XML 27 R12.htm IDEA: XBRL DOCUMENT v3.22.4
Segment Information
 12 Months Ended
Dec. 31, 2022
Segment Reporting [Abstract]  
Segment Information
The Company classifies its businesses into three underwriting segments – insurance, reinsurance and mortgage – and two 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, 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: primary and excess casualty coverages for middle market and large construction accounts, a comprehensive range of products for middle market accounts in specialty industries and casualty solutions for large national accounts, including loss sensitive primary insurance programs (large deductible, self-insured retention and retrospectively rated programs).
•    Excess and surplus casualty: primary and excess casualty insurance coverages written on a non-admitted basis.
•    Professional lines: directors’ and officers’ liability, errors and omissions liability, employment practices liability, fiduciary liability, crime, professional indemnity and other financial related coverages for corporate, private equity, venture capital, real estate investment trust, limited partnership, financial institution and not-for-profit clients of all sizes, cyber insurance, and medical professional and general liability
insurance coverages for the healthcare industry. The business is predominately written on a claims-made basis.
•    Programs: primarily targeting program managers with unique expertise and niche products offering some combination of general liability, commercial automobile, property, inland marine, umbrella and workers’ compensation.
•    Property, energy, marine and aviation: primary and excess general property insurance coverages, including catastrophe-exposed property coverage, for commercial clients. Coverages for marine include hull, cargo, war, specie and liability. Aviation, stand-alone terrorism and political risks are also offered. Coverage may be provided for operational and construction risk.
•    Travel, accident and health: specialty travel and accident and related insurance products for individual, group travelers, travel agents and suppliers, as well as accident and health, which provides accident, disability and medical plan insurance coverages for employer groups, medical plan members, students and other participant groups.
•    Warranty and lenders solutions: collateral protection, debt cancellation and service contract reimbursement products to banks, credit unions, automotive dealerships and original equipment manufacturers and other specialty programs that pertain to automotive lending and leasing.
•    Other: includes alternative market risks (including captive insurance programs), excess workers’ compensation and employer’s liability insurance coverages for qualified self-insured groups, associations and trusts, and contract, commercial and transactional surety coverages.
The reinsurance segment consists of the Company’s reinsurance underwriting units which offer specialty product lines on a worldwide basis. Reinsurance agreements are typically offered on a proportional and/or excess of loss basis and provide coverage to ceding company clients for specific underlying written policies. Product lines include:
•Casualty: provides coverage on third party liability exposures including, among others, executive assurance, professional liability, excess and umbrella liability, excess motor and healthcare business, and workers’ compensation. Business is assumed primarily on a treaty basis, with some facultative coverages also offered.
•Marine and aviation: provides coverage for energy, hull, cargo, specie, liability and transit, and aviation business, including airline and general aviation risks. Business written may also include space business, which
includes coverages for satellite assembly, launch and operation for commercial space programs.
•Other specialty: provides coverage for proportional motor reinsurance, whole account multi-line treaties, cyber, trade credit and surety, accident and health, workers’ compensation catastrophe, agriculture and political risk, among others.
•Property catastrophe: provides protection for most types of catastrophic losses, including hurricane, earthquake, flood, tornado, hail and fire, and for other perils on a case-by-case basis. Excess of loss coverages are triggered when aggregate losses and loss adjustment expense from a single occurrence of a covered peril exceed the retention specified in the contract.
•Property excluding property catastrophe: provides coverage for personal lines and/or commercial property exposures and principally covers buildings, structures, equipment and contents. The primary perils in this business include fire, explosion, collapse, riot, vandalism, wind, tornado, flood and earthquake. Business is assumed on either a treaty or facultative basis.
•Other: includes life reinsurance business, casualty clash business and, in limited instances, non-traditional business which is intended to provide insurers with risk management solutions that complement traditional reinsurance.

The mortgage segment includes the Company’s underwriting units which offer mortgage insurance and reinsurance products on a worldwide basis. Underwriting units include:
•U.S. primary mortgage insurance: offers private mortgage insurance through Arch Mortgage Insurance Company and United Guaranty Residential Insurance Company (combined “Arch MI U.S.”), both approved eligible mortgage insurers by Fannie Mae and Freddie Mac. Arch MI U.S. also includes AMG, which is not a government sponsored enterprise (“GSE”) approved entity.
