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Segment Information
 6 Months Ended
Jun. 30, 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
June 30, 2022
 InsuranceReinsuranceMortgageSub-TotalOtherTotal
Gross premiums written (1)$1,705,167 $1,793,398 $371,896 $3,869,727 $— $3,869,727 
Premiums ceded(476,910)(630,764)(78,148)(1,185,088)— (1,185,088)
Net premiums written1,228,257 1,162,634 293,748 2,684,639 — 2,684,639 
Change in unearned premiums(126,113)(234,635)1,884 (358,864)— (358,864)
Net premiums earned1,102,144 927,999 295,632 2,325,775 — 2,325,775 
Other underwriting income (loss)— 4,526 (1,556)2,970 — 2,970 
Losses and loss adjustment expenses(629,759)(537,578)64,681 (1,102,656)— (1,102,656)
Acquisition expenses(213,688)(189,494)(10,137)(413,319)— (413,319)
Other operating expenses(161,088)(66,053)(50,251)(277,392)— (277,392)
Underwriting income (loss)$97,609 $139,400 $298,369 535,378 — 535,378 
Net investment income106,392 — 106,392 
Net realized gains (losses)(266,579)— (266,579)
Equity in net income (loss) of investment funds accounted for using the equity method58,061 — 58,061 
Other income (loss)(11,777)— (11,777)
Corporate expenses (2)(27,359)— (27,359)
Transaction costs and other (2)(261)— (261)
Amortization of intangible assets(27,207)— (27,207)
Interest expense(32,795)— (32,795)
Net foreign exchange gains (losses)87,775 — 87,775 
Income (loss) before income taxes and income (loss) from operating affiliates421,628 — 421,628 
Income tax (expense) benefit(22,323)— (22,323)
Income (loss) from operating affiliates4,640 — 4,640 
Net income (loss)403,945 — 403,945 
Amounts attributable to redeemable noncontrolling interests399 — 399 
Net income (loss) available to Arch404,344 — 404,344 
Preferred dividends(10,184)— (10,184)
Net income (loss) available to Arch common shareholders$394,160 $— $394,160 
Underwriting Ratios
Loss ratio57.1 %57.9 %(21.9)%47.4 %— %47.4 %
Acquisition expense ratio19.4 %20.4 %3.4 %17.8 %— %17.8 %
Other operating expense ratio14.6 %7.1 %17.0 %11.9 %— %11.9 %
Combined ratio91.1 %85.4 %(1.5)%77.1 %— %77.1 %
Goodwill and intangible assets$236,661 $166,437 $464,916 $868,014 $— $868,014 
(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
June 30, 2021
 InsuranceReinsuranceMortgageSub-TotalOtherTotal
Gross premiums written (1)$1,368,867 $1,358,020 $391,511 $3,117,505 $240,942 $3,286,291 
Premiums ceded(405,312)(433,288)(55,665)(893,372)(65,551)(886,767)
Net premiums written963,555 924,732 335,846 2,224,133 175,391 2,399,524 
Change in unearned premiums(98,128)(187,708)(1,625)(287,461)8,846 (278,615)
Net premiums earned865,427 737,024 334,221 1,936,672 184,237 2,120,909 
Other underwriting income (loss)— 1,053 4,148 5,201 328 5,529 
Losses and loss adjustment expenses(545,880)(463,823)(9,880)(1,019,583)(140,248)(1,159,831)
Acquisition expenses(136,852)(133,585)(30,117)(300,554)(34,589)(335,143)
Other operating expenses(133,342)(44,695)(48,312)(226,349)(18,594)(244,943)
Underwriting income (loss)$49,353 $95,974 $250,060 395,387 (8,866)386,521 
Net investment income89,430 22,183 111,613 
Net realized gains (losses)163,394 39,513 202,907 
Equity in net income (loss) of investment funds accounted for using the equity method122,186 — 122,186 
Other income (loss)6,852 — 6,852 
Corporate expenses (2)(17,175)— (17,175)
Transaction costs and other (2)1,444 (220)1,224 
Amortization of intangible assets(14,388)(898)(15,286)
Interest expense(31,439)(4,261)(35,700)
Net foreign exchange gains (losses)(17,892)117 (17,775)
Income (loss) before income taxes and income (loss) from operating affiliates697,799 47,568 745,367 
Income tax (expense) benefit(50,953)(226)(51,179)
Income (loss) from operating affiliates24,476 — 24,476 
Net income (loss)671,322 47,342 718,664 
Amounts attributable to redeemable noncontrolling interests(580)(981)(1,561)
Amounts attributable to nonredeemable noncontrolling interests— (41,617)(41,617)
Net income (loss) available to Arch670,742 4,744 675,486 
Preferred dividends(11,666)— (11,666)
Net income (loss) available to Arch common shareholders$659,076 $4,744 $663,820 
Underwriting Ratios     
Loss ratio63.1 %62.9 %3.0 %52.6 %76.1 %54.7 %
Acquisition expense ratio15.8 %18.1 %9.0 %15.5 %18.8 %15.8 %
Other operating expense ratio15.4 %6.1 %14.5 %11.7 %10.1 %11.5 %
Combined ratio94.3 %87.1 %26.5 %79.8 %105.0 %82.0 %
Goodwill and intangible assets$270,262 $16,168 $370,405 $656,835 $10,318 $667,153 

(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.’
