EX-99.2 3 ex-992supplement33124.htm EX-99.2 Document

EXHIBIT 99.2
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Arch Capital Group Ltd.
Waterloo House, Ground Floor
100 Pitts Bay Road
Pembroke HM 08 Bermuda


Financial Supplement
March 31, 2024
 
The following financial supplement is provided to assist in your understanding of Arch Capital Group Ltd. (“Arch”) and its subsidiaries (collectively, the “Company”).
 
This report is for informational purposes only. It should be read in conjunction with documents filed by Arch with the U.S. Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and the Quarterly Reports on Form 10-Q. Please refer to the Company’s website at www.archgroup.com for further information describing Arch.

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Arch Capital Group Ltd.Investor Relations
François Morin: (441) 278-9250Donald Watson: (914) 872-3616; dwatson@archgroup.com


Arch Capital Group Ltd. and Subsidiaries
Table of Contents

  Page
   
I.Financial Highlights
  
II.Consolidated Financial Statements
 a.Consolidated Statements of Income
 b.Consolidated Balance Sheets
 c.Consolidated Statements of Changes in Shareholders’ Equity
 d.Consolidated Statements of Cash Flows
  
III.Segment Information
 a.Overview
 b.Consolidated Results
 c.Insurance Segment Results
 d.Reinsurance Segment Results
e.Mortgage Segment Results
f.Segment Consolidated Results
g.Selected Information on Losses and Loss Adjustment Expenses
  
IV.Investment Information
 a.Investable Asset Summary and Investment Portfolio Metrics
b.Composition of Net Investment Income, Yield and Total Return
 c.Composition of Fixed Maturities
d.Credit Quality Distribution and Maturity Profile
e.Analysis of Corporate Exposures
 f.Structured Securities
  
V.Other
 a.Comments on Regulation G - Non GAAP Financial Measures
 b.Operating Income Reconciliation and Annualized Operating Return on Average Common Equity
c.Operating Income and Effective Tax Rate Calculations
 d.Capital Structure and Share Repurchase Activity

1
Arch Capital Group Ltd. and Subsidiaries
Basis of Presentation
Basis of Presentation
All financial information contained herein is unaudited, however, certain information relating to the consolidated balance sheet at December 31, 2023 is derived from or agrees to audited financial information. Unless otherwise noted, all amounts are in millions, except for per share amounts and ratio information. Amounts presented have been rounded for presentation purposes and may not reconcile due to rounding differences.
Cautionary Note Regarding Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This release or any other written or oral statements made by or on behalf of Arch and its subsidiaries may include forward-looking statements, which reflect the Company’s current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements.
Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or their negative or variations or similar terminology. Forward-looking statements involve the Company’s current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: adverse general economic and market conditions; increased competition; pricing and policy term trends; fluctuations in the actions of rating agencies and the Company’s ability to maintain and improve the Company’s ratings; investment performance; the loss and addition of key personnel; the adequacy of the Company’s loss reserves, severity and/or frequency of losses, greater than expected loss ratios and adverse development on claim and/or claim expense liabilities; greater frequency or severity of unpredictable natural and man-made catastrophic events, including pandemics such as COVID-19; the impact of acts of terrorism and acts of war; changes in regulations and/or tax laws in the United States or elsewhere; the Company’s ability to successfully integrate, establish and maintain operating procedures as well as integrate the businesses we have acquired or may acquire into the existing operations; changes in accounting principles or policies; material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements; availability and cost to the Company of reinsurance to manage gross and net exposures; the failure of others to meet their obligations to the Company; an incident, disruption in operations or other cyber event caused by cyber attacks, the use of artificial intelligence technologies or other technology on the Company’s systems or those of the Company’s business partners and service providers, which could negatively impact the Company’s business and/or expose the Company to litigation; and other factors identified in the Company’s filings with the U.S. Securities and Exchange Commission.
The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein or elsewhere. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on the Company’s behalf are expressly qualified in their entirety by these cautionary statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
2
Arch Capital Group Ltd. and Subsidiaries
Financial Highlights
The following table presents financial highlights:
(U.S. Dollars and shares in millions, except per share data)Three Months Ended
March 31,
20242023Change
Underwriting results:
Gross premiums written$5,933 $4,780 24.1 %
Net premiums written4,085 3,424 19.3 %
Net premiums earned3,422 2,883 18.7 %
Underwriting income (loss) (1)736 570 29.1 %
Loss ratio50.5 %51.0 %(0.5)
Acquisition expense ratio17.7 %18.5 %(0.8)
Other operating expense ratio10.6 %11.1 %(0.5)
Combined ratio78.8 %80.6 %(1.8)
Net investment income$327 $199 64.3 %
Per diluted share$0.86 $0.53 62.3 %
Net income available to Arch common shareholders$1,110 $705 57.4 %
Per diluted share$2.92 $1.87 56.1 %
After-tax operating income available to Arch common shareholders (1)$933 $654 42.7 %
Per diluted share$2.45 $1.73 41.6 %
Comprehensive income (loss) available to Arch$975 $1,064 (8.4)%
Net cash provided by operating activities$1,564 $963 62.4 %
Weighted average common shares and common share equivalents outstanding — diluted380.5 377.6 0.8 %
Financial measures:   
Change in book value per common share during period5.2 %8.4 %(3.2)
Annualized net income return on average common equity24.6 %22.3 %2.3 
Annualized operating return on average common equity (1)20.7 %20.7 %— 
Total return on investments (2)0.80 %2.54 %-174 bps
 