•U.S. credit risk transfer (“CRT”) and other: underwrites CRT transactions, which are predominantly with GSEs, and other U.S. reinsurance transactions.
•International mortgage insurance/reinsurance: underwrites mortgage insurance and reinsurance outside of the U.S.
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 12, “Variable Interest Entity and Noncontrolling Interests.”
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, summary information regarding net premiums written and earned by major line of business and net premiums written by location:
Year Ended December 31, 2022
InsuranceReinsuranceMortgageSub-TotalOtherTotal
Gross premiums written (1)$6,930,864 $6,948,438 $1,454,971 $15,326,447 $— $15,326,447 
Premiums ceded(1,910,222)(2,024,462)(322,400)(4,249,258)— (4,249,258)
Net premiums written5,020,642 4,923,976 1,132,571 11,077,189 — 11,077,189 
Change in unearned premiums(461,307)(964,595)26,790 (1,399,112)— (1,399,112)
Net premiums earned4,559,335 3,959,381 1,159,361 9,678,077 — 9,678,077 
Other underwriting income— 4,871 8,356 13,227 — 13,227 
Losses and loss adjustment expenses(2,782,945)(2,568,843)324,271 (5,027,517)— (5,027,517)
Acquisition expenses(885,866)(813,555)(40,159)(1,739,580)— (1,739,580)
Other operating expenses(665,472)(267,531)(195,172)(1,128,175)— (1,128,175)
Underwriting income$225,052 $314,323 $1,256,657 1,796,032 — 1,796,032 
Net investment income496,547 — 496,547 
Net realized gains (losses)(662,734)— (662,734)
Equity in net income (loss) of investments accounted for using the equity method115,856 — 115,856 
Other income (loss)(26,165)— (26,165)
Corporate expenses (94,390)— (94,390)
Transaction costs and other(1,092)— (1,092)
Amortization of intangible assets(106,200)— (106,200)
Interest expense(130,266)— (130,266)
Net foreign exchange gains (losses)100,905 — 100,905 
Income (loss) before income taxes and income (loss) from operating affiliates1,488,493 — 1,488,493 
Income tax expense(79,961)— (79,961)
Income (loss) from operating affiliates73,891 — 73,891 
Net income (loss)1,482,423 — 1,482,423 
Amounts attributable to redeemable noncontrolling interests(5,490)— (5,490)
Net income (loss) available to Arch1,476,933 — 1,476,933 
Preferred dividends(40,736)— (40,736)
Net income (loss) available to Arch common shareholders$1,436,197 $— $1,436,197 
Underwriting Ratios
Loss ratio61.0 %64.9 %-28.0 %51.9 %— %51.9 %
Acquisition expense ratio19.4 %20.5 %3.5 %18.0 %— %18.0 %
Other operating expense ratio14.6 %6.8 %16.8 %11.7 %— %11.7 %
Combined ratio95.0 %92.2 %-7.7 %81.6 %— %81.6 %
Goodwill and intangible assets$228,532 $144,846 $430,911 $804,289 $— $804,289 
Total investable assets$28,065,497 $— $28,065,497 
Total assets47,990,507 — 47,990,507 
Total liabilities35,069,605 — 35,069,605 
(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.
