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Segment Information
 3 Months Ended
Mar. 31, 2022
Segment Reporting [Abstract]  
Segment Information
The Company classifies its businesses into three underwriting segments — insurance, reinsurance and mortgage — and two other operating segments — corporate and ‘other.’ 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 Chief Executive Officer of Arch Capital, the Chief Financial Officer and Treasurer of Arch Capital and the President and Chief Underwriting Officer of Arch Capital. 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. primary mortgage insurance business, investment and services related to U.S. credit-risk transfer (“CRT”) which are predominately with government sponsored enterprises (“GSE’s”) and international mortgage insurance and reinsurance operations. Arch Mortgage Insurance Company and United Guaranty Residential Insurance 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. Arch MI U.S. also includes Arch Mortgage Guaranty Company, which is not a GSE-approved entity.
The corporate segment results include net investment income, net realized gains or losses (which includes changes in the allowance for credit losses on financial assets and net impairment losses recognized in earnings), equity in net income or loss of investments accounted for using the equity method, other income (loss), corporate expenses, transaction costs and other, amortization of intangible assets, interest expense, net foreign exchange gains or losses, income taxes, income or loss from operating affiliates and items related to the Company’s non-cumulative preferred shares. Such amounts exclude the results of the ‘other’ segment.
Through June 30, 2021, the ‘other’ segment included the results of Somers. In July 2021, the Company announced the completion of the previously disclosed acquisition of Somers by Greysbridge. Based on the governing documents of Greysbridge, the Company has concluded that, while it retains significant influence over Somers, Somers no longer constitutes a variable interest entity. Accordingly, effective July 1, 2021, Arch no longer consolidates the results of Somers in its consolidated financial statements. See note 11.
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 Arch common shareholders:
Three Months Ended
March 31, 2022
 InsuranceReinsuranceMortgageSub-TotalOtherTotal
Gross premiums written (1)$1,719,605 $1,718,942 $364,839 $3,800,775 $— $3,800,775 
Premiums ceded(512,709)(579,818)(76,719)(1,166,635)— (1,166,635)
Net premiums written1,206,896 1,139,124 288,120 2,634,140 — 2,634,140 
Change in unearned premiums(180,200)(334,724)1,417 (513,507)— (513,507)
Net premiums earned1,026,696 804,400 289,537 2,120,633 — 2,120,633 
Other underwriting income (loss)— 836 5,061 5,897 — 5,897 
Losses and loss adjustment expenses(600,739)(454,700)54,604 (1,000,835)— (1,000,835)
Acquisition expenses(195,650)(171,996)(10,513)(378,159)— (378,159)
Other operating expenses(166,825)(69,776)(53,342)(289,943)— (289,943)
Underwriting income (loss)$63,482 $108,764 $285,347 457,593 — 457,593 
Net investment income80,436 — 80,436 
Net realized gains (losses)(292,414)— (292,414)
Equity in net income (loss) of investment funds accounted for using the equity method36,305 — 36,305 
Other income (loss)(9,025)— (9,025)
Corporate expenses (2)(31,935)— (31,935)
Transaction costs and other (2)(397)— (397)
Amortization of intangible assets(27,167)— (27,167)
Interest expense(32,708)— (32,708)
Net foreign exchange gains (losses)3,845 — 3,845 
Income (loss) before income taxes and income (loss) from operating affiliates184,533 — 184,533 
Income tax (expense) benefit(11,619)— (11,619)
Income (loss) from operating affiliates24,518 — 24,518 
Net income (loss)197,432 — 197,432 
Amounts attributable to redeemable noncontrolling interests(1,632)— (1,632)
Net income (loss) available to Arch195,800 — 195,800 
Preferred dividends(10,184)— (10,184)
Net income (loss) available to Arch common shareholders$185,616 $— $185,616 
Underwriting Ratios
Loss ratio58.5 %56.5 %(18.9)%47.2 %— %47.2 %
Acquisition expense ratio19.1 %21.4 %3.6 %17.8 %— %17.8 %
Other operating expense ratio16.2 %8.7 %18.4 %13.7 %— %13.7 %
Combined ratio93.8 %86.6 %3.1 %78.7 %— %78.7 %
Goodwill and intangible assets$249,423 $183,675 $493,329 $926,427 $— $926,427 
(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 ‘transaction costs and other.’
Three Months Ended
March 31, 2021
 InsuranceReinsuranceMortgageSub-TotalOtherTotal
Gross premiums written (1)$1,415,886 $1,471,060 $391,246 $3,277,293 $216,523 $3,397,206 
Premiums ceded(421,047)(471,948)(56,051)(948,147)(37,212)(888,749)
Net premiums written994,839 999,112 335,195 2,329,146 179,311 2,508,457 
Change in unearned premiums(175,365)(354,212)1,122 (528,455)(31,580)(560,035)
Net premiums earned819,474 644,900 336,317 1,800,691 147,731 1,948,422 
Other underwriting income (loss)— (1,198)6,897 5,699 411 6,110 
Losses and loss adjustment expenses(535,747)(484,870)(63,689)(1,084,306)(118,794)(1,203,100)
Acquisition expenses(128,222)(118,025)(30,082)(276,329)(28,152)(304,481)
Other operating expenses(137,113)(60,514)(49,131)(246,758)(14,275)(261,033)
Underwriting income (loss)$18,392 $(19,707)$200,312 198,997 (13,079)185,918 
Net investment income78,729 20,127 98,856 
Net realized gains (losses)101,336 41,125 142,461 
Equity in net income (loss) of investment funds accounted for using the equity method71,686 — 71,686 
Other income (loss)(1,741)— (1,741)
Corporate expenses (2)(23,468)— (23,468)
Transaction costs and other (2)(1,201)(715)(1,916)
Amortization of intangible assets(14,402)— (14,402)
Interest expense(34,197)(4,149)(38,346)
Net foreign exchange gains (losses)21,505 (1,442)20,063 
Income (loss) before income taxes and income (loss) from operating affiliates397,244 41,867 439,111 
Income tax (expense) benefit(38,852)(8)(38,860)
Income (loss) from operating affiliates75,457 — 75,457 
Net income (loss)433,849 41,859 475,708 
Amounts attributable to redeemable noncontrolling interests117 (972)(855)
Amounts attributable to nonredeemable noncontrolling interests— (36,697)(36,697)
Net income (loss) available to Arch433,966 4,190 438,156 
Preferred dividends(10,403)— (10,403)
Net income (loss) available to Arch common shareholders$423,563 $4,190 $427,753 
Underwriting Ratios     
Loss ratio65.4 %75.2 %18.9 %60.2 %80.4 %61.7 %
Acquisition expense ratio15.6 %18.3 %8.9 %15.3 %19.1 %15.6 %
Other operating expense ratio16.7 %9.4 %14.6 %13.7 %9.7 %13.4 %
Combined ratio97.7 %102.9 %42.4 %89.2 %109.2 %90.7 %
Goodwill and intangible assets$276,211 $17,807 $377,841 $671,859 $7,650 $679,509 

(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 ‘transaction costs and other.’