Six Months Ended
June 30, 2022
 InsuranceReinsuranceMortgageSub-TotalOtherTotal
Gross premiums written (1)$3,424,772 $3,512,340 $736,735 $7,670,502 $— $7,670,502 
Premiums ceded(989,619)(1,210,582)(154,867)(2,351,723)— (2,351,723)
Net premiums written2,435,153 2,301,758 581,868 5,318,779 — 5,318,779 
Change in unearned premiums(306,313)(569,359)3,301 (872,371)— (872,371)
Net premiums earned2,128,840 1,732,399 585,169 4,446,408 — 4,446,408 
Other underwriting income (loss)— 5,362 3,505 8,867 — 8,867 
Losses and loss adjustment expenses(1,230,498)(992,278)119,285 (2,103,491)— (2,103,491)
Acquisition expenses(409,338)(361,490)(20,650)(791,478)— (791,478)
Other operating expenses(327,913)(135,829)(103,593)(567,335)— (567,335)
Underwriting income (loss)$161,091 $248,164 $583,716 $992,971 $— $992,971 
Net investment income186,828 — 186,828 
Net realized gains (losses)(558,993)— (558,993)
Equity in net income (loss) of investment funds accounted for using the equity method94,366 — 94,366 
Other income (loss)(20,802)— (20,802)
Corporate expenses (2)(59,294)— (59,294)
Transaction costs and other (2)(658)— (658)
Amortization of intangible assets(54,374)— (54,374)
Interest expense(65,503)— (65,503)
Net foreign exchange gains (losses)91,620 — 91,620 
Income (loss) before income taxes and income (loss) from operating affiliates606,161 — 606,161 
Income tax (expense) benefit(33,942)— (33,942)
Income (loss) from operating affiliates29,158 — 29,158 
Net income (loss)601,377 — 601,377 
Amounts attributable to redeemable noncontrolling interests(1,233)— (1,233)
Net income (loss) available to Arch600,144 — 600,144 
Preferred dividends(20,368)— (20,368)
Net income (loss) available to Arch common shareholders$579,776 $— $579,776 
Underwriting Ratios
Loss ratio57.8 %57.3 %(20.4)%47.3 %— %47.3 %
Acquisition expense ratio19.2 %20.9 %3.5 %17.8 %— %17.8 %
Other operating expense ratio15.4 %7.8 %17.7 %12.8 %— %12.8 %
Combined ratio92.4 %86.0 %0.8 %77.9 %— %77.9 %
(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.’
Six Months Ended
June 30, 2021
 InsuranceReinsuranceMortgageSub-TotalOtherTotal
Gross premiums written (1)$2,784,753 $2,829,080 $782,757 $6,394,798 $457,465 $6,683,497 
Premiums ceded(826,359)(905,236)(111,716)(1,841,519)(102,763)(1,775,516)
Net premiums written1,958,394 1,923,844 671,041 4,553,279 354,702 4,907,981 
Change in unearned premiums(273,493)(541,920)(503)(815,916)(22,734)(838,650)
Net premiums earned1,684,901 1,381,924 670,538 3,737,363 331,968 4,069,331 
Other underwriting income (loss)— (145)11,045 10,900 739 11,639 
Losses and loss adjustment expenses(1,081,627)(948,693)(73,569)(2,103,889)(259,042)(2,362,931)
Acquisition expenses(265,074)(251,610)(60,199)(576,883)(62,741)(639,624)
Other operating expenses(270,455)(105,209)(97,443)(473,107)(32,869)(505,976)
Underwriting income (loss)$67,745 $76,267 $450,372 $594,384 $(21,945)$572,439 
Net investment income168,159 42,310 210,469 
Net realized gains (losses)264,730 80,638 345,368 
Equity in net income (loss) of investment funds accounted for using the equity method193,872 — 193,872 
Other income (loss)5,111 — 5,111 
Corporate expenses (2)(40,643)— (40,643)
Transaction costs and other (2)243 (935)(692)
Amortization of intangible assets(28,790)(898)(29,688)
Interest expense(65,636)(8,410)(74,046)
Net foreign exchange gains (losses)3,613 (1,325)2,288 
Income (loss) before income taxes and income (loss) from operating affiliates1,095,043 89,435 1,184,478 
Income tax (expense) benefit(89,805)(234)(90,039)
Income (loss) from operating affiliates99,933 — 99,933 
Net income (loss)1,105,171 89,201 1,194,372 
Amounts attributable to redeemable noncontrolling interests(463)(1,953)(2,416)
Amounts attributable to nonredeemable noncontrolling interests— (78,314)(78,314)
Net income (loss) available to Arch1,104,708 8,934 1,113,642 
Preferred dividends(22,069)— (22,069)
Net income (loss) available to Arch common shareholders$1,082,639 $8,934 $1,091,573 
Underwriting Ratios
Loss ratio64.2 %68.7 %11.0 %56.3 %78.0 %58.1 %
Acquisition expense ratio15.7 %18.2 %9.0 %15.4 %18.9 %15.7 %
Other operating expense ratio16.1 %7.6 %14.5 %12.7 %9.9 %12.4 %
Combined ratio96.0 %94.5 %34.5 %84.4 %106.8 %86.2 %
(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.’