47,713 | ) | |||||||||||||||||
Net foreign exchange gains (losses) | (3,812 | ) | 2,287 | (1,525 | ) | ||||||||||||||||||
Income (loss) before income taxes | 650,493 | 121,783 | 772,276 | ||||||||||||||||||||
Income tax (expense) benefit | (43,673 | ) | 1 | (43,672 | ) | ||||||||||||||||||
Net income (loss) | 606,820 | 121,784 | 728,604 | ||||||||||||||||||||
Dividends attributable to redeemable noncontrolling interests | — | (13,761 | ) | (13,761 | ) | ||||||||||||||||||
Amounts attributable to nonredeemable noncontrolling interests | — | (96,118 | ) | (96,118 | ) | ||||||||||||||||||
Net income (loss) available to Arch | 606,820 | 11,905 | 618,725 | ||||||||||||||||||||
Preferred dividends | (16,453 | ) | — | (16,453 | ) | ||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 590,367 | $ | 11,905 | $ | 602,272 | |||||||||||||||||
Underwriting Ratios | |||||||||||||||||||||||
Loss ratio | 64.8 | % | 45.2 | % | 9.8 | % | 54.3 | % | 68.4 | % | 56.0 | % | |||||||||||
Acquisition expense ratio | 14.7 | % | 20.0 | % | 8.3 | % | 15.8 | % | 27.5 | % | 17.2 | % | |||||||||||
Other operating expense ratio | 16.9 | % | 13.5 | % | 34.4 | % | 17.2 | % | 5.3 | % | 15.8 | % | |||||||||||
Combined ratio | 96.4 | % | 78.7 | % | 52.5 | % | 87.3 | % | 101.2 | % | 89.0 | % |
(1) | Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. |
(2) | Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘UGC transaction costs and other.’ |
ACGL 2017 THIRD QUARTER FORM 10-Q | 20 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Reserve for losses and loss adjustment expenses at beginning of period | $ | 10,520,511 | $ | 9,471,647 | $ | 10,200,960 | $ | 9,125,250 | |||||||
Unpaid losses and loss adjustment expenses recoverable and deferred charges | 2,116,210 | 2,003,768 | 2,083,575 | 1,828,837 | |||||||||||
Net reserve for losses and loss adjustment expenses at beginning of period | 8,404,301 | 7,467,879 | 8,117,385 | 7,296,413 | |||||||||||
Net incurred losses and loss adjustment expenses relating to losses occurring in: | |||||||||||||||
Current year | 1,092,175 | 598,940 | 2,487,212 | 1,848,299 | |||||||||||
Prior years | (45,232 | ) | (74,757 | ) | (197,839 | ) | (216,575 | ) | |||||||
Discount and accretion on retroactive reinsurance | (802 | ) | — | (802 | ) | — | |||||||||
Total net incurred losses and loss adjustment expenses | 1,046,141 | 524,183 | 2,288,571 | 1,631,724 | |||||||||||
Net foreign exchange losses (gains) | 61,919 | 1,463 | 168,493 | (13,270 | ) | ||||||||||
Net paid losses and loss adjustment expenses relating to losses occurring in: | |||||||||||||||
Current year | (167,450 | ) | (128,432 | ) | (282,952 | ) | (285,468 | ) | |||||||
Prior years | (457,183 | ) | (304,673 | ) | (1,403,769 | ) | (1,068,979 | ) | |||||||
Total net paid losses and loss adjustment expenses | (624,633 | ) | (433,105 | ) | (1,686,721 | ) | (1,354,447 | ) | |||||||
Net reserve for losses and loss adjustment expenses at end of period | 8,887,728 | 7,560,420 | 8,887,728 | 7,560,420 | |||||||||||
Unpaid losses and loss adjustment expenses recoverable and deferred charges | 2,463,539 | 2,049,769 | 2,463,539 | 2,049,769 | |||||||||||
Reserve for losses and loss adjustment expenses at end of period | $ | 11,351,267 | $ | 9,610,189 | $ | 11,351,267 | $ | 9,610,189 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 21 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 22 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 23 |
Estimated Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Cost or Amortized Cost | OTTI Unrealized Losses (2) | |||||||||||||||
September 30, 2017 | |||||||||||||||||||
Fixed maturities (1): | |||||||||||||||||||
Corporate bonds | $ | 4,275,437 | $ | 49,576 | $ | (22,303 | ) | $ | 4,248,164 | $ | (73 | ) | |||||||
Mortgage backed securities | 323,900 | 5,078 | (2,540 | ) | 321,362 | (2,146 | ) | ||||||||||||
Municipal bonds | 2,353,234 | 31,202 | (7,614 | ) | 2,329,646 | — | |||||||||||||
Commercial mortgage backed securities | 584,730 | 3,114 | (4,377 | ) | 585,993 | — | |||||||||||||
U.S. government and government agencies | 3,761,612 | 3,303 | (20,246 | ) | 3,778,555 | — | |||||||||||||
Non-U.S. government securities | 1,473,819 | 49,570 | (21,647 | ) | 1,445,896 | — | |||||||||||||
Asset backed securities | 1,544,919 | 9,053 | (4,748 | ) | 1,540,614 | (22 | ) | ||||||||||||
Total | 14,317,651 | 150,896 | (83,475 | ) | 14,250,230 | (2,241 | ) | ||||||||||||
Equity securities | 480,607 | 84,755 | (7,873 | ) | 403,725 | — | |||||||||||||
Other investments | 260,339 | 54,512 | (1 | ) | 205,828 | — | |||||||||||||
Short-term investments | 1,646,036 | 667 | (504 | ) | 1,645,873 | — | |||||||||||||
Total | $ | 16,704,633 | $ | 290,830 | $ | (91,853 | ) | $ | 16,505,656 | $ | (2,241 | ) | |||||||
December 31, 2016 | |||||||||||||||||||
Fixed maturities (1): | |||||||||||||||||||
Corporate bonds | $ | 4,392,373 | $ | 27,606 | $ | (46,905 | ) | $ | 4,411,672 | $ | (2,285 | ) | |||||||
Mortgage backed securities | 490,093 | 4,794 | (8,357 | ) | 493,656 | (3,323 | ) | ||||||||||||
Municipal bonds | 3,713,434 | 8,554 | (29,154 | ) | 3,734,034 | (201 | ) | ||||||||||||
Commercial mortgage backed securities | 536,051 | 2,876 | (6,508 | ) | 539,683 | — | |||||||||||||
U.S. government and government agencies | 2,804,540 | 9,319 | (24,437 | ) | 2,819,658 | — | |||||||||||||
Non-U.S. government securities | 1,096,440 | 19,036 | (56,872 | ) | 1,134,276 | — | |||||||||||||
Asset backed securities | 1,123,987 | 6,897 | (6,526 | ) | 1,123,616 | (22 | ) | ||||||||||||
Total | 14,156,918 | 79,082 | (178,759 | ) | 14,256,595 | (5,831 | ) | ||||||||||||
Equity securities | 532,680 | 62,627 | (17,517 | ) | 487,570 | — | |||||||||||||
Other investments | 167,970 | 21,358 | (2,465 | ) | 149,077 | — | |||||||||||||
Short-term investments | 612,005 | 272 | (145 | ) | 611,878 | — | |||||||||||||
Total | $ | 15,469,573 | $ | 163,339 | $ | (198,886 | ) | $ | 15,505,120 | $ | (5,831 | ) |
(1) | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” |
(2) | Represents the total other-than-temporary impairments (“OTTI”) recognized in accumulated other comprehensive income (“AOCI”). It does not include the change in fair value subsequent to the impairment measurement date. At September 30, 2017, the net unrealized gain related to securities for which a non-credit OTTI was recognized in AOCI was $0.9 million, compared to a net unrealized gain of $2.8 million at December 31, 2016. |
ACGL 2017 THIRD QUARTER FORM 10-Q | 24 |
Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||
Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | ||||||||||||||||||
September 30, 2017 | |||||||||||||||||||||||
Fixed maturities (1): | |||||||||||||||||||||||
Corporate bonds | $ | 1,173,096 | $ | (18,315 | ) | $ | 191,382 | $ | (3,988 | ) | $ | 1,364,478 | $ | (22,303 | ) | ||||||||
Mortgage backed securities | 146,352 | (2,477 | ) | 1,511 | (63 | ) | 147,863 | (2,540 | ) | ||||||||||||||
Municipal bonds | 745,410 | (5,958 | ) | 110,752 | (1,656 | ) | 856,162 | (7,614 | ) | ||||||||||||||
Commercial mortgage backed securities | 282,901 | (3,579 | ) | 17,570 | (798 | ) | 300,471 | (4,377 | ) | ||||||||||||||
U.S. government and government agencies | 3,083,239 | (19,736 | ) | 25,894 | (510 | ) | 3,109,133 | (20,246 | ) | ||||||||||||||
Non-U.S. government securities | 1,149,528 | (20,741 | ) | 37,655 | (906 | ) | 1,187,183 | (21,647 | ) | ||||||||||||||
Asset backed securities | 587,561 | (4,404 | ) | 22,051 | (344 | ) | 609,612 | (4,748 | ) | ||||||||||||||
Total | 7,168,087 | (75,210 | ) | 406,815 | (8,265 | ) | 7,574,902 | (83,475 | ) | ||||||||||||||
Equity securities | 170,937 | (7,873 | ) | — | — | 170,937 | (7,873 | ) | |||||||||||||||
Other investments | 725 | (1 | ) | — | — | 725 | (1 | ) | |||||||||||||||
Short-term investments | 110,444 | (504 | ) | — | — | 110,444 | (504 | ) | |||||||||||||||
Total | $ | 7,450,193 | $ | (83,588 | ) | $ | 406,815 | $ | (8,265 | ) | $ | 7,857,008 | $ | (91,853 | ) | ||||||||
December 31, 2016 | |||||||||||||||||||||||
Fixed maturities (1): | |||||||||||||||||||||||
Corporate bonds | $ | 1,700,813 | $ | (43,011 | ) | $ | 46,902 | $ | (3,894 | ) | $ | 1,747,715 | $ | (46,905 | ) | ||||||||
Mortgage backed securities | 402,699 | (8,134 | ) | 6,105 | (223 | ) | 408,804 | (8,357 | ) | ||||||||||||||
Municipal bonds | 1,513,308 | (28,504 | ) | 29,636 | (650 | ) | 1,542,944 | (29,154 | ) | ||||||||||||||
Commercial mortgage backed securities | 231,374 | (6,331 | ) | 5,635 | (177 | ) | 237,009 | (6,508 | ) | ||||||||||||||
U.S. government and government agencies | 1,888,018 | (24,437 | ) | — | — | 1,888,018 | (24,437 | ) | |||||||||||||||
Non-U.S. government securities | 807,598 | (56,872 | ) | — | — | 807,598 | (56,872 | ) | |||||||||||||||
Asset backed securities | 627,557 | (5,465 | ) | 65,723 | (1,061 | ) | 693,280 | (6,526 | ) | ||||||||||||||
Total | 7,171,367 | (172,754 | ) | 154,001 | (6,005 | ) | 7,325,368 | (178,759 | ) | ||||||||||||||
Equity securities | 269,381 | (17,517 | ) | — | — | 269,381 | (17,517 | ) | |||||||||||||||
Other investments | 39,299 | (2,465 | ) | — | — | 39,299 | (2,465 | ) | |||||||||||||||
Short-term investments | 29,146 | (145 | ) | — | — | 29,146 | (145 | ) | |||||||||||||||
Total | $ | 7,509,193 | $ | (192,881 | ) | $ | 154,001 | $ | (6,005 | ) | $ | 7,663,194 | $ | (198,886 | ) |
(1) | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” |
ACGL 2017 THIRD QUARTER FORM 10-Q | 25 |
September 30, 2017 | December 31, 2016 | |||||||||||||||
Maturity | Estimated Fair Value | Amortized Cost | Estimated Fair Value | Amortized Cost | ||||||||||||
Due in one year or less | $ | 537,043 | $ | 534,513 | $ | 560,830 | $ | 557,675 | ||||||||
Due after one year through five years | 7,547,002 | 7,508,674 | 6,158,148 | 6,211,099 | ||||||||||||
Due after five years through 10 years | 3,495,424 | 3,480,251 | 4,676,847 | 4,710,017 | ||||||||||||
Due after 10 years | 284,633 | 278,823 | 610,962 | 620,849 | ||||||||||||
11,864,102 | 11,802,261 | 12,006,787 | 12,099,640 | |||||||||||||
Mortgage backed securities | 323,900 | 321,362 | 490,093 | 493,656 | ||||||||||||
Commercial mortgage backed securities | 584,730 | 585,993 | 536,051 | 539,683 | ||||||||||||
Asset backed securities | 1,544,919 | 1,540,614 | 1,123,987 | 1,123,616 | ||||||||||||
Total (1) | $ | 14,317,651 | $ | 14,250,230 | $ | 14,156,918 | $ | 14,256,595 |
(1) | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” |
Remaining Contractual Maturity of the Agreements | ||||||||||||||||||||
Overnight and Continuous | Less than 30 Days | 30-90 Days | 90 Days or More | Total | ||||||||||||||||
September 30, 2017 | ||||||||||||||||||||
U.S. government and government agencies | $ | 424,838 | $ | 8,186 | $ | 74,930 | $ | — | $ | 507,954 | ||||||||||
Corporate bonds | 31,305 | — | — | — | 31,305 | |||||||||||||||
Equity securities | 3,984 | — | — | — | 3,984 | |||||||||||||||
Total | $ | 460,127 | $ | 8,186 | $ | 74,930 | $ | — | $ | 543,243 | ||||||||||
Gross amount of recognized liabilities for securities lending in offsetting disclosure in Note 9 | $ | — | ||||||||||||||||||
Amounts related to securities lending not included in offsetting disclosure in Note 9 | $ | 543,243 | ||||||||||||||||||
December 31, 2016 | ||||||||||||||||||||
U.S. government and government agencies | $ | 556,015 | $ | 31,244 | $ | 126,093 | $ | 5,140 | $ | 718,492 | ||||||||||
Corporate bonds | 29,078 | — | — | — | 29,078 | |||||||||||||||
Equity securities | 14,984 | — | — | — | 14,984 | |||||||||||||||
Total | $ | 600,077 | $ | 31,244 | $ | 126,093 | $ | 5,140 | $ | 762,554 | ||||||||||
Gross amount of recognized liabilities for securities lending in offsetting disclosure in Note 9 | $ | — | ||||||||||||||||||
Amounts related to securities lending not included in offsetting disclosure in Note 9 | $ | 762,554 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 26 |
September 30, 2017 | December 31, 2016 | ||||||
Available for sale: | |||||||
Asian and emerging markets | $ | 123,225 | $ | 84,778 | |||
Investment grade fixed income | 53,325 | 33,923 | |||||
Credit related funds | 20,752 | 7,469 | |||||
Other | 63,037 | 41,800 | |||||
Total available for sale | 260,339 | 167,970 | |||||
Fair value option: | |||||||
Term loan investments (par value: $1,378,797 and $1,208,537) | 1,387,663 | 1,190,799 | |||||
Mezzanine debt funds | 172,000 | 127,943 | |||||
Credit related funds | 194,200 | 218,298 | |||||
Investment grade fixed income | 95,151 | 75,468 | |||||
Asian and emerging markets | 300,552 | 178,568 | |||||
Other (1) | 147,639 | 129,717 | |||||
Total fair value option | 2,297,205 | 1,920,793 | |||||
Total | $ | 2,557,544 | $ | 2,088,763 |
(1) | Includes fund investments with strategies in mortgage servicing rights, transportation, infrastructure and other. |
September 30, 2017 | December 31, 2016 | ||||||
Fixed maturities | $ | 1,508,204 | $ | 1,099,116 | |||
Other investments | 2,297,205 | 1,920,793 | |||||
Short-term investments | 349,540 | 373,669 | |||||
Equity securities | 94,685 | 27,642 | |||||
Investments accounted for using the fair value option | $ | 4,249,634 | $ | 3,421,220 |
September 30, 2017 | December 31, 2016 | ||||||
Investments accounted for using the equity method (1) | $ | 962,574 | $ | 800,970 | |||
Investments accounted for using the fair value option (2) | 109,157 | 90,804 | |||||
Total | $ | 1,071,731 | $ | 891,774 |
(1) | Aggregate unfunded commitments were $850.4 million at September 30, 2017, compared to $776.6 million at December 31, 2016. |
(2) | Aggregate unfunded commitments were $162.3 million at September 30, 2017, compared to $16.7 million at December 31, 2016. |
ACGL 2017 THIRD QUARTER FORM 10-Q | 27 |
September 30, | |||||||
2017 | 2016 | ||||||
Three Months Ended | |||||||
Fixed maturities | $ | 96,144 | $ | 71,366 | |||
Equity securities | 2,887 | 3,311 | |||||
Short-term investments | 2,957 | 1,703 | |||||
Other (1) | 37,957 | 37,466 | |||||
Gross investment income | 139,945 | 113,846 | |||||
Investment expenses | (23,486 | ) | (20,228 | ) | |||
Net investment income | $ | 116,459 | $ | 93,618 | |||
Nine Months Ended | |||||||
Fixed maturities | $ | 284,807 | $ | 223,033 | |||
Equity securities | 9,184 | 10,409 | |||||
Short-term investments | 6,732 | 3,015 | |||||
Other (1) | 111,613 | 98,089 | |||||
Gross investment income | 412,336 | 334,546 | |||||
Investment expenses | (66,879 | ) | (58,855 | ) | |||
Net investment income | $ | 345,457 | $ | 275,691 |
(1) | Includes income distributions from investment funds, term loan investments and other items. |
September 30, | |||||||
2017 | 2016 | ||||||
Three Months Ended | |||||||
Available for sale securities: | |||||||
Gross gains on investment sales | $ | 66,565 | $ | 84,451 | |||
Gross losses on investment sales | (39,015 | ) | (22,985 | ) | |||
Change in fair value of assets and liabilities accounted for using the fair value option: | |||||||
Fixed maturities | 4,035 | 43,935 | |||||
Other investments | 24,264 | 46,428 | |||||
Equity securities | 10,230 | (52 | ) | ||||
Short-term investments | (3,320 | ) | 1,150 | ||||
Derivative instruments (1) | 4,298 | (16,964 | ) | ||||
Other (2) | (782 | ) | (10,858 | ) | |||
Net realized gains (losses) | $ | 66,275 | $ | 125,105 | |||
Nine Months Ended | |||||||
Available for sale securities: | |||||||
Gross gains on investment sales | $ | 212,470 | $ | 266,965 | |||
Gross losses on investment sales | (152,996 | ) | (129,409 | ) | |||
Change in fair value of assets and liabilities accounted for using the fair value option: | |||||||
Fixed maturities | 34,232 | 62,234 | |||||
Other investments | 42,149 | 38,016 | |||||
Equity securities | 16,604 | 385 | |||||
Short-term investments | 12 | 107 | |||||
Derivative instruments (1) | (9,653 | ) | 24,102 | ||||
Other (2) | (20,655 | ) | (31,753 | ) | |||
Net realized gains (losses) | $ | 122,163 | $ | 230,647 |
(1) | See Note 9 for information on the Company’s derivative instruments. |
(2) | Includes the re-measurement of contingent consideration liability amounts. |
ACGL 2017 THIRD QUARTER FORM 10-Q | 28 |
September 30, | |||||||
2017 | 2016 | ||||||
Three Months Ended | |||||||
Fixed maturities: | |||||||
Mortgage backed securities | $ | (50 | ) | $ | (233 | ) | |
Corporate bonds | (82 | ) | — | ||||
Non-U.S. government securities | (178 | ) | (545 | ) | |||
U.S. government and government agencies | (426 | ) | — | ||||
Municipal bonds | (202 | ) | — | ||||
Total | (938 | ) | (778 | ) | |||
Equity securities | (940 | ) | (557 | ) | |||
Other investments | — | (2,532 | ) | ||||
Net impairment losses recognized in earnings | $ | (1,878 | ) | $ | (3,867 | ) | |
Nine Months Ended | |||||||
Fixed maturities: | |||||||
Mortgage backed securities | $ | (1,461 | ) | $ | (788 | ) | |
Corporate bonds | (1,484 | ) | (5,655 | ) | |||
Non-U.S. government securities | (376 | ) | (777 | ) | |||
Asset backed securities | — | (2,506 | ) | ||||
U.S. government and government agencies | (426 | ) | — | ||||
Municipal bonds | (375 | ) | — | ||||
Total | (4,122 | ) | (9,726 | ) | |||
Equity securities | (1,126 | ) | (3,594 | ) | |||
Other investments | (167 | ) | (3,529 | ) | |||
Net impairment losses recognized in earnings | $ | (5,415 | ) | $ | (16,849 | ) |
September 30, | |||||||
2017 | 2016 | ||||||
Three Months Ended | |||||||
Balance at start of period | $ | 4,437 | $ | 14,847 | |||
Credit loss impairments recognized on securities not previously impaired | — | 38 | |||||
Credit loss impairments recognized on securities previously impaired | 15 | 60 | |||||
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security | — | — | |||||
Reductions for securities sold during the period | (689 | ) | (1,166 | ) | |||
Balance at end of period | $ | 3,763 | $ | 13,779 | |||
Nine Months Ended | |||||||
Balance at start of year | $ | 13,138 | $ | 26,875 | |||
Credit loss impairments recognized on securities not previously impaired | 31 | 1,388 | |||||
Credit loss impairments recognized on securities previously impaired | 210 | 582 | |||||
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security | — | — | |||||
Reductions for securities sold during the period | (9,616 | ) | (15,066 | ) | |||
Balance at end of period | $ | 3,763 | $ | 13,779 |
September 30, 2017 | December 31, 2016 | ||||||
Assets used for collateral or guarantees: | |||||||
Affiliated transactions | $ | 4,264,131 | $ | 3,871,971 | |||
Third party agreements | 1,689,104 | 1,513,079 | |||||
Deposits with U.S. regulatory authorities | 618,136 | 472,890 | |||||
Deposits with non-U.S. regulatory authorities | 56,753 | 44,399 | |||||
Total restricted assets | $ | 6,628,124 | $ | 5,902,339 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 29 |
Level 1: | Inputs to the valuation methodology are observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets |
Level 2: | Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument |
Level 3: | Inputs to the valuation methodology are unobservable and significant to the fair value measurement |
ACGL 2017 THIRD QUARTER FORM 10-Q | 30 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 31 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 32 |
Estimated Fair Value Measurements Using: | |||||||||||||||
Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets measured at fair value (1): | |||||||||||||||
Available for sale securities: | |||||||||||||||
Fixed maturities: | |||||||||||||||
Corporate bonds | $ | 4,275,437 | $ | — | $ | 4,263,446 | $ | 11,991 | |||||||
Mortgage backed securities | 323,900 | — | 323,496 | 404 | |||||||||||
Municipal bonds | 2,353,234 | — | 2,353,234 | — | |||||||||||
Commercial mortgage backed securities | 584,730 | — | 584,185 | 545 | |||||||||||
U.S. government and government agencies | 3,761,612 | 3,687,126 | 74,486 | — | |||||||||||
Non-U.S. government securities | 1,473,819 | — | 1,473,819 | — | |||||||||||
Asset backed securities | 1,544,919 | — | 1,539,919 | 5,000 | |||||||||||
Total | 14,317,651 | 3,687,126 | 10,612,585 | 17,940 | |||||||||||
Equity securities | 480,607 | 473,908 | 6,699 | — | |||||||||||
Short-term investments | 1,646,036 | 1,600,885 | 45,151 | — | |||||||||||
Other investments | 84,671 | 83,254 | 1,417 | — | |||||||||||
Other investments measured at net asset value (2) | 175,668 | ||||||||||||||
Total other investments | 260,339 | 83,254 | 1,417 | — | |||||||||||
Derivative instruments (4) | 33,141 | — | 33,141 | — | |||||||||||
Fair value option: | |||||||||||||||
Corporate bonds | 823,181 | — | 811,710 | 11,471 | |||||||||||
Non-U.S. government bonds | 97,614 | — | 97,614 | — | |||||||||||
Mortgage backed securities | 21,218 | — | 21,218 | — | |||||||||||
Municipal bonds | 2,740 | — | 2,740 | — | |||||||||||
Commercial mortgage backed securities | 12,539 | — | 12,539 | — | |||||||||||
Asset backed securities | 63,437 | — | 63,437 | — | |||||||||||
U.S. government and government agencies | 487,475 | 487,475 | — | — | |||||||||||
Short-term investments | 349,540 | 343,620 | 5,920 | — | |||||||||||
Equity securities | 94,685 | 59,332 | 35,353 | — | |||||||||||
Other investments | 1,298,198 | 120,212 | 1,146,840 | 31,146 | |||||||||||
Other investments measured at net asset value (2) | 999,007 | ||||||||||||||
Total | 4,249,634 | 1,010,639 | 2,197,371 | 42,617 | |||||||||||
Total assets measured at fair value | $ | 20,987,408 | $ | 6,855,812 | $ | 12,896,364 | $ | 60,557 | |||||||
Liabilities measured at fair value: | |||||||||||||||
Contingent consideration liabilities | $ | (59,248 | ) | $ | — | $ | — | $ | (59,248 | ) | |||||
Securities sold but not yet purchased (3) | (72,682 | ) | — | (72,682 | ) | — | |||||||||
Derivative instruments (4) | (23,037 | ) | — | (23,037 | ) | — | |||||||||
Total liabilities measured at fair value | $ | (154,967 | ) | $ | — | $ | (95,719 | ) | $ | (59,248 | ) |
(1) | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See Note 7, “Investment Information—Securities Lending Agreements.” |
(2) | In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. |
(3) | Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. |
(4) | See Note 9, “Derivative Instruments.” |
ACGL 2017 THIRD QUARTER FORM 10-Q | 33 |
Estimated Fair Value Measurements Using: | |||||||||||||||
Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets measured at fair value (1): | |||||||||||||||
Available for sale securities: | |||||||||||||||
Fixed maturities: | |||||||||||||||
Corporate bonds | $ | 4,392,373 | $ | — | $ | 4,374,029 | $ | 18,344 | |||||||
Mortgage backed securities | 490,093 | — | 490,093 | — | |||||||||||
Municipal bonds | 3,713,434 | — | 3,713,434 | — | |||||||||||
Commercial mortgage backed securities | 536,051 | — | 536,051 | — | |||||||||||
U.S. government and government agencies | 2,804,540 | 2,691,575 | 112,965 | — | |||||||||||
Non-U.S. government securities | 1,096,440 | — | 1,096,440 | — | |||||||||||
Asset backed securities | 1,123,987 | — | 1,112,698 | 11,289 | |||||||||||
Total | 14,156,918 | 2,691,575 | 11,435,710 | 29,633 | |||||||||||
Equity securities | 532,680 | 529,695 | 2,985 | — | |||||||||||
Short-term investments | 612,005 | 608,862 | 3,143 | — | |||||||||||
Other investments | 112,313 | 112,313 | — | — | |||||||||||
Other investments measured at net asset value (2) | 55,657 | ||||||||||||||
Total other investments | 167,970 | 112,313 | — | — | |||||||||||
Derivative instruments (4) | 28,410 | — | 28,410 | — | |||||||||||
Fair value option: | |||||||||||||||
Corporate bonds | 790,935 | — | 790,935 | — | |||||||||||
Non-U.S. government bonds | 61,747 | — | 61,747 | — | |||||||||||
Mortgage backed securities | 18,624 | — | 18,624 | — | |||||||||||
Asset backed securities | 30,324 | — | 30,324 | — | |||||||||||
U.S. government and government agencies | 197,486 | 197,486 | — | — | |||||||||||
Short-term investments | 373,669 | 309,127 | 64,542 | — | |||||||||||
Equity securities | 27,642 | 25,328 | 2,314 | — | |||||||||||
Other investments | 1,226,242 | 80,706 | 1,120,536 | 25,000 | |||||||||||
Other investments measured at net asset value (2) | 694,551 | ||||||||||||||
Total | 3,421,220 | 612,647 | 2,089,022 | 25,000 | |||||||||||
Total assets measured at fair value | $ | 18,919,203 | $ | 4,555,092 | $ | 13,559,270 | $ | 54,633 | |||||||
Liabilities measured at fair value: | |||||||||||||||
Contingent consideration liabilities | $ | (122,350 | ) | $ | — | $ | — | $ | (122,350 | ) | |||||
Securities sold but not yet purchased (3) | (33,157 | ) | — | (33,157 | ) | — | |||||||||
Derivative instruments (4) | (26,049 | ) | — | (26,049 | ) | — | |||||||||
Total liabilities measured at fair value | $ | (181,556 | ) | $ | — | $ | (59,206 | ) | $ | (122,350 | ) |
(1) | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See Note 7, “Investment Information—Securities Lending Agreements.” |
(2) | In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. |
(3) | Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. |
(4) | See Note 9, “Derivative Instruments.” |
ACGL 2017 THIRD QUARTER FORM 10-Q | 34 |
Assets | Liabilities | ||||||||||||||||||||||
s | Available For Sale | Fair Value Option | |||||||||||||||||||||
Structured Securities (1) | Corporate Bonds | Corporate Bonds | Other Investments | Total | Contingent Consideration Liabilities | ||||||||||||||||||
Three Months Ended September 30, 2017 | |||||||||||||||||||||||
Balance at beginning of period | $ | — | $ | 11,570 | $ | — | $ | 25,000 | $ | 36,570 | $ | (57,246 | ) | ||||||||||
Total gains or (losses) (realized/unrealized) | |||||||||||||||||||||||
Included in earnings (2) | — | — | — | — | — | (2,002 | ) | ||||||||||||||||
Included in other comprehensive income | — | 289 | — | — | 289 | — | |||||||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||||||||
Purchases | — | — | — | 1,348 | 1,348 | — | |||||||||||||||||
Issuances | — | — | — | — | — | — | |||||||||||||||||
Sales | — | — | — | — | — | — | |||||||||||||||||
Settlements | — | — | — | — | — | — | |||||||||||||||||
Transfers in and/or out of Level 3 | 5,949 | 132 | 11,471 | 4,798 | 22,350 | — | |||||||||||||||||
Balance at end of period | $ | 5,949 | $ | 11,991 | $ | 11,471 | $ | 31,146 | $ | 60,557 | $ | (59,248 | ) | ||||||||||
Three Months Ended September 30, 2016 | |||||||||||||||||||||||
Balance at beginning of period | $ | 49,211 | $ | 17,305 | $ | — | $ | — | $ | 66,516 | $ | (111,670 | ) | ||||||||||
Total gains or (losses) (realized/unrealized) | |||||||||||||||||||||||
Included in earnings (2) | — | 1,667 | — | — | 1,667 | (4,795 | ) | ||||||||||||||||
Included in other comprehensive income | — | — | — | — | — | 88 | |||||||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||||||||
Purchases | — | — | — | — | — | — | |||||||||||||||||
Issuances | — | — | — | — | — | — | |||||||||||||||||
Sales | — | — | — | — | — | — | |||||||||||||||||
Settlements | (22,435 | ) | — | — | — | (22,435 | ) | — | |||||||||||||||
Transfers in and/or out of Level 3 | — | — | — | — | — | — | |||||||||||||||||
Balance at end of period | $ | 26,776 | $ | 18,972 | $ | — | $ | — | $ | 45,748 | $ | (116,377 | ) | ||||||||||
Nine Months Ended September 30, 2017 | |||||||||||||||||||||||
Balance at beginning of year | $ | 11,289 | $ | 18,344 | $ | — | $ | 25,000 | $ | 54,633 | $ | (122,350 | ) | ||||||||||
Total gains or (losses) (realized/unrealized) | |||||||||||||||||||||||
Included in earnings (2) | 3,779 | 893 | — | — | 4,672 | (9,089 | ) | ||||||||||||||||
Included in other comprehensive income | — | 289 | — | — | 289 | — | |||||||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||||||||
Purchases | — | 4,935 | — | 1,348 | 6,283 | — | |||||||||||||||||
Issuances | — | — | — | — | — | — | |||||||||||||||||
Sales | (13,640 | ) | (12,602 | ) | — | — | (26,242 | ) | — | ||||||||||||||
Settlements | (1,428 | ) | — | — | — | (1,428 | ) | 72,191 | |||||||||||||||
Transfers in and/or out of Level 3 | 5,949 | 132 | 11,471 | 4,798 | 22,350 | — | |||||||||||||||||
Balance at end of period | $ | 5,949 | $ | 11,991 | $ | 11,471 | $ | 31,146 | $ | 60,557 | $ | (59,248 | ) | ||||||||||
Nine Months Ended September 30, 2016 | |||||||||||||||||||||||
Balance at beginning of year | $ | 57,500 | $ | 16,368 | $ | — | $ | — | $ | 73,868 | $ | (96,048 | ) | ||||||||||
Total gains or (losses) (realized/unrealized) | |||||||||||||||||||||||
Included in earnings (2) | (2,500 | ) | 1,828 | — | — | (672 | ) | (20,916 | ) | ||||||||||||||
Included in other comprehensive income | — | — | — | — | — | 51 | |||||||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||||||||
Purchases | — | 776 | — | — | 776 | — | |||||||||||||||||
Issuances | — | — | — | — | — | — | |||||||||||||||||
Sales | — | — | — | — | — | — | |||||||||||||||||
Settlements | (28,224 | ) | — | — | — | (28,224 | ) | 536 | |||||||||||||||
Transfers in and/or out of Level 3 | — | — | — | — | — | — | |||||||||||||||||
Balance at end of period | $ | 26,776 | $ | 18,972 | $ | — | $ | — | $ | 45,748 | $ | (116,377 | ) |
(1) | Includes asset backed securities, mortgage backed securities and commercial mortgage backed securities. |
(2) | For the 2017 periods, gains or losses were included in net realized gains (losses). For the 2016 periods, losses on structured securities were included in net impairment losses recognized in earnings gains or losses while gains or losses on corporate bonds and contingent consideration liabilities were included in net realized gains (losses). |
ACGL 2017 THIRD QUARTER FORM 10-Q | 35 |
Estimated Fair Value | |||||||||||
Asset Derivatives | Liability Derivatives | Notional Value (1) | |||||||||
September 30, 2017 | |||||||||||
Futures contracts (2) | $ | 5,351 | $ | (6,722 | ) | $ | 1,524,985 | ||||
Foreign currency forward contracts (2) | 19,376 | (5,348 | ) | 805,201 | |||||||
TBAs (3) | 18,331 | — | 18,143 | ||||||||
Other (2) | 8,414 | (10,967 | ) | 2,032,922 | |||||||
Total | $ | 51,472 | $ | (23,037 | ) | ||||||
December 31, 2016 | |||||||||||
Futures contracts (2) | $ | 360 | $ | (9,398 | ) | $ | 1,655,530 | ||||
Foreign currency forward contracts (2) | 9,354 | (12,941 | ) | 1,186,386 | |||||||
TBAs (3) | — | — | — | ||||||||
Other (2) | 20,287 | (3,710 | ) | 1,014,863 | |||||||
Total | $ | 30,001 | $ | (26,049 | ) |
(1) | Represents the absolute notional value of all outstanding contracts, consisting of long and short positions. |
(2) | The fair value of asset derivatives are included in ‘other assets’ and the fair value of liability derivatives are included in ‘other liabilities.’ |
(3) | The fair value of TBAs are included in ‘fixed maturities available for sale, at fair value.’ |
ACGL 2017 THIRD QUARTER FORM 10-Q | 36 |
Derivatives not designated as | September 30, | |||||||
hedging instruments: | 2017 | 2016 | ||||||
Three Months Ended | ||||||||
Net realized gains (losses): | ||||||||
Futures contracts | $ | 4,899 | $ | (15,368 | ) | |||
Foreign currency forward contracts | (228 | ) | 4,583 | |||||
TBAs | 122 | (23 | ) | |||||
Other | (495 | ) | (6,156 | ) | ||||
Total | $ | 4,298 | $ | (16,964 | ) | |||
Nine Months Ended | ||||||||
Net realized gains (losses): | ||||||||
Futures contracts | $ | 7,309 | $ | 45,954 | ||||
Foreign currency forward contracts | (12,266 | ) | (13,951 | ) | ||||
TBAs | 143 | 311 | ||||||
Other | (4,839 | ) | (8,212 | ) | ||||
Total | $ | (9,653 | ) | $ | 24,102 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 37 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 38 |
Amounts Reclassified from AOCI | ||||||||||||||||||
Consolidated Statement of Income | Three Months Ended | Nine Months Ended | ||||||||||||||||
Details About | Line Item That Includes | September 30, | September 30, | |||||||||||||||
AOCI Components | Reclassification | 2017 | 2016 | 2017 | 2016 | |||||||||||||
Unrealized appreciation on available-for-sale investments | ||||||||||||||||||
Net realized gains (losses) | $ | 27,550 | $ | 61,464 | $ | 59,474 | $ | 137,555 | ||||||||||
Other-than-temporary impairment losses | (1,878 | ) | (3,867 | ) | (5,415 | ) | (16,999 | ) | ||||||||||
Total before tax | 25,672 | 57,597 | 54,059 | 120,556 | ||||||||||||||
Income tax (expense) benefit | (1,760 | ) | (2,605 | ) | (7,879 | ) | (11,247 | ) | ||||||||||
Net of tax | $ | 23,912 | $ | 54,992 | $ | 46,180 | $ | 109,309 |
Before Tax Amount | Tax Expense (Benefit) | Net of Tax Amount | |||||||||
Three Months Ended September 30, 2017 | |||||||||||
Unrealized appreciation (decline) in value of investments: | |||||||||||
Unrealized holding gains (losses) arising during period | $ | 69,330 | $ | 2,868 | $ | 66,462 | |||||
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) | — | — | — | ||||||||
Less reclassification of net realized gains (losses) included in net income | 25,672 | 1,760 | 23,912 | ||||||||
Foreign currency translation adjustments | 8,590 | 310 | 8,280 | ||||||||
Other comprehensive income (loss) | $ | 52,248 | $ | 1,418 | $ | 50,830 | |||||
Three Months Ended September 30, 2016 | |||||||||||
Unrealized appreciation (decline) in value of investments: | |||||||||||
Unrealized holding gains (losses) arising during period | $ | 11,692 | $ | (4,589 | ) | $ | 16,281 | ||||
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) | — | — | — | ||||||||
Less reclassification of net realized gains (losses) included in net income | 57,597 | 2,605 | 54,992 | ||||||||
Foreign currency translation adjustments | (5,407 | ) | (95 | ) | (5,312 | ) | |||||
Other comprehensive income (loss) | $ | (51,312 | ) | $ | (7,289 | ) | $ | (44,023 | ) | ||
Nine Months Ended September 30, 2017 | |||||||||||
Unrealized appreciation (decline) in value of investments: | |||||||||||
Unrealized holding gains (losses) arising during period | $ | 288,813 | $ | 28,590 | $ | 260,223 | |||||
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) | — | — | — | ||||||||
Less reclassification of net realized gains (losses) included in net income | 54,059 | 7,879 | 46,180 | ||||||||
Foreign currency translation adjustments | 30,264 | 563 | 29,701 | ||||||||
Other comprehensive income (loss) | $ | 265,018 | $ | 21,274 | $ | 243,744 | |||||
Nine Months Ended September 30, 2016 | |||||||||||
Unrealized appreciation (decline) in value of investments: | |||||||||||
Unrealized holding gains (losses) arising during period | $ | 281,770 | $ | 30,048 | $ | 251,722 | |||||
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) | (150 | ) | — | (150 | ) | ||||||
Less reclassification of net realized gains (losses) included in net income | 120,556 | 11,247 | 109,309 | ||||||||
Foreign currency translation adjustments | (5,733 | ) | 417 | (6,150 | ) | ||||||
Other comprehensive income (loss) | $ | 155,331 | $ | 19,218 | $ | 136,113 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 39 |
September 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 | $ | 402 | $ | 69,671 | $ | 21,876,508 | $ | (14,700 | ) | $ | 21,931,881 | |||||||||
Cash | 4,868 | 88,818 | 768,675 | — | 862,361 | |||||||||||||||
Investments in subsidiaries | 9,214,178 | 4,028,493 | — | (13,242,671 | ) | — | ||||||||||||||
Due from subsidiaries and affiliates | 81 | 117 | 1,923,941 | (1,924,139 | ) | — | ||||||||||||||
Premiums receivable | — | — | 1,863,203 | (593,525 | ) | 1,269,678 | ||||||||||||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | — | — | 7,023,836 | (4,517,821 | ) | 2,506,015 | ||||||||||||||
Contractholder receivables | — | — | 1,864,348 | — | 1,864,348 | |||||||||||||||
Ceded unearned premiums | — | — | 2,240,129 | (1,292,994 | ) | 947,135 | ||||||||||||||
Deferred acquisition costs | — | — | 677,567 | (146,371 | ) | 531,196 | ||||||||||||||
Goodwill and intangible assets | — | — | 684,405 | — | 684,405 | |||||||||||||||