Year Ended December 31, 2021
InsuranceReinsuranceMortgageSub-TotalOtherTotal
Gross premiums written (1)$5,867,734 $5,093,930 $1,507,825 $12,463,788 $457,465 $12,752,487 
Premiums ceded(1,719,541)(1,839,556)(246,757)(3,800,153)(102,763)(3,734,150)
Net premiums written4,148,193 3,254,374 1,261,068 8,663,635 354,702 9,018,337 
Change in unearned premiums(521,725)(413,931)22,351 (913,305)(22,734)(936,039)
Net premiums earned3,626,468 2,840,443 1,283,419 7,750,330 331,968 8,082,298 
Other underwriting income— 3,669 17,665 21,334 739 22,073 
Losses and loss adjustment expenses(2,344,365)(1,924,719)(56,677)(4,325,761)(259,042)(4,584,803)
Acquisition expenses, net(606,265)(536,754)(97,418)(1,240,437)(62,741)(1,303,178)
Other operating expenses(558,906)(212,810)(194,010)(965,726)(32,869)(998,595)
Underwriting income (loss)$116,932 $169,829 $952,979 1,239,740 (21,945)1,217,795 
Net investment income346,808 42,310 389,118 
Net realized gains (losses)299,207 80,638 379,845 
Equity in net income (loss) of investments accounted for using the equity method366,402 — 366,402 
Other income (loss)10,244 — 10,244 
Corporate expenses(77,119)— (77,119)
Transaction costs and other(1,103)(935)(2,038)
Amortization of intangible assets(82,057)(898)(82,955)
Interest expense(131,060)(8,410)(139,470)
Net foreign exchange gains (losses)42,854 (1,325)41,529 
Income (loss) before income taxes and income (loss) from operating affiliates2,013,916 89,435 2,103,351 
Income tax expense(128,348)(234)(128,582)
Income (loss) from operating affiliates264,693 — 264,693 
Net income (loss)2,150,261 89,201 2,239,462 
Amounts attributable to redeemable noncontrolling interests(2,346)(1,953)(4,299)
Amounts attributable to nonredeemable noncontrolling interests— (78,314)(78,314)
Net income (loss) available to Arch2,147,915 8,934 2,156,849 
Preferred dividends(48,343)— (48,343)
Loss on redemption of preferred shares(15,101)— (15,101)
Net income (loss) available to Arch common shareholders$2,084,471 $8,934 $2,093,405 
Underwriting Ratios
Loss ratio64.6 %67.8 %4.4 %55.8 %78.0 %56.7 %
Acquisition expense ratio16.7 %18.9 %7.6 %16.0 %18.9 %16.1 %
Other operating expense ratio15.4 %7.5 %15.1 %12.5 %9.9 %12.4 %
Combined ratio96.7 %94.2 %27.1 %84.3 %106.8 %85.2 %
Goodwill and intangible assets$256,434 $183,523 $505,026 $944,983 $— $944,983 
Total investable assets$27,442,153 $— $27,442,153 
Total assets45,100,945 — 45,100,945 
Total liabilities31,545,816 — 31,545,816 
(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.
Year Ended December 31, 2020
InsuranceReinsuranceMortgageSub-TotalOtherTotal
Gross premiums written (1)$4,688,562 $3,472,086 $1,473,999 $9,632,691 $728,546 $10,088,068 
Premiums ceded(1,525,655)(1,014,716)(194,149)(2,732,564)(190,957)(2,650,352)
Net premiums written3,162,907 2,457,370 1,279,850 6,900,127 537,589 7,437,716 
Change in unearned premiums(291,487)(295,141)118,085 (468,543)22,762 (445,781)
Net premiums earned2,871,420 2,162,229 1,397,935 6,431,584 560,351 6,991,935 
Other underwriting income(31)4,454 20,316 24,739 2,045 26,784 
Losses and loss adjustment expenses(2,092,453)(1,628,320)(528,344)(4,249,117)(440,482)(4,689,599)
Acquisition expenses, net(418,483)(354,048)(134,240)(906,771)(98,071)(1,004,842)
Other operating expenses(489,153)(168,011)(162,202)(819,366)(55,810)(875,176)
Underwriting income (loss)$(128,700)$16,304 $593,465 481,069 (31,967)449,102 
Net investment income401,908 117,700 519,608 
Net realized gains (losses)813,781 9,679 823,460 
Equity in net income (loss) of investments accounted for using the equity method146,693 — 146,693 
Other income (loss)29 — 29 
Corporate expenses(68,492)— (68,492)
Transaction costs and other(9,456)(4,040)(13,496)
