Guarantor Financial Information

9 Months Ended

Sep. 30, 2019

Condensed Financial Information Disclosure [Abstract]

Guarantor Financial Information

Guarantor Financial Information

The following tables present condensed financial information for Arch Capital, Arch Capital Group (U.S.) Inc. (“Arch-U.S.”), a 100% owned subsidiary of Arch Capital, and Arch Capital’s other subsidiaries. The senior notes of Arch-U.S. due November 1, 2043 are fully and unconditionally guaranteed by Arch Capital.

		September 30, 2019
Condensed Consolidating Balance Sheet		Arch Capital (Parent Guarantor)		Arch-U.S. (Subsidiary Issuer)		Other Arch Capital Subsidiaries		Consolidating Adjustments and Eliminations			Arch Capital Consolidated
Assets
Total investments		$	41	$	918,720	$	22,737,556	$	(38,982	)	$	23,617,335
Cash		12,696		72,727		794,676		—			880,099
Investments in subsidiaries		11,454,186		4,189,656		—		(15,643,842		)	—
Due from subsidiaries and affiliates		106		2		1,899,559		(1,899,667		)	—
Premiums receivable		—		—		2,446,539		(828,353		)	1,618,186
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses		—		—		8,490,131		(5,321,936		)	3,168,195
Contractholder receivables		—		—		2,094,683		—			2,094,683
Ceded unearned premiums		—		—		2,149,492		(981,234		)	1,168,258
Deferred acquisition costs		—		—		674,559		(52,531		)	622,028
Goodwill and intangible assets		—		—		624,500		—			624,500
Other assets		21,336		25,586		1,875,817		(143,420		)	1,779,319
	Total assets	$	11,488,365	$	5,206,691	$	43,787,512	$	(24,909,965	)	$	35,572,603
Liabilities
Reserve for losses and loss adjustment expenses		$	—	$	—	$	17,486,844	$	(5,097,460	)	$	12,389,384
Unearned premiums		—		—		5,224,606		(981,234		)	4,243,372
Reinsurance balances payable		—		—		1,430,244		(828,353		)	601,891
Contractholder payables		—		—		2,094,683		—			2,094,683
Collateral held for insured obligations		—		—		205,449					205,449
Senior notes		297,228		494,803		1,114,355		(35,000		)	1,871,386
Revolving credit agreement borrowings		—		—		490,720		—			490,720
Due to subsidiaries and affiliates		8		542,103		1,357,556		(1,899,667		)	—
Other liabilities		33,033		55,585		1,946,208		(420,917		)	1,613,909
	Total liabilities	330,269		1,092,491		31,350,665		(9,262,631		)	23,510,794
Redeemable noncontrolling interests		—		—		52,281		(3,492		)	48,789
Shareholders’ Equity
Total shareholders’ equity available to Arch		11,158,096		4,114,200		11,529,642		(15,643,842		)	11,158,096
Non-redeemable noncontrolling interests		—		—		854,924		—			854,924
	Total shareholders’ equity	11,158,096		4,114,200		12,384,566		(15,643,842		)	12,013,020
	Total liabilities, noncontrolling interests and shareholders’ equity	$	11,488,365	$	5,206,691	$	43,787,512	$	(24,909,965	)	$	35,572,603