Other assets | 13,357 | 59,734 | 2,146,993 | (192,306 | ) | 2,027,778 | ||||||||||||||
Total assets | $ | 9,232,886 | $ | 4,246,833 | $ | 41,069,605 | $ | (21,924,527 | ) | $ | 32,624,797 | |||||||||
Liabilities | ||||||||||||||||||||
Reserve for losses and loss adjustment expenses | $ | — | $ | — | $ | 15,836,263 | $ | (4,484,996 | ) | $ | 11,351,267 | |||||||||
Unearned premiums | — | — | 5,044,544 | (1,292,994 | ) | 3,751,550 | ||||||||||||||
Reinsurance balances payable | — | — | 945,530 | (593,524 | ) | 352,006 | ||||||||||||||
Contractholder payables | — | — | 1,864,348 | — | 1,864,348 | |||||||||||||||
Collateral held for insured obligations | — | — | 345,726 | 345,726 | ||||||||||||||||
Senior notes | 297,030 | 494,596 | 941,100 | — | 1,732,726 | |||||||||||||||
Revolving credit agreement borrowings | — | — | 826,242 | — | 826,242 | |||||||||||||||
Due to subsidiaries and affiliates | 41 | 542,103 | 1,381,996 | (1,924,140 | ) | — | ||||||||||||||
Other liabilities | 24,671 | 100,278 | 2,669,614 | (371,502 | ) | 2,423,061 | ||||||||||||||
Total liabilities | 321,742 | 1,136,977 | 29,855,363 | (8,667,156 | ) | 22,646,926 | ||||||||||||||
Redeemable noncontrolling interests | — | — | 220,529 | (14,700 | ) | 205,829 | ||||||||||||||
Shareholders’ Equity | ||||||||||||||||||||
Total shareholders’ equity available to Arch | 8,911,144 | 3,109,856 | 10,132,815 | (13,242,671 | ) | 8,911,144 | ||||||||||||||
Non-redeemable noncontrolling interests | — | — | 860,898 | — | 860,898 | |||||||||||||||
Total shareholders’ equity | 8,911,144 | 3,109,856 | 10,993,713 | (13,242,671 | ) | 9,772,042 | ||||||||||||||
Total liabilities, noncontrolling interests and shareholders’ equity | $ | 9,232,886 | $ | 4,246,833 | $ | 41,069,605 | $ | (21,924,527 | ) | $ | 32,624,797 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 40 |
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 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 41 |
Three Months Ended September 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 | $ | — | $ | — | $ | 1,261,886 | $ | — | $ | 1,261,886 | ||||||||||
Net investment income | 117 | 151 | 138,784 | (22,593 | ) | 116,459 | ||||||||||||||
Net realized gains (losses) | — | — | 66,275 | — | 66,275 | |||||||||||||||
Net impairment losses recognized in earnings | — | — | (1,878 | ) | — | (1,878 | ) | |||||||||||||
Other underwriting income | — | — | 6,064 | — | 6,064 | |||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | — | — | 31,090 | — | 31,090 | |||||||||||||||
Other income (loss) | (102 | ) | — | (240 | ) | — | (342 | ) | ||||||||||||
Total revenues | 15 | 151 | 1,501,981 | (22,593 | ) | 1,479,554 | ||||||||||||||
Expenses | ||||||||||||||||||||
Losses and loss adjustment expenses | — | — | 1,046,141 | — | 1,046,141 | |||||||||||||||
Acquisition expenses | — | — | 193,854 | — | 193,854 | |||||||||||||||
Other operating expenses | — | — | 170,127 | — | 170,127 | |||||||||||||||
Corporate expenses | 14,576 | 410 | 2,112 | — | 17,098 | |||||||||||||||
Amortization of intangible assets | — | — | 31,824 | — | 31,824 | |||||||||||||||
Interest expense | 5,934 | 12,037 | 33,811 | (22,272 | ) | 29,510 | ||||||||||||||
Net foreign exchange (gains) losses | — | — | 20,510 | 7,518 | 28,028 | |||||||||||||||
Total expenses | 20,510 | 12,447 | 1,498,379 | (14,754 | ) | 1,516,582 | ||||||||||||||
Income (loss) before income taxes | (20,495 | ) | (12,296 | ) | 3,602 | (7,839 | ) | (37,028 | ) | |||||||||||
Income tax (expense) benefit | — | 4,432 | (12,621 | ) | — | (8,189 | ) | |||||||||||||
Income (loss) before equity in net income of subsidiaries | (20,495 | ) | (7,864 | ) | (9,019 | ) | (7,839 | ) | (45,217 | ) | ||||||||||
Equity in net income (loss) of subsidiaries | (13,161 | ) | 50,057 | — | (36,896 | ) | — | |||||||||||||
Net income (loss) | (33,656 | ) | 42,193 | (9,019 | ) | (44,735 | ) | (45,217 | ) | |||||||||||
Net (income) loss attributable to noncontrolling interests | — | — | 11,238 | 323 | 11,561 | |||||||||||||||
Net income (loss) available to Arch | (33,656 | ) | 42,193 | 2,219 | (44,412 | ) | (33,656 | ) | ||||||||||||
Preferred dividends | (12,369 | ) | — | — | — | (12,369 | ) | |||||||||||||
Loss on redemption of preferred shares | (6,735 | ) | — | — | — | (6,735 | ) | |||||||||||||
Net income (loss) available to Arch common shareholders | $ | (52,760 | ) | $ | 42,193 | $ | 2,219 | $ | (44,412 | ) | $ | (52,760 | ) | |||||||
Comprehensive income (loss) available to Arch | $ | 17,585 | $ | 47,676 | $ | 45,936 | $ | (93,612 | ) | $ | 17,585 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 42 |
Three Months Ended September 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 | $ | — | $ | — | $ | 958,403 | $ | — | $ | 958,403 | ||||||||||
Net investment income | 6 | 803 | 99,654 | (6,845 | ) | 93,618 | ||||||||||||||
Net realized gains (losses) | — | — | 125,105 | — | 125,105 | |||||||||||||||
Net impairment losses recognized in earnings | — | — | (3,867 | ) | — | (3,867 | ) | |||||||||||||
Other underwriting income | — | — | 7,980 | — | 7,980 | |||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | — | — | 16,662 | — | 16,662 | |||||||||||||||
Other income (loss) | 71 | — | (471 | ) | — | (400 | ) | |||||||||||||
Total revenues | 77 | 803 | 1,203,466 | (6,845 | ) | 1,197,501 | ||||||||||||||
Expenses | ||||||||||||||||||||
Losses and loss adjustment expenses | — | — | 524,183 | — | 524,183 | |||||||||||||||
Acquisition expenses | — | — | 161,267 | — | 161,267 | |||||||||||||||
Other operating expenses | — | — | 153,286 | — | 153,286 | |||||||||||||||
Corporate expenses | 18,488 | 608 | (611 | ) | — | 18,485 | ||||||||||||||
Amortization of intangible assets | — | — | 4,865 | — | 4,865 | |||||||||||||||
Interest expense | 5,948 | 6,627 | 9,890 | (6,522 | ) | 15,943 | ||||||||||||||
Net foreign exchange (gains) losses | — | — | 2,723 | (102 | ) | 2,621 | ||||||||||||||
Total expenses | 24,436 | 7,235 | 855,603 | (6,624 | ) | 880,650 | ||||||||||||||
Income (loss) before income taxes | (24,359 | ) | (6,432 | ) | 347,863 | (221 | ) | 316,851 | ||||||||||||
Income tax (expense) benefit | — | 2,116 | (15,347 | ) | — | (13,231 | ) | |||||||||||||
Income (loss) before equity in net income of subsidiaries | (24,359 | ) | (4,316 | ) | 332,516 | (221 | ) | 303,620 | ||||||||||||
Equity in net income of subsidiaries | 277,231 | 21,945 | — | (299,176 | ) | — | ||||||||||||||
Net income | 252,872 | 17,629 | 332,516 | (299,397 | ) | 303,620 | ||||||||||||||
Net (income) loss attributable to noncontrolling interests | — | — | (51,071 | ) | 323 | (50,748 | ) | |||||||||||||
Net income available to Arch | 252,872 | 17,629 | 281,445 | (299,074 | ) | 252,872 | ||||||||||||||
Preferred dividends | (5,484 | ) | — | — | — | (5,484 | ) | |||||||||||||
Net income available to Arch common shareholders | $ | 247,388 | $ | 17,629 | $ | 281,445 | $ | (299,074 | ) | $ | 247,388 | |||||||||
Comprehensive income (loss) available to Arch | $ | 208,790 | $ | 2,019 | $ | 237,555 | $ | (239,574 | ) | $ | 208,790 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 43 |
Nine Months Ended September 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 | $ | — | $ | — | $ | 3,619,777 | $ | — | $ | 3,619,777 | ||||||||||
Net investment income | 123 | 1,151 | 410,392 | (66,209 | ) | 345,457 | ||||||||||||||
Net realized gains (losses) | — | — | 122,163 | — | 122,163 | |||||||||||||||
Net impairment losses recognized in earnings | — | — | (5,415 | ) | — | (5,415 | ) | |||||||||||||
Other underwriting income | — | — | 15,519 | — | 15,519 | |||||||||||||||
Equity in net income of investment funds accounted for using the equity method | — | — | 111,884 | — | 111,884 | |||||||||||||||
Other income (loss) | (368 | ) | — | (2,750 | ) | — | (3,118 | ) | ||||||||||||
Total revenues | (245 | ) | 1,151 | 4,271,570 | (66,209 | ) | 4,206,267 | |||||||||||||
Expenses | ||||||||||||||||||||
Losses and loss adjustment expenses | — | — | 2,288,571 | — | 2,288,571 | |||||||||||||||
Acquisition expenses | — | — | 566,579 | — | 566,579 | |||||||||||||||
Other operating expenses | — | — | 514,827 | — | 514,827 | |||||||||||||||
Corporate expenses | 53,639 | 3,727 | 12,400 | — | 69,766 | |||||||||||||||
Amortization of intangible assets | — | — | 93,942 | — | 93,942 | |||||||||||||||
Interest expense | 18,024 | 35,956 | 98,197 | (65,242 | ) | 86,935 | ||||||||||||||
Net foreign exchange losses (gains) | — | — | 65,701 | 21,274 | 86,975 | |||||||||||||||
Total expenses | 71,663 | 39,683 | 3,640,217 | (43,968 | ) | 3,707,595 | ||||||||||||||
Income (loss) before income taxes | (71,908 | ) | (38,532 | ) | 631,353 | (22,241 | ) | 498,672 | ||||||||||||
Income tax (expense) benefit | — | 13,374 | (84,129 | ) | — | (70,755 | ) | |||||||||||||
Income (loss) before equity in net income of subsidiaries | (71,908 | ) | (25,158 | ) | 547,224 | (22,241 | ) | 427,917 | ||||||||||||
Equity in net income of subsidiaries | 476,546 | 213,586 | — | (690,132 | ) | — | ||||||||||||||
Net income | 404,638 | 188,428 | 547,224 | (712,373 | ) | 427,917 | ||||||||||||||
Amounts attributable to noncontrolling interests | — | — | (24,247 | ) | 968 | (23,279 | ) | |||||||||||||
Net income available to Arch | 404,638 | 188,428 | 522,977 | (711,405 | ) | 404,638 | ||||||||||||||
Preferred dividends | (34,936 | ) | — | — | — | (34,936 | ) | |||||||||||||
Loss on redemption of preferred shares | (6,735 | ) | — | — | — | (6,735 | ) | |||||||||||||
Net income available to Arch common shareholders | $ | 362,967 | $ | 188,428 | $ | 522,977 | $ | (711,405 | ) | $ | 362,967 | |||||||||
Comprehensive income (loss) available to Arch | $ | 648,861 | $ | 240,759 | $ | 745,856 | $ | (986,615 | ) | $ | 648,861 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 44 |
Nine Months Ended September 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 | $ | — | $ | — | $ | 2,915,967 | $ | — | $ | 2,915,967 | ||||||||||
Net investment income | 7 | 2,351 | 294,012 | (20,679 | ) | 275,691 | ||||||||||||||
Net realized gains (losses) | — | — | 230,647 | — | 230,647 | |||||||||||||||
Net impairment losses recognized in earnings | — | — | (16,849 | ) | — | (16,849 | ) | |||||||||||||
Other underwriting income | — | — | 54,749 | (16,498 | ) | 38,251 | ||||||||||||||
Equity in net income of investment funds accounted for using the equity method | — | — | 32,054 | — | 32,054 | |||||||||||||||
Other income (loss) | 270 | — | (702 | ) | — | (432 | ) | |||||||||||||
Total revenues | 277 | 2,351 | 3,509,878 | (37,177 | ) | 3,475,329 | ||||||||||||||
Expenses | ||||||||||||||||||||
Losses and loss adjustment expenses | — | — | 1,631,724 | — | 1,631,724 | |||||||||||||||
Acquisition expenses | — | — | 501,782 | — | 501,782 | |||||||||||||||
Other operating expenses | — | — | 460,748 | — | 460,748 | |||||||||||||||
Corporate expenses | 45,284 | 1,549 | (1,765 | ) | — | 45,068 | ||||||||||||||
Amortization of intangible assets | — | — | 14,493 | — | 14,493 | |||||||||||||||
Interest expense | 17,811 | 19,946 | 46,169 | (36,213 | ) | 47,713 | ||||||||||||||
Net foreign exchange losses (gains) | — | — | 5,093 | (3,568 | ) | 1,525 | ||||||||||||||
Total expenses | 63,095 | 21,495 | 2,658,244 | (39,781 | ) | 2,703,053 | ||||||||||||||
Income (loss) before income taxes | (62,818 | ) | (19,144 | ) | 851,634 | 2,604 | 772,276 | |||||||||||||
Income tax (expense) benefit | — | 6,446 | (50,118 | ) | — | (43,672 | ) | |||||||||||||
Income (loss) before equity in net income of subsidiaries | (62,818 | ) | (12,698 | ) | 801,516 | 2,604 | 728,604 | |||||||||||||
Equity in net income of subsidiaries | 681,543 | 64,684 | — | (746,227 | ) | — | ||||||||||||||
Net income | 618,725 | 51,986 | 801,516 | (743,623 | ) | 728,604 | ||||||||||||||
Amounts attributable to noncontrolling interests | — | — | (110,844 | ) | 965 | (109,879 | ) | |||||||||||||
Net income available to Arch | 618,725 | 51,986 | 690,672 | (742,658 | ) | 618,725 | ||||||||||||||
Preferred dividends | (16,453 | ) | — | — | — | (16,453 | ) | |||||||||||||
Net income available to Arch common shareholders | $ | 602,272 | $ | 51,986 | $ | 690,672 | $ | (742,658 | ) | $ | 602,272 | |||||||||
Comprehensive income (loss) available to Arch | $ | 754,979 | $ | 89,204 | $ | 830,348 | $ | (919,552 | ) | $ | 754,979 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 45 |
Nine Months Ended September 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 | $ | 130,715 | $ | 70,761 | $ | 1,464,701 | $ | (585,043 | ) | $ | 1,081,134 | |||||||||||
Investing Activities | ||||||||||||||||||||||
Purchases of fixed maturity investments | — | — | (28,079,129 | ) | — | (28,079,129 | ) | |||||||||||||||
Purchases of equity securities | — | — | (667,135 | ) | — | (667,135 | ) | |||||||||||||||
Purchases of other investments | — | — | (1,406,528 | ) | — | (1,406,528 | ) | |||||||||||||||
Proceeds from the sales of fixed maturity investments | — | — | 27,629,474 | — | 27,629,474 | |||||||||||||||||
Proceeds from the sales of equity securities | — | — | 751,873 | — | 751,873 | |||||||||||||||||
Proceeds from the sales, redemptions and maturities of other investments | — | — | 938,581 | — | 938,581 | |||||||||||||||||
Proceeds from redemptions and maturities of fixed maturity investments | — | — | 747,621 | — | 747,621 | |||||||||||||||||
Net settlements of derivative instruments | — | — | (20,952 | ) | — | (20,952 | ) | |||||||||||||||
Net (purchases) sales of short-term investments | 2,209 | (27,998 | ) | (938,864 | ) | — | (964,653 | ) | ||||||||||||||
Change in cash collateral related to securities lending | — | — | 148,692 | — | 148,692 | |||||||||||||||||
Contributions to subsidiaries | 20,641 | (72,900 | ) | (353,588 | ) | 405,847 | — | |||||||||||||||
Issuance of intercompany loans | — | — | (47,000 | ) | 47,000 | — | ||||||||||||||||
Repayment of intercompany loans | — | 47,000 | — | (47,000 | ) | — | ||||||||||||||||
Acquisitions, net of cash | — | — | (27,709 | ) | — | (27,709 | ) | |||||||||||||||
Purchases of fixed assets | (18 | ) | — | (16,844 | ) | — | (16,862 | ) | ||||||||||||||
Other | — | — | 106,786 | (20,641 | ) | 86,145 | ||||||||||||||||
Net Cash Provided By (Used For) Investing Activities | 22,832 | (53,898 | ) | (1,234,722 | ) | 385,206 | (880,582 | ) | ||||||||||||||
Financing Activities | ||||||||||||||||||||||
Proceeds from issuance of preferred shares, net | 222,054 | — | — | — | 222,054 | |||||||||||||||||
Redemption of preferred shares | (230,000 | ) | — | — | — | (230,000 | ) | |||||||||||||||
Proceeds from common shares issued, net | (7,484 | ) | — | 405,847 | (405,847 | ) | (7,484 | ) | ||||||||||||||
Proceeds from intercompany borrowings | — | — | 47,000 | (47,000 | ) | — | ||||||||||||||||
Proceeds from borrowings | — | — | 238,915 | — | 238,915 | |||||||||||||||||
Repayments of intercompany borrowings | — | — | (47,000 | ) | 47,000 | — | ||||||||||||||||
Repayments of borrowings | (100,000 | ) | — | (72,000 | ) | — | (172,000 | ) | ||||||||||||||
Change in cash collateral related to securities lending | — | — | (148,692 | ) | — | (148,692 | ) | |||||||||||||||
Dividends paid to redeemable noncontrolling interests | — | — | (14,447 | ) | 956 | (13,491 | ) | |||||||||||||||
Dividends paid to parent (1) | — | — | (584,087 | ) | 584,087 | — | ||||||||||||||||
Other | — | — | (69,921 | ) | 20,641 | (49,280 | ) | |||||||||||||||
Preferred dividends paid | (34,936 | ) | — | — | — | (34,936 | ) | |||||||||||||||
Net Cash Provided By (Used For) Financing Activities | (150,366 | ) | — | (244,385 | ) | 199,837 | (194,914 | ) | ||||||||||||||
Effects of exchange rates changes on foreign currency cash | — | — | 13,781 | — | 13,781 | |||||||||||||||||
Increase (decrease) in cash | 3,181 | 16,863 | (625 | ) | — | 19,419 | ||||||||||||||||
Cash beginning of year | 1,687 | 71,955 | 769,300 | — | 842,942 | |||||||||||||||||
Cash end of period | $ | 4,868 | $ | 88,818 | $ | 768,675 | $ | — | $ | 862,361 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 46 |
Nine Months Ended September 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 | $ | 94,250 | $ | 14,448 | $ | 1,096,443 | $ | (168,002 | ) | $ | 1,037,139 | |||||||||||
Investing Activities | ||||||||||||||||||||||
Purchases of fixed maturity investments | — | — | (27,840,555 | ) | — | (27,840,555 | ) | |||||||||||||||
Purchases of equity securities | — | — | (377,767 | ) | — | (377,767 | ) | |||||||||||||||
Purchases of other investments | — | — | (1,008,774 | ) | — | (1,008,774 | ) | |||||||||||||||
Proceeds from the sales of fixed maturity investments | — | — | 26,731,924 | — | 26,731,924 | |||||||||||||||||
Proceeds from the sales of equity securities | — | — | 464,904 | — | 464,904 | |||||||||||||||||
Proceeds from the sales, redemptions and maturities of other investments | — | — | 879,330 | — | 879,330 | |||||||||||||||||
Proceeds from redemptions and maturities of fixed maturity investments | — | 41,500 | 499,323 | — | 540,823 | |||||||||||||||||
Net settlements of derivative instruments | — | — | 23,396 | — | 23,396 | |||||||||||||||||
Net (purchases) sales of short-term investments | (436,830 | ) | (53,779 | ) | (113,553 | ) | — | (604,162 | ) | |||||||||||||
Change in cash collateral related to securities lending | — | — | (27,935 | ) | — | (27,935 | ) | |||||||||||||||
Contributions to subsidiaries | (3,585 | ) | — | (9,247 | ) | 12,832 | — | |||||||||||||||
Acquisitions, net of cash | — | — | (20,911 | ) | — | (20,911 | ) | |||||||||||||||
Purchases of fixed assets | (8 | ) | — | (11,557 | ) | — | (11,565 | ) | ||||||||||||||
Other | 2,000 | — | (5,816 | ) | — | (3,816 | ) | |||||||||||||||
Net Cash Provided By (Used For) Investing Activities | (438,423 | ) | (12,279 | ) | (817,238 | ) | 12,832 | (1,255,108 | ) | |||||||||||||
Financing Activities | ||||||||||||||||||||||
Proceeds from issuance of preferred shares, net | 434,899 | — | — | — | 434,899 | |||||||||||||||||
Purchases of common shares under share repurchase program | (75,256 | ) | — | — | — | (75,256 | ) | |||||||||||||||
Proceeds from common shares issued, net | (3,785 | ) | — | 12,832 | (12,832 | ) | (3,785 | ) | ||||||||||||||
Proceeds from borrowings | — | — | 46,000 | — | 46,000 | |||||||||||||||||
Repayments of borrowings | — | — | (179,171 | ) | — | (179,171 | ) | |||||||||||||||
Change in cash collateral related to securities lending | — | — | 27,935 | — | 27,935 | |||||||||||||||||
Dividends paid to redeemable noncontrolling interests | — | — | (14,448 | ) | 957 | (13,491 | ) | |||||||||||||||
Dividends paid to parent (1) | — | — | (167,045 | ) | 167,045 | — | ||||||||||||||||
Other | — | 200 | 32,913 | — | 33,113 | |||||||||||||||||
Preferred dividends paid | (16,453 | ) | — | — | — | (16,453 | ) | |||||||||||||||
Net Cash Provided By (Used For) Financing Activities | 339,405 | 200 | (240,984 | ) | 155,170 | 253,791 | ||||||||||||||||
Effects of exchange rates changes on foreign currency cash | — | — | (10,332 | ) | — | (10,332 | ) | |||||||||||||||
Increase (decrease) in cash | (4,768 | ) | 2,369 | 27,889 | — | 25,490 | ||||||||||||||||
Cash beginning of year | 6,809 | 17,023 | 529,494 | — | 553,326 | |||||||||||||||||
Cash end of period | $ | 2,041 | $ | 19,392 | $ | 557,383 | $ | — | $ | 578,816 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 47 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 48 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 49 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
ACGL 2017 THIRD QUARTER FORM 10-Q | 50 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 51 |
Arch Portfolio | Benchmark Return | ||||
2017 Third Quarter | 1.60 | % | 1.24 | % | |
2016 Third Quarter | 0.88 | % | 0.83 | % | |
Nine Months Ended September 30, 2017 | 5.05 | % | 4.33 | % | |
Nine Months Ended September 30, 2016 | 4.03 | % | 4.43 | % |
% | ||
BoAML 1-10 Year U.S. Corporate & All Yankees, A - AAA Rated Index | 20.00 | % |
BoAML 1-10 Year U.S. Municipal Securities Index | 17.00 | |
BoAML 1-5 Year U.S. Treasury Index | 13.00 | |
BoAML 3-5 Year Fixed Rate Asset Backed Securities Index | 7.00 | |
BoAML 5-10 Year U.S. Treasury Index | 5.00 | |
Barclays CMBS Inv. Grade, AAA Rated Index | 5.00 | |
MSCI All Country World Gross Total Return Index | 5.00 | |
BoAML German Government Index | 4.50 | |
BoAML U.S. Mortgage Backed Securities Index | 4.00 | |
BoAML 1-5 Year U.K. Gilt Index | 3.00 | |
Hedge Fund Research HFRX Fixed Income Credit Index | 2.50 | |
Hedge Fund Research HFRX Equal Weighted Strategies | 2.50 | |
BoAML U.S. High Yield Constrained Index | 2.50 | |
BoAML 1-5 Year Australian Governments Index | 2.50 | |
S&P Leveraged Loan Index | 2.50 | |
BoAML 0-3 Month U.S. Treasury Bill Index | 2.00 | |
BoAML 1-5 Year Canada Government Index | 1.50 | |
BoAML 20+ Year Canada Government Index | 0.50 | |
Total | 100.00 | % |
ACGL 2017 THIRD QUARTER FORM 10-Q | 52 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 53 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income (loss) available to Arch common shareholders | $ | (52,760 | ) | $ | 247,388 | $ | 362,967 | $ | 602,272 | ||||||
Net realized (gains) losses | (64,344 | ) | (99,159 | ) | (111,930 | ) | (175,558 | ) | |||||||
Net impairment losses recognized in earnings | 1,878 | 3,867 | 5,415 | 16,849 | |||||||||||
Equity in net (income) loss of investment funds accounted for using the equity method | (31,090 | ) | (16,662 | ) | (111,884 | ) | (32,054 | ) | |||||||
Net foreign exchange (gains) losses | 27,811 | 4,054 | 85,619 | 3,560 | |||||||||||
UGC transaction costs and other | 2,990 | 7,142 | 21,249 | 7,142 | |||||||||||
Loss on redemption of preferred shares | 6,735 | — | 6,735 | — | |||||||||||
Income tax expense (benefit) (1) | 1,647 | 2,970 | 1,580 | 13,705 | |||||||||||
After-tax operating income (loss) available to Arch common shareholders | $ | (107,133 | ) | $ | 149,600 | $ | 259,751 | $ | 435,916 | ||||||
Beginning common shareholders’ equity | $ | 8,126,332 | $ | 6,340,583 | $ | 7,481,163 | $ | 5,841,542 | |||||||
Ending common shareholders’ equity | 8,138,589 | 6,538,983 | 8,138,589 | 6,538,983 | |||||||||||
Average common shareholders’ equity | $ | 8,132,461 | $ | 6,439,783 | $ | 7,809,876 | $ | 6,190,263 | |||||||
Annualized return on average common equity % | (2.6 | ) | 15.4 | 6.2 | 13.0 | ||||||||||
Annualized operating return on average common equity % | (5.3 | ) | 9.3 | 4.4 | 9.4 |
(1) | Income tax on net realized gains or losses, net impairment losses recognized in earnings, equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses, UGC transaction costs and other and loss on redemption of preferred shares reflects the relative mix reported by jurisdiction and the varying tax rates in each jurisdiction. |
ACGL 2017 THIRD QUARTER FORM 10-Q | 54 |
Three Months Ended September 30, | ||||||||||
2017 | 2016 | % Change | ||||||||
Gross premiums written | $ | 787,447 | $ | 758,934 | 3.8 | |||||
Premiums ceded | (222,516 | ) | (217,446 | ) | ||||||
Net premiums written | 564,931 | 541,488 | 4.3 | |||||||
Change in unearned premiums | (29,766 | ) | (22,410 | ) | ||||||
Net premiums earned | 535,165 | 519,078 | 3.1 | |||||||
Losses and loss adjustment expenses | (568,795 | ) | (332,845 | ) | ||||||
Acquisition expenses | (82,638 | ) | (77,146 | ) | ||||||
Other operating expenses | (90,875 | ) | (86,613 | ) | ||||||
Underwriting income (loss) | $ | (207,143 | ) | $ | 22,474 | (1,021.7 | ) | |||
Underwriting Ratios | % Point Change | |||||||||
Loss ratio | 106.3 | % | 64.1 | % | 42.2 | |||||
Acquisition expense ratio | 15.4 | % | 14.9 | % | 0.5 | |||||
Other operating expense ratio | 17.0 | % | 16.7 | % | 0.3 | |||||
Combined ratio | 138.7 | % | 95.7 | % | 43.0 |
Nine Months Ended September 30, | ||||||||||
2017 | 2016 | % Change | ||||||||
Gross premiums written | $ | 2,313,630 | $ | 2,319,530 | (0.3 | ) | ||||
Premiums ceded | (704,057 | ) | (713,110 | ) | ||||||
Net premiums written | 1,609,573 | 1,606,420 | 0.2 | |||||||
Change in unearned premiums | (51,188 | ) | (46,603 | ) | ||||||
Net premiums earned | 1,558,385 | 1,559,817 | (0.1 | ) | ||||||
Losses and loss adjustment expenses | (1,252,375 | ) | (1,011,087 | ) | ||||||
Acquisition expenses | (236,378 | ) | (228,806 | ) | ||||||
Other operating expenses | (271,268 | ) | (263,111 | ) | ||||||
Underwriting income (loss) | $ | (201,636 | ) | $ | 56,813 | (454.9 | ) | |||
Underwriting Ratios | % Point Change | |||||||||
Loss ratio | 80.4 | % | 64.8 | % | 15.6 | |||||
Acquisition expense ratio | 15.2 | % | 14.7 | % | 0.5 | |||||
Other operating expense ratio | 17.4 | % | 16.9 | % | 0.5 | |||||
Combined ratio | 113.0 | % | 96.4 | % | 16.6 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 55 |
Three Months Ended September 30, | |||||||||||||
2017 | 2016 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Professional lines | $ | 120,509 | 21.3 | $ | 119,198 | 22.0 | |||||||
Programs | 109,805 | 19.4 | 91,165 | 16.8 | |||||||||
Construction and national accounts | 66,053 | 11.7 | 65,105 | 12.0 | |||||||||
Travel, accident and health | 71,386 | 12.6 | 63,453 | 11.7 | |||||||||
Excess and surplus casualty | 43,853 | 7.8 | 54,075 | 10.0 | |||||||||
Property, energy, marine and aviation | 48,396 | 8.6 | 42,092 | 7.8 | |||||||||
Lenders products | 25,732 | 4.6 | 28,633 | 5.3 | |||||||||
Other | 79,197 | 14.0 | 77,767 | 14.4 | |||||||||
Total | $ | 564,931 | 100.0 | $ | 541,488 | 100.0 |
Nine Months Ended September 30, | |||||||||||||
2017 | 2016 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Professional lines | $ | 339,761 | 21.1 | $ | 336,184 | 20.9 | |||||||
Programs | 303,190 | 18.8 | 256,369 | 16.0 | |||||||||
Construction and national accounts | 239,504 | 14.9 | 254,839 | 15.9 | |||||||||
Travel, accident and health | 189,604 | 11.8 | 175,172 | 10.9 | |||||||||
Excess and surplus casualty | 134,907 | 8.4 | 168,144 | 10.5 | |||||||||
Property, energy, marine and aviation | 134,531 | 8.4 | 142,261 | 8.9 | |||||||||
Lenders products | 71,896 | 4.5 | 78,671 | 4.9 | |||||||||
Other | 196,180 | 12.2 | 194,780 | 12.1 | |||||||||
Total | $ | 1,609,573 | 100.0 | $ | 1,606,420 | 100.0 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 56 |
Three Months Ended September 30, | |||||||||||||
2017 | 2016 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Professional lines | $ | 113,146 | 21.1 | $ | 110,614 | 21.3 | |||||||
Programs | 94,353 | 17.6 | 84,889 | 16.4 | |||||||||
Construction and national accounts | 77,779 | 14.5 | 80,090 | 15.4 | |||||||||
Travel, accident and health | 66,136 | 12.4 | 57,097 | 11.0 | |||||||||
Excess and surplus casualty | 47,852 | 8.9 | 54,687 | 10.5 | |||||||||
Property, energy, marine and aviation | 46,906 | 8.8 | 45,304 | 8.7 | |||||||||
Lenders products | 23,499 | 4.4 | 25,090 | 4.8 | |||||||||
Other | 65,494 | 12.2 | 61,307 | 11.8 | |||||||||
Total | $ | 535,165 | 100.0 | $ | 519,078 | 100.0 |
Nine Months Ended September 30, | |||||||||||||
2017 | 2016 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Professional lines | $ | 330,159 | 21.2 | $ | 324,114 | 20.8 | |||||||
Programs | 267,115 | 17.1 | 273,985 | 17.6 | |||||||||
Construction and national accounts | 236,050 | 15.1 | 241,547 | 15.5 | |||||||||
Travel, accident and health | 188,053 | 12.1 | 164,463 | 10.5 | |||||||||
Excess and surplus casualty | 147,709 | 9.5 | 166,807 | 10.7 | |||||||||
Property, energy, marine and aviation | 126,407 | 8.1 | 141,417 | 9.1 | |||||||||
Lenders products | 72,160 | 4.6 | 72,499 | 4.6 | |||||||||
Other | 190,732 | 12.2 | 174,985 | 11.2 | |||||||||
Total | $ | 1,558,385 | 100.0 | $ | 1,559,817 | 100.0 |
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Current year | 106.9 | % | 66.7 | % | 80.9 | % | 66.4 | % | |||
Prior period reserve development | (0.6 | )% | (2.6 | )% | (0.5 | )% | (1.6 | )% | |||
Loss ratio | 106.3 | % | 64.1 | % | 80.4 | % | 64.8 | % |
ACGL 2017 THIRD QUARTER FORM 10-Q | 57 |
Three Months Ended September 30, | ||||||||||
2017 | 2016 | % Change | ||||||||
Gross premiums written | $ | 422,083 | $ | 324,361 | 30.1 | |||||
Premiums ceded | (105,389 | ) | (89,551 | ) | ||||||
Net premiums written | 316,694 | 234,810 | 34.9 | |||||||
Change in unearned premiums | 6,879 | 17,117 | ||||||||
Net premiums earned | 323,573 | 251,927 | 28.4 | |||||||
Other underwriting income | 1,728 | 2,216 | ||||||||
Losses and loss adjustment expenses | (318,609 | ) | (105,924 | ) | ||||||
Acquisition expenses | (57,340 | ) | (50,192 | ) | ||||||
Other operating expenses | (36,214 | ) | (35,389 | ) | ||||||
Underwriting income (loss) | $ | (86,862 | ) | $ | 62,638 | (238.7 | ) | |||
Underwriting Ratios | % Point Change | |||||||||
Loss ratio | 98.5 | % | 42.0 | % | 56.5 | |||||
Acquisition expense ratio | 17.7 | % | 19.9 | % | (2.2 | ) | ||||
Other operating expense ratio | 11.2 | % | 14.0 | % | (2.8 | ) | ||||
Combined ratio | 127.4 | % | 75.9 | % | 51.5 |
Nine Months Ended September 30, | ||||||||||
2017 | 2016 | % Change | ||||||||
Gross premiums written | $ | 1,351,051 | $ | 1,217,804 | 10.9 | |||||
Premiums ceded | (386,743 | ) | (370,068 | ) | ||||||
Net premiums written | 964,308 | 847,736 | 13.8 | |||||||
Change in unearned premiums | (81,182 | ) | (43,345 | ) | ||||||
Net premiums earned | 883,126 | 804,391 | 9.8 | |||||||
Other underwriting income | 1,143 | 22,659 | ||||||||
Losses and loss adjustment expenses | (631,669 | ) | (363,613 | ) | ||||||
Acquisition expenses | (154,638 | ) | (160,706 | ) | ||||||
Other operating expenses | (110,458 | ) | (108,561 | ) | ||||||
Underwriting income (loss) | $ | (12,496 | ) | $ | 194,170 | (106.4 | ) | |||
Underwriting Ratios | % Point Change | |||||||||
Loss ratio | 71.5 | % | 45.2 | % | 26.3 | |||||
Acquisition expense ratio | 17.5 | % | 20.0 | % | (2.5 | ) | ||||
Other operating expense ratio | 12.5 | % | 13.5 | % | (1.0 | ) | ||||
Combined ratio | 101.5 | % | 78.7 | % | 22.8 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 58 |
Three Months Ended September 30, | |||||||||||||
2017 | 2016 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Other specialty | $ | 101,400 | 32.0 | $ | 74,169 | 31.6 | |||||||
Casualty | 113,446 | 35.8 | 59,242 | 25.2 | |||||||||
Property excluding property catastrophe | 63,943 | 20.2 | 70,733 | 30.1 | |||||||||
Property catastrophe | 28,123 | 8.9 | 19,793 | 8.4 | |||||||||
Marine and aviation | 2,037 | 0.6 | 5,435 | 2.3 | |||||||||
Other | 7,745 | 2.4 | 5,438 | 2.3 | |||||||||
Total | $ | 316,694 | 100.0 | $ | 234,810 | 100.0 | |||||||
Pro rata | $ | 206,948 | 65.3 | $ | 147,280 | 62.7 | |||||||
Excess of loss | 109,746 | 34.7 | 87,530 | 37.3 | |||||||||
Total | $ | 316,694 | 100.0 | $ | 234,810 | 100.0 |
Nine Months Ended September 30, | |||||||||||||
2017 | 2016 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Other specialty | $ | 371,146 | 38.5 | $ | 288,932 | 34.1 | |||||||
Casualty | 287,120 | 29.8 | 247,280 | 29.2 | |||||||||
Property excluding property catastrophe | 208,445 | 21.6 | 214,287 | 25.3 | |||||||||
Property catastrophe | 57,773 | 6.0 | 59,269 | 7.0 | |||||||||
Marine and aviation | 20,510 | 2.1 | 24,438 | 2.9 | |||||||||
Other | 19,314 | 2.0 | 13,530 | 1.6 | |||||||||
Total | $ | 964,308 | 100.0 | $ | 847,736 | 100.0 | |||||||
Pro rata | $ | 536,857 | 55.7 | $ | 405,720 | 47.9 | |||||||
Excess of loss | 427,451 | 44.3 | 442,016 | 52.1 | |||||||||
Total | $ | 964,308 | 100.0 | $ | 847,736 | 100.0 |
Three Months Ended September 30, | |||||||||||||
2017 | 2016 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Other specialty | $ | 96,090 | 29.7 | $ | 76,686 | 30.4 | |||||||
Casualty | 117,255 | 36.2 | 69,414 | 27.6 | |||||||||
Property excluding property catastrophe | 65,049 | 20.1 | 72,550 | 28.8 | |||||||||
Property catastrophe | 30,039 | 9.3 | 17,582 | 7.0 | |||||||||
Marine and aviation | 6,801 | 2.1 | 10,336 | 4.1 | |||||||||
Other | 8,339 | 2.6 | 5,359 | 2.1 | |||||||||
Total | $ | 323,573 | 100.0 | $ | 251,927 | 100.0 | |||||||
Pro rata | $ | 188,874 | 58.4 | $ | 132,649 | 52.7 | |||||||
Excess of loss | 134,699 | 41.6 | 119,278 | 47.3 | |||||||||
Total | $ | 323,573 | 100.0 | $ | 251,927 | 100.0 |
Nine Months Ended September 30, | |||||||||||||
2017 | 2016 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Other specialty | $ | 307,620 | 34.8 | $ | 260,428 | 32.4 | |||||||
Casualty | 270,126 | 30.6 | 225,624 | 28.0 | |||||||||
Property excluding property catastrophe | 197,785 | 22.4 | 209,990 | 26.1 | |||||||||
Property catastrophe | 61,975 | 7.0 | 55,358 | 6.9 | |||||||||
Marine and aviation | 26,277 | 3.0 | 40,773 | 5.1 | |||||||||
Other | 19,343 | 2.2 | 12,218 | 1.5 | |||||||||
Total | $ | 883,126 | 100.0 | $ | 804,391 | 100.0 | |||||||
Pro rata | $ | 503,954 | 57.1 | $ | 426,275 | 53.0 | |||||||
Excess of loss | 379,172 | 42.9 | 378,116 | 47.0 | |||||||||
Total | $ | 883,126 | 100.0 | $ | 804,391 | 100.0 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 59 |
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Current year | 109.8 | % | 65.6 | % | 86.6 | % | 67.2 | % | |||
Prior period reserve development | (11.3 | )% | (23.6 | )% | (15.1 | )% | (22.0 | )% | |||
Loss ratio | 98.5 | % | 42.0 | % | 71.5 | % | 45.2 | % |
Three Months Ended September 30, | ||||||||||
2017 | 2016 | % Change | ||||||||
Gross premiums written | $ | 347,951 | $ | 131,726 | 164.1 | |||||
Premiums ceded | (57,900 | ) | (51,182 | ) | ||||||
Net premiums written | 290,051 | 80,544 | 260.1 | |||||||
Change in unearned premiums | (15,533 | ) | (3,582 | ) | ||||||
Net premiums earned | 274,518 | 76,962 | 256.7 | |||||||
Other underwriting income | 3,599 | 4,740 | ||||||||
Losses and loss adjustment expenses | (35,156 | ) | (11,107 | ) | ||||||
Acquisition expenses | (21,803 | ) | (5,190 | ) | ||||||
Other operating expenses | (34,770 | ) | (24,249 | ) | ||||||
Underwriting income | $ | 186,388 | $ | 41,156 | 352.9 | |||||
Underwriting Ratios | % Point Change | |||||||||
Loss ratio | 12.8 | % | 14.4 | % | (1.6 | ) | ||||
Acquisition expense ratio | 7.9 | % | 6.7 | % | 1.2 | |||||
Other operating expense ratio | 12.7 | % | 31.5 | % | (18.8 | ) | ||||
Combined ratio | 33.4 | % | 52.6 | % | (19.2 | ) |
ACGL 2017 THIRD QUARTER FORM 10-Q | 60 |
Nine Months Ended September 30, | ||||||||||
2017 | 2016 | % Change | ||||||||
Gross premiums written | $ | 1,032,800 | $ | 361,440 | 185.7 | |||||
Premiums ceded | (194,139 | ) | (62,918 | ) | ||||||
Net premiums written | 838,661 | 298,522 | 180.9 | |||||||
Change in unearned premiums | (61,776 | ) | (93,283 | ) | ||||||
Net premiums earned | 776,885 | 205,239 | 278.5 | |||||||
Other underwriting income | 11,999 | 12,670 | ||||||||
Losses and loss adjustment expenses | (84,915 | ) | (20,102 | ) | ||||||
Acquisition expenses | (76,235 | ) | (16,947 | ) | ||||||
Other operating expenses | (108,790 | ) | (70,590 | ) | ||||||
Underwriting income | $ | 518,944 | $ | 110,270 | 370.6 | |||||
Underwriting Ratios | % Point Change | |||||||||
Loss ratio | 10.9 | % | 9.8 | % | 1.1 | |||||
Acquisition expense ratio | 9.8 | % | 8.3 | % | 1.5 | |||||
Other operating expense ratio | 14.0 | % | 34.4 | % | (20.4 | ) | ||||
Combined ratio | 34.7 | % | 52.5 | % | (17.8 | ) |
Three Months Ended September 30, | |||||||||||||
2017 | 2016 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Client location: | |||||||||||||
United States | $ | 262,028 | 90.3 | $ | 77,488 | 96.2 | |||||||
Other | 28,023 | 9.7 | 3,056 | 3.8 | |||||||||
Total | $ | 290,051 | 100.0 | $ | 80,544 | 100.0 | |||||||
Underwriting location: | |||||||||||||
United States | $ | 235,447 | 81.2 | $ | 50,236 | 62.4 | |||||||
Other | 54,604 | 18.8 | 30,308 | 37.6 | |||||||||