Amortization of intangible assets(69,031)— (69,031)
Interest expense(120,214)(23,242)(143,456)
Net foreign exchange gains (losses)(80,161)(3,473)(83,634)
Income (loss) before income taxes and income (loss) from operating affiliates1,496,126 64,657 1,560,783 
Income tax expense(111,812)(26)(111,838)
Income (loss) from operating affiliates16,766 — 16,766 
Net income1,401,080 64,631 1,465,711 
Amounts attributable to redeemable noncontrolling interests(2,997)(4,117)(7,114)
Amounts attributable to nonredeemable noncontrolling interests— (53,076)(53,076)
Net income (loss) available to Arch1,398,083 7,438 1,405,521 
Preferred dividends(41,612)— (41,612)
Net income (loss) available to Arch common shareholders$1,356,471 $7,438 $1,363,909 
Underwriting Ratios
Loss ratio72.9 %75.3 %37.8 %66.1 %78.6 %67.1 %
Acquisition expense ratio14.6 %16.4 %9.6 %14.1 %17.5 %14.4 %
Other operating expense ratio17.0 %7.8 %11.6 %12.7 %10.0 %12.5 %
Combined ratio104.5 %99.5 %59.0 %92.9 %106.1 %94.0 %
Goodwill and intangible assets$280,978 $18,963 $385,272 $685,213 $7,650 $692,863 
Total investable assets$26,856,295 $2,657,612 $29,513,907 
Total assets39,791,983 3,490,314 43,282,297 
Total liabilities26,789,149 2,505,707 29,294,856 
(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.
The following tables provide summary information regarding net premiums earned by major line of business and net premiums written by underwriting location:
INSURANCE SEGMENTYear Ended December 31,
202220212020
Net premiums earned (1)
Professional lines$1,314,236 $942,817 $655,872 
Property, energy, marine and aviation772,388667,892506,182
Programs589,860506,867432,854
Travel, accident and health491,847255,590190,944
Construction and national accounts432,020416,107398,999
Excess and surplus casualty393,353318,027270,620
Warranty and lenders solutions127,222153,958114,687
Other 438,409365,210301,262
Total$4,559,335 $3,626,468 $2,871,420 
Net premiums written by underwriting location (1)
United States$3,340,038 $2,813,039 $2,158,415 
Europe1,405,7191,125,192856,572
Other274,885 209,962 147,920 
Total$5,020,642 $4,148,193 $3,162,907 
REINSURANCE SEGMENTYear Ended December 31,
202220212020
Net premiums earned (1)
Other specialty$1,377,880 $818,801 $626,409 
Property excluding property catastrophe1,091,440836,573562,208
Casualty854,543666,754549,056
Property catastrophe366,991280,738237,736
Marine and aviation159,401152,955109,624
Other109,12684,62277,196
Total$3,959,381 $2,840,443 $2,162,229 
Net premiums written by underwriting location (1)
United States$1,246,507 $828,504 $687,622 
Bermuda2,561,7711,557,2941,001,990 
Europe and other1,115,698868,576767,758 
Total$4,923,976 $3,254,374 $2,457,370 
MORTGAGE SEGMENTYear Ended December 31,
202220212020
Net premiums earned by underwriting location
United States$815,519 $970,507 $1,158,563 
Other343,842 312,912 239,372 
Total$1,159,361 $1,283,419 $1,397,935 
Net premiums written by underwriting location
United States$780,256 $914,477 $1,021,950 
Other352,315 346,591 257,900 
Total$1,132,571 $1,261,068 $1,279,850 

(1)    Segment results include premiums assumed through intersegment transactions and exclude premiums ceded through intersegment transactions.
OTHER SEGMENTYear Ended December 31,
202220212020
Net premiums earned (1)
Casualty $— $138,551 $245,272 
Other specialty— 118,356 186,717 
Property catastrophe— 15,235 23,037 
Property excluding property catastrophe— 6,578 1,130 
Marine and aviation— 190 429 
Other — 53,058 103,766 
Total$— $331,968 $560,351 
Net premiums written by underwriting location (1)
United States$— $63,403 $115,471 
Europe— 91,499 97,753 
Bermuda— 199,800 324,365 
Total$— $354,702 $537,589