		December 31, 2018
Condensed Consolidating Balance Sheet		Arch Capital (Parent Guarantor)		Arch-U.S. (Subsidiary Issuer)		Other Arch Capital Subsidiaries		Consolidating Adjustments and Eliminations			Arch Capital Consolidated
Assets
Total investments		$	104	$	452,674	$	21,307,206	$	(14,700	)	$	21,745,284
Cash		6,125		5,940		634,491		—			646,556
Investments in subsidiaries		9,735,256		3,999,243		—		(13,734,499		)	—
Due from subsidiaries and affiliates		9		2		1,802,686		(1,802,697		)	—
Premiums receivable		—		—		1,834,389		(535,239		)	1,299,150
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses		—		—		8,618,660		(5,699,288		)	2,919,372
Contractholder receivables		—		—		2,079,111		—			2,079,111
Ceded unearned premiums		—		—		1,730,262		(754,793		)	975,469
Deferred acquisition costs		—		—		618,535		(48,961		)	569,574
Goodwill and intangible assets		—		—		634,920		—			634,920
Other assets		12,588		80,949		1,466,438		(211,082		)	1,348,893
	Total assets	$	9,754,082	$	4,538,808	$	40,726,698	$	(22,801,259	)	$	32,218,329
Liabilities
Reserve for losses and loss adjustment expenses		$	—	$	—	$	17,345,142	$	(5,491,845	)	$	11,853,297
Unearned premiums		—		—		4,508,429		(754,793		)	3,753,636
Reinsurance balances payable		—		—		928,346		(535,239		)	393,107
Contractholder payables		—		—		2,079,111		—			2,079,111
Collateral held for insured obligations		—		—		236,630		—			236,630
Senior notes		297,150		494,723		941,655		—			1,733,528
Revolving credit agreement borrowings		—		—		455,682		—			455,682
Due to subsidiaries and affiliates		—		536,805		1,265,892		(1,802,697		)	—
Other liabilities		17,105		26,270		1,699,768		(467,484		)	1,275,659
	Total liabilities	314,255		1,057,798		29,460,655		(9,052,058		)	21,780,650
Redeemable noncontrolling interests		—		—		220,992		(14,700		)	206,292
Shareholders’ Equity
Total shareholders’ equity available to Arch		9,439,827		3,481,010		10,253,491		(13,734,501		)	9,439,827
Non-redeemable noncontrolling interests		—		—		791,560		—			791,560
	Total shareholders’ equity	9,439,827		3,481,010		11,045,051		(13,734,501		)	10,231,387
	Total liabilities, noncontrolling interests and shareholders’ equity	$	9,754,082	$	4,538,808	$	40,726,698	$	(22,801,259	)	$	32,218,329

		Three Months Ended September 30, 2019
Condensed Consolidating Statement of Income and Comprehensive Income		Arch Capital (Parent Guarantor)			Arch-U.S. (Subsidiary Issuer)			Other Arch Capital Subsidiaries			Consolidating Adjustments and Eliminations			Arch Capital Consolidated
Revenues
Net premiums earned		$	—		$	—		$	1,438,023		$	—		$	1,438,023
Net investment income		81			2,899			181,621			(23,113		)	161,488
Net realized gains (losses)		—			1,880			66,683			(6,045		)	62,518
Net impairment losses recognized in earnings		—			—			(1,163		)	—			(1,163		)
Other underwriting income		—			—			3,326			—			3,326
Equity in net income (loss) of investment funds accounted for using the equity method		—			600			16,530			—			17,130
Other income (loss)		(153		)	—			1,491			—			1,338
	Total revenues	(72		)	5,379			1,706,511			(29,158		)	1,682,660
Expenses
Losses and loss adjustment expenses		—			—			802,455			—			802,455
Acquisition expenses		—			—			211,120			—			211,120
Other operating expenses		—			—			196,512			—			196,512
Corporate expenses		15,066			1,631			364			—			17,061
Amortization of intangible assets		—			—			20,003			—			20,003
Interest expense		5,539			12,019			36,712			(22,942		)	31,328
Net foreign exchange (gains) losses		1			—			(25,405		)	(7,720		)	(33,124		)
	Total expenses	20,606			13,650			1,241,761			(30,662		)	1,245,355
Income (loss) before income taxes		(20,678		)	(8,271		)	464,750			1,504			437,305
Income tax (expense) benefit		—			1,647			(39,763		)	—			(38,116		)
Income (loss) before equity in net income of subsidiaries		(20,678		)	(6,624		)	424,987			1,504			399,189
Equity in net income of subsidiaries		413,131			124,814			—			(537,945		)	—
Net income		392,453			118,190			424,987			(536,441		)	399,189
Net (income) loss attributable to noncontrolling interests		—			—			(6,906		)	170			(6,736		)
Net income available to Arch		392,453			118,190			418,081			(536,271		)	392,453
Preferred dividends		(10,403		)	—			—			—			(10,403		)
Net income available to Arch common shareholders		$	382,050		$	118,190		$	418,081		$	(536,271	)	$	382,050
Comprehensive income available to Arch		$	397,340		$	138,832		$	427,238		$	(566,070	)	$	397,340