Total | $ | 290,051 | 100.0 | $ | 80,544 | 100.0 |
Nine Months Ended September 30, | |||||||||||||
2017 | 2016 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Client location: | |||||||||||||
United States | 756,620 | 90.2 | 199,552 | 66.8 | |||||||||
Other | 82,041 | 9.8 | 98,970 | 33.2 | |||||||||
Total | $ | 838,661 | 100.0 | $ | 298,522 | 100.0 | |||||||
Underwriting location: | |||||||||||||
United States | $ | 679,442 | 81.0 | $ | 128,008 | 42.9 | |||||||
Other | 159,219 | 19.0 | 170,514 | 57.1 | |||||||||
Total | $ | 838,661 | 100.0 | $ | 298,522 | 100.0 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 61 |
(U.S. Dollars in millions) | Three Months Ended September 30, | ||||||||||||
2017 | 2016 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Total new insurance written (NIW) (1) | $ | 17,683 | $ | 8,753 | |||||||||
Credit quality (FICO): | |||||||||||||
>=740 | $ | 10,063 | 56.9 | $ | 5,187 | 59.3 | |||||||
680-739 | 6,357 | 35.9 | 3,074 | 35.1 | |||||||||
620-679 | 1,263 | 7.1 | 492 | 5.6 | |||||||||
Total | $ | 17,683 | 100.0 | $ | 8,753 | 100.0 | |||||||
Loan-to-value (LTV): | |||||||||||||
95.01% and above | $ | 1,757 | 9.9 | $ | 507 | 5.8 | |||||||
90.01% to 95.00% | 8,406 | 47.5 | 4,261 | 48.7 | |||||||||
85.01% to 90.00% | 5,668 | 32.1 | 2,883 | 32.9 | |||||||||
85.01% and below | 1,852 | 10.5 | 1,102 | 12.6 | |||||||||
Total | $ | 17,683 | 100.0 | $ | 8,753 | 100.0 | |||||||
Monthly vs. single: | |||||||||||||
Monthly | $ | 15,392 | 87.0 | $ | 7,765 | 88.7 | |||||||
Single | 2,291 | 13.0 | 988 | 11.3 | |||||||||
Total | $ | 17,683 | 100.0 | $ | 8,753 | 100.0 | |||||||
Purchase vs. refinance: | |||||||||||||
Purchase | $ | 16,460 | 93.1 | $ | 7,264 | 83.0 | |||||||
Refinance | 1,223 | 6.9 | 1,489 | 17.0 | |||||||||
Total | $ | 17,683 | 100.0 | $ | 8,753 | 100.0 |
(1) | Represents the original principal balance of all loans that received coverage during the period. |
(U.S. Dollars in millions) | Nine Months Ended September 30, | ||||||||||||
2017 | 2016 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Total new insurance written (NIW) (1) | $ | 47,646 | $ | 18,079 | |||||||||
Credit quality (FICO): | |||||||||||||
>=740 | $ | 27,061 | 56.8 | $ | 10,945 | 60.5 | |||||||
680-739 | 17,246 | 36.2 | 6,195 | 34.3 | |||||||||
620-679 | 3,339 | 7.0 | 938 | 5.2 | |||||||||
<620 | — | — | 1 | — | |||||||||
Total | $ | 47,646 | 100.0 | $ | 18,079 | 100.0 | |||||||
Loan-to-value (LTV): | |||||||||||||
95.01% and above | $ | 4,429 | 9.3 | $ | 1,233 | 6.8 | |||||||
90.01% to 95.00% | 22,763 | 47.8 | 8,477 | 46.9 | |||||||||
85.01% to 90.00% | 15,191 | 31.9 | 5,982 | 33.1 | |||||||||
85.01% and below | 5,263 | 11.0 | 2,387 | 13.2 | |||||||||
Total | $ | 47,646 | 100.0 | $ | 18,079 | 100.0 | |||||||
Monthly vs. single: | |||||||||||||
Monthly | $ | 40,592 | 85.2 | $ | 15,136 | 83.7 | |||||||
Single | 7,054 | 14.8 | 2,943 | 16.3 | |||||||||
Total | $ | 47,646 | 100.0 | $ | 18,079 | 100.0 | |||||||
Purchase vs. refinance: | |||||||||||||
Purchase | $ | 43,243 | 90.8 | $ | 14,628 | 80.9 | |||||||
Refinance | 4,403 | 9.2 | 3,451 | 19.1 | |||||||||
Total | $ | 47,646 | 100.0 | $ | 18,079 | 100.0 |
(1) | Represents the original principal balance of all loans that received coverage during the period. |
Three Months Ended September 30, | |||||||||||||
2017 | 2016 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Client Location: | |||||||||||||
United States | $ | 262,324 | 95.6 | $ | 64,616 | 84.0 | |||||||
Other | 12,194 | 4.4 | 12,346 | 16.0 | |||||||||
Total | $ | 274,518 | 100.0 | $ | 76,962 | 100.0 | |||||||
Underwriting location: | |||||||||||||
United States | $ | 233,862 | 85.2 | $ | 40,498 | 52.6 | |||||||
Other | 40,656 | 14.8 | 36,464 | 47.4 | |||||||||
Total | $ | 274,518 | 100.0 | $ | 76,962 | 100.0 |
Nine Months Ended September 30, | |||||||||||||
2017 | 2016 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Client Location: | |||||||||||||
United States | $ | 745,011 | 95.9 | $ | 182,794 | 89.1 | |||||||
Other | 31,874 | 4.1 | 22,445 | 10.9 | |||||||||
Total | $ | 776,885 | 100.0 | $ | 205,239 | 100.0 | |||||||
Underwriting location: | |||||||||||||
United States | $ | 661,645 | 85.2 | $ | 107,142 | 52.2 | |||||||
Other | 115,240 | 14.8 | 98,097 | 47.8 | |||||||||
Total | $ | 776,885 | 100.0 | $ | 205,239 | 100.0 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 62 |
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Current year | 20.6 | % | 17.6 | % | 20.5 | % | 17.7 | % | |||
Prior period reserve development | (7.8 | )% | (3.2 | )% | (9.6 | )% | (7.9 | )% | |||
Loss ratio | 12.8 | % | 14.4 | % | 10.9 | % | 9.8 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Fixed maturities | $ | 84,602 | $ | 58,542 | $ | 251,039 | $ | 181,908 | |||||||
Equity securities | 3,210 | 3,633 | 10,152 | 11,373 | |||||||||||
Short-term investments | 2,514 | 823 | 5,624 | 1,899 | |||||||||||
Other (1) | 18,238 | 15,103 | 57,770 | 47,454 | |||||||||||
Gross investment income | 108,564 | 78,101 | 324,585 | 242,634 | |||||||||||
Investment expenses (2) | (14,437 | ) | (11,819 | ) | (42,126 | ) | (35,546 | ) | |||||||
Net investment income | $ | 94,127 | $ | 66,282 | $ | 282,459 | 207,088 |
(1) | Amounts include dividends and interest distributions on investment funds, term loan investments and other items. |
(2) | Investment expenses were approximately 0.32% of average invested assets for the 2017 third quarter, compared to 0.31% for the 2016 third quarter, and 0.30% for the nine months ended September 30, 2017, compared to 0.32% for the 2016 period. |
ACGL 2017 THIRD QUARTER FORM 10-Q | 63 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 64 |
• | Investable Assets Held by Arch |
Investable assets (1): | Estimated Fair Value | % of Total | ||||
September 30, 2017 | ||||||
Fixed maturities (2) | $ | 14,731,262 | 74.8 | |||
Short-term investments | 1,723,081 | 8.7 | ||||
Cash | 805,210 | 4.1 | ||||
Equity securities (2) | 546,027 | 2.8 | ||||
Other investments (2) | 1,496,531 | 7.6 | ||||
Investments accounted for using the equity method | 962,574 | 4.9 | ||||
Securities transactions entered into but not settled at the balance sheet date | (568,498 | ) | (2.9 | ) | ||
Total investable assets held by Arch | $ | 19,696,187 | 100.0 | |||
December 31, 2016 | ||||||
Fixed maturities (2) | $ | 14,521,774 | 77.9 | |||
Short-term investments | 676,547 | 3.6 | ||||
Cash | 768,049 | 4.1 | ||||
Equity securities (2) | 558,008 | 3.0 | ||||
Other investments (2) | 1,276,841 | 6.9 | ||||
Investments accounted for using the equity method | 811,273 | 4.4 | ||||
Securities transactions entered into but not settled at the balance sheet date | 23,697 | 0.1 | ||||
Total investable assets held by Arch | $ | 18,636,189 | 100.0 |
(1) | In securities lending transactions, we receive collateral in excess of the fair value of the securities pledged. For purposes of this table, we have excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. |
(2) | Includes investments carried as available for sale, at fair value and at fair value under the fair value option. |
ACGL 2017 THIRD QUARTER FORM 10-Q | 65 |
Estimated Fair Value | % of Total | |||||
September 30, 2017 | ||||||
Corporate bonds | $ | 4,588,758 | 31.1 | |||
Mortgage backed securities | 337,478 | 2.3 | ||||
Municipal bonds | 2,353,234 | 16.0 | ||||
Commercial mortgage backed securities | 584,730 | 4.0 | ||||
U.S. government and government agencies | 3,761,612 | 25.5 | ||||
Non-U.S. government securities | 1,554,956 | 10.6 | ||||
Asset backed securities | 1,550,494 | 10.5 | ||||
Total | $ | 14,731,262 | 100.0 | |||
December 31, 2016 | ||||||
Corporate bonds | $ | 4,696,079 | 32.3 | |||
Mortgage backed securities | 504,677 | 3.5 | ||||
Municipal bonds | 3,713,434 | 25.6 | ||||
Commercial mortgage backed securities | 536,051 | 3.7 | ||||
U.S. government and government agencies | 2,804,811 | 19.3 | ||||
Non-U.S. government securities | 1,142,735 | 7.9 | ||||
Asset backed securities | 1,123,987 | 7.7 | ||||
Total | $ | 14,521,774 | 100.0 |
Estimated Fair Value | % of Total | |||||
September 30, 2017 | ||||||
U.S. government and gov’t agencies (1) | $ | 4,040,392 | 27.4 | |||
AAA | 4,048,800 | 27.5 | ||||
AA | 2,406,692 | 16.3 | ||||
A | 2,285,336 | 15.5 | ||||
BBB | 1,110,089 | 7.5 | ||||
BB | 291,798 | 2.0 | ||||
B | 231,880 | 1.6 | ||||
Lower than B | 90,947 | 0.6 | ||||
Not rated | 225,328 | 1.5 | ||||
Total | $ | 14,731,262 | 100.0 | |||
December 31, 2016 | ||||||
U.S. government and gov’t agencies (1) | $ | 3,210,899 | 22.1 | |||
AAA | 3,918,739 | 27.0 | ||||
AA | 3,148,226 | 21.7 | ||||
A | 2,338,834 | 16.1 | ||||
BBB | 1,203,942 | 8.3 | ||||
BB | 226,321 | 1.6 | ||||
B | 156,405 | 1.1 | ||||
Lower than B | 90,833 | 0.6 | ||||
Not rated | 227,574 | 1.6 | ||||
Total | $ | 14,521,774 | 100.0 |
(1) | Includes U.S. government-sponsored agency residential mortgage-backed securities and agency commercial mortgage-backed securities. |
Severity of gross unrealized losses: | Estimated Fair Value | Gross Unrealized Losses | % of Total Gross Unrealized Losses | |||||||
September 30, 2017 | ||||||||||
0-10% | $ | 7,499,372 | $ | (71,889 | ) | 86.1 | ||||
10-20% | 73,042 | (10,600 | ) | 12.7 | ||||||
20-30% | 2,164 | (687 | ) | 0.8 | ||||||
Greater than 30% | 324 | (299 | ) | 0.4 | ||||||
Total | $ | 7,574,902 | $ | (83,475 | ) | 100.0 | ||||
December 31, 2016 | ||||||||||
0-10% | $ | 7,078,582 | $ | (127,909 | ) | 71.6 | ||||
10-20% | 155,403 | (24,219 | ) | 13.5 | ||||||
20-30% | 89,887 | (25,929 | ) | 14.5 | ||||||
Greater than 30% | 1,496 | (702 | ) | 0.4 | ||||||
Total | $ | 7,325,368 | $ | (178,759 | ) | 100.0 |
Estimated Fair Value | Credit Rating (1) | ||||
Apple Inc. | $ | 144,561 | AA+/Aa1 | ||
Microsoft Corporation | 131,597 | AAA/Aaa | |||
JPMorgan Chase & Co. | 116,451 | A-/A3 | |||
The Bank of New York Mellon Corporation | 89,245 | A/A1 | |||
Citigroup Inc. | 87,285 | A-/A3 | |||
Wells Fargo & Company | 82,560 | A/A2 | |||
New York Life Insurance Company | 74,684 | AA+/Aaa | |||
Massmutual Global Funding II C | 72,581 | AA+/Aa2 | |||
MetLife, Inc. | 71,893 | AA-/Aa3 | |||
American Express Company | 69,096 | A-/A2 | |||
Total | $ | 939,953 |
(1) | Average credit ratings as assigned by S&P and Moody’s, respectively. |
ACGL 2017 THIRD QUARTER FORM 10-Q | 66 |
Agencies | Investment Grade | Below Investment Grade | Total | ||||||||||||
Sep. 30, 2017 | |||||||||||||||
RMBS | $ | 274,710 | $ | 19,940 | $ | 42,828 | $ | 337,478 | |||||||
CMBS | 4,071 | 509,080 | 71,579 | 584,730 | |||||||||||
ABS | — | 1,458,114 | 92,380 | 1,550,494 | |||||||||||
Total | $ | 278,781 | $ | 1,987,134 | $ | 206,787 | $ | 2,472,702 | |||||||
December 31, 2016 | |||||||||||||||
RMBS | $ | 393,188 | $ | 60,600 | $ | 50,889 | $ | 504,677 | |||||||
CMBS | 12,900 | 513,266 | 9,885 | 536,051 | |||||||||||
ABS | — | 1,077,614 | 46,373 | 1,123,987 | |||||||||||
Total | $ | 406,088 | $ | 1,651,480 | $ | 107,147 | $ | 2,164,715 |
Severity of gross unrealized losses: | Estimated Fair Value | Gross Unrealized Losses | % of Total Gross Unrealized Losses | |||||||
September 30, 2017 | ||||||||||
0-10% | $ | 155,016 | $ | (3,670 | ) | 46.6 | ||||
10-20% | 11,219 | (1,804 | ) | 22.9 | ||||||
20-30% | 2,632 | (848 | ) | 10.8 | ||||||
Greater than 30% | 2,070 | (1,551 | ) | 19.7 | ||||||
Total | $ | 170,937 | $ | (7,873 | ) | 100.0 | ||||
December 31, 2016 | ||||||||||
0-10% | $ | 214,364 | $ | (8,776 | ) | 50.1 | ||||
10-20% | 52,034 | (7,100 | ) | 40.5 | ||||||
20-30% | 1,983 | (607 | ) | 3.5 | ||||||
Greater than 30% | 1,000 | (1,034 | ) | 5.9 | ||||||
Total | $ | 269,381 | $ | (17,517 | ) | 100.0 |
Country (1) | Sovereign (2) | Corporate Bonds | Other (3) | Total | |||||||||||
Netherlands | $ | 100,463 | $ | 96,733 | $ | 7,154 | $ | 204,350 | |||||||
Germany | 103,751 | 27,931 | 43,928 | 175,610 | |||||||||||
Belgium | 47,890 | 7,522 | — | 55,412 | |||||||||||
Luxembourg | — | 16,605 | 18,624 | 35,229 | |||||||||||
France | 1,011 | 7,017 | 23,885 | 31,914 | |||||||||||
Austria | 16,120 | — | — | 16,120 | |||||||||||
Spain | — | 1,696 | 10,192 | 11,889 | |||||||||||
Ireland | — | 6,698 | 2,670 | 9,369 | |||||||||||
Italy | — | 1,685 | 6,942 | 8,626 | |||||||||||
Finland | — | — | 4,306 | 4,306 | |||||||||||
Portugal | — | — | 549 | 549 | |||||||||||
Greece | — | — | 402 | 402 | |||||||||||
Total | $ | 269,236 | $ | 165,887 | $ | 118,653 | $ | 553,777 |
(1) | The country allocations set forth in the table are based on various assumptions made by us in assessing the country in which the underlying credit risk resides, including a review of the jurisdiction of organization, business operations and other factors. Based on such analysis, we do not believe that we have any other Eurozone investments at September 30, 2017. |
(2) | Includes securities issued and/or guaranteed by Eurozone governments. |
(3) | Includes bank loans, equities and other. |
September 30, 2017 | December 31, 2016 | ||||||
Available for sale: | |||||||
Asian and emerging markets | $ | 123,225 | $ | 84,778 | |||
Investment grade fixed income | 53,325 | 33,923 | |||||
Credit related funds | 20,752 | 7,469 | |||||
Other | 63,037 | 41,800 | |||||
Total available for sale | 260,339 | 167,970 | |||||
Fair value option: | |||||||
Term loan investments | 376,721 | 378,877 | |||||
Mezzanine debt funds | 172,000 | 127,943 | |||||
Credit related funds | 194,200 | 218,298 | |||||
Investment grade fixed income | 95,151 | 75,468 | |||||
Asian and emerging markets | 250,481 | 178,568 | |||||
Other (1) | 147,639 | 129,717 | |||||
Total fair value option | 1,236,192 | 1,108,871 | |||||
Total | $ | 1,496,531 | $ | 1,276,841 |
(1) | Includes fund investments with strategies in mortgage servicing rights, transportation and infrastructure assets and other. |
• | Investable Assets in the ‘Other’ Segment |
ACGL 2017 THIRD QUARTER FORM 10-Q | 67 |
September 30, 2017 | December 31, 2016 | ||||||
Investments accounted for using the fair value option: | |||||||
Other investments | $ | 1,061,013 | $ | 811,922 | |||
Fixed maturities | 1,094,593 | 734,260 | |||||
Short-term investments | 272,495 | 309,127 | |||||
Equity securities | 29,265 | 2,314 | |||||
Total | 2,457,366 | 1,857,623 | |||||
Cash | 57,151 | 74,893 | |||||
Securities sold but not yet purchased | (72,682 | ) | (33,157 | ) | |||
Securities transactions entered into but not settled at the balance sheet date | (137,014 | ) | (41,596 | ) | |||
Total investable assets included in ‘other’ segment | $ | 2,304,821 | $ | 1,857,763 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Premiums written: | |||||||||||||||
Direct | $ | 1,147,793 | $ | 841,119 | $ | 3,338,106 | $ | 2,539,073 | |||||||
Assumed | 500,453 | 437,646 | 1,577,789 | 1,507,594 | |||||||||||
Ceded | (322,843 | ) | (264,487 | ) | (1,065,537 | ) | (887,591 | ) | |||||||
Net | $ | 1,325,403 | $ | 1,014,278 | $ | 3,850,358 | $ | 3,159,076 | |||||||
Premiums earned: | |||||||||||||||
Direct | $ | 1,121,168 | $ | 807,656 | $ | 3,216,268 | $ | 2,382,784 | |||||||
Assumed | 501,587 | 413,960 | 1,431,746 | 1,308,349 | |||||||||||
Ceded | (360,869 | ) | (263,213 | ) | (1,028,237 | ) | (775,166 | ) | |||||||
Net | $ | 1,261,886 | $ | 958,403 | $ | 3,619,777 | $ | 2,915,967 | |||||||
Losses and LAE: | |||||||||||||||
Direct | $ | 917,721 | $ | 490,420 | $ | 1,968,900 | $ | 1,471,472 | |||||||
Assumed | 621,717 | 172,490 | 1,112,255 | 630,271 | |||||||||||
Ceded | (493,297 | ) | (138,727 | ) | (792,584 | ) | (470,019 | ) | |||||||
Net | $ | 1,046,141 | $ | 524,183 | $ | 2,288,571 | $ | 1,631,724 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 68 |
September 30, 2017 | December 31, 2016 | ||||||
Insurance segment: | |||||||
Case reserves | $ | 1,524,718 | $ | 1,414,603 | |||
IBNR reserves | 3,411,009 | 3,187,451 | |||||
Total net reserves | 4,935,727 | 4,602,054 | |||||
Reinsurance segment: | |||||||
Case reserves | 1,011,298 | 762,730 | |||||
Additional case reserves | 162,632 | 92,524 | |||||
IBNR reserves | 1,534,236 | 1,517,983 | |||||
Deferred reinsurance charge asset | (802 | ) | — | ||||
Total net reserves | 2,707,364 | 2,373,237 | |||||
Mortgage segment: | |||||||
Case reserves | 458,960 | 593,222 | |||||
IBNR reserves | 84,926 | 59,791 | |||||
Total net reserves (1) | 543,886 | 653,013 | |||||
Other segment: | |||||||
Case reserves | 232,345 | 125,703 | |||||
Additional case reserves | 31,575 | 9,513 | |||||
IBNR reserves | 436,831 | 353,865 | |||||
Total net reserves | 700,751 | 489,081 | |||||
Total: | |||||||
Case reserves | 3,227,321 | 2,896,258 | |||||
Additional case reserves | 194,207 | 102,037 | |||||
IBNR reserves | 5,467,002 | 5,119,090 | |||||
Deferred reinsurance charge asset | (802 | ) | — | ||||
Total net reserves | $ | 8,887,728 | $ | 8,117,385 |
(1) | At September 30, 2017, total net reserves include $481.5 million from U.S. primary mortgage insurance business, of which 72.2% represents policy years 2007 and prior, 11.7% from 2008 and the remainder from later policy years. |
September 30, 2017 | December 31, 2016 | ||||||
Insurance segment: | |||||||
Professional lines (1) | $ | 1,321,024 | $ | 1,293,667 | |||
Construction and national accounts | 1,064,949 | 976,109 | |||||
Excess and surplus casualty (2) | 683,852 | 687,305 | |||||
Programs | 677,879 | 667,677 | |||||
Property, energy, marine and aviation | 439,409 | 302,057 | |||||
Travel, accident and health | 80,391 | 72,726 | |||||
Lenders products | 53,512 | 42,147 | |||||
Other (3) | 614,711 | 560,366 | |||||
Total net reserves | $ | 4,935,727 | $ | 4,602,054 |
(1) | Includes professional liability, executive assurance and healthcare business. |
(2) | Includes casualty and contract binding business. |
(3) | Includes alternative markets, excess workers’ compensation and surety business. |
September 30, 2017 | December 31, 2016 | ||||||
Reinsurance segment: | |||||||
Casualty (1) | $ | 1,482,463 | $ | 1,355,362 | |||
Other specialty (2) | 503,947 | 428,205 | |||||
Property excluding property catastrophe (3) | 392,002 | 297,200 | |||||
Marine and aviation | 140,432 | 147,700 | |||||
Property catastrophe | 128,988 | 86,026 | |||||
Other (4) | 59,532 | 58,744 | |||||
Total net reserves | $ | 2,707,364 | $ | 2,373,237 |
(1) | Includes executive assurance, professional liability, workers’ compensation, excess motor, healthcare and other. |
(2) | Includes non-excess motor, surety, accident and health, workers’ compensation catastrophe, agriculture, trade credit and other. |
(3) | Includes facultative business. |
(4) | Includes life, casualty clash and other. |
(U.S. Dollars in millions) | September 30, 2017 | June 30, 2017 | |||||||||||
Amount | % | Amount | % | ||||||||||
Insurance In Force (IIF) (1): | |||||||||||||
U.S. primary mortgage insurance | $ | 250,375 | 72.3 | $ | 244,235 | 73.4 | |||||||
Mortgage reinsurance | 26,869 | 7.8 | 26,120 | 7.8 | |||||||||
Other (2) | 68,925 | 19.9 | 62,503 | 18.8 | |||||||||
Total | $ | 346,169 | 100.0 | $ | 332,858 | 100.0 | |||||||
Risk In Force (RIF) (3): | |||||||||||||
U.S. primary mortgage insurance | $ | 64,005 | 92.5 | $ | 62,362 | 92.6 | |||||||
Mortgage reinsurance | 2,433 | 3.5 | 2,453 | 3.6 | |||||||||
Other (2) | 2,742 | 4.0 | 2,517 | 3.7 | |||||||||
Total | $ | 69,180 | 100.0 | $ | 67,332 | 100.0 |
(1) | Represents the aggregate dollar amount of each insured mortgage loan’s current principal balance. |
(2) | Includes GSE credit risk-sharing transactions and international insurance business. |
(3) | Represents the aggregate dollar amount of each insured mortgage loan’s current principal balance multiplied by the insurance coverage percentage specified in the policy for insurance policies issued and after contract limits and/or loss ratio caps for credit risk-sharing or reinsurance transactions. |
ACGL 2017 THIRD QUARTER FORM 10-Q | 69 |
(U.S. Dollars in millions) | IIF | RIF | Delinquency | |||||||||||||
Amount | % | Amount | % | Rate (1) | ||||||||||||
Policy year: | ||||||||||||||||
2007 and prior | $ | 22,206 | 8.9 | $ | 5,052 | 7.9 | 10.30 | % | ||||||||
2008 | 5,192 | 2.1 | 1,273 | 2.0 | 6.27 | % | ||||||||||
2009 | 1,192 | 0.5 | 282 | 0.4 | 2.72 | % | ||||||||||
2010 | 1,368 | 0.5 | 369 | 0.6 | 1.70 | % | ||||||||||
2011 | 4,415 | 1.8 | 1,205 | 1.9 | 1.09 | % | ||||||||||
2012 | 14,995 | 6.0 | 4,101 | 6.4 | 0.60 | % | ||||||||||
2013 | 22,719 | 9.1 | 6,217 | 9.7 | 0.77 | % | ||||||||||
2014 | 24,747 | 9.9 | 6,582 | 10.3 | 0.81 | % | ||||||||||
2015 | 44,453 | 17.8 | 11,417 | 17.8 | 0.47 | % | ||||||||||
2016 | 63,805 | 25.5 | 16,027 | 25.0 | 0.32 | % | ||||||||||
2017 | 45,283 | 18.1 | 11,480 | 17.9 | 0.06 | % | ||||||||||
Total | $ | 250,375 | 100.0 | $ | 64,005 | 100.0 | 1.98 | % |
(1) | Represents the ending percentage of loans in default. |
(U.S. Dollars in millions) | September 30, 2017 | June 30, 2017 | |||||||||||
Amount | % | Amount | % | ||||||||||
Credit quality (FICO): | |||||||||||||
>=740 | $ | 37,297 | 58.3 | $ | 36,378 | 58.3 | |||||||
680-739 | 20,822 | 32.5 | 20,122 | 32.3 | |||||||||
620-679 | 5,178 | 8.1 | 5,118 | 8.2 | |||||||||
<620 | 708 | 1.1 | 744 | 1.2 | |||||||||
Total | $ | 64,005 | 100.0 | $ | 62,362 | 100.0 | |||||||
Weighted average FICO score | 743 | 743 | |||||||||||
Loan-to-value (LTV): | |||||||||||||
95.01% and above | $ | 6,175 | 9.6 | $ | 5,983 | 9.6 | |||||||
90.01% to 95.00% | 35,703 | 55.8 | 34,718 | 55.7 | |||||||||
85.01% to 90.00% | 19,247 | 30.1 | 18,810 | 30.2 | |||||||||
85.00% and below | 2,880 | 4.5 | 2,851 | 4.6 | |||||||||
Total | $ | 64,005 | 100.0 | $ | 62,362 | 100.0 | |||||||
Weighted average LTV | 92.9 | % | 92.8 | % | |||||||||
Total RIF, net of external reinsurance | $ | 47,980 | $ | 45,774 |
(U.S. Dollars in millions) | September 30, 2017 | June 30, 2017 | |||||||||||
Amount | % | Amount | % | ||||||||||
Total RIF by State: | |||||||||||||
Texas | $ | 5,120 | 8.0 | $ | 5,075 | 8.1 | |||||||
California | 3,671 | 5.7 | 3,524 | 5.7 | |||||||||
Florida | 2,764 | 4.3 | 2,622 | 4.2 | |||||||||
Virginia | 2,743 | 4.3 | 2,691 | 4.3 | |||||||||
North Carolina | 2,378 | 3.7 | 2,346 | 3.8 | |||||||||
Washington | 2,312 | 3.6 | 2,311 | 3.7 | |||||||||
Georgia | 2,293 | 3.6 | 2,239 | 3.6 | |||||||||
Maryland | 2,209 | 3.5 | 2,160 | 3.5 | |||||||||
Illinois | 2,200 | 3.4 | 2,157 | 3.5 | |||||||||
Minnesota | 2,138 | 3.3 | 2,072 | 3.3 | |||||||||
Others | 36,177 | 56.5 | 35,165 | 56.4 | |||||||||
Total | $ | 64,005 | 100.0 | $ | 62,362 | 100.0 |
(U.S. Dollars in thousands, except policy, loan and claim count) | Three Months Ended | |||||||
September 30, 2017 | June 30, 2017 | |||||||
Roll-forward of insured loans in default: | ||||||||
Beginning delinquent number of loans | 23,903 | 26,234 | ||||||
New notices | 9,028 | 8,858 | ||||||
Cures | (7,891 | ) | (9,078 | ) | ||||
Paid claims | (1,270 | ) | (2,111 | ) | ||||
Ending delinquent number of loans (1) | 23,770 | 23,903 | ||||||
Ending number of policies in force (1) | 1,202,619 | 1,183,659 | ||||||
Delinquency rate (1) | 1.98 | % | 2.02 | % | ||||
Losses: | ||||||||
Number of claims paid | 1,270 | 2,111 | ||||||
Total paid claims | $ | 59,832 | $ | 85,539 | ||||
Average per claim | $ | 47.1 | $ | 40.5 | ||||
Severity (2) | 103.5 | % | 104.4 | % | ||||
Average reserve per default (in thousands) (1) | $ | 19.3 | $ | 20.4 |
(1) | Includes first lien primary and pool policies. |
(2) | Represents total paid claims divided by RIF of loans for which claims were paid. |
ACGL 2017 THIRD QUARTER FORM 10-Q | 70 |
(U.S. dollars in thousands, except share data) | September 30, 2017 | December 31, 2016 | |||||
Total shareholders’ equity available to Arch | $ | 8,911,144 | $ | 8,253,718 | |||
Less preferred shareholders’ equity | 772,555 | 772,555 | |||||
Common shareholders’ equity available to Arch | $ | 8,138,589 | $ | 7,481,163 | |||
Common shares and common share equivalents outstanding, net of treasury shares (1) | 136,540,573 | 135,550,337 | |||||
Book value per share | $ | 59.61 | $ | 55.19 |
(1) | Excludes the effects of 6,784,649 and 6,872,494 stock options and 419,908 and 381,461 restricted stock units outstanding at September 30, 2017 and December 31, 2016, respectively. |
(U.S. dollars in thousands, except share data) | September 30, 2017 | December 31, 2016 | |||||
Debt: | |||||||
ACGL senior notes, due May 2034 | $ | 297,030 | $ | 296,957 | |||
Arch-U.S. senior notes, due Nov 2043 (1) | 494,596 | 494,525 | |||||
ACF senior notes, due Dec 2026 (2) | 495,955 | 495,689 | |||||
ACF senior notes, due Dec 2046 (2) | 445,145 | 445,087 | |||||
Revolving credit agreement borrowings due Oct 2021 | 400,000 | 500,000 | |||||
Total | $ | 2,132,726 | $ | 2,232,258 | |||
Shareholders’ equity available to Arch: | |||||||
Series C non-cumulative preferred shares | $ | 92,555 | $ | 322,555 | |||
Series E non-cumulative preferred shares | 450,000 | 450,000 | |||||
Series F non-cumulative preferred shares | 230,000 | — | |||||
Common shareholders’ equity | 8,138,589 | 7,481,163 | |||||
Total | $ | 8,911,144 | $ | 8,253,718 | |||
Total capital available to Arch | $ | 11,043,870 | $ | 10,485,976 | |||
Debt to total capital (%) | 19.3 | 21.3 | |||||
Debt and prefered to total capital (%) | 26.3 | 28.7 |
(1) | Issued by Arch Capital Group (U.S.) Inc., a wholly owned subsidiary of ACGL, and fully and unconditionally guaranteed by ACGL. |
(2) | Issued by Arch Capital Finance LLC (“ACF”), a wholly owned subsidiary of Arch U.S. MI Holdings Inc., and fully and unconditionally guaranteed by ACGL. |
ACGL 2017 THIRD QUARTER FORM 10-Q | 71 |
Nine Months Ended | |||||||
September 30, | |||||||
2017 | 2016 | ||||||
Total cash provided by (used for): | |||||||
Operating activities | $ | 860,197 | $ | 831,086 | |||
Investing activities | (486,201 | ) | (1,131,147 | ) | |||
Financing activities | (348,337 | ) | 372,393 | ||||
Effects of exchange rate changes on foreign currency cash | 11,492 | (5,322 | ) | ||||
Increase (decrease) in cash | $ | 37,151 | $ | 67,010 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 72 |
(U.S. dollars in billions) | Interest Rate Shift in Basis Points | ||||||||||||||||||
-100 | -50 | — | +50 | +100 | |||||||||||||||
Sep. 30, 2017 | |||||||||||||||||||
Total fair value | $ | 18.95 | $ | 18.64 | $ | 18.35 | $ | 18.07 | $ | 17.79 | |||||||||
Change from base | 3.3 | % | 1.6 | % | (1.5 | )% | (3.0 | )% | |||||||||||
Change in unrealized value | $ | 0.61 | $ | 0.29 | $ | (0.28 | ) | $ | (0.55 | ) | |||||||||
Dec. 31, 2016 | |||||||||||||||||||
Total fair value | $ | 17.95 | $ | 17.62 | $ | 17.31 | $ | 17.00 | $ | 16.70 | |||||||||
Change from base | 3.7 | % | 1.8 | % | (1.8 | )% | (3.5 | )% | |||||||||||
Change in unrealized value | $ | 0.64 | $ | 0.31 | $ | (0.31 | ) | $ | (0.61 | ) |
(U.S. dollars in billions) | Credit Spread Shift in Percentage Points | ||||||||||||||||||
-100 | -50 | — | +50 | +100 | |||||||||||||||
Sep. 30, 2017 | |||||||||||||||||||
Total fair value | $ | 18.73 | $ | 18.55 | $ | 18.35 | $ | 18.14 | $ | 17.96 | |||||||||
Change from base | 2.1 | % | 1.1 | % | (1.1 | )% | (2.1 | )% | |||||||||||
Change in unrealized value | $ | 0.39 | $ | 0.20 | $ | (0.20 | ) | $ | (0.39 | ) | |||||||||
Dec. 31, 2016 | |||||||||||||||||||
Total fair value | $ | 17.79 | $ | 17.55 | $ | 17.31 | $ | 17.07 | $ | 16.83 | |||||||||
Change from base | 2.8 | % | 1.4 | % | (1.4 | )% | (2.8 | )% | |||||||||||
Change in unrealized value | $ | 0.48 | $ | 0.24 | $ | (0.24 | ) | $ | (0.48 | ) |
ACGL 2017 THIRD QUARTER FORM 10-Q | 73 |
(U.S. dollars in thousands, except per share data) | September 30, 2017 | December 31, 2016 | |||||
Net assets (liabilities), denominated in foreign currencies, excluding shareholders’ equity and derivatives | $ | (713,065 | ) | $ | (63,077 | ) | |
Shareholders’ equity denominated in foreign currencies (1) | 356,048 | 290,752 | |||||
Net foreign currency forward contracts outstanding (2) | (191,878 | ) | (250,263 | ) | |||
Net exposures denominated in foreign currencies | $ | (548,895 | ) | $ | (22,588 | ) | |
Pre-tax impact of a hypothetical 10% appreciation of the U.S. Dollar against foreign currencies: | |||||||
Shareholders’ equity | $ | 54,890 | $ | 2,259 | |||
Book value per common share | $ | 0.40 | $ | 0.02 | |||
Pre-tax impact of a hypothetical 10% decline of the U.S. Dollar against foreign currencies: | |||||||
Shareholders’ equity | $ | (54,890 | ) | $ | (2,259 | ) | |
Book value per common share | $ | (0.40 | ) | $ | (0.02 | ) |
(1) | Represents capital contributions held in the foreign currencies of our operating units. |
(2) | Represents the net notional value of outstanding foreign currency forward contracts. |
ACGL 2017 THIRD QUARTER FORM 10-Q | 74 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 75 |
ACGL 2017 THIRD QUARTER FORM 10-Q | 76 |
Issuer Purchases of Equity Securities | ||||||||||||||
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan or Programs (2) | ||||||||||
7/1/2017 - 7/31/2017 | 4,414 | $ | 94.39 | — | $ | 446,501 | ||||||||
8/1/2017 - 8/31/2017 | 4,074 | 96.99 | — | $ | 446,501 | |||||||||
9/1/2017 - 9/30/2017 | 15,618 | 95.38 | — | $ | 446,501 | |||||||||
Total | 24,106 | $ | 95.47 | — | $ | 446,501 |
(1) | Represents repurchases by ACGL of shares, from time to time, from employees in order to facilitate the payment of withholding taxes on restricted shares granted and the exercise of stock appreciation rights. We purchased these shares at their fair value, as determined by reference to the closing price of our common shares on the day the restricted shares vested or the stock appreciation rights were exercised. |
(2) | Remaining amount available at September 30, 2017 under ACGL’s share repurchase authorization, under which repurchases may be effected from time to time in open market or privately negotiated transactions through December 31, 2019. |
ACGL 2017 THIRD QUARTER FORM 10-Q | 77 |
Exhibit No. | Description | |
101 | The following financial information from Arch Capital Group Ltd.’s Quarterly Report for the quarter ended September 30, 2017 formatted in XBRL: (i) Consolidated Balance Sheets at September 30, 2017 and December 31, 2016; (ii) Consolidated Statements of Income for the three and nine month periods ended September 30, 2017 and 2016; (iii) Consolidated Statements of Comprehensive Income for the three and nine month periods ended September 30, 2017 and 2016; (iv) Consolidated Statements of Changes in Shareholders’ Equity for the nine month periods ended September 30, 2017 and 2016; (v) Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2017 and 2016; and (vi) Notes to Consolidated Financial Statements. | |
† | Management contract or compensatory plan or arrangement. |
ACGL 2017 THIRD QUARTER FORM 10-Q | 78 |
ARCH CAPITAL GROUP LTD. | ||
(REGISTRANT) | ||
/s/ Constantine Iordanou | ||
Date: November 3, 2017 | Constantine Iordanou | |
Chief Executive Officer (Principal Executive Officer) and Chairman of the Board of Directors | ||
/s/ Mark D. Lyons | ||
Date: November 3, 2017 | Mark D. Lyons | |
Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) |
ACGL 2017 THIRD QUARTER FORM 10-Q | 79 |
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Maamoun Rajeh | |||
Maamoun Rajeh | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Maamoun Rajeh | |||
Maamoun Rajeh | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/Andrew Rippert | |||
Andrew Rippert | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Maamoun Rajeh | |||
Maamoun Rajeh | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Employee Signature | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Nicolas Papadopoulo | |||
Nicolas Papadopoulo | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Maamoun Rajeh | |||
Maamoun Rajeh | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Andrew Rippert | |||
Andrew Rippert | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Andrew Rippert | |||
Andrew Rippert | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Maamoun Rajeh | |||
Maamoun Rajeh | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Andrew Rippert | |||
Andrew Rippert | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Andrew Rippert | |||
Andrew Rippert | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Maamoun Rajeh | |||
Maamoun Rajeh | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Andrew Rippert | |||
Andrew Rippert | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Maamoun Rajeh | |||
Maamoun Rajeh | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Nicolas Papadopoulo | |||
Nicolas Papadopoulo | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Nicolas Papadopoulo | |||
Nicolas Papadopoulo | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Employee Signature | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Employee Signature | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Employee Signature | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Dawna Ferguson | ||
Name: | Dawna Ferguson | ||
Title: | Secretary | ||
/s/ Employee Signature | |||
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Susie Tindall | ||
Name: | Susie Tindall | ||
Title: | Secretary | ||
/s/ Constantine Iordanou | |||
Constantine Iordanou | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Susie Tindall | ||
Name: | Susie Tindall | ||
Title: | Secretary | ||
/s/ Maamoun Rajeh | |||
Maamoun Rajeh | |||
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Susie Tindall | ||
Name: | Susie Tindall | ||
Title: | Secretary | ||
/s/ Maamoun Rajeh | |||
Maamoun Rajeh | |||
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Marc Grandisson | ||
Name: | Marc Grandisson | ||
Title: | President & Chief Operating Officer | ||
ARCH INSURANCE GROUP INC. | |||
By: | /s/ Carl Sullo | ||
Name: | Carl Sullo | ||
Title: | SVP | ||
Accepted as of the date hereof: | |||
/s/ David McElroy | |||
David McElroy |
(a) | such major medical, life insurance and disability insurance coverage as is, or may during the Employment Period, be provided generally for other senior executive officers of the Company as set forth from time to time in the applicable plan documents; |
(b) | in addition to the usual public holidays and eight (8) paid days off for sick leave, a maximum of five (5) weeks of paid vacation annually during the term of the Employment Period (Section 11 of the Bermuda Employment Act 2000 shall otherwise not apply to the Executive’s employment hereunder); |
(c) | benefits under any plan or arrangement available generally for the senior executive officers of the Company, subject to and consistent with the terms and conditions and overall administration of such plans as set forth from time to time in the applicable plan documents; |
(d) | payment by the Company of the reasonable cost of preparation of annual tax returns and associated tax planning on a basis no less favorable than such arrangements provided on the date hereof to similarly situated senior executives residing in Bermuda, and the cost paid by the Company under this Section 4.03(d) for one calendar year shall be paid by the Company promptly upon presentation by the Executive to the Company of the required documentation and, in all events, not later than the end of the following calendar year; and |
(e) | other fringe benefits customarily provided from time to time during the Employment Period to similarly situated senior executives residing in Bermuda. |
If to the Executive: | To the last address delivered to the Company by the Executive in the manner set forth herein. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Marc Grandisson | ||
Name: | Marc Grandisson | ||
Title: | President & Chief Operating Officer | ||
/s/ Maamoun Rajeh | |||
Maamoun Rajeh |
(a) | such major medical, life insurance and disability insurance coverage as is, or may during the Employment Period, be provided generally for other senior executive officers of the Company as set forth from time to time in the applicable plan documents; |
(b) | in addition to the usual public holidays and eight (8) paid days off for sick leave, a maximum of five (5) weeks of paid vacation annually during the term of the Employment Period (Section 11 of the Bermuda Employment Act 2000 shall otherwise not apply to the Executive’s employment hereunder); |
(c) | benefits under any plan or arrangement available generally for the senior executive officers of the Company, subject to and consistent with the terms and conditions and overall administration of such plans as set forth from time to time in the applicable plan documents; |
(d) | payment by the Company of the reasonable cost of preparation of annual tax returns and associated tax planning on a basis no less favorable than such arrangements provided on the date hereof to similarly situated senior executives residing in Bermuda, and the cost paid by the Company under this Section 4.03(d) for one calendar year shall be paid by the Company promptly upon presentation by the Executive to the Company of the required documentation and, in all events, not later than the end of the following calendar year; |
(e) | and other fringe benefits customarily provided from time to time during the Employment Period to similarly situated senior executives residing in Bermuda. |
If to the Executive: | To the last address delivered to the Company by the Executive in the manner set forth herein. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Marc Grandisson | ||
Name: | Marc Grandisson | ||
Title: | President & Chief Operating Officer | ||
/s/ Nicolas Papadopoulo | |||
Nicolas Papadopoulo |
(a) | such major medical, life insurance and disability insurance coverage as is, or may during the Employment Period, be provided generally for other senior executive officers of the Company as set forth from time to time in the applicable plan documents; |
(b) | in addition to the usual public holidays and eight (8) paid days off for sick leave, a maximum of five (5) weeks of paid vacation annually during the term of the Employment Period (Section 11 of the Bermuda Employment Act 2000 shall otherwise not apply to the Executive’s employment hereunder); |
(c) | benefits under any plan or arrangement available generally for the senior executive officers of the Company, subject to and consistent with the terms and conditions and overall administration of such plans as set forth from time to time in the applicable plan documents; |
(d) | payment by the Company of the reasonable cost of preparation of annual tax returns and associated tax planning on a basis no less favorable than such arrangements provided on the date hereof to similarly situated senior executives residing in Bermuda, and the cost paid by the Company under this Section 4.03(d) for one calendar year shall be paid by the Company promptly upon presentation by the Executive to the Company of the required documentation and, in all events, not later than the end of the following calendar year; and |
(e) | other fringe benefits customarily provided from time to time during the Employment Period to similarly situated senior executives residing in Bermuda. |
If to the Executive: | To the last address delivered to the Company by the Executive in the manner set forth herein. |
ARCH CAPITAL GROUP LTD. | |||
By: | /s/ Marc Grandisson | ||
Name: | Marc Grandisson | ||
Title: | President & Chief Operating Officer | ||
/s/ Andrew Rippert | |||
Andrew Rippert |
1. | I have reviewed this quarterly report on Form 10-Q of Arch Capital Group Ltd.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in the report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and to the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | November 3, 2017 | |
By: | /s/ Constantine Iordanou | |
Name: | Constantine Iordanou | |
Title: | Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Arch Capital Group Ltd.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in the report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and to the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | November 3, 2017 | |
By: | /s/ Mark D. Lyons | |
Name: | Mark D. Lyons | |
Title: | Executive Vice President, Chief Financial Officer and Treasurer |
(1) | the Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and |
(2) | the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | November 3, 2017 | |
By: | /s/ Constantine Iordanou | |
Name: | Constantine Iordanou | |
Title: | Chief Executive Officer |
(1) | the Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and |
(2) | the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | November 3, 2017 | |
By: | /s/ Mark D. Lyons | |
Name: | Mark D. Lyons | |
Title: | Executive Vice President, Chief Financial Officer and Treasurer |
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Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Oct. 31, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ARCH CAPITAL GROUP LTD. | |
Entity Central Index Key | 0000947484 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 130,874,024 |
Unaudited Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Fixed maturities available for sale, at amortized cost | $ 13,722,581 | $ 13,522,671 |
Short-term investments available for sale, at amortized cost | 1,645,873 | 611,878 |
Collateral received under securities lending, at amortized cost | 543,243 | 762,554 |
Equity securities available for sale, at cost | 401,674 | 475,085 |
Other investments available for sale, at cost | 205,828 | 149,077 |
Securities pledged under securities lending, at amortized cost | $ 529,700 | $ 746,409 |
Common shares, par value per share | $ 0.0033 | $ 0.0033 |
Common shares issued (shares) | 182,924,882 | 174,644,101 |
Common shares held in treasury (shares) | 52,058,509 | 51,856,584 |
Unaudited Consolidated Statements of Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Revenues | ||||
Net premiums written | $ 1,325,403 | $ 1,014,278 | $ 3,850,358 | $ 3,159,076 |
Change in unearned premiums | (63,517) | (55,875) | (230,581) | (243,109) |
Net premiums earned | 1,261,886 | 958,403 | 3,619,777 | 2,915,967 |
Net investment income | 116,459 | 93,618 | 345,457 | 275,691 |
Net realized gains (losses) | 66,275 | 125,105 | 122,163 | 230,647 |
Other-than-temporary impairment losses | (1,878) | (3,867) | (5,415) | (16,999) |
Less investment impairments recognized in other comprehensive income, before taxes | 0 | 0 | 0 | 150 |
Net impairment losses recognized in earnings | (1,878) | (3,867) | (5,415) | (16,849) |
Other underwriting income | 6,064 | 7,980 | 15,519 | 38,251 |
Equity in net income (loss) of investment funds accounted for using the equity method | 31,090 | 16,662 | 111,884 | 32,054 |
Other income (loss) | (342) | (400) | (3,118) | (432) |
Total revenues | 1,479,554 | 1,197,501 | 4,206,267 | 3,475,329 |
Expenses | ||||
Losses and loss adjustment expenses | 1,046,141 | 524,183 | 2,288,571 | 1,631,724 |
Acquisition expenses | 193,854 | 161,267 | 566,579 | 501,782 |
Other operating expenses | 170,127 | 153,286 | 514,827 | 460,748 |
Corporate expenses | 17,098 | 18,485 | 69,766 | 45,068 |
Amortization of intangible assets | 31,824 | 4,865 | 93,942 | 14,493 |
Interest expense | 29,510 | 15,943 | 86,935 | 47,713 |
Net foreign exchange losses (gains) | 28,028 | 2,621 | 86,975 | 1,525 |
Total expenses | 1,516,582 | 880,650 | 3,707,595 | 2,703,053 |
Income (loss) before income taxes | (37,028) | 316,851 | 498,672 | 772,276 |
Income tax expense | (8,189) | (13,231) | (70,755) | (43,672) |
Net income (loss) | (45,217) | 303,620 | 427,917 | 728,604 |
Net (income) loss attributable to noncontrolling interests | 11,561 | (50,748) | (23,279) | (109,879) |
Net income (loss) available to Arch | (33,656) | 252,872 | 404,638 | 618,725 |
Preferred dividends | (12,369) | (5,484) | (34,936) | (16,453) |
Loss on redemption of preferred shares | (6,735) | 0 | (6,735) | 0 |
Net income (loss) available to Arch common shareholders | $ (52,760) | $ 247,388 | $ 362,967 | $ 602,272 |
Net income per common share | ||||
Basic (per share) | $ (0.39) | $ 2.05 | $ 2.70 | $ 4.99 |
Diluted (per share) | $ (0.39) | $ 1.98 | $ 2.61 | $ 4.84 |
Weighted average common shares and common share equivalents outstanding | ||||
Basic (shares) | 134,885,451 | 120,938,916 | 134,472,129 | 120,656,420 |
Diluted (shares) | 134,885,451 | 124,931,653 | 139,222,324 | 124,528,174 |
General |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General Arch Capital Group Ltd. (“ACGL”) is a Bermuda public limited liability company which provides insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly-owned subsidiaries. As used herein, the “Company” means ACGL and its subsidiaries. The Company’s consolidated financial statements include the results of Watford Holdings Ltd. and its wholly owned subsidiaries. See Note 3. On December 31, 2016, the Company completed the acquisition of United Guaranty Corporation, a North Carolina corporation (“UGC”) pursuant to a stock purchase agreement with American International Group, Inc. (“AIG”). The acquisition of UGC (“UGC acquisition”) expanded the scale of Arch’s existing mortgage insurance businesses by combining UGC’s position as the market leader in the U.S. private mortgage insurance industry with Arch’s financial strength and history of innovation, further diversifying the Company’s business profile and customer base. The interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions and balances have been eliminated in consolidation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of results on an interim basis. The results of any interim period are not necessarily indicative of the results for a full year or any future periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted; however, management believes that the disclosures are adequate to make the information presented not misleading. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (“2016 Form 10-K”), including the Company’s audited consolidated financial statements and related notes. The Company has reclassified the presentation of certain prior year information to conform to the current presentation, including the presentation of ‘amortization of intangible assets’ on its consolidated statements of income to split out such item (previously reflected in acquisition expenses and/or other operating expenses). Such reclassifications had no effect on the Company’s net income, comprehensive income, shareholders’ equity or cash flows. Tabular amounts are in U.S. Dollars in thousands, except share amounts, unless otherwise noted. |
Recent Accounting Pronouncements |
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Sep. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Issued Accounting Standards Adopted The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standard Update (“ASU”) 2016-09, “Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting,” effective January 1, 2017. This ASU was issued in the 2016 first quarter to improve and simplify the accounting for employee share-based payment transactions. This ASU provides simplifications with respect to income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows for these types of transactions. With respect to the forfeiture accounting policy election, the Company has elected to account for forfeitures as they occur, which did not result in a material cumulative effect adjustment. With respect to the change in presentation in the statement of cash flows related to excess tax benefits, the Company has applied the guidance prospectively and prior periods have not been adjusted. Recently Issued Accounting Standards Not Yet Adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” was issued in the 2014 second quarter and updated through various ASUs in 2016. This ASU (and as updated in 2016) creates a new comprehensive revenue recognition standard that will serve as a single source of revenue guidance for all companies in all industries. The guidance applies to all companies that either enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of non-financial assets, unless those contracts are within the scope of other standards, such as insurance contracts or financial instruments.The ASU also requires enhanced disclosures about revenue. The ASU is effective in the 2018 first quarter and the Company intends on adopting the ASU using the modified retrospective method, whereby the cumulative effect of adoption will be recognized as an adjustment to retained earnings at the date of initial application. The adoption of this ASU will not impact the Company's insurance premium revenues or revenues from its investment portfolio, which represent a substantial portion of consolidated revenues, but may have an impact on the Company's other revenues. Based on the Company’s evaluation of the impacted revenue streams, the ASU is not expected to have a material effect on the Company’s consolidated financial statements and the cumulative effect adjustment to retained earnings at the date of initial application is not expected to be material. ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities,” was issued in the 2016 first quarter to enhance the reporting model for financial instruments and to provide improved financial information to readers of the financial statements. Among other provisions focused on improving the recognition and measurement of financial instruments, the ASU requires that equity investments be measured at fair value on the balance sheet with changes in fair value reported in the income statement and that an exit price notion be used when measuring the fair value of financial instruments for disclosure purposes. The ASU is effective in the 2018 first quarter and, aside from limited situations, cannot be early adopted. The Company is currently assessing the impact the implementation of this ASU will have on its consolidated financial statements. The adoption of this ASU is not expected to have a material impact on the Company's financial position, cash flows, or total comprehensive income, but will have a material impact on the Company's results of operations as changes in fair value of equity instruments will be presented in net income rather than other comprehensive income. ASU 2016-18, "Statement of Cash Flows (Topic 230) - Restricted Cash " was issued in the 2016 fourth quarter. The ASU requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents in the reconciliation of beginning and ending cash on the statements of cash flows. As a result, transfers between cash and cash equivalents and restricted cash and restricted cash equivalents will no longer be presented on the statement of cash flows. The ASU is effective, with retrospective adoption, for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company is currently assessing the impact the implementation of this ASU will have on its consolidated financial statements. The adoption of this ASU is not expected to have a material effect on the Company’s results of operations, financial position, comprehensive income or net cash provided from operating activities. ASU 2017-08, “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities,” was issued in the 2017 first quarter. The ASU amends the amortization period for certain purchased callable debt securities held at a premium by shortening the amortization period for the premium to the earliest call date. The ASU will be effective for the Company on January 1, 2019 and is required to be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently assessing the impact the implementation of this ASU will have on its consolidated financial statements. The adoption of this ASU is not expected to have a material effect on the Company’s results of operations, financial position or cash flows. ASU 2017-09, “Compensation - Stock Compensation (Topic 718) - Scope of Modification Accounting” was issued in the 2017 second quarter. The ASU provides updated guidance to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The ASU is effective prospectively for all companies for annual periods beginning on or after December 15, 2017, with early adoption permitted. The adoption of this ASU is not expected to have a material effect on the Company’s results of operations, financial position or cash flows. |
Variable Interest Entities and Noncontrolling Interests |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entity and Noncontrolling Interests | Variable Interest Entities and Noncontrolling Interests A variable interest entity (“VIE”) refers to an entity that has characteristics such as (i) insufficient equity at risk to allow the entity to finance its activities without additional financial support or (ii) instances where the equity investors, as a group, do not have characteristics of a controlling financial interest. The primary beneficiary of a VIE is defined as the variable interest holder that is determined to have the controlling financial interest as a result of having both (i) the power to direct the activities of a VIE that most significantly impact the economic performance of the VIE and (ii) the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. If a company is determined to be the primary beneficiary, it is required to consolidate the VIE in its financial statements. Watford Holdings Ltd. In March 2014, the Company invested $100.0 million and acquired approximately 11% of Watford Holdings Ltd.’s common equity and a warrant to purchase additional common equity. Watford Holdings Ltd. is the parent of Watford Re Ltd., a multi-line Bermuda reinsurance company (together with Watford Holdings Ltd., “Watford Re”). Watford Re is considered a VIE and the Company concluded that it is the primary beneficiary of Watford Re. As such, the results of Watford Re are included in the Company’s consolidated financial statements. The Company does not guarantee or provide credit support for Watford Re, and the Company’s financial exposure to Watford Re is limited to its investment in Watford Re’s common and preferred shares and counterparty credit risk (mitigated by collateral) arising from reinsurance transactions. The following table provides the carrying amount and balance sheet caption in which the assets and liabilities of Watford Re are reported:
For the nine months ended September 30, 2017, Watford Re generated $221.9 million of cash provided by operating activities, $394.4 million of cash used for investing activities and $152.5 million of cash provided by financing activities, compared to $207.0 million of cash provided by operating activities, $124.0 million of cash used for investing activities and $119.6 million of cash used for financing activities for the nine months ended September 30, 2016. Non-redeemable noncontrolling interests The Company accounts for the portion of Watford Re’s common equity attributable to third party investors in the shareholders’ equity section of its consolidated balance sheets. The noncontrolling ownership in Watford Re’s common shares was approximately 89% at September 30, 2017. The portion of Watford Re’s income or loss attributable to third party investors is recorded in the consolidated statements of income in ‘net (income) loss attributable to noncontrolling interests.’ The following table sets forth activity in the non-redeemable noncontrolling interests:
Redeemable noncontrolling interests The Company accounts for redeemable noncontrolling interests in the mezzanine section of its consolidated balance sheets in accordance with applicable accounting guidance. Such redeemable noncontrolling interests relate to the 9,065,200 cumulative redeemable preference shares (“Watford Preference Shares”) issued in March 2014 with a par value of $0.01 per share and a liquidation preference of $25.00 per share. Preferred dividends, including the accretion of the discount and issuance costs, are included in ‘net (income) loss attributable to noncontrolling interests’ in the Company’s consolidated statements of income. The following table sets forth activity in the redeemable non-controlling interests:
The portion of Watford Re’s income or loss attributable to third party investors, recorded in the Company’s consolidated statements of income in ‘net (income) loss attributable to noncontrolling interests,’ are summarized in the table below:
Bellemeade Re I and II Upon closing of the UGC acquisition, the Company acquired the rights and obligations related to aggregate excess of loss reinsurance agreements with Bellemeade Re I Ltd. (“Bellemeade I”), entered into in July 2015, and with Bellemeade Re II Ltd. (“Bellemeade II”), entered into in May 2016 (the “Bellemeade Agreements”). Bellemeade I and Bellemeade II are special purpose reinsurance companies domiciled in Bermuda, each of which provided for up to approximately $300 million of aggregate excess of loss reinsurance coverage at inception for new delinquencies on portfolios of in-force policies issued. As a result of the evaluation of the Bellemeade Agreements, the Company concluded that both Bellemeade I and Bellemeade II are VIEs. However, given that the ceding insurers do not have the unilateral power to direct those activities that are significant to the economic performance of Bellemeade I and Bellemeade II, the Company does not consolidate Bellemeade I and Bellemeade II in its consolidated financial statements. The following table presents total assets of Bellemeade I and Bellemeade II as well as the Company’s maximum exposure to loss associated with these VIEs:
See note 18, “Subsequent Event.” Irving Partners Limited Partnership Upon closing of the UGC acquisition, the Company acquired a limited partnership interest in Irving Partners Limited Partnership (“Irving Partners”), which owns and operates an office building in Greensboro, North Carolina in which the Company is the main tenant. The Company concluded that Irving Partners is a VIE but that it is not the primary beneficiary. During the 2017 third quarter, the Company’s ownership in Irving Partners was sold to a third party for approximately $14.5 million. |
Earnings Per Common Share |
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Earnings Per Common Share | Earnings (Loss) Per Common Share Due to the net loss recorded in the 2017 third quarter, diluted weighted average common shares and common share equivalents outstanding for the 2017 third quarter do not include the effect of 4.7 million otherwise dilutive securities since the inclusion of such securities is anti-dilutive to per share results. Since the Company reported net income for the other periods presented, the computation of diluted average shares outstanding includes dilutive securities for such periods. The following table sets forth the computation of basic and diluted earnings (loss) per common share:
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company classifies its businesses into three underwriting segments — insurance, reinsurance and mortgage — and two other operating segments — ‘other’ and corporate (non-underwriting). The Company determined its reportable segments using the management approach described in accounting guidance regarding disclosures about segments of an enterprise and related information. The accounting policies of the segments are the same as those used for the preparation of the Company’s consolidated financial statements. Intersegment business is allocated to the segment accountable for the underwriting results. The Company’s insurance, reinsurance and mortgage segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to the Company’s chief operating decision makers, the Chairman and Chief Executive Officer, the President and Chief Operating Officer, and the Chief Financial Officer of ACGL. The chief operating decision makers do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis. Management measures segment performance for its three underwriting segments based on underwriting income or loss. The Company does not manage its assets by underwriting segment, with the exception of goodwill and intangible assets, and, accordingly, investment income is not allocated to each underwriting segment. The insurance segment consists of the Company’s insurance underwriting units which offer specialty product lines on a worldwide basis. Product lines include: construction and national accounts; excess and surplus casualty; lenders products; professional lines; programs; property, energy, marine and aviation; travel, accident and health; and other (consisting of alternative markets, excess workers' compensation and surety business). The reinsurance segment consists of the Company’s reinsurance underwriting units which offer specialty product lines on a worldwide basis. Product lines include: casualty; marine and aviation; other specialty; property catastrophe; property excluding property catastrophe (losses on a single risk, both excess of loss and pro rata); and other (consisting of life reinsurance, casualty clash and other). The mortgage segment includes the Company’s U.S. and international mortgage insurance and reinsurance operations as well as government sponsored enterprise (“GSE”) credit-risk sharing transactions. Arch Mortgage Insurance Company, United Guaranty Residential Insurance Company and United Guaranty Mortgage Indemnity Company (combined “Arch MI U.S.”) are approved as eligible mortgage insurers by Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”), each a GSE. The corporate (non-underwriting) segment results include net investment income, other income (loss), corporate expenses, UGC transaction costs and other, interest expense, items related to the Company’s non-cumulative preferred shares, net realized gains or losses, net impairment losses included in earnings, equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses and income taxes. Such amounts exclude the results of the ‘other’ segment. The ‘other’ segment includes the results of Watford Re (see Note 3). Watford Re has its own management and board of directors that is responsible for the overall profitability of the ‘other’ segment. For the ‘other’ segment, performance is measured based on net income or loss. The following tables summarize the Company’s underwriting income or loss by segment, together with a reconciliation of underwriting income or loss to net income available to common shareholders:
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Reserve for Losses and Loss Adjustment Expenses |
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Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reserve for losses and loss adjustment expenses | Reserve for Losses and Loss Adjustment Expenses The following table represents an analysis of losses and loss adjustment expenses and a reconciliation of the beginning and ending reserve for losses and loss adjustment expenses:
2017 Third Quarter Catastrophe Losses The Company’s 2017 third quarter results reflect estimated net losses from current accident year catastrophic events of $347.8 million, net of reinsurance and reinstatement premiums, which consisted of $133.4 million from the reinsurance segment and $214.5 million from the insurance segment. Such amounts were primarily related to Hurricanes Harvey, Irma and Maria, along with the Mexican earthquakes and other more minor global events. In addition, estimated net losses from current accident year catastrophic events for the 2017 third quarter in the ‘other’ segment were $19.8 million. Development on Prior Year Loss Reserves 2017 Third Quarter During the 2017 third quarter, the Company recorded net favorable development on prior year loss reserves of $45.2 million, which consisted of $36.5 million from the reinsurance segment, $3.0 million from the insurance segment, $21.5 million from the mortgage segment and adverse development of $15.8 million from the ‘other’ segment. The reinsurance segment’s net favorable development of $36.5 million, or 11.3 points, for the 2017 third quarter consisted of $16.9 million from short-tailed lines and $19.6 million from long-tailed and medium-tailed lines. Favorable development in short-tailed lines included $11.8 million from property catastrophe and property other than property catastrophe reserves, across most underwriting years (i.e., all premiums and losses attributable to contracts having an inception or renewal date within the given twelve-month period), reflecting lower levels of reported and paid claims activity than previously anticipated which led to decreases in certain loss ratio selections during the period. Favorable development in long-tailed and medium-tailed lines reflected reductions in casualty reserves of $13.4 million based on varying levels of reported and paid claims activity, primarily from the 2002 to 2009 underwriting years, and favorable development in marine reserves of $4.3 million across most underwriting years. The insurance segment’s net favorable development of $3.0 million, or 0.6 points, for the 2017 third quarter consisted of $1.8 million of net favorable development in short-tailed lines and $1.2 million of net favorable development in long-tailed and medium-tailed lines. Net favorable development in short-tailed lines primarily resulted from property (including special risk other than marine) reserves from the 2011 to 2016 accident years (i.e., the year in which a loss occurred). Net favorable development in medium-tailed lines reflected $11.9 million from professional liability reserves across most accident years and in surety reserves with $4.2 million of favorable development. Such amounts were partially offset by $12.9 million of adverse development on a small number of programs in the 2014 to 2016 accident years. The mortgage segment’s net favorable development was $21.5 million, or 7.8 points, for the 2017 third quarter. The 2017 third quarter development was primarily driven by continued lower than expected claim emergence across most origination years and also reflected $6.1 million related to second lien and other portfolios, primarily due to subrogation recoveries. 2016 Third Quarter During the 2016 third quarter, the Company recorded net favorable development on prior year loss reserves of $74.8 million, which consisted of $59.5 million from the reinsurance segment, $13.7 million from the insurance segment, $2.5 million from the mortgage segment and adverse development of $0.9 million from the ‘other’ segment. The reinsurance segment’s net favorable development of $59.5 million, or 23.6 points, for the 2016 third quarter consisted of $27.7 million from short-tailed lines and $31.8 million from long-tailed and medium-tailed lines. Favorable development in short-tailed lines included $23.2 million from property catastrophe and property other than property catastrophe reserves, across most underwriting years, reflecting lower levels of reported and paid claims activity than previously anticipated which led to decreases in certain loss ratio selections during the period. Favorable development in long-tailed lines reflected reductions in casualty reserves of $29.3 million based on varying levels of reported and paid claims activity, primarily from the 2002 to 2010 underwriting years and 2012 to 2013 underwriting years. The insurance segment’s net favorable development of $13.7 million, or 2.6 points, for the 2016 third quarter consisted of $18.2 million of net favorable development in long-tailed lines, partially offset by $2.4 million of net adverse development in short-tailed lines and $2.0 million of net adverse development in medium-tailed lines. Net favorable development in long-tailed lines reflected net reductions in executive assurance reserves from the 2008 to 2015 accident years, and net reductions in casualty reserves from the 2007 and 2008 accident years. Net adverse development in short-tailed lines primarily resulted from property (including special risk other than marine) reserves from the 2015 accident year, primarily due to a small number of attritional losses. Net adverse development in medium-tailed lines primarily resulted from an increase in programs of $6.2 million stemming in part from terminated programs, partially offset by favorable development of $4.2 million in other medium-tailed lines, primarily in professional liability and surety. The mortgage segment’s net favorable development was $2.5 million, or 3.2 points, for the 2016 third quarter. The 2016 third quarter development was primarily driven by lower than expected claim rates across most origination years. Nine Months Ended September 30, 2017 During the nine months ended September 30, 2017, the Company recorded net favorable development on prior year loss reserves of $197.8 million, which consisted of $133.3 million from the reinsurance segment, $7.2 million from the insurance segment, $74.9 million from the mortgage segment and adverse development of $17.5 million from the ‘other’ segment. The reinsurance segment’s net favorable development of $133.3 million, or 15.1 points, for the 2017 period consisted of $85.8 million from short-tailed lines and $47.5 million from long-tailed and medium-tailed lines. Favorable development in short-tailed lines included $62.7 million from property catastrophe and property other than property catastrophe reserves, across most underwriting years, reflecting lower levels of reported and paid claims activity than previously anticipated which led to decreases in certain loss ratio selections during the period. Favorable development in long-tailed and medium-tailed lines reflected reductions in casualty reserves of $28.0 million based on varying levels of reported and paid claims activity, primarily from the 2002 to 2013 underwriting years, and favorable development in marine reserves of $16.6 million across most underwriting years. The insurance segment’s net favorable development of $7.2 million, or 0.5 points, for the 2017 period consisted of $9.0 million of net favorable development in short-tailed lines and $7.4 million of net favorable development in long-tailed lines, partially offset by $9.2 million of net adverse development in medium-tailed lines. Net favorable development in short-tailed lines primarily resulted from property (including special risk other than marine) reserves from the 2011 to 2016 accident years. Net favorable development in long-tailed lines reflected net reductions in executive assurance reserves from the 2008 to 2014 accident years and reductions in healthcare reserves across various accident years, partially offset by $17.2 million of adverse development on construction reserves across various accident years. Net adverse development in medium-tailed lines primarily resulted from an increase in programs of $39.3 million stemming in part from development on a small number of programs in the 2013 to 2015 accident years, partially offset by net favorable development of $30.1 million in other medium-tailed lines, primarily in professional liability and surety. The mortgage segment’s net favorable development was $74.9 million, or 9.6 points, for the 2017 period. The development was primarily driven by continued lower than expected claim emergence across most origination years and also reflected $19.2 million related to second lien and other portfolios, primarily due to subrogation recoveries. Nine Months Ended September 30, 2016 During the nine months ended September 30, 2016, the Company recorded net favorable development on prior year loss reserves of $216.6 million, which consisted of $176.7 million from the reinsurance segment, $24.8 million from the insurance segment, $16.3 million from the mortgage segment and adverse development of $1.2 million from the ‘other’ segment. The reinsurance segment’s net favorable development of $176.7 million, or 22.0 points, for the 2016 period consisted of $113.1 million from short-tailed lines and $63.6 million from long-tailed and medium-tailed lines. Favorable development in short-tailed lines included $92.6 million from property catastrophe and property other than property catastrophe reserves, across most underwriting years. The net reduction of loss estimates for the reinsurance segment’s short-tailed lines primarily resulted from varying levels of reported and paid claims activity than previously anticipated which led to decreases in certain loss ratio selections during the period. Favorable development in long-tailed lines reflected reductions in casualty reserves of $66.4 million based on varying levels of reported and paid claims activity, primarily from the 2002 to 2013 underwriting years. Such amounts were partially offset by net adverse development on marine reserves, primarily from the 2002 and 2015 underwriting years, partially offset by favorable development from most other underwriting years. The insurance segment’s net favorable development of $24.8 million, or 1.6 points, for the 2016 period consisted of $36.2 million of net favorable development in long-tailed lines and $7.7 million of net favorable development in short-tailed lines, partially offset by $19.1 million of net adverse development in medium-tailed lines. Net favorable development in long-tailed lines reflected net reductions in executive assurance reserves from the 2008 to 2009 accident years and 2011 to 2013 accident years, and net reductions in casualty reserves across most accident years, partially offset by a large energy casualty claim from the 2015 accident year. Net favorable development in short-tailed lines primarily resulted from reductions in property (including special risk other than marine) reserves from the 2009 to 2014 accident years, primarily due to varying levels of reported claims activity. Net adverse development in medium-tailed lines primarily resulted from an increase in programs of $28.6 million stemming in part from terminated programs, partially offset by favorable development of $9.5 million in other medium-tailed lines, primarily in professional liability and surety. The mortgage segment’s net favorable development was $16.3 million, or 7.9 points, for the 2016 period. The development was primarily driven by lower than expected claim rates across most origination years. |