		Three Months Ended September 30, 2018
Condensed Consolidating Statement of Income and Comprehensive Income		Arch Capital (Parent Guarantor)			Arch-U.S. (Subsidiary Issuer)			Other Arch Capital Subsidiaries			Consolidating Adjustments and Eliminations			Arch Capital Consolidated
Revenues
Net premiums earned		$	—		$	—		$	1,290,878		$	—		$	1,290,878
Net investment income		2			1,202			165,289			(22,469		)	144,024
Net realized gains (losses)		—			(64		)	(51,641		)	—			(51,705		)
Net impairment losses recognized in earnings		—			—			(492		)	—			(492		)
Other underwriting income		—			—			5,823			—			5,823
Equity in net income (loss) of investment funds accounted for using the equity method		—			—			15,982			—			15,982
Other income (loss)		(195		)	—			(531		)	—			(726		)
	Total revenues	(193		)	1,138			1,425,308			(22,469		)	1,403,784
Expenses
Losses and loss adjustment expenses		—			—			699,420			—			699,420
Acquisition expenses		—			—			201,602			—			201,602
Other operating expenses		—			—			161,098			—			161,098
Corporate expenses		15,170			446			(1,281		)	—			14,335
Amortization of intangible assets		—			—			26,315			—			26,315
Interest expense		5,536			12,075			34,276			(22,157		)	29,730
Net foreign exchange (gains) losses		—			—			(10,426		)	(412		)	(10,838		)
	Total expenses	20,706			12,521			1,111,004			(22,569		)	1,121,662
Income (loss) before income taxes		(20,899		)	(11,383		)	314,304			100			282,122
Income tax (expense) benefit		—			2,276			(35,632		)	—			(33,356		)
Income (loss) before equity in net income of subsidiaries		(20,899		)	(9,107		)	278,672			100			248,766
Equity in net income of subsidiaries		248,307			92,906			—			(341,213		)	—
Net income (loss)		227,408			83,799			278,672			(341,113		)	248,766
Net (income) loss attributable to noncontrolling interests		—			—			(21,669		)	311			(21,358		)
Net income (loss) available to Arch		227,408			83,799			257,003			(340,802		)	227,408
Preferred dividends		(10,402		)	—			—			—			(10,402		)
Net income (loss) available to Arch common shareholders		$	217,006		$	83,799		$	257,003		$	(340,802	)	$	217,006
Comprehensive income available to Arch		$	200,524		$	77,389		$	230,565		$	(307,954	)	$	200,524

		Nine Months Ended September 30, 2019
Condensed Consolidating Statement of Income and Comprehensive Income		Arch Capital (Parent Guarantor)			Arch-U.S. (Subsidiary Issuer)			Other Arch Capital Subsidiaries			Consolidating Adjustments and Eliminations			Arch Capital Consolidated
Revenues
Net premiums earned		$	—		$	—		$	4,270,616		$	—		$	4,270,616
Net investment income		165			9,425			532,031			(68,146		)	473,475
Net realized gains (losses)		—			16,223			320,356			(11,690		)	324,889
Net impairment losses recognized in earnings		—			—			(2,521		)	—			(2,521		)
Other underwriting income		—			—			18,104			—			18,104
Equity in net income (loss) of investment funds accounted for using the equity method		—			536			95,997			—			96,533
Other income (loss)		(634		)	—			4,184			—			3,550
	Total revenues	(469		)	26,184			5,238,767			(79,836		)	5,184,646
Expenses
Losses and loss adjustment expenses		—			—			2,288,530			—			2,288,530
Acquisition expenses		—			—			619,057			—			619,057
Other operating expenses		—			—			596,589			—			596,589
Corporate expenses		46,666			5,912			696			—			53,274
Amortization of intangible assets		—			—			60,214			—			60,214
Interest expense		16,615			35,966			104,430			(67,338		)	89,673
Net foreign exchange (gains) losses		3			—			(26,715		)	(4,985		)	(31,697		)
	Total expenses	63,284			41,878			3,642,801			(72,323		)	3,675,640
Income (loss) before income taxes		(63,753		)	(15,694		)	1,595,966			(7,513		)	1,509,006
Income tax (expense) benefit		—			3,491			(131,965		)	—			(128,474		)
Income (loss) before equity in net income of subsidiaries		(63,753		)	(12,203		)	1,464,001			(7,513		)	1,380,532
Equity in net income of subsidiaries		1,373,688			410,115			—			(1,783,803		)	—
Net income		1,309,935			397,912			1,464,001			(1,791,316		)	1,380,532
Net (income) loss attributable to noncontrolling interests		—			—			(71,405		)	808			(70,597		)
Net income available to Arch		1,309,935			397,912			1,392,596			(1,790,508		)	1,309,935
Preferred dividends		(31,209		)	—			—			—			(31,209		)
Net income available to Arch common shareholders		$	1,278,726		$	397,912		$	1,392,596		$	(1,790,508	)	$	1,278,726
Comprehensive income available to Arch		$	1,700,369		$	608,108		$	1,779,463		$	(2,387,571	)	$	1,700,369