Investment Information |
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Disclosure Investment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Information | Investment Information At September 30, 2017, total investable assets of $22.00 billion included $19.70 billion managed by the Company and $2.30 billion attributable to Watford Re. Available For Sale Investments The following table summarizes the fair value and cost or amortized cost of the Company’s investments classified as available for sale:
The following table summarizes, for all available for sale securities in an unrealized loss position, the fair value and gross unrealized loss by length of time the security has been in a continual unrealized loss position:
At September 30, 2017, on a lot level basis, approximately 2,870 security lots out of a total of approximately 7,410 security lots were in an unrealized loss position and the largest single unrealized loss from a single lot in the Company’s fixed maturity portfolio was $1.6 million. At December 31, 2016, on a lot level basis, approximately 3,540 security lots out of a total of approximately 7,240 security lots were in an unrealized loss position and the largest single unrealized loss from a single lot in the Company’s fixed maturity portfolio was $4.6 million. The contractual maturities of the Company’s fixed maturities are shown in the following table. Expected maturities, which are management’s best estimates, will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Securities Lending Agreements The Company enters into securities lending agreements with financial institutions to enhance investment income whereby it loans certain of its securities to third parties, primarily major brokerage firms, for short periods of time through a lending agent. The Company maintains legal control over the securities it lends, retains the earnings and cash flows associated with the loaned securities and receives a fee from the borrower for the temporary use of the securities. An indemnification agreement with the lending agent protects the Company in the event a borrower becomes insolvent or fails to return any of the securities on loan from the Company. The Company receives collateral in the form of cash or securities. At September 30, 2017, the fair value of the cash collateral received on securities lending was $63.8 million and the fair value of security collateral received was $479.5 million. At December 31, 2016, the fair value of the cash collateral received on securities lending was $212.5 million, and the fair value of security collateral received was $550.1 million. Cash collateral is reinvested in short-term investments. The Company’s securities lending transactions were accounted for as secured borrowings with significant investment categories as follows:
Other Investments The following table summarizes the Company’s other investments, including available for sale and fair value option components:
Certain of the Company’s other investments are in investment funds for which the Company has the option to redeem at agreed upon values as described in each investment fund’s subscription agreement. Depending on the terms of the various subscription agreements, investments in investment funds may be redeemed daily, monthly, quarterly or on other terms. Two common redemption restrictions which may impact the Company’s ability to redeem these investment funds are gates and lockups. A gate is a suspension of redemptions which may be implemented by the general partner or investment manager of the fund in order to defer, in whole or in part, the redemption request in the event the aggregate amount of redemption requests exceeds a predetermined percentage of the investment fund’s net assets which may otherwise hinder the general partner or investment manager’s ability to liquidate holdings in an orderly fashion in order to generate the cash necessary to fund extraordinarily large redemption payouts. A lockup period is the initial amount of time an investor is contractually required to hold the security before having the ability to redeem. If the investment funds are eligible to be redeemed, the time to redeem such fund can take weeks or months following the notification. Fair Value Option The following table summarizes the Company’s assets and liabilities which are accounted for using the fair value option:
Limited partnership interests In the normal course of its activities, the Company invests in limited partnerships as part of its overall investment strategy. Such amounts are included in ‘investments accounted for using the equity method’ and ‘investments accounted for using the fair value option.’ The Company has determined that it is not required to consolidate these investments because it is not the primary beneficiary of the funds. The Company’s maximum exposure to loss with respect to these investments is limited to the investment carrying amounts reported in the Company’s consolidated balance sheet and any unfunded commitment. The following table summarizes investments in limited partnership interests where the Company has a variable interest by balance sheet line item:
Net Investment Income The components of net investment income were derived from the following sources:
Net Realized Gains (Losses) Net realized gains (losses) were as follows, excluding other than-temporary impairment provision.
Equity in Net Income (Loss) of Investment Funds Accounted for Using the Equity Method The Company recorded $31.1 million of equity in net income related to investment funds accounted for using the equity method in the 2017 third quarter, compared to $16.7 million for the 2016 third quarter, and $111.9 million for the nine months ended September 30, 2017, compared to $32.1 million for the 2016 period. In applying the equity method, investments are initially recorded at cost and are subsequently adjusted based on the Company’s proportionate share of the net income or loss of the funds (which include changes in the market value of the underlying securities in the funds). Such investments are generally recorded on a one to three month lag based on the availability of reports from the investment funds. Other-Than-Temporary Impairments The Company performs quarterly reviews of its available for sale investments in order to determine whether declines in fair value below the amortized cost basis were considered other-than-temporary in accordance with applicable guidance. The following table details the net impairment losses recognized in earnings by asset class:
Net impairment losses recognized in earnings in the 2017 third quarter were primarily related to equities and on fixed maturities with foreign currency fluctuations. For the nine months ended September 30, 2017, net impairment losses recognized in earnings reflected the Company’s decision to liquidate a portfolio of mortgage backed securities in April 2017. The Company recorded impairment losses on securities in such portfolio that were in an unrealized loss position at March 31, 2017. The Company believes that the $2.2 million of OTTI included in accumulated other comprehensive income at September 30, 2017 on the securities which were considered by the Company to be impaired was due to market and sector-related factors (i.e., not credit losses). At September 30, 2017, the Company did not intend to sell these securities, or any other securities which were in an unrealized loss position, and determined that it is more likely than not that the Company will not be required to sell such securities before recovery of their cost basis. The following table provides a roll forward of the amount related to credit losses recognized in earnings for which a portion of an OTTI was recognized in accumulated other comprehensive income:
Restricted Assets The Company is required to maintain assets on deposit, which primarily consist of fixed maturities, with various regulatory authorities to support its insurance and reinsurance operations. The Company’s insurance and reinsurance subsidiaries maintain assets in trust accounts as collateral for insurance and reinsurance transactions with affiliated companies and also have investments in segregated portfolios primarily to provide collateral or guarantees for letters of credit to third parties. See Note 10 for further details. The following table details the value of the Company’s restricted assets:
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value Accounting guidance regarding fair value measurements addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under GAAP and provides a common definition of fair value to be used throughout GAAP. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly fashion between market participants at the measurement date. In addition, it establishes a three-level valuation hierarchy for the disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The level in the hierarchy within which a given fair value measurement falls is determined based on the lowest level input that is significant to the measurement (Level 1 being the highest priority and Level 3 being the lowest priority). The levels in the hierarchy are defined as follows:
Following is a description of the valuation methodologies used for securities measured at fair value, as well as the general classification of such securities pursuant to the valuation hierarchy. The Company reviews its securities measured at fair value and discusses the proper classification of such investments with investment advisers and others. The Company determines the existence of an active market based on its judgment as to whether transactions for the financial instrument occur in such market with sufficient frequency and volume to provide reliable pricing information. The independent pricing sources obtain market quotations and actual transaction prices for securities that have quoted prices in active markets. The Company uses quoted values and other data provided by nationally recognized independent pricing sources as inputs into its process for determining fair values of its fixed maturity investments. To validate the techniques or models used by pricing sources, the Company's review process includes, but is not limited to: (i) quantitative analysis (e.g., comparing the quarterly return for each managed portfolio to its target benchmark, with significant differences identified and investigated); (ii) a review of the average number of prices obtained in the pricing process and the range of resulting fair values; (iii) initial and ongoing evaluation of methodologies used by outside parties to calculate fair value; (iv) a comparison of the fair value estimates to the Company’s knowledge of the current market; (v) a comparison of the pricing services' fair values to other pricing services' fair values for the same investments; and (vi) periodic back-testing, which includes randomly selecting purchased or sold securities and comparing the executed prices to the fair value estimates from the pricing service. A price source hierarchy was maintained in order to determine which price source would be used (i.e., a price obtained from a pricing service with more seniority in the hierarchy will be used over a less senior one in all cases). The hierarchy prioritizes pricing services based on availability and reliability and assigns the highest priority to index providers. Based on the above review, the Company will challenge any prices for a security or portfolio which are considered not to be representative of fair value. The Company did not adjust any of the prices obtained from the independent pricing sources at September 30, 2017. In certain circumstances, when fair values are unavailable from these independent pricing sources, quotes are obtained directly from broker-dealers who are active in the corresponding markets. Such quotes are subject to the validation procedures noted above. Of the $21.14 billion of financial assets and liabilities measured at fair value at September 30, 2017, approximately $242.9 million, or 1.2%, were priced using non-binding broker-dealer quotes. Of the $19.10 billion of financial assets and liabilities measured at fair value at December 31, 2016, approximately $234.0 million, or 1.2%, were priced using non-binding broker-dealer quotes. Fixed maturities The Company uses the market approach valuation technique to estimate the fair value of its fixed maturity securities, when possible. The market approach includes obtaining prices from independent pricing services, such as index providers and pricing vendors, as well as to a lesser extent quotes from broker-dealers. The independent pricing sources obtain market quotations and actual transaction prices for securities that have quoted prices in active markets. Each source has its own proprietary method for determining the fair value of securities that are not actively traded. In general, these methods involve the use of “matrix pricing” in which the independent pricing source uses observable market inputs including, but not limited to, investment yields, credit risks and spreads, benchmarking of like securities, broker-dealer quotes, reported trades and sector groupings to determine a reasonable fair value. The following describes the significant inputs generally used to determine the fair value of the Company’s fixed maturity securities by asset class: •U.S. government and government agencies — valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The Company determined that all U.S. Treasuries would be classified as Level 1 securities due to observed levels of trading activity, the high number of strongly correlated pricing quotes received on U.S. Treasuries and other factors. The fair values of U.S. government agency securities are generally determined using the spread above the risk-free yield curve. As the yields for the risk-free yield curve and the spreads for these securities are observable market inputs, the fair values of U.S. government agency securities are classified within Level 2. •Corporate bonds — valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined using the spread above the risk-free yield curve. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. As the significant inputs used in the pricing process for corporate bonds are observable market inputs, the fair value of these securities are classified within Level 2. A small number of securities are included in Level 3 due to a low level of transparency on the inputs used in the pricing process. •Mortgage-backed securities — valuations provided by independent pricing services, substantially all through pricing vendors and index providers with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models (including Option Adjusted Spread) which use spreads to determine the expected average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for mortgage-backed securities are observable market inputs, the fair value of these securities are classified within Level 2. A small number of securities are included in Level 3 due to a low level of transparency on the inputs used in the pricing process. •Municipal bonds — valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The fair values of these securities are generally determined using spreads obtained from broker-dealers who trade in the relevant security market, trade prices and the new issue market. As the significant inputs used in the pricing process for municipal bonds are observable market inputs, the fair value of these securities are classified within Level 2. •Commercial mortgage-backed securities — valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models which use spreads to determine the appropriate average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for commercial mortgage-backed securities are observable market inputs, the fair value of these securities are classified within Level 2. A small number of securities are included in Level 3 due to a low level of transparency on the inputs used in the pricing process. •Non-U.S. government securities — valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The fair values of these securities are generally based on international indices or valuation models which include daily observed yield curves, cross-currency basis index spreads and country credit spreads. As the significant inputs used in the pricing process for non-U.S. government securities are observable market inputs, the fair value of these securities are classified within Level 2. •Asset-backed securities — valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models (including Option Adjusted Spread) which use spreads to determine the appropriate average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for asset-backed securities are observable market inputs, the fair value of these securities are classified within Level 2. A small number of securities are included in Level 3 due to a low level of transparency on the inputs used in the pricing process. During the 2017 third quarter, the Company transferred $17.6 million of fixed maturities from Level 2 to Level 3 based on a review of the pricing of such securities, as described above. Equity securities The Company determined that exchange-traded equity securities would be included in Level 1 as their fair values are based on quoted market prices in active markets. Other equity securities are included in Level 2 of the valuation hierarchy. Other investments The Company determined that exchange-traded investments in mutual funds would be included in Level 1 as their fair values are based on quoted market prices in active markets. Other investments also include term loan investments for which fair values are estimated by using quoted prices of term loan investments with similar characteristics, pricing models or matrix pricing. Such investments are generally classified within Level 2. The fair values for certain of the Company’s other investments are determined using net asset values as advised by external fund managers. The net asset value is based on the fund manager’s valuation of the underlying holdings in accordance with the fund’s governing documents. In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. A small number of securities are included in Level 3 due to the lack of an available independent price source for such securities. During the 2017 third quarter, the Company transferred $4.8 million of other investments from Level 2 to Level 3 based on a review of the pricing of such securities, as described above. Derivative instruments The Company’s futures contracts, foreign currency forward contracts, interest rate swaps and other derivatives trade in the over-the-counter derivative market. The Company uses the market approach valuation technique to estimate the fair value for these derivatives based on significant observable market inputs from third party pricing vendors, non-binding broker-dealer quotes and/or recent trading activity. As the significant inputs used in the pricing process for these derivative instruments are observable market inputs, the fair value of these securities are classified within Level 2. Short-term investments The Company determined that certain of its short-term investments held in highly liquid money market-type funds, Treasury bills and commercial paper would be included in Level 1 as their fair values are based on quoted market prices in active markets. The fair values of other short-term investments are generally determined using the spread above the risk-free yield curve and are classified within Level 2. Contingent consideration liabilities Contingent consideration liabilities (included in ‘other liabilities’ in the consolidated balance sheets) include amounts related to the acquisition of CMG Mortgage Insurance Company and its affiliated mortgage insurance companies and other acquisitions. Such amounts are remeasured at fair value at each balance sheet date with changes in fair value recognized in ‘net realized gains (losses).’ To determine the fair value of contingent consideration liabilities, the Company estimates future payments using an income approach based on modeled inputs which include a weighted average cost of capital. The Company determined that contingent consideration liabilities would be included within Level 3. The following table presents the Company’s financial assets and liabilities measured at fair value by level at September 30, 2017:
The following table presents the Company’s financial assets and liabilities measured at fair value by level at December 31, 2016:
The following table presents a reconciliation of the beginning and ending balances for all financial assets and liabilities measured at fair value on a recurring basis using Level 3 inputs:
Financial Instruments Disclosed, But Not Carried, At Fair Value The Company uses various financial instruments in the normal course of its business. The carrying values of cash, accrued investment income, receivable for securities sold, certain other assets, payable for securities purchased and certain other liabilities approximated their fair values at September 30, 2017, due to their respective short maturities. As these financial instruments are not actively traded, their respective fair values are classified within Level 2. At September 30, 2017, the senior notes of ACGL were carried at their cost, net of debt issuance costs, of $297.0 million and had a fair value of $406.0 million, while the senior notes of Arch Capital Group (U.S.) Inc. (“Arch-U.S.”) were carried at their cost, net of debt issuance costs, of $494.6 million and had a fair value of $566.2 million. The senior notes of Arch Capital Finance LLC due in 2026 were carried at their cost, net of debt issuance costs, of $496.0 million and had a fair value of $519.8 million, while the senior notes due in 2046 were carried at their cost, net of debt issuance costs, of $445.1 million and had a fair value of $503.5 million. The fair values of the senior notes were obtained from a third party pricing service and are based on observable market inputs. As such, the fair values of the senior notes are classified within Level 2. |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments The Company’s investment strategy allows for the use of derivative instruments. The Company’s derivative instruments are recorded on its consolidated balance sheets at fair value. The Company utilizes exchange traded U.S. Treasury note, Eurodollar and other futures contracts and commodity futures to manage portfolio duration or replicate investment positions in its portfolios and the Company routinely utilizes foreign currency forward contracts, currency options, index futures contracts and other derivatives as part of its total return objective. In addition, certain of the Company’s investments are managed in portfolios which incorporate the use of foreign currency forward contracts which are intended to provide an economic hedge against foreign currency movements. In addition, the Company purchases to-be-announced mortgage backed securities (“TBAs”) as part of its investment strategy. TBAs represent commitments to purchase a future issuance of agency mortgage backed securities. For the period between purchase of a TBA and issuance of the underlying security, the Company’s position is accounted for as a derivative. The Company purchases TBAs in both long and short positions to enhance investment performance and as part of its overall investment strategy. The following table summarizes information on the fair values and notional values of the Company’s derivative instruments:
The Company did not hold any derivatives which were designated as hedging instruments at September 30, 2017 or December 31, 2016. The Company’s derivative instruments can be traded under master netting agreements, which establish terms that apply to all derivative transactions with a counterparty. In the event of a bankruptcy or other stipulated event of default, such agreements provide that the non-defaulting party may elect to terminate all outstanding derivative transactions, in which case all individual derivative positions (loss or gain) with a counterparty are closed out and netted and replaced with a single amount, usually referred to as the termination amount, which is expressed in a single currency. The resulting single net amount, where positive, is payable to the party “in-the-money” regardless of whether or not it is the defaulting party, unless the parties have agreed that only the non-defaulting party is entitled to receive a termination payment where the net amount is positive and is in its favor. Contractual close-out netting reduces derivatives credit exposure from gross to net exposure. At September 30, 2017, asset derivatives and liability derivatives of $49.4 million and $22.5 million, respectively, were subject to a master netting agreement, compared to $28.4 million and $26.0 million, respectively, at December 31, 2016. The remaining derivatives included in the preceding table were not subject to a master netting agreement. All realized and unrealized contract gains and losses on the Company’s derivative instruments are reflected in net realized gains (losses) in the consolidated statements of income, as summarized in the following table:
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Commitments and Contingencies |
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Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Letter of Credit and Revolving Credit Facilities ACGL repaid $100.0 million of borrowings under its unsecured revolving loan and letter of credit facility in the 2017 third quarter, offset by an increase in borrowings in the Company’s ‘other’ segment. Investment Commitments The Company’s investment commitments, which are primarily related to agreements entered into by the Company to invest in funds and separately managed accounts when called upon, were approximately $1.58 billion at September 30, 2017, compared to $1.29 billion at December 31, 2016. |
Share Transactions |
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Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Share Transactions | Share Transactions Share Repurchases The board of directors of ACGL has authorized the investment in ACGL’s common shares through a share repurchase program. Since the inception of the share repurchase program, ACGL has repurchased approximately 125.2 million common shares for an aggregate purchase price of $3.68 billion. For the nine months ended September 30, 2017, the Company did not repurchase any shares under the share repurchase program, compared to 1.1 million common shares repurchased for the nine months ended September 30, 2016 with an aggregate purchase price of $75.3 million (no repurchases in the 2016 third quarter). At September 30, 2017, $446.5 million of share repurchases were available under the program, which may be effected from time to time in open market or privately negotiated transactions through December 31, 2019. The timing and amount of the repurchase transactions under this program will depend on a variety of factors, including market conditions and corporate and regulatory considerations. Conversion of Convertible Non-Voting Common Equivalent Preferred Shares On June 8, 2017, ACGL and AIG entered into Amendment No. 1 (the “Amendment”) to the Investor Rights Agreement (the “Investor Rights Agreement”) dated as of December 31, 2016 to amend the restrictions on transfers of the 1,276,282 shares of ACGL’s convertible non-voting common-equivalent preference shares owned by AIG (the “Convertible Preferred Shares”). The Convertible Preferred Shares were issued to AIG as part of the consideration in UGC acquisition. Pursuant to the certificate of designations for the Convertible Preferred Shares and in accordance with the terms and conditions set forth therein, each Convertible Preferred Share is convertible into ten common shares of ACGL. Pursuant to the Amendment, ACGL permitted AIG to transfer: (i) 638,141 Convertible Preferred Shares from and after June 8, 2017, and up to an additional 95,721 of the Convertible Preferred Shares to the extent that the several underwriters exercise the option to purchase additional securities expected to be granted pursuant to an underwritten secondary offering of ACGL common shares issuable upon conversion of the Convertible Preferred Shares by AIG and (ii) any and all of the Convertible Preferred Shares from and after January 15, 2018, subject to certain exceptions, and in each case subject to the terms and conditions of the Investor Rights Agreement. All other terms of the Investor Rights Agreement remain in effect. In June 2017, ACGL completed an underwritten public secondary offering of 7,088,620 common shares by AIG following transfer of 708,862 Convertible Preferred Shares. Proceeds from the sale of common shares pursuant to the public offering were received by AIG. At September 30, 2017, 567,420 Convertible Preferred Shares were outstanding. Series F Preferred Shares In August 2017, ACGL completed a $230 million underwritten public offering of 9.2 million depositary shares (the “Depositary Shares”), each of which represents a 1/1,000th interest in a share of its 5.45% Non-Cumulative Preferred Shares, Series F, have a $0.01 par value and $25,000 liquidation preference per share (equivalent to $25 liquidation preference per Depositary Share) (the “Series F Preferred Shares”). Each Depositary Share, evidenced by a depositary receipt, entitles the holder, through the depositary, to a proportional fractional interest in all rights and preferences of the Series F Preferred Shares represented thereby (including any dividend, liquidation, redemption and voting rights). Holders of Series F Preferred Shares will be entitled to receive dividend payments only when, as and if declared by our board of directors or a duly authorized committee of the board. Any such dividends will be payable from, and including, the date of original issue on a noncumulative basis, quarterly in arrears on the last day of March, June, September and December of each year, at an annual rate of 5.45%. Dividends on the Series F Preferred Shares are not cumulative. The Company will be restricted from paying dividends on or repurchasing its common shares unless certain dividend payments are made on the Series F Preferred Shares. Except in specified circumstances relating to certain tax or corporate events, the Series F Preferred Shares are not redeemable prior to August 17, 2022 (the fifth anniversary of the issue date). On and after that date, the Series F Preferred Shares will be redeemable at the Company’s option, in whole or in part, at a redemption price of $25,000 per share of the Series F Preferred Shares (equivalent to $25 per depositary share), plus any declared and unpaid dividends, without accumulation of any undeclared dividends to, but excluding, the redemption date. The Depositary Shares will be redeemed if and to the extent the related Series F Preferred Shares are redeemed by the Company. Neither the Depositary Shares nor the Series F Preferred Shares have a stated maturity, nor will they be subject to any sinking fund or mandatory redemption. The Series F Preferred Shares are not convertible into any other securities. The Series F Preferred Shares will not have voting rights, except under limited circumstances. The net proceeds from the offering of $222.1 million and other available funds were used to redeem in part its outstanding 6.75% Series C Non-Cumulative Preferred Shares. The preferred shares were redeemed at a redemption price equal to $25 per share, plus all declared and unpaid dividends to (but excluding) the redemption date. In accordance with GAAP, following the redemption, original issuance costs related to such shares have been removed from additional paid-in capital and recorded as a “loss on redemption of preferred shares.” Such adjustment had no impact on total shareholders’ equity or cash flows. |
Other Comprehensive Income (Loss) |
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Comprehensive Income Note Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) | Other Comprehensive Income (Loss) The following tables present details about amounts reclassified from accumulated other comprehensive income and the tax effects allocated to each component of other comprehensive income (loss):
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Guarantor Financial Information |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantor Financial Information | 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.
(1) Dividends received by parent are included in net cash provided by (used for) operating activities.
(1) Dividends received by parent are included in net cash provided by (used for) operating activities. |
Income Taxes |
9 Months Ended |
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Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s income tax provision on income before income taxes resulted in an expense of 14.2% for the nine months ended September 30, 2017, compared to an expense of 5.7% for the 2016 period. The Company’s effective tax rate, which is based upon the expected annual effective tax rate, may fluctuate from period to period based on the relative mix of income or loss reported by jurisdiction and the varying tax rates in each jurisdiction. For interim reporting purposes, the Company has calculated its effective tax rate for the full year of 2017 by treating any excess tax benefits that arise from the accounting for stock based compensation as a discrete item. As such, this amount is not included when projecting the Company’s full year effective tax rate but rather is accounted for at the U.S. Federal statutory rate of 35% after applying the projected full year effective tax rate to actual nine-month results before the discrete item. The impact of the discrete item resulted in a benefit of 1.5% for the nine months ended September 30, 2017. The Company had a net deferred tax asset of $248.3 million at September 30, 2017, compared to $221.2 million at December 31, 2016. In addition, the Company paid $47.9 million and $40.7 million of income taxes for the nine months ended September 30, 2017 and 2016, respectively. |
Legal Proceedings |
9 Months Ended |
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Sep. 30, 2017 | |
Disclosure Legal Proceedings [Abstract] | |
Legal Proceedings | Legal Proceedings The Company, in common with the insurance industry in general, is subject to litigation and arbitration in the normal course of its business. As of September 30, 2017, the Company was not a party to any litigation or arbitration which is expected by management to have a material adverse effect on the Company’s results of operations and financial condition and liquidity. |
Transactions with Related Parties |
9 Months Ended |
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Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | Transactions with Related Parties Kewsong Lee, a director of ACGL, is a Managing Director and Deputy Chief Investment Officer for Corporate Private Equity of Carlyle Group LP (“Carlyle”). As part of its investment philosophy, the Company invests a portion of its investment portfolio in alternative investment funds. As of September 30, 2017, the total value of the Company’s investments in funds or other investments managed by Carlyle was approximately $248.5 million, and the Company had aggregate unfunded commitments to funds managed by Carlyle of $471.6 million. The Company may make additional commitments to funds managed by Carlyle from time to time. During the nine months ended September 30, 2017 and 2016, the Company made aggregate capital contributions to funds managed by Carlyle of $86.0 million and $50.1 million, respectively, and received aggregate cash distributions from funds managed by Carlyle of $48.7 million and $17.9 million, respectively. Effective November 2, 2017, Mr. Lee resigned from ACGL’s Board of Directors because of the expansion of his duties at Carlyle following his recent promotion to co-CEO effective January 1, 2018. |
Acquisition |
9 Months Ended |
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Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisition | Acquisition On July 1, 2017, the Company completed its previously announced acquisition of AIG United Guaranty Insurance (Asia) Limited (renamed “Arch MI Asia Limited”) following the payment of $40.0 million to AIG. Arch MI Asia Limited compliments the Company’s existing private mortgage insurance businesses, which have operations in the United States, Europe and Australia. The purchase price was allocated to the acquired assets and liabilities of Arch MI Asia Limited based on estimated fair values on the acquisition date. The Company recognized other intangible assets of $2.3 million and goodwill of $0.8 million. The goodwill balance is primarily attributed to Arch MI Asia Limited’s assembled workforce and access to the mortgage insurance market. None of the goodwill recognized is expected to be deductible for income tax purposes. |
Subsequent Event |
9 Months Ended |
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Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Events On October 25, 2017, the Company’s first-lien U.S. mortgage insurance subsidiaries entered into an aggregate excess of loss reinsurance agreement with Bellemeade Re 2017-1 Ltd. (“Bellemeade III”), a special purpose reinsurance company domiciled in Bermuda. The Bellemeade III agreement provides for up to $368.1 million of aggregate excess of loss reinsurance coverage at inception for new delinquencies on a portfolio of in-force policies issued between January 1, 2017 and June 30, 2017. For the coverage period, Bellemeade III will cover $368.1 million in excess of $165.7 million of aggregate losses. The coverage amount decreases over a ten-year period as the underlying covered mortgages amortize. Bellemeade III financed the coverage through the issuance of mortgage insurance-linked notes in an aggregate amount of approximately $368.1 million to unrelated investors (the “Notes”). The maturity date of the Notes is October 25, 2027. The Notes will be redeemed prior to maturity upon the occurrence of a mandatory termination event or if the ceding insurers trigger a termination of the reinsurance agreement following the occurrence of an optional termination event. All of the proceeds paid to Bellemeade III from the sale of the Notes were deposited into a reinsurance trust for the sole benefit of the ceding insurers as security for Bellemeade III’s obligations. At all times, funds in the reinsurance trust account are required to be invested in high credit quality money market funds. In October 2017, a series of wildfires burned across several California counties. With the information available, the Company has established a preliminary range of pre-tax losses of $30 million to $55 million for these wildfires, net of reinsurance and reinstatement premiums. At this time, there are significant uncertainties surrounding the numbers of claims and scope of damage for these wildfires. The Company’s preliminary estimate for the wildfires is based on currently available information derived from modeling techniques, industry assessments of exposure, preliminary claims information obtained from the Company’s clients and brokers to date and a review of in-force contracts. Actual losses from these wildfires may vary materially from the estimates due to the inherent uncertainties in making such determinations. |
General (Policies) |
9 Months Ended |
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Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | The interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions and balances have been eliminated in consolidation. |
Use of estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of results on an interim basis. The results of any interim period are not necessarily indicative of the results for a full year or any future periods. |
Variable Interest Entities and Noncontrolling Interests (Tables) |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying value of assets and liabilities of variable interest entity | The following table provides the carrying amount and balance sheet caption in which the assets and liabilities of Watford Re are reported:
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Activity in non-redeemable noncontrolling interests | The following table sets forth activity in the non-redeemable noncontrolling interests:
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Activity in redeemable noncontrolling interests | The following table sets forth activity in the redeemable non-controlling interests:
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Portion of income or loss attributable to third party investors | The portion of Watford Re’s income or loss attributable to third party investors, recorded in the Company’s consolidated statements of income in ‘net (income) loss attributable to noncontrolling interests,’ are summarized in the table below:
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Total assets and maximum exposure to loss associated with VIEs | The following table presents total assets of Bellemeade I and Bellemeade II as well as the Company’s maximum exposure to loss associated with these VIEs:
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Earnings Per Common Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of computation of basic and diluted earnings per common share | The following table sets forth the computation of basic and diluted earnings (loss) per common share:
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Segment Information (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Analysis of underwriting income or loss by segment and reconciliation to net income available to common shareholders | The following tables summarize the Company’s underwriting income or loss by segment, together with a reconciliation of underwriting income or loss to net income available to common shareholders:
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Reserve for Losses and Loss Adjustment Expenses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Analysis of losses and loss adjustment expenses and reconciliation of beginning and ending reserve balances | The following table represents an analysis of losses and loss adjustment expenses and a reconciliation of the beginning and ending reserve for losses and loss adjustment expenses:
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Investment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Investment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of fair value and cost or amortized cost of available for sale securities | The following table summarizes the fair value and cost or amortized cost of the Company’s investments classified as available for sale:
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Summary of available for sale securities in a continual unrealized loss position | The following table summarizes, for all available for sale securities in an unrealized loss position, the fair value and gross unrealized loss by length of time the security has been in a continual unrealized loss position:
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Contractual maturities of the Company's fixed maturities and fixed maturities pledged under securities lending arrangements | The contractual maturities of the Company’s fixed maturities are shown in the following table. Expected maturities, which are management’s best estimates, will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
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Securities lending transactions accounted for as secured borrowings, by significant investment category | The Company’s securities lending transactions were accounted for as secured borrowings with significant investment categories as follows:
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Summary of other investments, including available for sale and fair value option components | The following table summarizes the Company’s other investments, including available for sale and fair value option components:
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Summary of assets and liabilities accounted for using the fair value option | The following table summarizes the Company’s assets and liabilities which are accounted for using the fair value option:
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Summary of investments in limited partnership interests where the Company has a variable interest | The following table summarizes investments in limited partnership interests where the Company has a variable interest by balance sheet line item:
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Components of net investment income | The components of net investment income were derived from the following sources:
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Summary of net realized gains (losses), excluding other-than-temporary impairment provisions | Net realized gains (losses) were as follows, excluding other than-temporary impairment provision.
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Summary of OTTI recognized in earnings by asset class | The following table details the net impairment losses recognized in earnings by asset class:
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Rollforward of the amount related to credit losses recognized in earnings for which a portion was recognized in AOCI | The following table provides a roll forward of the amount related to credit losses recognized in earnings for which a portion of an OTTI was recognized in accumulated other comprehensive income:
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Summary of restricted assets | The following table details the value of the Company’s restricted assets:
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Fair Value (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value hierarchy | The following table presents the Company’s financial assets and liabilities measured at fair value by level at September 30, 2017:
The following table presents the Company’s financial assets and liabilities measured at fair value by level at December 31, 2016:
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Rollforward of Level 3 investments | The following table presents a reconciliation of the beginning and ending balances for all financial assets and liabilities measured at fair value on a recurring basis using Level 3 inputs:
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Derivative Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value and notional amount of derivatives | The following table summarizes information on the fair values and notional values of the Company’s derivative instruments:
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Summary of net realized gains (losses) recorded in the consolidated statements of income | All realized and unrealized contract gains and losses on the Company’s derivative instruments are reflected in net realized gains (losses) in the consolidated statements of income, as summarized in the following table:
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Other Comprehensive Income (Loss) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income Note Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details about amounts reclassified from AOCI | The following tables present details about amounts reclassified from accumulated other comprehensive income and the tax effects allocated to each component of other comprehensive income (loss):
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Schedule of comprehensive income (loss) |
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Guarantor Financial Information (Tables) |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed consolidating balance sheet |
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Condensed consolidating statement of income and comprehensive income |
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Condensed consolidating statement of cash flows |
(1) Dividends received by parent are included in net cash provided by (used for) operating activities.
(1) Dividends received by parent are included in net cash provided by (used for) operating activities. |
Variable Interest Entities and Noncontrolling Interests - Variable interest entity (Details) - USD ($) $ in Thousands |
1 Months Ended | 9 Months Ended | |
---|---|---|---|
Mar. 31, 2014 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Variable Interest Entity [Line Items] | |||
Net cash provided by operating activities | $ 1,081,134 | $ 1,037,139 | |
Net cash used for investing activities | (880,582) | (1,255,108) | |
Net cash used for financing activities | (194,914) | 253,791 | |
Variable Interest Entity, Primary Beneficiary | Watford Holdings Ltd | |||
Variable Interest Entity [Line Items] | |||
Initial investment contribution amount | $ 100,000 | ||
Ownership percentage | 11.00% | ||
Variable Interest Entity, Primary Beneficiary | Watford Re | |||
Variable Interest Entity [Line Items] | |||
Net cash provided by operating activities | 221,900 | 207,000 | |
Net cash used for investing activities | (394,400) | (124,000) | |
Net cash used for financing activities | $ 152,500 | $ (119,600) |
Variable Interest Entities and Noncontrolling Interests - Redeemable noncontrolling interests (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Redeemable Noncontrolling Interest [Line Items] | ||||
Redeemable noncontrolling interests, beginning of period | $ 205,553 | |||
Redeemable noncontrolling interests, end of period | $ 205,829 | 205,829 | ||
Watford Re | ||||
Redeemable Noncontrolling Interest [Line Items] | ||||
Redeemable noncontrolling interests, beginning of period | 205,736 | $ 205,366 | 205,553 | $ 205,182 |
Accretion of preference share issuance costs | 93 | 93 | 276 | 277 |
Redeemable noncontrolling interests, end of period | $ 205,829 | $ 205,459 | $ 205,829 | $ 205,459 |
Cumulative redeemable preference shares | Watford Re | ||||
Redeemable Noncontrolling Interest [Line Items] | ||||
Preference shares, number of shares issued | 9,065,200 | 9,065,200 | ||
Par value per share | $ 0.01 | $ 0.01 | ||
Liquidation preference per share | $ 25.00 | $ 25.00 |
Variable Interest Entities and Noncontrolling Interests - Income or loss attributable to third party investors (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Noncontrolling Interest [Abstract] | ||||
Amounts attributable to non-redeemable noncontrolling interests | $ 16,147 | $ (46,160) | $ (9,523) | $ (96,118) |
Dividends attributable to redeemable noncontrolling interests | (4,586) | (4,588) | (13,756) | (13,761) |
Net (income) loss attributable to noncontrolling interests | $ 11,561 | $ (50,748) | $ (23,279) | $ (109,879) |
Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Numerator: | ||||||
Net income (loss) | $ (45,217) | $ 303,620 | $ 427,917 | $ 728,604 | ||
Net (income) loss attributable to noncontrolling interests | 11,561 | (50,748) | (23,279) | (109,879) | ||
Net income available to Arch | (33,656) | 252,872 | 404,638 | 618,725 | ||
Preferred dividends | (12,369) | (5,484) | (34,936) | (16,453) | ||
Loss on redemption of preferred shares | (6,735) | 0 | (6,735) | 0 | ||
Net income (loss) available to Arch common shareholders | $ (52,760) | $ 247,388 | $ 362,967 | $ 602,272 | ||
Denominator: | ||||||
Weighted average common shares outstanding | 129,211,251 | 120,938,916 | 124,526,611 | 120,656,420 | ||
Series D preferred shares | 5,674,200 | 0 | 9,945,518 | 0 | ||
Weighted average common shares outstanding — basic | 134,885,451 | 120,938,916 | 134,472,129 | 120,656,420 | ||
Effect of dilutive common share equivalents: | ||||||
Nonvested restricted shares | 0 | 1,313,025 | 1,459,879 | 1,295,825 | ||
Stock options | [1] | 0 | 2,679,712 | 3,290,316 | 2,575,929 | |
Weighted average common shares and common share equivalents outstanding — diluted | 134,885,451 | 124,931,653 | 139,222,324 | 124,528,174 | ||
Earnings per common share: | ||||||
Basic (per share) | $ (0.39) | $ 2.05 | $ 2.70 | $ 4.99 | ||
Diluted (per share) | $ (0.39) | $ 1.98 | $ 2.61 | $ 4.84 | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive securities excluded from computation of earnings per common share (shares) | 4,700,000 | |||||
Stock Options | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive securities excluded from computation of earnings per common share (shares) | 0 | 334,203 | 838,868 | 842,105 | ||
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Segment Information - Summary of underwriting income or loss by segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
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Segment Reporting Information [Line Items] | ||||||||||||
Gross premiums written | $ 1,648,246 | $ 1,278,765 | $ 4,915,895 | $ 4,046,667 | ||||||||
Premiums ceded | (322,843) | (264,487) | (1,065,537) | (887,591) | ||||||||
Net premiums written | 1,325,403 | 1,014,278 | 3,850,358 | 3,159,076 | ||||||||
Change in unearned premiums | (63,517) | (55,875) | (230,581) | (243,109) | ||||||||
Net premiums earned | 1,261,886 | 958,403 | 3,619,777 | 2,915,967 | ||||||||
Other underwriting income | 6,064 | 7,980 | 15,519 | 38,251 | ||||||||
Losses and loss adjustment expenses | (1,046,141) | (524,183) | (2,288,571) | (1,631,724) | ||||||||
Acquisition expenses, net | (193,854) | (161,267) | (566,579) | (501,782) | ||||||||
Other operating expenses | (170,127) | (153,286) | (514,827) | (460,748) | ||||||||
Underwriting income (loss) | (142,172) | 127,647 | 265,319 | 359,964 | ||||||||
Net investment income | 116,459 | 93,618 | 345,457 | 275,691 | ||||||||
Net realized gains (losses) | 66,275 | 125,105 | 122,163 | 230,647 | ||||||||
Net impairment losses recognized in earnings | (1,878) | (3,867) | (5,415) | (16,849) | ||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 31,090 | 16,662 | 111,884 | 32,054 | ||||||||
Other income (loss) | (342) | (400) | (3,118) | (432) | ||||||||
Corporate expenses | (14,108) | [1] | (11,343) | (48,517) | (37,926) | |||||||
UGC transaction costs and other | (2,990) | [1] | (7,142) | (21,249) | [1] | (7,142) | ||||||
Amortization of intangible assets | (31,824) | (4,865) | (93,942) | (14,493) | ||||||||
Interest expense | (29,510) | (15,943) | (86,935) | (47,713) | ||||||||
Net foreign exchange gains (losses) | (28,028) | (2,621) | (86,975) | (1,525) | ||||||||
Income (loss) before income taxes | (37,028) | 316,851 | 498,672 | 772,276 | ||||||||
Income tax expense | (8,189) | (13,231) | (70,755) | (43,672) | ||||||||
Net income (loss) | (45,217) | 303,620 | 427,917 | 728,604 | ||||||||
Dividends attributable to redeemable noncontrolling interests | (4,586) | (4,588) | (13,756) | (13,761) | ||||||||
Amounts attributable to non-redeemable noncontrolling interests | 16,147 | (46,160) | (9,523) | (96,118) | ||||||||
Net income (loss) available to Arch | (33,656) | 252,872 | 404,638 | 618,725 | ||||||||
Preferred dividends | (12,369) | (5,484) | (34,936) | (16,453) | ||||||||
Loss on redemption of preferred shares | (6,735) | 0 | (6,735) | 0 | ||||||||
Net income (loss) available to Arch common shareholders | $ (52,760) | $ 247,388 | $ 362,967 | $ 602,272 | ||||||||
Underwriting Ratios | ||||||||||||
Loss ratio | 82.90% | 54.70% | 63.20% | 56.00% | ||||||||
Acquisition expense ratio | 15.40% | 16.80% | 15.70% | 17.20% | ||||||||
Other operating expense ratio | 13.50% | 16.00% | 14.20% | 15.80% | ||||||||
Combined ratio | 111.80% | 87.50% | 93.10% | 89.00% | ||||||||
Goodwill and intangible assets | $ 684,405 | $ 90,941 | $ 684,405 | $ 90,941 | $ 781,553 | |||||||
Other | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Gross premiums written | [2] | 166,198 | 163,736 | 473,131 | 421,627 | |||||||
Premiums ceded | (12,471) | (6,300) | (35,315) | (15,229) | ||||||||
Net premiums written | 153,727 | 157,436 | 437,816 | 406,398 | ||||||||
Change in unearned premiums | (25,097) | (47,000) | (36,435) | (59,878) | ||||||||
Net premiums earned | 128,630 | 110,436 | 401,381 | 346,520 | ||||||||
Other underwriting income | 737 | 1,024 | 2,377 | 2,922 | ||||||||
Losses and loss adjustment expenses | (123,581) | (74,307) | (319,612) | (236,922) | ||||||||
Acquisition expenses, net | (32,073) | (28,739) | (99,328) | (95,323) | ||||||||
Other operating expenses | (8,268) | (7,035) | (24,311) | (18,486) | ||||||||
Underwriting income (loss) | (34,555) | 1,379 | (39,493) | (1,289) | ||||||||
Net investment income | 22,332 | 27,336 | 62,998 | 68,603 | ||||||||
Net realized gains (losses) | 2,171 | 29,159 | 11,501 | 61,912 | ||||||||
Net impairment losses recognized in earnings | 0 | 0 | 0 | 0 | ||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 | 0 | 0 | ||||||||
Other income (loss) | 0 | 0 | 0 | 0 | ||||||||
Corporate expenses | 0 | [1] | 0 | 0 | 0 | |||||||
UGC transaction costs and other | 0 | [1] | 0 | 0 | [1] | 0 | ||||||
Amortization of intangible assets | 0 | 0 | 0 | 0 | ||||||||
Interest expense | (3,246) | (3,019) | (9,003) | (9,730) | ||||||||
Net foreign exchange gains (losses) | (243) | 1,611 | (1,524) | 2,287 | ||||||||
Income (loss) before income taxes | (13,541) | 56,466 | 24,479 | 121,783 | ||||||||
Income tax expense | (21) | 1 | (21) | 1 | ||||||||
Net income (loss) | (13,562) | 56,467 | 24,458 | 121,784 | ||||||||
Dividends attributable to redeemable noncontrolling interests | (4,586) | (4,588) | (13,756) | (13,761) | ||||||||
Amounts attributable to non-redeemable noncontrolling interests | 16,147 | (46,160) | (9,523) | (96,118) | ||||||||
Net income (loss) available to Arch | (2,001) | 5,719 | 1,179 | 11,905 | ||||||||
Preferred dividends | 0 | 0 | 0 | 0 | ||||||||
Loss on redemption of preferred shares | 0 | 0 | ||||||||||
Net income (loss) available to Arch common shareholders | $ (2,001) | $ 5,719 | $ 1,179 | $ 11,905 | ||||||||
Underwriting Ratios | ||||||||||||
Loss ratio | 96.10% | 67.30% | 79.60% | 68.40% | ||||||||
Acquisition expense ratio | 24.90% | 26.00% | 24.70% | 27.50% | ||||||||
Other operating expense ratio | 6.40% | 6.40% | 6.10% | 5.30% | ||||||||
Combined ratio | 127.40% | 99.70% | 110.40% | 101.20% | ||||||||
Goodwill and intangible assets | $ 7,650 | $ 7,650 | $ 7,650 | $ 7,650 | ||||||||
Sub-Total | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Gross premiums written | [2] | 1,557,179 | 1,214,765 | 4,697,007 | 3,898,025 | |||||||
Premiums ceded | (385,503) | (357,923) | (1,284,465) | (1,145,347) | ||||||||
Net premiums written | 1,171,676 | 856,842 | 3,412,542 | 2,752,678 | ||||||||
Change in unearned premiums | (38,420) | (8,875) | (194,146) | (183,231) | ||||||||
Net premiums earned | 1,133,256 | 847,967 | 3,218,396 | 2,569,447 | ||||||||
Other underwriting income | 5,327 | 6,956 | 13,142 | 35,329 | ||||||||
Losses and loss adjustment expenses | (922,560) | (449,876) | (1,968,959) | (1,394,802) | ||||||||
Acquisition expenses, net | (161,781) | (132,528) | (467,251) | (406,459) | ||||||||
Other operating expenses | (161,859) | (146,251) | (490,516) | (442,262) | ||||||||
Underwriting income (loss) | (107,617) | 126,268 | 304,812 | 361,253 | ||||||||
Net investment income | 94,127 | 66,282 | 282,459 | 207,088 | ||||||||
Net realized gains (losses) | 64,104 | 95,946 | 110,662 | 168,735 | ||||||||
Net impairment losses recognized in earnings | (1,878) | (3,867) | (5,415) | (16,849) | ||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 31,090 | 16,662 | 111,884 | 32,054 | ||||||||
Other income (loss) | (342) | (400) | (3,118) | (432) | ||||||||
Corporate expenses | (14,108) | [1] | (11,343) | (48,517) | (37,926) | |||||||
UGC transaction costs and other | (2,990) | [1] | (7,142) | (21,249) | [1] | (7,142) | ||||||
Amortization of intangible assets | (31,824) | (4,865) | (93,942) | (14,493) | ||||||||
Interest expense | (26,264) | (12,924) | (77,932) | (37,983) | ||||||||
Net foreign exchange gains (losses) | (27,785) | (4,232) | (85,451) | (3,812) | ||||||||
Income (loss) before income taxes | (23,487) | 260,385 | 474,193 | 650,493 | ||||||||
Income tax expense | (8,168) | (13,232) | (70,734) | (43,673) | ||||||||
Net income (loss) | (31,655) | 247,153 | 403,459 | 606,820 | ||||||||
Dividends attributable to redeemable noncontrolling interests | 0 | 0 | 0 | 0 | ||||||||
Amounts attributable to non-redeemable noncontrolling interests | 0 | 0 | 0 | 0 | ||||||||
Net income (loss) available to Arch | (31,655) | 247,153 | 403,459 | 606,820 | ||||||||
Preferred dividends | (12,369) | (5,484) | (34,936) | (16,453) | ||||||||
Loss on redemption of preferred shares | (6,735) | (6,735) | ||||||||||
Net income (loss) available to Arch common shareholders | $ (50,759) | $ 241,669 | $ 361,788 | $ 590,367 | ||||||||
Underwriting Ratios | ||||||||||||
Loss ratio | 81.40% | 53.10% | 61.20% | 54.30% | ||||||||
Acquisition expense ratio | 14.30% | 15.60% | 14.50% | 15.80% | ||||||||
Other operating expense ratio | 14.30% | 17.20% | 15.20% | 17.20% | ||||||||
Combined ratio | 110.00% | 85.90% | 90.90% | 87.30% | ||||||||
Goodwill and intangible assets | $ 676,755 | $ 83,291 | $ 676,755 | $ 83,291 | ||||||||
Sub-Total | Insurance | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Gross premiums written | [2] | 787,447 | 758,934 | 2,313,630 | 2,319,530 | |||||||
Premiums ceded | (222,516) | (217,446) | (704,057) | (713,110) | ||||||||
Net premiums written | 564,931 | 541,488 | 1,609,573 | 1,606,420 | ||||||||
Change in unearned premiums | (29,766) | (22,410) | (51,188) | (46,603) | ||||||||
Net premiums earned | 535,165 | 519,078 | 1,558,385 | 1,559,817 | ||||||||
Other underwriting income | 0 | 0 | 0 | 0 | ||||||||
Losses and loss adjustment expenses | (568,795) | (332,845) | (1,252,375) | (1,011,087) | ||||||||
Acquisition expenses, net | (82,638) | (77,146) | (236,378) | (228,806) | ||||||||
Other operating expenses | (90,875) | (86,613) | (271,268) | (263,111) | ||||||||
Underwriting income (loss) | $ (207,143) | $ 22,474 | $ (201,636) | $ 56,813 | ||||||||
Underwriting Ratios | ||||||||||||
Loss ratio | 106.30% | 64.10% | 80.40% | 64.80% | ||||||||
Acquisition expense ratio | 15.40% | 14.90% | 15.20% | 14.70% | ||||||||
Other operating expense ratio | 17.00% | 16.70% | 17.40% | 16.90% | ||||||||
Combined ratio | 138.70% | 95.70% | 113.00% | 96.40% | ||||||||
Goodwill and intangible assets | $ 23,445 | $ 26,367 | $ 23,445 | $ 26,367 | ||||||||
Sub-Total | Reinsurance | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Gross premiums written | [2] | 422,083 | 324,361 | 1,351,051 | 1,217,804 | |||||||
Premiums ceded | (105,389) | (89,551) | (386,743) | (370,068) | ||||||||
Net premiums written | 316,694 | 234,810 | 964,308 | 847,736 | ||||||||
Change in unearned premiums | 6,879 | 17,117 | (81,182) | (43,345) | ||||||||
Net premiums earned | 323,573 | 251,927 | 883,126 | 804,391 | ||||||||
Other underwriting income | 1,728 | 2,216 | 1,143 | 22,659 | ||||||||
Losses and loss adjustment expenses | (318,609) | (105,924) | (631,669) | (363,613) | ||||||||
Acquisition expenses, net | (57,340) | (50,192) | (154,638) | (160,706) | ||||||||
Other operating expenses | (36,214) | (35,389) | (110,458) | (108,561) | ||||||||
Underwriting income (loss) | $ (86,862) | $ 62,638 | $ (12,496) | $ 194,170 | ||||||||
Underwriting Ratios | ||||||||||||
Loss ratio | 98.50% | 42.00% | 71.50% | 45.20% | ||||||||
Acquisition expense ratio | 17.70% | 19.90% | 17.50% | 20.00% | ||||||||
Other operating expense ratio | 11.20% | 14.00% | 12.50% | 13.50% | ||||||||
Combined ratio | 127.40% | 75.90% | 101.50% | 78.70% | ||||||||
Goodwill and intangible assets | $ 417 | $ 1,228 | $ 417 | $ 1,228 | ||||||||
Sub-Total | Mortgage | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Gross premiums written | [2] | 347,951 | 131,726 | 1,032,800 | 361,440 | |||||||
Premiums ceded | (57,900) | (51,182) | (194,139) | (62,918) | ||||||||
Net premiums written | 290,051 | 80,544 | 838,661 | 298,522 | ||||||||
Change in unearned premiums | (15,533) | (3,582) | (61,776) | (93,283) | ||||||||
Net premiums earned | 274,518 | 76,962 | 776,885 | 205,239 | ||||||||
Other underwriting income | 3,599 | 4,740 | 11,999 | 12,670 | ||||||||
Losses and loss adjustment expenses | (35,156) | (11,107) | (84,915) | (20,102) | ||||||||
Acquisition expenses, net | (21,803) | (5,190) | (76,235) | (16,947) | ||||||||
Other operating expenses | (34,770) | (24,249) | (108,790) | (70,590) | ||||||||
Underwriting income (loss) | $ 186,388 | $ 41,156 | $ 518,944 | $ 110,270 | ||||||||
Underwriting Ratios | ||||||||||||
Loss ratio | 12.80% | 14.40% | 10.90% | 9.80% | ||||||||
Acquisition expense ratio | 7.90% | 6.70% | 9.80% | 8.30% | ||||||||
Other operating expense ratio | 12.70% | 31.50% | 14.00% | 34.40% | ||||||||
Combined ratio | 33.40% | 52.60% | 34.70% | 52.50% | ||||||||
Goodwill and intangible assets | $ 652,893 | $ 55,696 | $ 652,893 | $ 55,696 | ||||||||
|
Segment Information - Narrative (Details) |
9 Months Ended |
---|---|
Sep. 30, 2017
segment
| |
Underwriting segments | |
Segment Reporting Information [Line Items] | |
Number of segments | 3 |
Other | |
Segment Reporting Information [Line Items] | |
Number of segments | 2 |
Investment Information - Summary of available for sale securities (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
||||||
Available for sale securities: | |||||||
Estimated Fair Value | $ 16,704,633 | $ 15,469,573 | |||||
Gross Unrealized Gains | 290,830 | 163,339 | |||||
Gross Unrealized Losses | (91,853) | (198,886) | |||||
Cost or Amortized Cost | 16,505,656 | 15,505,120 | |||||
OTTI Unrealized Losses | [1] | (2,241) | (5,831) | ||||
Fixed maturities | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 14,317,651 | 14,156,918 | |||||
Gross Unrealized Gains | [2] | 150,896 | 79,082 | ||||
Gross Unrealized Losses | [2] | (83,475) | (178,759) | ||||
Cost or Amortized Cost | [2] | 14,250,230 | 14,256,595 | ||||
OTTI Unrealized Losses | [1],[2] | (2,241) | (5,831) | ||||
Fixed maturities | Corporate bonds | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 4,275,437 | 4,392,373 | |||||
Gross Unrealized Gains | [2] | 49,576 | 27,606 | ||||
Gross Unrealized Losses | [2] | (22,303) | (46,905) | ||||
Cost or Amortized Cost | [2] | 4,248,164 | 4,411,672 | ||||
OTTI Unrealized Losses | [1],[2] | (73) | (2,285) | ||||
Fixed maturities | Mortgage backed securities | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 323,900 | 490,093 | |||||
Gross Unrealized Gains | [2] | 5,078 | 4,794 | ||||
Gross Unrealized Losses | [2] | (2,540) | (8,357) | ||||
Cost or Amortized Cost | [2] | 321,362 | 493,656 | ||||
OTTI Unrealized Losses | [1],[2] | (2,146) | (3,323) | ||||
Fixed maturities | Municipal bonds | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 2,353,234 | 3,713,434 | |||||
Gross Unrealized Gains | [2] | 31,202 | 8,554 | ||||
Gross Unrealized Losses | [2] | (7,614) | (29,154) | ||||
Cost or Amortized Cost | [2] | 2,329,646 | 3,734,034 | ||||
OTTI Unrealized Losses | [1],[2] | 0 | (201) | ||||
Fixed maturities | Commercial mortgage backed securities | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 584,730 | 536,051 | |||||
Gross Unrealized Gains | [2] | 3,114 | 2,876 | ||||
Gross Unrealized Losses | [2] | (4,377) | (6,508) | ||||
Cost or Amortized Cost | [2] | 585,993 | 539,683 | ||||
OTTI Unrealized Losses | [1],[2] | 0 | 0 | ||||
Fixed maturities | US government and government agencies | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 3,761,612 | 2,804,540 | |||||
Gross Unrealized Gains | [2] | 3,303 | 9,319 | ||||
Gross Unrealized Losses | [2] | (20,246) | (24,437) | ||||
Cost or Amortized Cost | [2] | 3,778,555 | 2,819,658 | ||||
OTTI Unrealized Losses | [1],[2] | 0 | 0 | ||||
Fixed maturities | Non-US government securities | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 1,473,819 | 1,096,440 | |||||
Gross Unrealized Gains | [2] | 49,570 | 19,036 | ||||
Gross Unrealized Losses | [2] | (21,647) | (56,872) | ||||
Cost or Amortized Cost | [2] | 1,445,896 | 1,134,276 | ||||
OTTI Unrealized Losses | [1],[2] | 0 | 0 | ||||
Fixed maturities | Asset backed securities | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 1,544,919 | 1,123,987 | |||||
Gross Unrealized Gains | [2] | 9,053 | 6,897 | ||||
Gross Unrealized Losses | [2] | (4,748) | (6,526) | ||||
Cost or Amortized Cost | [2] | 1,540,614 | 1,123,616 | ||||
OTTI Unrealized Losses | [1],[2] | (22) | (22) | ||||
Equity securities | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 480,607 | 532,680 | |||||
Gross Unrealized Gains | 84,755 | 62,627 | |||||
Gross Unrealized Losses | (7,873) | (17,517) | |||||
Cost or Amortized Cost | 403,725 | 487,570 | |||||
OTTI Unrealized Losses | [1] | 0 | 0 | ||||
Other investments | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 260,339 | 167,970 | |||||
Gross Unrealized Gains | 54,512 | 21,358 | |||||
Gross Unrealized Losses | (1) | (2,465) | |||||
Cost or Amortized Cost | 205,828 | 149,077 | |||||
OTTI Unrealized Losses | [1] | 0 | 0 | ||||
Short-term investments | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 1,646,036 | 612,005 | |||||
Gross Unrealized Gains | 667 | 272 | |||||
Gross Unrealized Losses | (504) | (145) | |||||
Cost or Amortized Cost | 1,645,873 | 611,878 | |||||
OTTI Unrealized Losses | [1] | $ 0 | $ 0 | ||||
|