		Nine Months Ended September 30, 2018
Condensed Consolidating Statement of Income and Comprehensive Income		Arch Capital (Parent Guarantor)			Arch-U.S. (Subsidiary Issuer)			Other Arch Capital Subsidiaries			Consolidating Adjustments and Eliminations			Arch Capital Consolidated
Revenues
Net premiums earned		$	—		$	—		$	3,862,540		$	—		$	3,862,540
Net investment income		37			2,020			471,588			(67,229		)	406,416
Net realized gains (losses)		29			(71		)	(239,272		)	—			(239,314		)
Net impairment losses recognized in earnings		—			—			(1,124		)	—			(1,124		)
Other underwriting income		—			—			15,046			—			15,046
Equity in net income (loss) of investment funds accounted for using the equity method		—			—			52,523			—			52,523
Other income (loss)		2,066			—			395			—			2,461
	Total revenues	2,132			1,949			4,161,696			(67,229		)	4,098,548
Expenses
Losses and loss adjustment expenses		—			—			2,062,433			—			2,062,433
Acquisition expenses		—			—			595,816			—			595,816
Other operating expenses		—			—			512,294			—			512,294
Corporate expenses		47,981			1,205			2,973			—			52,159
Amortization of intangible assets		—			—			79,523			—			79,523
Interest expense		16,609			36,014			104,359			(66,272		)	90,710
Net foreign exchange (gains) losses		29			—			(37,347		)	(7,505		)	(44,823		)
	Total expenses	64,619			37,219			3,320,051			(73,777		)	3,348,112
Income (loss) before income taxes		(62,487		)	(35,270		)	841,645			6,548			750,436
Income tax (expense) benefit		—			7,704			(86,643		)	—			(78,939		)
Income (loss) before equity in net income of subsidiaries		(62,487		)	(27,566		)	755,002			6,548			671,497
Equity in net income of subsidiaries		683,964			266,053			—			(950,017		)	—
Net income		621,477			238,487			755,002			(943,469		)	671,497
Net (income) loss attributable to noncontrolling interests		—			—			(50,976		)	956			(50,020		)
Net income available to Arch		621,477			238,487			704,026			(942,513		)	621,477
Preferred dividends		(31,242		)	—			—			—			(31,242		)
Loss on redemption of preferred shares		(2,710		)	—			—			—			(2,710		)
Net income available to Arch common shareholders		$	587,525		$	238,487		$	704,026		$	(942,513	)	$	587,525
Comprehensive income available to Arch		$	432,186		$	153,992		$	522,448		$	(676,440	)	$	432,186

		Nine Months Ended September 30, 2019
Condensed Consolidating Statement of Cash Flows		Arch Capital (Parent Guarantor)			Arch-U.S. (Subsidiary Issuer)			Other Arch Capital Subsidiaries			Consolidating Adjustments and Eliminations			Arch Capital Consolidated
Operating Activities
	Net Cash Provided By (Used For) Operating Activities	$	42,221		$	525,712		$	1,554,406		$	(579,200	)	$	1,543,139
Investing Activities
Purchases of fixed maturity investments		—			(868,773		)	(23,313,996		)	172,146			(24,010,623		)
Purchases of equity securities		—			(74,502		)	(520,292		)	70,743			(524,051		)
Purchases of other investments		—			(28,557		)	(986,368		)	—			(1,014,925		)
Proceeds from the sales of fixed maturity investments		—			482,804			22,373,404			(148,354		)	22,707,854
Proceeds from the sales of equity securities		—			7,441			434,432			(70,743		)	371,130
Proceeds from the sales, redemptions and maturities of other investments		—			1,057			826,460			—			827,517
Proceeds from redemptions and maturities of fixed maturity investments		—			—			394,719			—			394,719
Net settlements of derivative instruments		—			—			92,423			—			92,423
Net (purchases) sales of short-term investments		63			31,605			97,410			—			129,078
Change in cash collateral related to securities lending		—			—			6,990			—			6,990
Contributions to subsidiaries		(2,121		)	—			(70,125		)	72,246			—
Issuance of intercompany loans		—			—			(53,828		)	53,828			—
Purchases of fixed assets		(32		)	—			(27,603		)	—			(27,635		)
Other		—			(10,000		)	(192,953		)	—			(202,953		)
	Net Cash Provided By (Used For) Investing Activities	(2,090		)	(458,925		)	(939,327		)	149,866			(1,250,476		)
Financing Activities
Purchases of common shares under share repurchase program		(2,871		)	—			—			—			(2,871		)
Proceeds from common shares issued, net		518			—			72,246			(72,246		)	518
Proceeds from intercompany borrowings		—			—			53,828			(53,828		)	—
Proceeds from borrowings		—			—			235,083			(35,000		)	200,083
Repayments of intercompany borrowings		—			—			—			—			—
Repayments of borrowings		—			—			(27,538		)	—			(27,538		)
Change in cash collateral related to securities lending		—			—			(6,990		)	—			(6,990		)
Change in third party investment in redeemable noncontrolling interests		—			—			(173,082		)	11,208			(161,874		)
Dividends paid to redeemable noncontrolling interests		—			—			(12,217		)	809			(11,408		)
Dividends paid to parent (1)		—			—			(578,391		)	578,391			—
Other		—			—			(5,207		)	—			(5,207		)
Preferred dividends paid		(31,209		)	—			—			—			(31,209		)
	Net Cash Provided By (Used For) Financing Activities	(33,562		)	—			(442,268		)	429,334			(46,496		)
Effects of exchange rates changes on foreign currency cash and restricted cash		—			—			(8,335		)	—			(8,335		)
Increase (decrease) in cash and restricted cash		6,569			66,787			164,476			—			237,832
Cash and restricted cash, beginning of year		6,159			5,940			712,544			—			724,643
Cash and restricted cash, end of period		$	12,728		$	72,727		$	877,020		$	—		$	962,475