Investment Information - Maturity profile of available for sale securities) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
|||
---|---|---|---|---|---|
Estimated Fair Value: | |||||
Estimated fair value | $ 13,792,903 | $ 13,426,577 | |||
Amortized Cost: | |||||
Amortized cost | 13,722,581 | 13,522,671 | |||
Fixed maturities | |||||
Estimated Fair Value: | |||||
Due in one year or less | 537,043 | 560,830 | |||
Due after one year through five years | 7,547,002 | 6,158,148 | |||
Due after five years through 10 years | 3,495,424 | 4,676,847 | |||
Due after 10 years | 284,633 | 610,962 | |||
Single maturity date | 11,864,102 | 12,006,787 | |||
Estimated fair value | [1] | 14,317,651 | 14,156,918 | ||
Amortized Cost: | |||||
Due in one year or less | 534,513 | 557,675 | |||
Due after one year through five years | 7,508,674 | 6,211,099 | |||
Due after five years through 10 years | 3,480,251 | 4,710,017 | |||
Due after 10 years | 278,823 | 620,849 | |||
Single maturity date | 11,802,261 | 12,099,640 | |||
Amortized cost | [1] | 14,250,230 | 14,256,595 | ||
Fixed maturities | Mortgage backed securities | |||||
Estimated Fair Value: | |||||
Securities without single maturity date | 323,900 | 490,093 | |||
Amortized Cost: | |||||
Securities without single maturity date | 321,362 | 493,656 | |||
Fixed maturities | Commercial mortgage backed securities | |||||
Estimated Fair Value: | |||||
Securities without single maturity date | 584,730 | 536,051 | |||
Amortized Cost: | |||||
Securities without single maturity date | 585,993 | 539,683 | |||
Fixed maturities | Asset backed securities | |||||
Estimated Fair Value: | |||||
Securities without single maturity date | 1,544,919 | 1,123,987 | |||
Amortized Cost: | |||||
Securities without single maturity date | $ 1,540,614 | $ 1,123,616 | |||
|
Investment Information - Securities lending agreements (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Disclosure Investment Information [Abstract] | ||
Fair value of cash collateral received on securities lending | $ 63,800 | $ 212,500 |
Fair value of non-cash collateral received on securities lending | 479,500 | 550,100 |
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 543,243 | 762,554 |
Gross amount of recognized liabilities for securities lending in offsetting disclosure in Note 9 | 0 | 0 |
Amounts related to securities lending not included in offsetting disclosure in Note 9 | 543,243 | 762,554 |
US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 507,954 | 718,492 |
Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 31,305 | 29,078 |
Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 3,984 | 14,984 |
Overnight and continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 460,127 | 600,077 |
Overnight and continuous | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 424,838 | 556,015 |
Overnight and continuous | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 31,305 | 29,078 |
Overnight and continuous | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 3,984 | 14,984 |
Less than 30 days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 8,186 | 31,244 |
Less than 30 days | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 8,186 | 31,244 |
Less than 30 days | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
Less than 30 days | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
30 - 90 days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 74,930 | 126,093 |
30 - 90 days | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 74,930 | 126,093 |
30 - 90 days | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
30 - 90 days | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
90 days or more | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 5,140 |
90 days or more | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 5,140 |
90 days or more | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
90 days or more | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | $ 0 | $ 0 |
Investment Information - Other investments (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
||
---|---|---|---|---|
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | $ 2,557,544 | $ 2,088,763 | ||
Available for sale | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 260,339 | 167,970 | ||
Available for sale | Asian and emerging markets | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 123,225 | 84,778 | ||
Available for sale | Investment grade fixed income | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 53,325 | 33,923 | ||
Available for sale | Credit related funds | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 20,752 | 7,469 | ||
Available for sale | Other | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 63,037 | 41,800 | ||
Fair value option | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 2,297,205 | 1,920,793 | ||
Fair value option | Term loan investments | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 1,387,663 | 1,190,799 | ||
Other investments par | 1,378,797 | 1,208,537 | ||
Fair value option | Mezzanine debt funds | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 172,000 | 127,943 | ||
Fair value option | Asian and emerging markets | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 300,552 | 178,568 | ||
Fair value option | Investment grade fixed income | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 95,151 | 75,468 | ||
Fair value option | Credit related funds | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 194,200 | 218,298 | ||
Fair value option | Other | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | [1] | $ 147,639 | $ 129,717 | |
|
Investment Information - Fair value option (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | $ 4,249,634 | $ 3,421,220 |
Fixed maturities | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | 1,508,204 | 1,099,116 |
Other investments | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | 2,297,205 | 1,920,793 |
Short-term investments | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | 349,540 | 373,669 |
Equity securities | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | $ 94,685 | $ 27,642 |
Investment Information - Limited partnership interests (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
|||||
---|---|---|---|---|---|---|---|
Schedule of Equity Method Investments [Line Items] | |||||||
Maximum Exposure to Loss | $ 1,071,731 | $ 891,774 | |||||
Aggregate unfunded commitments | 1,580,000 | 1,290,000 | |||||
Equity method investments | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Maximum Exposure to Loss | [1] | 962,574 | 800,970 | ||||
Aggregate unfunded commitments | 850,400 | 776,600 | |||||
Fair value option | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Maximum Exposure to Loss | [2] | 109,157 | 90,804 | ||||
Aggregate unfunded commitments | $ 162,300 | $ 16,700 | |||||
|
Investment Information - Net investment income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Net investment income: | ||||
Gross investment income | $ 139,945 | $ 113,846 | $ 412,336 | $ 334,546 |
Investment expenses | (23,486) | (20,228) | (66,879) | (58,855) |
Net investment income | 116,459 | 93,618 | 345,457 | 275,691 |
Fixed maturities | ||||
Net investment income: | ||||
Gross investment income | 96,144 | 71,366 | 284,807 | 223,033 |
Equity securities (dividends) | ||||
Net investment income: | ||||
Gross investment income | 2,887 | 3,311 | 9,184 | 10,409 |
Short-term investments | ||||
Net investment income: | ||||
Gross investment income | 2,957 | 1,703 | 6,732 | 3,015 |
Other | ||||
Net investment income: | ||||
Gross investment income | $ 37,957 | $ 37,466 | $ 111,613 | $ 98,089 |
Investment Information - Net realized gains and losses (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
||||||
Net realized gains and losses: | |||||||||
Available for sale securities, gross gains on investment sales | $ 66,565 | $ 84,451 | $ 212,470 | $ 266,965 | |||||
Available for sale securities, gross losses on investment sales | (39,015) | (22,985) | (152,996) | (129,409) | |||||
Derivative instruments | [1] | 4,298 | (16,964) | (9,653) | 24,102 | ||||
Other | [2] | (782) | (10,858) | (20,655) | (31,753) | ||||
Net realized gains (losses) | 66,275 | 125,105 | 122,163 | 230,647 | |||||
Fixed maturities | |||||||||
Net realized gains and losses: | |||||||||
Change in fair value of assets and liabilities accounted for using the fair value option | 4,035 | 43,935 | 34,232 | 62,234 | |||||
Other investments | |||||||||
Net realized gains and losses: | |||||||||
Change in fair value of assets and liabilities accounted for using the fair value option | 24,264 | 46,428 | 42,149 | 38,016 | |||||
Equity securities | |||||||||
Net realized gains and losses: | |||||||||
Change in fair value of assets and liabilities accounted for using the fair value option | 10,230 | (52) | 16,604 | 385 | |||||
Short-term investments | |||||||||
Net realized gains and losses: | |||||||||
Change in fair value of assets and liabilities accounted for using the fair value option | $ (3,320) | $ 1,150 | $ 12 | $ 107 | |||||
|
Investment Information - Other than temporary impairments recognized in earnings (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | $ (1,878) | $ (3,867) | $ (5,415) | $ (16,849) |
Fixed maturities | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (938) | (778) | (4,122) | (9,726) |
Fixed maturities | Mortgage backed securities | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (50) | (233) | (1,461) | (788) |
Fixed maturities | Corporate bonds | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (82) | 0 | (1,484) | (5,655) |
Fixed maturities | Non-US government securities | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (178) | (545) | (376) | (777) |
Fixed maturities | Asset backed securities | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | 0 | (2,506) | ||
Fixed maturities | US government and government agencies | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (426) | 0 | (426) | 0 |
Fixed maturities | Municipal bonds | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (202) | 0 | (375) | 0 |
Equity securities | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (940) | (557) | (1,126) | (3,594) |
Other investments | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | $ 0 | $ (2,532) | $ (167) | $ (3,529) |
Investment Information - Other than temporary impairments rollforward (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Rollforward: | ||||
Balance at start of period | $ 4,437 | $ 14,847 | $ 13,138 | $ 26,875 |
Credit loss impairments recognized on securities not previously impaired | 0 | 38 | 31 | 1,388 |
Credit loss impairments recognized on securities previously impaired | 15 | 60 | 210 | 582 |
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security | 0 | 0 | 0 | 0 |
Reductions for securities sold during the period | (689) | (1,166) | (9,616) | (15,066) |
Balance at end of period | $ 3,763 | $ 13,779 | $ 3,763 | $ 13,779 |
Investment Information - Restricted assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Restricted Assets [Line Items] | ||
Restricted assets | $ 6,628,124 | $ 5,902,339 |
Collateral or guarantees - affiliated transactions | ||
Restricted Assets [Line Items] | ||
Restricted assets | 4,264,131 | 3,871,971 |
Collateral or guarantees - third party agreements | ||
Restricted Assets [Line Items] | ||
Restricted assets | 1,689,104 | 1,513,079 |
Deposits with US regulatory authorities | ||
Restricted Assets [Line Items] | ||
Restricted assets | 618,136 | 472,890 |
Deposits with non-US regulatory authorities | ||
Restricted Assets [Line Items] | ||
Restricted assets | $ 56,753 | $ 44,399 |
Investment Information - Narrative (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Sep. 30, 2017
USD ($)
lots
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2017
USD ($)
lots
|
Sep. 30, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
lots
|
|||
Narrative items: | |||||||
Investable assets | $ 22,000,000 | $ 22,000,000 | |||||
Equity in net income (loss) of investment funds accounted for using the equity method | 31,090 | $ 16,662 | 111,884 | $ 32,054 | |||
OTTI unrealized (losses) gains at current fair value | $ 900 | $ 900 | $ 2,800 | ||||
Continuous unrealized loss, qualitative disclosures: | |||||||
Number of positions in an unrealized loss position (lots) | lots | 2,870 | 2,870 | 3,540 | ||||
Total number of positions (lots) | lots | 7,410 | 7,410 | 7,240 | ||||
Largest single loss | $ 1,600 | $ 1,600 | $ 4,600 | ||||
OTTI unrealized losses (gains) | [1] | $ 2,241 | $ 5,831 | ||||
Minimum | |||||||
Narrative items: | |||||||
Time lag for reporting | 1 month | ||||||
Maximum | |||||||
Narrative items: | |||||||
Time lag for reporting | 3 months | ||||||
Underwriting segments | |||||||
Narrative items: | |||||||
Investable assets | 19,700,000 | $ 19,700,000 | |||||
Equity in net income (loss) of investment funds accounted for using the equity method | 31,090 | 16,662 | 111,884 | 32,054 | |||
Other | |||||||
Narrative items: | |||||||
Investable assets | 2,300,000 | 2,300,000 | |||||
Equity in net income (loss) of investment funds accounted for using the equity method | $ 0 | $ 0 | $ 0 | $ 0 | |||
|
Fair Value - Fair Value Hierarchy (Details) - Recurring - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
|||||||
---|---|---|---|---|---|---|---|---|---|
Quoted Prices in Active Markets for Identical Assets (Level 1) | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | $ 6,855,812 | $ 4,555,092 | |||||||
Liabilities measured at fair value | 0 | 0 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Contingent consideration liability | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | 0 | 0 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Securities sold but not yet purchased | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | [1] | 0 | 0 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Derivative instruments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | 0 | 0 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 3,687,126 | 2,691,575 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Corporate bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Municipal bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Commercial mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | US government and government agencies | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 3,687,126 | 2,691,575 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Non-US government securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Asset backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 473,908 | 529,695 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Short-term investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 1,600,885 | 608,862 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 83,254 | 112,313 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other investments at fair value | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 83,254 | 112,313 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Derivative instruments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 1,010,639 | 612,647 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Corporate bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Municipal bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | ||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Commercial mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | ||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | US government and government agencies | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 487,475 | 197,486 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Non-US government securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Asset backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Short-term investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 343,620 | 309,127 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Equity securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 59,332 | 25,328 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Other investments fair value option | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 120,212 | 80,706 | |||||||
Significant Other Observable Inputs (Level 2) | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 12,896,364 | 13,559,270 | |||||||
Liabilities measured at fair value | (95,719) | (59,206) | |||||||
Significant Other Observable Inputs (Level 2) | Contingent consideration liability | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | 0 | 0 | |||||||
Significant Other Observable Inputs (Level 2) | Securities sold but not yet purchased | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | [1] | (72,682) | (33,157) | ||||||
Significant Other Observable Inputs (Level 2) | Derivative instruments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | (23,037) | (26,049) | |||||||
Significant Other Observable Inputs (Level 2) | Fixed maturities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 10,612,585 | 11,435,710 | ||||||
Significant Other Observable Inputs (Level 2) | Fixed maturities | Corporate bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 4,263,446 | 4,374,029 | ||||||
Significant Other Observable Inputs (Level 2) | Fixed maturities | Mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 323,496 | 490,093 | ||||||
Significant Other Observable Inputs (Level 2) | Fixed maturities | Municipal bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 2,353,234 | 3,713,434 | ||||||
Significant Other Observable Inputs (Level 2) | Fixed maturities | Commercial mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 584,185 | 536,051 | ||||||
Significant Other Observable Inputs (Level 2) | Fixed maturities | US government and government agencies | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 74,486 | 112,965 | ||||||
Significant Other Observable Inputs (Level 2) | Fixed maturities | Non-US government securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 1,473,819 | 1,096,440 | ||||||
Significant Other Observable Inputs (Level 2) | Fixed maturities | Asset backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 1,539,919 | 1,112,698 | ||||||
Significant Other Observable Inputs (Level 2) | Equity securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 6,699 | 2,985 | |||||||
Significant Other Observable Inputs (Level 2) | Short-term investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 45,151 | 3,143 | |||||||
Significant Other Observable Inputs (Level 2) | Other investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 1,417 | 0 | |||||||
Significant Other Observable Inputs (Level 2) | Other investments at fair value | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 1,417 | 0 | |||||||
Significant Other Observable Inputs (Level 2) | Derivative instruments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 33,141 | 28,410 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 2,197,371 | 2,089,022 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | Corporate bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 811,710 | 790,935 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | Mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 21,218 | 18,624 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | Municipal bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 2,740 | ||||||||
Significant Other Observable Inputs (Level 2) | Fair value option | Commercial mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 12,539 | ||||||||
Significant Other Observable Inputs (Level 2) | Fair value option | US government and government agencies | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | Non-US government securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 97,614 | 61,747 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | Asset backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 63,437 | 30,324 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | Short-term investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 5,920 | 64,542 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | Equity securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 35,353 | 2,314 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | Other investments fair value option | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 1,146,840 | 1,120,536 | |||||||
Significant Unobservable Inputs (Level 3) | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 60,557 | 54,633 | |||||||
Liabilities measured at fair value | (59,248) | (122,350) | |||||||
Significant Unobservable Inputs (Level 3) | Contingent consideration liability | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | (59,248) | (122,350) | |||||||
Significant Unobservable Inputs (Level 3) | Securities sold but not yet purchased | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | [1] | 0 | 0 | ||||||
Significant Unobservable Inputs (Level 3) | Derivative instruments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fixed maturities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 17,940 | 29,633 | ||||||
Significant Unobservable Inputs (Level 3) | Fixed maturities | Corporate bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 11,991 | 18,344 | ||||||
Significant Unobservable Inputs (Level 3) | Fixed maturities | Mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 404 | 0 | ||||||
Significant Unobservable Inputs (Level 3) | Fixed maturities | Municipal bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Significant Unobservable Inputs (Level 3) | Fixed maturities | Commercial mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 545 | 0 | ||||||
Significant Unobservable Inputs (Level 3) | Fixed maturities | US government and government agencies | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Significant Unobservable Inputs (Level 3) | Fixed maturities | Non-US government securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Significant Unobservable Inputs (Level 3) | Fixed maturities | Asset backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 5,000 | 11,289 | ||||||
Significant Unobservable Inputs (Level 3) | Equity securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Short-term investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Other investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Other investments at fair value | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Derivative instruments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 42,617 | 25,000 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | Corporate bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 11,471 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | Mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | Municipal bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | ||||||||
Significant Unobservable Inputs (Level 3) | Fair value option | Commercial mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | ||||||||
Significant Unobservable Inputs (Level 3) | Fair value option | US government and government agencies | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | Non-US government securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | Asset backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | Short-term investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | Equity securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | Other investments fair value option | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 31,146 | 25,000 | |||||||
Estimated Fair Value | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 20,987,408 | 18,919,203 | |||||||
Liabilities measured at fair value | (154,967) | (181,556) | |||||||
Estimated Fair Value | Contingent consideration liability | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | (59,248) | (122,350) | |||||||
Estimated Fair Value | Securities sold but not yet purchased | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | [1] | (72,682) | (33,157) | ||||||
Estimated Fair Value | Derivative instruments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | (23,037) | (26,049) | |||||||
Estimated Fair Value | Fixed maturities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 14,317,651 | 14,156,918 | |||||||
Estimated Fair Value | Fixed maturities | Corporate bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 4,275,437 | 4,392,373 | |||||||
Estimated Fair Value | Fixed maturities | Mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 323,900 | 490,093 | |||||||
Estimated Fair Value | Fixed maturities | Municipal bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 2,353,234 | 3,713,434 | |||||||
Estimated Fair Value | Fixed maturities | Commercial mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 584,730 | 536,051 | |||||||
Estimated Fair Value | Fixed maturities | US government and government agencies | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 3,761,612 | 2,804,540 | |||||||
Estimated Fair Value | Fixed maturities | Non-US government securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 1,473,819 | 1,096,440 | |||||||
Estimated Fair Value | Fixed maturities | Asset backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 1,544,919 | 1,123,987 | |||||||
Estimated Fair Value | Equity securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 480,607 | 532,680 | |||||||
Estimated Fair Value | Short-term investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 1,646,036 | 612,005 | |||||||
Estimated Fair Value | Other investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 260,339 | 167,970 | |||||||
Estimated Fair Value | Other investments at fair value | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 84,671 | 112,313 | |||||||
Estimated Fair Value | Other investments measured at net asset value | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [3] | 175,668 | 55,657 | ||||||
Estimated Fair Value | Derivative instruments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 33,141 | 28,410 | |||||||
Estimated Fair Value | Fair value option | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 4,249,634 | 3,421,220 | |||||||
Estimated Fair Value | Fair value option | Corporate bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 823,181 | 790,935 | |||||||
Estimated Fair Value | Fair value option | Mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 21,218 | 18,624 | |||||||
Estimated Fair Value | Fair value option | Municipal bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 2,740 | ||||||||
Estimated Fair Value | Fair value option | Commercial mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 12,539 | ||||||||
Estimated Fair Value | Fair value option | US government and government agencies | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 487,475 | 197,486 | |||||||
Estimated Fair Value | Fair value option | Non-US government securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 97,614 | 61,747 | |||||||
Estimated Fair Value | Fair value option | Asset backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 63,437 | 30,324 | |||||||
Estimated Fair Value | Fair value option | Short-term investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 349,540 | 373,669 | |||||||
Estimated Fair Value | Fair value option | Equity securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 94,685 | 27,642 | |||||||
Estimated Fair Value | Fair value option | Other investments fair value option | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 1,298,198 | 1,226,242 | |||||||
Estimated Fair Value | Fair value option | Other investments measured at net asset value | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [3] | $ 999,007 | $ 694,551 | ||||||
|
Fair Value - Rollforward of Level 3 assets and liabilities (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | $ 36,570 | $ 66,516 | $ 54,633 | $ 73,868 | |||
Total gains or (losses) (realized/unrealized) - included in earnings | 0 | 1,667 | 4,672 | (672) | |||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 289 | 0 | 289 | 0 | |||
Purchases, issuances, sales and settlements | |||||||
Purchases | 1,348 | 0 | 6,283 | 776 | |||
Issuances | 0 | 0 | 0 | 0 | |||
Sales | 0 | 0 | (26,242) | 0 | |||
Settlements | 0 | (22,435) | (1,428) | (28,224) | |||
Transfers in and/or out of Level 3 | 22,350 | 0 | 22,350 | 0 | |||
Balance at end of period | 60,557 | 45,748 | 60,557 | 45,748 | |||
Contingent consideration liability | |||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | (57,246) | (111,670) | (122,350) | (96,048) | |||
Total gains or (losses) (realized/unrealized) - included in earnings | (2,002) | (4,795) | (9,089) | (20,916) | |||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 88 | 0 | 51 | |||
Purchases, issuances, sales and settlements | |||||||
Purchases | 0 | 0 | 0 | 0 | |||
Issuances | 0 | 0 | 0 | 0 | |||
Sales | 0 | 0 | 0 | 0 | |||
Settlements | 0 | 0 | (72,191) | 536 | |||
Transfers in and/or out of Level 3 | 0 | 0 | 0 | 0 | |||
Balance at end of period | (59,248) | (116,377) | (59,248) | (116,377) | |||
Available for sale | Asset backed securities | |||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | [1] | 0 | 49,211 | 11,289 | 57,500 | ||
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | 0 | 0 | 3,779 | (2,500) | ||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | [1] | 0 | 0 | 0 | 0 | ||
Purchases, issuances, sales and settlements | |||||||
Purchases | [1] | 0 | 0 | 0 | 0 | ||
Issuances | [1] | 0 | 0 | 0 | 0 | ||
Sales | [1] | 0 | 0 | (13,640) | 0 | ||
Settlements | [1] | 0 | (22,435) | (1,428) | (28,224) | ||
Transfers in and/or out of Level 3 | [1] | 5,949 | 0 | 5,949 | 0 | ||
Balance at end of period | [1] | 5,949 | 26,776 | 5,949 | 26,776 | ||
Available for sale | Corporate bonds | |||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | 11,570 | 17,305 | 18,344 | 16,368 | |||
Total gains or (losses) (realized/unrealized) - included in earnings | 0 | 1,667 | 893 | 1,828 | |||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 289 | 0 | 289 | 0 | |||
Purchases, issuances, sales and settlements | |||||||
Purchases | 0 | 0 | 4,935 | 776 | |||
Issuances | 0 | 0 | 0 | 0 | |||
Sales | 0 | 0 | (12,602) | 0 | |||
Settlements | 0 | 0 | 0 | 0 | |||
Transfers in and/or out of Level 3 | 132 | 0 | 132 | 0 | |||
Balance at end of period | 11,991 | 18,972 | 11,991 | 18,972 | |||
Fair value option | Corporate bonds | |||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | 0 | 0 | 0 | 0 | |||
Total gains or (losses) (realized/unrealized) - included in earnings | 0 | 0 | 0 | 0 | |||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | 0 | 0 | |||
Purchases, issuances, sales and settlements | |||||||
Purchases | 0 | 0 | 0 | 0 | |||
Issuances | 0 | 0 | 0 | 0 | |||
Sales | 0 | 0 | 0 | 0 | |||
Settlements | 0 | 0 | 0 | 0 | |||
Transfers in and/or out of Level 3 | 11,471 | 0 | 11,471 | 0 | |||
Balance at end of period | 11,471 | 0 | 11,471 | 0 | |||
Fair value option | Other investments | |||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | 25,000 | 0 | 25,000 | 0 | |||
Total gains or (losses) (realized/unrealized) - included in earnings | 0 | 0 | 0 | 0 | |||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | 0 | 0 | |||
Purchases, issuances, sales and settlements | |||||||
Purchases | 1,348 | 0 | 1,348 | 0 | |||
Issuances | 0 | 0 | 0 | 0 | |||
Sales | 0 | 0 | 0 | 0 | |||
Settlements | 0 | 0 | 0 | 0 | |||
Transfers in and/or out of Level 3 | 4,798 | 0 | 4,798 | 0 | |||
Balance at end of period | $ 31,146 | $ 0 | $ 31,146 | $ 0 | |||
|
Fair Value - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
|
Fair Value Disclosures [Abstract] | ||
Total assets and liabilities measured at fair value | $ 21,140,000 | $ 19,100,000 |
Total assets and liabilities measured at fair value priced using non-binding broker quotes | $ 242,900 | $ 234,000 |
Total assets and liabilities measured at fair value priced using non-binding broker quotes (percentage) | 1.20% | 1.20% |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior notes | $ 1,732,726 | $ 1,732,258 |
Reportable Legal Entities | ACGL (Parent Guarantor) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior notes | 297,030 | 296,957 |
Estimated fair value of senior notes | 406,000 | |
Reportable Legal Entities | Arch-U.S. (Subsidiary Issuer) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior notes | 494,596 | $ 494,525 |
Estimated fair value of senior notes | 566,200 | |
Fixed maturities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Transfers into Level 3 | 17,600 | |
Other investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Transfers into Level 3 | 4,800 | |
Unsecured debt | Notes due 2026 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior notes | 496,000 | |
Estimated fair value of senior notes | 519,800 | |
Unsecured debt | Notes due 2046 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior notes | 445,100 | |
Estimated fair value of senior notes | $ 503,500 |
Derivative Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
||||||||||||
Derivative offsetting [Abstract] | ||||||||||||||||
Derivative assets subject to master netting agreements | $ 49,400 | $ 49,400 | $ 28,400 | |||||||||||||
Derivative liabilities subject to master netting agreements | 22,500 | 22,500 | 26,000 | |||||||||||||
Net realized gains (losses) on derivative instruments | ||||||||||||||||
Net realized gains (losses) on derivative instruments | [1] | 4,298 | $ (16,964) | (9,653) | $ 24,102 | |||||||||||
Not Designated as Hedging Instrument [Member] | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Asset derivatives - fair value | 51,472 | 51,472 | 30,001 | |||||||||||||
Liability derivatives - fair value | (23,037) | (23,037) | (26,049) | |||||||||||||
Net realized gains (losses) on derivative instruments | ||||||||||||||||
Net realized gains (losses) on derivative instruments | 4,298 | (16,964) | (9,653) | 24,102 | ||||||||||||
Not Designated as Hedging Instrument [Member] | Futures contracts | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Net derivatives - notional value | [2],[3] | 1,524,985 | 1,524,985 | 1,655,530 | ||||||||||||
Net realized gains (losses) on derivative instruments | ||||||||||||||||
Net realized gains (losses) on derivative instruments | 4,899 | (15,368) | 7,309 | 45,954 | ||||||||||||
Not Designated as Hedging Instrument [Member] | Futures contracts | Other assets | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Asset derivatives - fair value | 5,351 | [3] | 5,351 | [3] | 360 | |||||||||||
Not Designated as Hedging Instrument [Member] | Futures contracts | Other liabilities | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Liability derivatives - fair value | [3] | (6,722) | (6,722) | (9,398) | ||||||||||||
Not Designated as Hedging Instrument [Member] | Foreign currency forward contracts | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Net derivatives - notional value | [2],[3] | 805,201 | 805,201 | 1,186,386 | ||||||||||||
Net realized gains (losses) on derivative instruments | ||||||||||||||||
Net realized gains (losses) on derivative instruments | (228) | 4,583 | (12,266) | (13,951) | ||||||||||||
Not Designated as Hedging Instrument [Member] | Foreign currency forward contracts | Other assets | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Asset derivatives - fair value | [3] | 19,376 | 19,376 | 9,354 | ||||||||||||
Not Designated as Hedging Instrument [Member] | Foreign currency forward contracts | Other liabilities | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Liability derivatives - fair value | [3] | (5,348) | (5,348) | (12,941) | ||||||||||||
Not Designated as Hedging Instrument [Member] | TBAs | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Net derivatives - notional value | [2],[4] | 18,143 | 18,143 | 0 | ||||||||||||
Net realized gains (losses) on derivative instruments | ||||||||||||||||
Net realized gains (losses) on derivative instruments | 122 | (23) | 143 | 311 | ||||||||||||
Not Designated as Hedging Instrument [Member] | TBAs | Fixed maturities available for sale | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Asset derivatives - fair value | 18,331 | [4] | 18,331 | [4] | 0 | |||||||||||
Liability derivatives - fair value | [4] | 0 | 0 | 0 | ||||||||||||
Not Designated as Hedging Instrument [Member] | Other | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Net derivatives - notional value | [2],[3] | 2,032,922 | 2,032,922 | 1,014,863 | ||||||||||||
Net realized gains (losses) on derivative instruments | ||||||||||||||||
Net realized gains (losses) on derivative instruments | (495) | $ (6,156) | (4,839) | $ (8,212) | ||||||||||||
Not Designated as Hedging Instrument [Member] | Other | Other assets | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Asset derivatives - fair value | [3] | 8,414 | 8,414 | 20,287 | ||||||||||||
Not Designated as Hedging Instrument [Member] | Other | Other liabilities | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Liability derivatives - fair value | [3] | $ (10,967) | $ (10,967) | $ (3,710) | ||||||||||||
|
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Commitments and Contingencies Disclosure [Abstract] | ||||
Repayments of borrowings | $ 100,000 | $ 172,000 | $ 179,171 | |
Investment commitments | $ 1,580,000 | $ 1,580,000 | $ 1,290,000 |
Share Transactions - Share repurchases (Details) - Common shares - USD ($) shares in Millions, $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Class of Stock [Line Items] | ||
Cumulative number of shares acquired since inception of share repurchase program | 125.2 | |
Aggregate purchase price of shares acquired since inception of share repurchase program | $ 3,680.0 | |
Treasury stock, shares acquired (shares) | 1.1 | |
Treasury stock, value of shares acquired | $ 75.3 | |
Remaining authorized repurchase amount | $ 446.5 |
Share Transactions - Conversion of Non-voting common equivalent preferred shares (Details) - shares |
1 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Sep. 30, 2017 |
Jun. 08, 2017 |
|
Class of Stock [Line Items] | |||
Number of convertible shares transferred | 708,862 | ||
Number of common shares issued on conversion | 7,088,620 | ||
Shares transferred | |||
Class of Stock [Line Items] | |||
Number of convertible shares transferred | 638,141 | ||
Underwriter option | |||
Class of Stock [Line Items] | |||
Number of convertible shares transferred | 95,721 | ||
AIG | |||
Class of Stock [Line Items] | |||
Preferred shares | 567,420 | 1,276,282 |
Share Transactions - Series F Preferred Shares (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions |
1 Months Ended | 9 Months Ended | |
---|---|---|---|
Aug. 31, 2017 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Class of Stock [Line Items] | |||
Proceeds from issuance of preferred shares, net | $ 222,054 | $ 434,899 | |
Series C Preferred Shares | |||
Class of Stock [Line Items] | |||
Dividend rate percentage | 6.75% | ||
Redemption price per share | $ 25.00 | ||
Series F Preferred Shares | |||
Class of Stock [Line Items] | |||
Preferred stock value outstanding | $ 230,000 | ||
Number of shares outstanding | 9.2 | ||
Proportionate interest per depositary share | 0.10% | ||
Dividend rate percentage | 5.45% | ||
Par value per share | $ 0.01 | ||
Liquidation preference per share | 25,000 | ||
Redemption price per share | $ 25,000 | ||
Proceeds from issuance of preferred shares, net | $ 222,100 | ||
Depositary share equivalent | |||
Class of Stock [Line Items] | |||
Liquidation preference per share | $ 25 | ||
Redemption price per share | $ 25 |
Other Comprehensive Income (Loss) - Amounts reclassified from accumulated other comprehensive income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Other-than-temporary impairment losses | $ (1,878) | $ (3,867) | $ (5,415) | $ (16,999) |
Income (loss) before income taxes | (37,028) | 316,851 | 498,672 | 772,276 |
Income tax expense | (8,189) | (13,231) | (70,755) | (43,672) |
Net of tax | (33,656) | 252,872 | 404,638 | 618,725 |
Reclassification out of accumulated other comprehensive income | Unrealized appreciation on available-for-sale investments | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net realized gains (losses) | 27,550 | 61,464 | 59,474 | 137,555 |
Other-than-temporary impairment losses | (1,878) | (3,867) | (5,415) | (16,999) |
Income (loss) before income taxes | 25,672 | 57,597 | 54,059 | 120,556 |
Income tax expense | (1,760) | (2,605) | (7,879) | (11,247) |
Net of tax | $ 23,912 | $ 54,992 | $ 46,180 | $ 109,309 |
Other Comprehensive Income (Loss) - Components of other comprehensive income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Before tax amount: | ||||
Unrealized holding gains (losses) arising during period, before tax | $ 69,330 | $ 11,692 | $ 288,813 | $ 281,770 |
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss), before tax | 0 | 0 | 0 | (150) |
Less reclassification of net realized gains included in net income, before tax | 25,672 | 57,597 | 54,059 | 120,556 |
Foreign currency translation adjustments, before tax | 8,590 | (5,407) | 30,264 | (5,733) |
Other comprehensive income (loss), before tax | 52,248 | (51,312) | 265,018 | 155,331 |
Tax expense (benefit): | ||||
Unrealized holding gains (losses) arising during period, tax | 2,868 | (4,589) | 28,590 | 30,048 |
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss), tax | 0 | 0 | 0 | 0 |
Less reclassification of net realized gains included in net income, tax | 1,760 | 2,605 | 7,879 | 11,247 |
Foreign currency translation adjustments, tax | 310 | (95) | 563 | 417 |
Other comprehensive income (loss), tax | 1,418 | (7,289) | 21,274 | 19,218 |
Net of tax amount: | ||||
Unrealized holding gains (losses) arising during period, net of tax | 66,462 | 16,281 | 260,223 | 251,722 |
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss), net of tax | 0 | 0 | 0 | (150) |
Less reclassification of net realized gains included in net income, net of tax | 23,912 | 54,992 | 46,180 | 109,309 |
Foreign currency translation adjustments, net of tax | 8,280 | (5,312) | 29,701 | (6,150) |
Net current period other comprehensive income (loss) | $ 50,830 | $ (44,023) | $ 243,744 | $ 136,113 |
Guarantor Financial Information - Condensed consolidating balance sheet (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|---|---|
Assets | ||||||
Total investments | $ 21,931,881 | $ 19,719,651 | ||||
Cash | 862,361 | 842,942 | $ 578,816 | $ 553,326 | ||
Investments in subsidiaries | 0 | 0 | ||||
Due from subsidiaries and affiliates | 0 | 0 | ||||
Premiums receivable | 1,269,678 | 1,072,435 | ||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 2,506,015 | 2,114,138 | ||||
Contractholder receivables | 1,864,348 | 1,717,436 | ||||
Ceded unearned premiums | 947,135 | 859,567 | ||||
Deferred acquisition costs | 531,196 | 447,560 | ||||
Goodwill and intangible assets | 684,405 | 781,553 | 90,941 | |||
Other assets | 2,027,778 | 1,816,827 | ||||
Total assets | 32,624,797 | 29,372,109 | ||||
Liabilities | ||||||
Reserve for losses and loss adjustment expenses | 11,351,267 | $ 10,520,511 | 10,200,960 | 9,610,189 | $ 9,471,647 | 9,125,250 |
Unearned premiums | 3,751,550 | 3,406,870 | ||||
Reinsurance balances payable | 352,006 | 300,407 | ||||
Contractholder payables | 1,864,348 | 1,717,436 | ||||
Collateral held for insured obligations | 345,726 | 301,406 | ||||
Deposit accounting liabilities | 22,150 | |||||
Senior notes | 1,732,726 | 1,732,258 | ||||
Revolving credit agreement borrowings | 826,242 | 756,650 | ||||
Due to subsidiaries and affiliates | 0 | 0 | ||||
Other liabilities | 2,423,061 | 1,622,847 | ||||
Total liabilities | 22,646,926 | 20,060,984 | ||||
Redeemable noncontrolling interests | 205,829 | 205,553 | ||||
Shareholders' Equity | ||||||
Total shareholders’ equity available to Arch | 8,911,144 | 8,253,718 | 7,313,983 | |||
Non-redeemable noncontrolling interests | 860,898 | 851,854 | 834,808 | |||
Total shareholders’ equity | 9,772,042 | 9,105,572 | 8,148,791 | |||
Total liabilities, noncontrolling interests and shareholders’ equity | 32,624,797 | 29,372,109 | ||||
Reportable Legal Entities | ACGL (Parent Guarantor) | ||||||
Assets | ||||||
Total investments | 402 | 2,612 | ||||
Cash | 4,868 | 1,687 | 2,041 | 6,809 | ||
Investments in subsidiaries | 9,214,178 | 8,660,586 | ||||
Due from subsidiaries and affiliates | 81 | 14,297 | ||||
Premiums receivable | 0 | 0 | ||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 0 | 0 | ||||
Contractholder receivables | 0 | 0 | ||||
Ceded unearned premiums | 0 | 0 | ||||
Deferred acquisition costs | 0 | 0 | ||||
Goodwill and intangible assets | 0 | 0 | ||||
Other assets | 13,357 | 15,725 | ||||
Total assets | 9,232,886 | 8,694,907 | ||||
Liabilities | ||||||
Reserve for losses and loss adjustment expenses | 0 | 0 | ||||
Unearned premiums | 0 | 0 | ||||
Reinsurance balances payable | 0 | 0 | ||||
Contractholder payables | 0 | 0 | ||||
Collateral held for insured obligations | 0 | 0 | ||||
Deposit accounting liabilities | 0 | |||||
Senior notes | 297,030 | 296,957 | ||||
Revolving credit agreement borrowings | 0 | 100,000 | ||||
Due to subsidiaries and affiliates | 41 | 26,270 | ||||
Other liabilities | 24,671 | 17,962 | ||||
Total liabilities | 321,742 | 441,189 | ||||
Redeemable noncontrolling interests | 0 | 0 | ||||
Shareholders' Equity | ||||||
Total shareholders’ equity available to Arch | 8,911,144 | 8,253,718 | ||||
Non-redeemable noncontrolling interests | 0 | 0 | ||||
Total shareholders’ equity | 8,911,144 | 8,253,718 | ||||
Total liabilities, noncontrolling interests and shareholders’ equity | 9,232,886 | 8,694,907 | ||||
Reportable Legal Entities | Arch-U.S. (Subsidiary Issuer) | ||||||
Assets | ||||||
Total investments | 69,671 | 41,672 | ||||
Cash | 88,818 | 71,955 | 19,392 | 17,023 | ||
Investments in subsidiaries | 4,028,493 | 3,716,681 | ||||
Due from subsidiaries and affiliates | 117 | 51,298 | ||||
Premiums receivable | 0 | 0 | ||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 0 | 0 | ||||
Contractholder receivables | 0 | 0 | ||||
Ceded unearned premiums | 0 | 0 | ||||
Deferred acquisition costs | 0 | 0 | ||||
Goodwill and intangible assets | 0 | 0 | ||||
Other assets | 59,734 | 49,244 | ||||
Total assets | 4,246,833 | 3,930,850 | ||||
Liabilities | ||||||
Reserve for losses and loss adjustment expenses | 0 | 0 | ||||
Unearned premiums | 0 | 0 | ||||
Reinsurance balances payable | 0 | 0 | ||||
Contractholder payables | 0 | 0 | ||||
Collateral held for insured obligations | 0 | 0 | ||||
Deposit accounting liabilities | 0 | |||||
Senior notes | 494,596 | 494,525 | ||||
Revolving credit agreement borrowings | 0 | 0 | ||||
Due to subsidiaries and affiliates | 542,103 | 535,584 | ||||
Other liabilities | 100,278 | 54,823 | ||||
Total liabilities | 1,136,977 | 1,084,932 | ||||
Redeemable noncontrolling interests | 0 | 0 | ||||
Shareholders' Equity | ||||||
Total shareholders’ equity available to Arch | 3,109,856 | 2,845,918 | ||||
Non-redeemable noncontrolling interests | 0 | 0 | ||||
Total shareholders’ equity | 3,109,856 | 2,845,918 | ||||
Total liabilities, noncontrolling interests and shareholders’ equity | $ 4,246,833 | 3,930,850 | ||||
Percentage Ownership of Subsidiary | 100.00% | |||||
Reportable Legal Entities | Other ACGL Subsidiaries | ||||||
Assets | ||||||
Total investments | $ 21,876,508 | 19,690,067 | ||||
Cash | 768,675 | 769,300 | 557,383 | 529,494 | ||
Investments in subsidiaries | 0 | 0 | ||||
Due from subsidiaries and affiliates | 1,923,941 | 1,866,681 | ||||
Premiums receivable | 1,863,203 | 1,579,865 | ||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 7,023,836 | 6,114,518 | ||||
Contractholder receivables | 1,864,348 | 1,717,436 | ||||
Ceded unearned premiums | 2,240,129 | 1,985,311 | ||||
Deferred acquisition costs | 677,567 | 577,461 | ||||
Goodwill and intangible assets | 684,405 | 781,553 | ||||
Other assets | 2,146,993 | 1,901,786 | ||||
Total assets | 41,069,605 | 36,983,978 | ||||
Liabilities | ||||||
Reserve for losses and loss adjustment expenses | 15,836,263 | 14,164,191 | ||||
Unearned premiums | 5,044,544 | 4,532,614 | ||||
Reinsurance balances payable | 945,530 | 807,837 | ||||
Contractholder payables | 1,864,348 | 1,717,436 | ||||
Collateral held for insured obligations | 345,726 | 301,406 | ||||
Deposit accounting liabilities | 22,150 | |||||
Senior notes | 941,100 | 940,776 | ||||
Revolving credit agreement borrowings | 826,242 | 656,650 | ||||
Due to subsidiaries and affiliates | 1,381,996 | 1,370,422 | ||||
Other liabilities | 2,669,614 | 1,867,040 | ||||
Total liabilities | 29,855,363 | 26,380,522 | ||||
Redeemable noncontrolling interests | 220,529 | 220,253 | ||||
Shareholders' Equity | ||||||
Total shareholders’ equity available to Arch | 10,132,815 | 9,531,349 | ||||
Non-redeemable noncontrolling interests | 860,898 | 851,854 | ||||
Total shareholders’ equity | 10,993,713 | 10,383,203 | ||||
Total liabilities, noncontrolling interests and shareholders’ equity | 41,069,605 | 36,983,978 | ||||
Consolidating Adjustments and Eliminations | ||||||
Assets | ||||||
Total investments | (14,700) | (14,700) | ||||
Cash | 0 | 0 | $ 0 | $ 0 | ||
Investments in subsidiaries | (13,242,671) | (12,377,267) | ||||
Due from subsidiaries and affiliates | (1,924,139) | (1,932,276) | ||||
Premiums receivable | (593,525) | (507,430) | ||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | (4,517,821) | (4,000,380) | ||||
Contractholder receivables | 0 | 0 | ||||
Ceded unearned premiums | (1,292,994) | (1,125,744) | ||||
Deferred acquisition costs | (146,371) | (129,901) | ||||
Goodwill and intangible assets | 0 | 0 | ||||
Other assets | (192,306) | (149,928) | ||||
Total assets | (21,924,527) | (20,237,626) | ||||
Liabilities | ||||||
Reserve for losses and loss adjustment expenses | (4,484,996) | (3,963,231) | ||||
Unearned premiums | (1,292,994) | (1,125,744) | ||||
Reinsurance balances payable | (593,524) | (507,430) | ||||
Contractholder payables | 0 | 0 | ||||
Collateral held for insured obligations | 0 | |||||
Deposit accounting liabilities | 0 | |||||
Senior notes | 0 | 0 | ||||
Revolving credit agreement borrowings | 0 | 0 | ||||
Due to subsidiaries and affiliates | (1,924,140) | (1,932,276) | ||||
Other liabilities | (371,502) | (316,978) | ||||
Total liabilities | (8,667,156) | (7,845,659) | ||||
Redeemable noncontrolling interests | (14,700) | (14,700) | ||||
Shareholders' Equity | ||||||
Total shareholders’ equity available to Arch | (13,242,671) | (12,377,267) | ||||
Non-redeemable noncontrolling interests | 0 | 0 | ||||
Total shareholders’ equity | (13,242,671) | (12,377,267) | ||||
Total liabilities, noncontrolling interests and shareholders’ equity | $ (21,924,527) | $ (20,237,626) |
Guarantor Financial Information - Condensed consolidating statement of income and comprehensive income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Revenues | ||||
Net premiums earned | $ 1,261,886 | $ 958,403 | $ 3,619,777 | $ 2,915,967 |
Net investment income | 116,459 | 93,618 | 345,457 | 275,691 |
Net realized gains (losses) | 66,275 | 125,105 | 122,163 | 230,647 |
Net impairment losses recognized in earnings | (1,878) | (3,867) | (5,415) | (16,849) |
Other underwriting income | 6,064 | 7,980 | 15,519 | 38,251 |
Equity in net income (loss) of investment funds accounted for using the equity method | 31,090 | 16,662 | 111,884 | 32,054 |
Other income (loss) | (342) | (400) | (3,118) | (432) |
Total revenues | 1,479,554 | 1,197,501 | 4,206,267 | 3,475,329 |
Expenses | ||||
Losses and loss adjustment expenses | 1,046,141 | 524,183 | 2,288,571 | 1,631,724 |
Acquisition expenses | 193,854 | 161,267 | 566,579 | 501,782 |
Other operating expenses | 170,127 | 153,286 | 514,827 | 460,748 |
Corporate expenses | 17,098 | 18,485 | 69,766 | 45,068 |
Amortization of intangible assets | 31,824 | 4,865 | 93,942 | 14,493 |
Interest expense | 29,510 | 15,943 | 86,935 | 47,713 |
Net foreign exchange (gains) losses | 28,028 | 2,621 | 86,975 | 1,525 |
Total expenses | 1,516,582 | 880,650 | 3,707,595 | 2,703,053 |
Income (loss) before income taxes | (37,028) | 316,851 | 498,672 | 772,276 |
Income tax (expense) benefit | (8,189) | (13,231) | (70,755) | (43,672) |
Income (loss) before equity in net income of subsidiaries | (45,217) | 303,620 | 427,917 | 728,604 |
Equity in net income of subsidiaries | 0 | 0 | 0 | 0 |
Net income (loss) | (45,217) | 303,620 | 427,917 | 728,604 |
Net (income) loss attributable to noncontrolling interests | 11,561 | (50,748) | (23,279) | (109,879) |
Net income available to Arch | (33,656) | 252,872 | 404,638 | 618,725 |
Preferred dividends | (12,369) | (5,484) | (34,936) | (16,453) |
Loss on redemption of preferred shares | (6,735) | 0 | (6,735) | 0 |
Net income (loss) available to Arch common shareholders | (52,760) | 247,388 | 362,967 | 602,272 |
Comprehensive income (loss) available to Arch | 17,585 | 208,790 | 648,861 | 754,979 |
Reportable Legal Entities | ACGL (Parent Guarantor) | ||||
Revenues | ||||
Net premiums earned | 0 | 0 | 0 | 0 |
Net investment income | 117 | 6 | 123 | 7 |
Net realized gains (losses) | 0 | 0 | 0 | 0 |
Net impairment losses recognized in earnings | 0 | 0 | 0 | 0 |
Other underwriting income | 0 | 0 | 0 | 0 |
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 | 0 | 0 |
Other income (loss) | (102) | 71 | (368) | 270 |
Total revenues | 15 | 77 | (245) | 277 |
Expenses | ||||
Losses and loss adjustment expenses | 0 | 0 | 0 | 0 |
Acquisition expenses | 0 | 0 | 0 | 0 |
Other operating expenses | 0 | 0 | 0 | 0 |
Corporate expenses | 14,576 | 18,488 | 53,639 | 45,284 |
Amortization of intangible assets | 0 | 0 | 0 | 0 |
Interest expense | 5,934 | 5,948 | 18,024 | 17,811 |
Net foreign exchange (gains) losses | 0 | 0 | 0 | 0 |
Total expenses | 20,510 | 24,436 | 71,663 | 63,095 |
Income (loss) before income taxes | (20,495) | (24,359) | (71,908) | (62,818) |
Income tax (expense) benefit | 0 | 0 | 0 | 0 |
Income (loss) before equity in net income of subsidiaries | (20,495) | (24,359) | (71,908) | (62,818) |
Equity in net income of subsidiaries | (13,161) | 277,231 | 476,546 | 681,543 |
Net income (loss) | (33,656) | 252,872 | 404,638 | 618,725 |
Net (income) loss attributable to noncontrolling interests | 0 | 0 | 0 | 0 |
Net income available to Arch | (33,656) | 252,872 | 404,638 | 618,725 |
Preferred dividends | (12,369) | (5,484) | (34,936) | (16,453) |
Loss on redemption of preferred shares | (6,735) | (6,735) | ||
Net income (loss) available to Arch common shareholders | (52,760) | 247,388 | 362,967 | 602,272 |
Comprehensive income (loss) available to Arch | 17,585 | 208,790 | 648,861 | 754,979 |
Reportable Legal Entities | Arch-U.S. (Subsidiary Issuer) | ||||
Revenues | ||||
Net premiums earned | 0 | 0 | 0 | 0 |
Net investment income | 151 | 803 | 1,151 | 2,351 |
Net realized gains (losses) | 0 | 0 | 0 | 0 |
Net impairment losses recognized in earnings | 0 | 0 | 0 | 0 |
Other underwriting income | 0 | 0 | 0 | 0 |
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 | 0 | 0 |
Other income (loss) | 0 | 0 | 0 | 0 |
Total revenues | 151 | 803 | 1,151 | 2,351 |
Expenses | ||||
Losses and loss adjustment expenses | 0 | 0 | 0 | 0 |
Acquisition expenses | 0 | 0 | 0 | 0 |
Other operating expenses | 0 | 0 | 0 | 0 |
Corporate expenses | 410 | 608 | 3,727 | 1,549 |
Amortization of intangible assets | 0 | 0 | 0 | 0 |
Interest expense | 12,037 | 6,627 | 35,956 | 19,946 |
Net foreign exchange (gains) losses | 0 | 0 | 0 | 0 |
Total expenses | 12,447 | 7,235 | 39,683 | 21,495 |
Income (loss) before income taxes | (12,296) | (6,432) | (38,532) | (19,144) |
Income tax (expense) benefit | 4,432 | 2,116 | 13,374 | 6,446 |
Income (loss) before equity in net income of subsidiaries | (7,864) | (4,316) | (25,158) | (12,698) |
Equity in net income of subsidiaries | 50,057 | 21,945 | 213,586 | 64,684 |
Net income (loss) | 42,193 | 17,629 | 188,428 | 51,986 |
Net (income) loss attributable to noncontrolling interests | 0 | 0 | 0 | 0 |
Net income available to Arch | 42,193 | 17,629 | 188,428 | 51,986 |
Preferred dividends | 0 | 0 | 0 | 0 |
Loss on redemption of preferred shares | 0 | 0 | ||
Net income (loss) available to Arch common shareholders | 42,193 | 17,629 | 188,428 | 51,986 |
Comprehensive income (loss) available to Arch | 47,676 | 2,019 | 240,759 | 89,204 |
Reportable Legal Entities | Other ACGL Subsidiaries | ||||
Revenues | ||||
Net premiums earned | 1,261,886 | 958,403 | 3,619,777 | 2,915,967 |
Net investment income | 138,784 | 99,654 | 410,392 | 294,012 |
Net realized gains (losses) | 66,275 | 125,105 | 122,163 | 230,647 |
Net impairment losses recognized in earnings | (1,878) | (3,867) | (5,415) | (16,849) |
Other underwriting income | 6,064 | 7,980 | 15,519 | 54,749 |
Equity in net income (loss) of investment funds accounted for using the equity method | 31,090 | 16,662 | 111,884 | 32,054 |
Other income (loss) | (240) | (471) | (2,750) | (702) |
Total revenues | 1,501,981 | 1,203,466 | 4,271,570 | 3,509,878 |
Expenses | ||||
Losses and loss adjustment expenses | 1,046,141 | 524,183 | 2,288,571 | 1,631,724 |
Acquisition expenses | 193,854 | 161,267 | 566,579 | 501,782 |
Other operating expenses | 170,127 | 153,286 | 514,827 | 460,748 |
Corporate expenses | 2,112 | (611) | 12,400 | (1,765) |
Amortization of intangible assets | 31,824 | 4,865 | 93,942 | 14,493 |
Interest expense | 33,811 | 9,890 | 98,197 | 46,169 |
Net foreign exchange (gains) losses | 20,510 | 2,723 | 65,701 | 5,093 |
Total expenses | 1,498,379 | 855,603 | 3,640,217 | 2,658,244 |
Income (loss) before income taxes | 3,602 | 347,863 | 631,353 | 851,634 |
Income tax (expense) benefit | (12,621) | (15,347) | (84,129) | (50,118) |
Income (loss) before equity in net income of subsidiaries | (9,019) | 332,516 | 547,224 | 801,516 |
Equity in net income of subsidiaries | 0 | 0 | 0 | 0 |
Net income (loss) | (9,019) | 332,516 | 547,224 | 801,516 |
Net (income) loss attributable to noncontrolling interests | 11,238 | (51,071) | (24,247) | (110,844) |
Net income available to Arch | 2,219 | 281,445 | 522,977 | 690,672 |
Preferred dividends | 0 | 0 | 0 | 0 |
Loss on redemption of preferred shares | 0 | 0 | ||
Net income (loss) available to Arch common shareholders | 2,219 | 281,445 | 522,977 | 690,672 |
Comprehensive income (loss) available to Arch | 45,936 | 237,555 | 745,856 | 830,348 |
Consolidating Adjustments and Eliminations | ||||
Revenues | ||||
Net premiums earned | 0 | 0 | 0 | 0 |
Net investment income | (22,593) | (6,845) | (66,209) | (20,679) |
Net realized gains (losses) | 0 | 0 | 0 | 0 |
Net impairment losses recognized in earnings | 0 | 0 | 0 | 0 |
Other underwriting income | 0 | 0 | 0 | (16,498) |
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 | 0 | 0 |
Other income (loss) | 0 | 0 | 0 | 0 |
Total revenues | (22,593) | (6,845) | (66,209) | (37,177) |
Expenses | ||||
Losses and loss adjustment expenses | 0 | 0 | 0 | 0 |
Acquisition expenses | 0 | 0 | 0 | 0 |
Other operating expenses | 0 | 0 | 0 | 0 |
Corporate expenses | 0 | 0 | 0 | 0 |
Amortization of intangible assets | 0 | 0 | 0 | 0 |
Interest expense | (22,272) | (6,522) | (65,242) | (36,213) |
Net foreign exchange (gains) losses | 7,518 | (102) | 21,274 | (3,568) |
Total expenses | (14,754) | (6,624) | (43,968) | (39,781) |
Income (loss) before income taxes | (7,839) | (221) | (22,241) | 2,604 |
Income tax (expense) benefit | 0 | 0 | 0 | 0 |
Income (loss) before equity in net income of subsidiaries | (7,839) | (221) | (22,241) | 2,604 |
Equity in net income of subsidiaries | (36,896) | (299,176) | (690,132) | (746,227) |
Net income (loss) | (44,735) | (299,397) | (712,373) | (743,623) |
Net (income) loss attributable to noncontrolling interests | 323 | 323 | 968 | 965 |
Net income available to Arch | (44,412) | (299,074) | (711,405) | (742,658) |
Preferred dividends | 0 | 0 | 0 | 0 |
Loss on redemption of preferred shares | 0 | 0 | ||
Net income (loss) available to Arch common shareholders | (44,412) | (299,074) | (711,405) | (742,658) |
Comprehensive income (loss) available to Arch | $ (93,612) | $ (239,574) | $ (986,615) | $ (919,552) |
Guarantor Financial Information - Condensed consolidating statement of cash flows (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2017 |
Sep. 30, 2016 |
||||
Operating Activities | ||||||
Net Cash Provided by (Used in) Operating Activities | $ 1,081,134 | $ 1,037,139 | ||||
Investing Activities | ||||||
Purchases of fixed maturity investments | (28,079,129) | (27,840,555) | ||||
Purchases of equity securities | (667,135) | (377,767) | ||||
Purchases of other investments | (1,406,528) | (1,008,774) | ||||
Proceeds from sales of fixed maturity investments | 27,629,474 | 26,731,924 | ||||
Proceeds from sales of equity securities | 751,873 | 464,904 | ||||
Proceeds from sales, redemptions and maturities of other investments | 938,581 | 879,330 | ||||
Proceeds from redemptions and maturities of fixed maturity investments | 747,621 | 540,823 | ||||
Net settlements of derivative instruments | (20,952) | 23,396 | ||||
Net (purchases) sales of short-term investments | (964,653) | (604,162) | ||||
Change in cash collateral related to securities lending | 148,692 | (27,935) | ||||
Contributions to subsidiaries | 0 | 0 | ||||
Issuance of intercompany loans | 0 | |||||
Repayment of intercompany loans | 0 | |||||
Acquisitions, net of cash | (27,709) | (20,911) | ||||
Purchases of fixed assets | (16,862) | (11,565) | ||||
Other | 86,145 | (3,816) | ||||
Net Cash Provided By (Used For) Investing Activities | (880,582) | (1,255,108) | ||||
Financing Activities | ||||||
Proceeds from issuance of preferred shares, net | 222,054 | 434,899 | ||||
Redemption of preferred shares | (230,000) | 0 | ||||
Purchases of common shares under share repurchase program | 0 | (75,256) | ||||
Proceeds from common shares issued, net | (7,484) | (3,785) | ||||
Proceeds from intercompany borrowings | 0 | |||||
Proceeds from borrowings | 238,915 | 46,000 | ||||
Repayments of Intercompany Debt Financing Activities | 0 | |||||
Repayments of borrowings | $ (100,000) | (172,000) | (179,171) | |||
Change in cash collateral related to securities lending | (148,692) | 27,935 | ||||
Dividends paid to redeemable noncontrolling interests | (13,491) | (13,491) | ||||
Dividends paid to parent | [1] | 0 | 0 | |||
Other | (49,280) | 33,113 | ||||
Preferred dividends paid | (34,936) | (16,453) | ||||
Net Cash Provided By (Used For) Financing Activities | (194,914) | 253,791 | ||||
Effects of exchange rate changes on foreign currency cash | 13,781 | (10,332) | ||||
Increase (decrease) in cash | 19,419 | 25,490 | ||||
Cash beginning of year | 842,942 | 553,326 | ||||
Cash end of period | 862,361 | 862,361 | 578,816 | |||
Reportable Legal Entities | ACGL (Parent Guarantor) | ||||||
Operating Activities | ||||||
Net Cash Provided by (Used in) Operating Activities | 130,715 | 94,250 | ||||
Investing Activities | ||||||
Purchases of fixed maturity investments | 0 | 0 | ||||
Purchases of equity securities | 0 | 0 | ||||
Purchases of other investments | 0 | 0 | ||||
Proceeds from sales of fixed maturity investments | 0 | 0 | ||||
Proceeds from sales of equity securities | 0 | 0 | ||||
Proceeds from sales, redemptions and maturities of other investments | 0 | 0 | ||||
Proceeds from redemptions and maturities of fixed maturity investments | 0 | 0 | ||||
Net settlements of derivative instruments | 0 | 0 | ||||
Net (purchases) sales of short-term investments | 2,209 | (436,830) | ||||
Change in cash collateral related to securities lending | 0 | 0 | ||||
Contributions to subsidiaries | 20,641 | (3,585) | ||||
Issuance of intercompany loans | 0 | |||||
Repayment of intercompany loans | 0 | |||||
Acquisitions, net of cash | 0 | 0 | ||||
Purchases of fixed assets | (18) | (8) | ||||
Other | 0 | 2,000 | ||||
Net Cash Provided By (Used For) Investing Activities | 22,832 | (438,423) | ||||
Financing Activities | ||||||
Proceeds from issuance of preferred shares, net | 222,054 | 434,899 | ||||
Redemption of preferred shares | (230,000) | |||||
Purchases of common shares under share repurchase program | (75,256) | |||||
Proceeds from common shares issued, net | (7,484) | (3,785) | ||||
Proceeds from intercompany borrowings | 0 | |||||
Proceeds from borrowings | 0 | 0 | ||||
Repayments of Intercompany Debt Financing Activities | 0 | |||||
Repayments of borrowings | (100,000) | 0 | ||||
Change in cash collateral related to securities lending | 0 | 0 | ||||
Dividends paid to redeemable noncontrolling interests | 0 | 0 | ||||
Dividends paid to parent | [1] | 0 | 0 | |||
Other | 0 | 0 | ||||
Preferred dividends paid | (34,936) | (16,453) | ||||
Net Cash Provided By (Used For) Financing Activities | (150,366) | 339,405 | ||||
Effects of exchange rate changes on foreign currency cash | 0 | 0 | ||||
Increase (decrease) in cash | 3,181 | (4,768) | ||||
Cash beginning of year | 1,687 | 6,809 | ||||
Cash end of period | 4,868 | 4,868 | 2,041 | |||
Reportable Legal Entities | Arch-U.S. (Subsidiary Issuer) | ||||||
Operating Activities | ||||||
Net Cash Provided by (Used in) Operating Activities | 70,761 | 14,448 | ||||
Investing Activities | ||||||
Purchases of fixed maturity investments | 0 | 0 | ||||
Purchases of equity securities | 0 | 0 | ||||
Purchases of other investments | 0 | 0 | ||||
Proceeds from sales of fixed maturity investments | 0 | 0 | ||||
Proceeds from sales of equity securities | 0 | 0 | ||||
Proceeds from sales, redemptions and maturities of other investments | 0 | 0 | ||||
Proceeds from redemptions and maturities of fixed maturity investments | 0 | 41,500 | ||||
Net settlements of derivative instruments | 0 | 0 | ||||
Net (purchases) sales of short-term investments | (27,998) | (53,779) | ||||
Change in cash collateral related to securities lending | 0 | 0 | ||||
Contributions to subsidiaries | (72,900) | 0 | ||||
Issuance of intercompany loans | 0 | |||||
Repayment of intercompany loans | 47,000 | |||||
Acquisitions, net of cash | 0 | 0 | ||||
Purchases of fixed assets | 0 | 0 | ||||
Other | 0 | 0 | ||||
Net Cash Provided By (Used For) Investing Activities | (53,898) | (12,279) | ||||
Financing Activities | ||||||
Proceeds from issuance of preferred shares, net | 0 | 0 | ||||
Redemption of preferred shares | 0 | |||||
Purchases of common shares under share repurchase program | 0 | |||||
Proceeds from common shares issued, net | 0 | 0 | ||||
Proceeds from intercompany borrowings | 0 | |||||
Proceeds from borrowings | 0 | 0 | ||||
Repayments of Intercompany Debt Financing Activities | 0 | |||||
Repayments of borrowings | 0 | 0 | ||||
Change in cash collateral related to securities lending | 0 | 0 | ||||
Dividends paid to redeemable noncontrolling interests | 0 | 0 | ||||
Dividends paid to parent | [1] | 0 | 0 | |||
Other | 0 | 200 | ||||
Preferred dividends paid | 0 | 0 | ||||
Net Cash Provided By (Used For) Financing Activities | 0 | 200 | ||||
Effects of exchange rate changes on foreign currency cash | 0 | 0 | ||||
Increase (decrease) in cash | 16,863 | 2,369 | ||||
Cash beginning of year | 71,955 | 17,023 | ||||
Cash end of period | 88,818 | 88,818 | 19,392 | |||
Reportable Legal Entities | Other ACGL Subsidiaries | ||||||
Operating Activities | ||||||
Net Cash Provided by (Used in) Operating Activities | 1,464,701 | 1,096,443 | ||||
Investing Activities | ||||||
Purchases of fixed maturity investments | (28,079,129) | (27,840,555) | ||||
Purchases of equity securities | (667,135) | (377,767) | ||||
Purchases of other investments | (1,406,528) | (1,008,774) | ||||
Proceeds from sales of fixed maturity investments | 27,629,474 | 26,731,924 | ||||
Proceeds from sales of equity securities | 751,873 | 464,904 | ||||
Proceeds from sales, redemptions and maturities of other investments | 938,581 | 879,330 | ||||
Proceeds from redemptions and maturities of fixed maturity investments | 747,621 | 499,323 | ||||
Net settlements of derivative instruments | (20,952) | 23,396 | ||||
Net (purchases) sales of short-term investments | (938,864) | (113,553) | ||||
Change in cash collateral related to securities lending | 148,692 | (27,935) | ||||
Contributions to subsidiaries | (353,588) | (9,247) | ||||
Issuance of intercompany loans | (47,000) | |||||
Repayment of intercompany loans | 0 | |||||
Acquisitions, net of cash | (27,709) | (20,911) | ||||
Purchases of fixed assets | (16,844) | (11,557) | ||||
Other | 106,786 | (5,816) | ||||
Net Cash Provided By (Used For) Investing Activities | (1,234,722) | (817,238) | ||||
Financing Activities | ||||||
Proceeds from issuance of preferred shares, net | 0 | 0 | ||||
Redemption of preferred shares | 0 | |||||
Purchases of common shares under share repurchase program | 0 | |||||
Proceeds from common shares issued, net | 405,847 | 12,832 | ||||
Proceeds from intercompany borrowings | 47,000 | |||||
Proceeds from borrowings | 238,915 | 46,000 | ||||
Repayments of Intercompany Debt Financing Activities | (47,000) | |||||
Repayments of borrowings | (72,000) | (179,171) | ||||
Change in cash collateral related to securities lending | (148,692) | 27,935 | ||||
Dividends paid to redeemable noncontrolling interests | (14,447) | (14,448) | ||||
Dividends paid to parent | [1] | (584,087) | (167,045) | |||
Other | (69,921) | 32,913 | ||||
Preferred dividends paid | 0 | 0 | ||||
Net Cash Provided By (Used For) Financing Activities | (244,385) | (240,984) | ||||
Effects of exchange rate changes on foreign currency cash | 13,781 | (10,332) | ||||
Increase (decrease) in cash | (625) | 27,889 | ||||
Cash beginning of year | 769,300 | 529,494 | ||||
Cash end of period | 768,675 | 768,675 | 557,383 | |||
Consolidating Adjustments and Eliminations | ||||||
Operating Activities | ||||||
Net Cash Provided by (Used in) Operating Activities | (585,043) | (168,002) | ||||
Investing Activities | ||||||
Purchases of fixed maturity investments | 0 | 0 | ||||
Purchases of equity securities | 0 | 0 | ||||
Purchases of other investments | 0 | 0 | ||||
Proceeds from sales of fixed maturity investments | 0 | 0 | ||||
Proceeds from sales of equity securities | 0 | 0 | ||||
Proceeds from sales, redemptions and maturities of other investments | 0 | 0 | ||||
Proceeds from redemptions and maturities of fixed maturity investments | 0 | 0 | ||||
Net settlements of derivative instruments | 0 | 0 | ||||
Net (purchases) sales of short-term investments | 0 | 0 | ||||
Change in cash collateral related to securities lending | 0 | 0 | ||||
Contributions to subsidiaries | 405,847 | 12,832 | ||||
Issuance of intercompany loans | 47,000 | |||||
Repayment of intercompany loans | (47,000) | |||||
Acquisitions, net of cash | 0 | 0 | ||||
Purchases of fixed assets | 0 | 0 | ||||
Other | (20,641) | 0 | ||||
Net Cash Provided By (Used For) Investing Activities | 385,206 | 12,832 | ||||
Financing Activities | ||||||
Proceeds from issuance of preferred shares, net | 0 | 0 | ||||
Redemption of preferred shares | 0 | |||||
Purchases of common shares under share repurchase program | 0 | |||||
Proceeds from common shares issued, net | (405,847) | (12,832) | ||||
Proceeds from intercompany borrowings | (47,000) | |||||
Proceeds from borrowings | 0 | 0 | ||||
Repayments of Intercompany Debt Financing Activities | 47,000 | |||||
Repayments of borrowings | 0 | 0 | ||||
Change in cash collateral related to securities lending | 0 | 0 | ||||
Dividends paid to redeemable noncontrolling interests | 956 | 957 | ||||
Dividends paid to parent | [1] | 584,087 | 167,045 | |||
Other | 20,641 | 0 | ||||
Preferred dividends paid | 0 | 0 | ||||
Net Cash Provided By (Used For) Financing Activities | 199,837 | 155,170 | ||||
Effects of exchange rate changes on foreign currency cash | 0 | 0 | ||||
Increase (decrease) in cash | 0 | 0 | ||||
Cash beginning of year | 0 | 0 | ||||
Cash end of period | $ 0 | $ 0 | $ 0 | |||
|
Income Taxes (Details) - USD ($) $ in Millions |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Effective tax rate on income before income taxes (percentage) | 14.20% | 5.70% | |
Statutory federal tax rate | 35.00% | ||
Tax benefit on share-based compensation | 1.50% | ||
Net deferred tax assets | $ 248.3 | $ 221.2 | |
Income taxes paid | $ 47.9 | $ 40.7 |
Transactions with Related Parties (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Related Party Transaction [Line Items] | |||
Investment commitments | $ 1,580,000 | $ 1,290,000 | |
Purchases of other investments | 1,406,528 | $ 1,008,774 | |
Common director | The Carlyle Group | |||
Related Party Transaction [Line Items] | |||
Investments, value | 248,500 | ||
Unfunded commitments | 471,600 | ||
Purchases of other investments | 86,000 | 50,100 | |
Aggregate cash distributions received | $ 48,700 | $ 17,900 |
Acquisition (Details) - AIG United Guaranty Insurance (Asia) Limited $ in Millions |
Jul. 01, 2017
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Payment to acquire businesses | $ 40.0 |
Intangible assets acquired | 2.3 |
Goodwill | $ 0.8 |
Subsequent Event (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|---|
Oct. 31, 2017 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Oct. 25, 2017 |
|
Subsequent Event [Line Items] | ||||||
Incurred claims | $ 1,092,175 | $ 598,940 | $ 2,487,212 | $ 1,848,299 | ||
Subsequent event | Variable Interest Entity, Not Primary Beneficiary | Bellemeade Re 2017-1 Ltd | ||||||
Subsequent Event [Line Items] | ||||||
Aggregate excess of loss reinsurance agreement | $ 368,100 | |||||
Aggregate losses | 165,700 | |||||
Mortgage insurance-linked notes issued | $ 368,100 | |||||
Subsequent event | California Wildfires [Member] | Minimum | ||||||
Subsequent Event [Line Items] | ||||||
Incurred claims | $ 30,000 | |||||
Subsequent event | California Wildfires [Member] | Maximum | ||||||
Subsequent Event [Line Items] | ||||||
Incurred claims | $ 55,000 |
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