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

		Nine Months Ended September 30, 2018
Condensed Consolidating Statement of Cash Flows		Arch Capital (Parent Guarantor)			Arch-U.S. (Subsidiary Issuer)			Other Arch Capital Subsidiaries			Consolidating Adjustments and Eliminations			Arch Capital Consolidated
Operating Activities
	Net Cash Provided By (Used For) Operating Activities	$	222,097		$	176,851		$	1,622,248		$	(900,209	)	$	1,120,987
Investing Activities
Purchases of fixed maturity investments		—			(214,449		)	(25,229,184		)	605,716			(24,837,917		)
Purchases of equity securities		—			—			(819,342		)	—			(819,342		)
Purchases of other investments		—			—			(1,543,332		)	—			(1,543,332		)
Proceeds from the sales of fixed maturity investments		—			111,533			23,804,386			(605,716		)	23,310,203
Proceeds from the sales of equity securities		—			—			866,919			—			866,919
Proceeds from the sales, redemptions and maturities of other investments		—			—			1,178,035			—			1,178,035
Proceeds from redemptions and maturities of fixed maturity investments		—			—			724,021			—			724,021
Net settlements of derivative instruments		—			—			765			—			765
Net (purchases) sales of short-term investments		96,397			(49,031		)	506,949			—			554,315
Change in cash collateral related to securities lending		—			—			137,073			—			137,073
Contributions to subsidiaries		—			(2,500		)	(29,646		)	32,146			—
Purchases of fixed assets		(71		)	—			(18,979		)	—			(19,050		)
Other		(4		)	—			58,231			—			58,227
	Net Cash Provided By (Used For) Investing Activities	96,322			(154,447		)	(364,104		)	32,146			(390,083		)
Financing Activities
Redemption of preferred shares		(92,555		)	—			—			—			(92,555		)
Purchases of common shares under share repurchase program		(184,529		)	—			—			—			(184,529		)
Proceeds from common shares issued, net		(12,029		)	—			32,146			(32,146		)	(12,029		)
Proceeds from borrowings		—			—			167,259			—			167,259
Repayments of borrowings		—			—			(427,000		)	—			(427,000		)
Change in cash collateral related to securities lending		—			—			(137,073		)	—			(137,073		)
Dividends paid to redeemable noncontrolling interests		—			—			(14,447		)	956			(13,491		)
Dividends paid to parent (1)		—			—			(899,253		)	899,253			—
Other		—			—			(6,084		)	—			(6,084		)
Preferred dividends paid		(31,242		)	—			—			—			(31,242		)
	Net Cash Provided By (Used For) Financing Activities	(320,355		)	—			(1,284,452		)	868,063			(736,744		)
Effects of exchange rates changes on foreign currency cash and restricted cash		—			—			(11,625		)	—			(11,625		)
Increase (decrease) in cash and restricted cash		(1,936		)	22,404			(37,933		)	—			(17,465		)
Cash and restricted cash, beginning of year		10,048			30,380			686,856			—			727,284
Cash and restricted cash, end of period		$	8,112		$	52,784		$	648,923		$	—		$	709,819

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