(1)See ‘Comments on Regulation G - Non-GAAP Financial Measures’ for a further discussion of consolidated underwriting income or loss, after-tax operating income or loss available to Arch common shareholders and annualized operating return on average common equity.
(2)Total return on investments includes investment income, equity in net income (loss) of investment funds accounted for using the equity method, net realized gains and losses and the change in unrealized gains and losses and is calculated on a pre-tax basis and before investment expenses. See ‘Comments on Regulation G - Non-GAAP Financial Measures’ for a further discussion of the presentation of total return on investments.
3
Arch Capital Group Ltd. and Subsidiaries
Consolidated Statements of Income
(U.S. Dollars and shares in millions, except per share data)Three Months Ended
 March 31,December 31,September 30,June 30,March 31,
 20242023202320232023
Revenues     
Net premiums earned$3,422 $3,344 $3,248 $2,965 $2,883 
Net investment income327 313 269 242 199 
Net realized gains (losses)67 189 (248)(123)17 
Other underwriting income12 10 5 6 10 
Equity in net income (loss) of investment funds accounted for using the equity method99 102 59 69 48 
Other income (loss)14 17 (4)3 11 
Total revenues3,941 3,975 3,329 3,162 3,168 
Expenses
Losses and loss adjustment expenses(1,728)(1,637)(1,647)(1,491)(1,471)
Acquisition expenses(607)(643)(575)(561)(533)
Other operating expenses(363)(359)(310)(313)(319)
Corporate expenses(53)(31)(20)(21)(30)
Amortization of intangible assets(21)(24)(24)(24)(23)
Interest expense(34)(34)(34)(33)(32)
Net foreign exchange gains (losses)31 (59)22 (5)(18)
Total expenses(2,775)(2,787)(2,588)(2,448)(2,426)
Income (loss) before income taxes and income (loss) from operating affiliates1,166 1,188 741 714 742 
Income tax (expense) benefit(101)1,076 (72)(67)(64)
Income (loss) from operating affiliates55 69 54 22 39 
Net income (loss)1,120 2,333 723 669 717 
Net (income) loss attributable to noncontrolling interests— 1 — 2 (2)
Net income (loss) attributable to Arch1,120 2,334 723 671 715 
Preferred dividends(10)(10)(10)(10)(10)
Net income (loss) available to Arch common shareholders$1,110 $2,324 $713 $661 $705 
Comprehensive income (loss) available to Arch$975 $3,111 $589 $649 $1,064 
Net income (loss) per common share and common share equivalent
Basic$2.99 $6.29 $1.93 $1.79 $1.92 
Diluted$2.92 $6.12 $1.88 $1.75 $1.87 
Weighted average common shares and common share equivalents outstanding
Basic370.9 369.6 369.2 368.7 367.3 
Diluted380.5 379.8 379.4 378.4 377.6 



4
Arch Capital Group Ltd. and Subsidiaries
Consolidated Balance Sheets

(U.S. Dollars and shares in millions, except per share data)March 31,December 31,September 30,June 30,March 31,
20242023202320232023
Assets     
Investments:     
Fixed maturities available for sale, at fair value$23,628 $23,553 $22,485 $21,434 $20,692 
Short-term investments available for sale, at fair value2,142 2,063 1,682 1,702 1,553 
Equity securities, at fair value1,720 1,186 894 911 859 
Other investments2,886 2,488 2,068 1,846 1,776 
Investments accounted for using the equity method4,842 4,566 4,251 4,073 3,896 
Total investments35,218 33,856 31,380 29,966 28,776 
Cash993 917 859 904 803 
Accrued investment income236 236 217 233 163 
Investment in operating affiliates1,174 1,119 1,000 973 1,015 
Premiums receivable5,765 4,644 4,937 5,296 4,513 
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses7,509 7,064 6,821 6,717 6,612 
Contractholder receivables1,907 1,814 1,805 1,761 1,750 
Ceded unearned premiums2,717 2,170 2,444 2,459 2,116 
Deferred acquisition costs1,625 1,531 1,483 1,452 1,355 
Receivable for securities sold166 63 59 97 84 
Goodwill and intangible assets778 731 739 775 785 
Other assets4,680 4,761 3,483 3,223 3,131 
Total assets$62,768 $58,906 $55,227 $53,856 $51,103 
Liabilities     
Reserve for losses and loss adjustment expenses$23,705 $22,752 $21,836 $21,268 $20,758 
Unearned premiums9,971 8,808 9,074 9,052 8,218 
Reinsurance balances payable2,497 2,000 2,215 2,191 1,819 
Contractholder payables1,910 1,817 1,807 1,764 1,752 
Collateral held for insured obligations263 259 274 275 252 
Senior notes2,727 2,726 2,726 2,726 2,726 
Payable for securities purchased433 247 417 526 262 
Other liabilities1,905 1,942 1,637 1,411 1,317 
Total liabilities43,411 40,551 39,986 39,213 37,104 
Redeemable noncontrolling interests2 2 2 2 11 
Shareholders’ equity     
Non-cumulative preferred shares830 830 830 830 830 
Common shares1 1 1 1 1 
Additional paid-in capital2,401 2,327 2,297 2,278 2,260 
Retained earnings21,405 20,295 17,971 17,258 16,597 
Accumulated other comprehensive income (loss), net of deferred income tax(821)(676)(1,453)(1,319)(1,297)
Common shares held in treasury, at cost(4,461)(4,424)(4,407)(4,407)(4,403)
Total shareholders’ equity19,355 18,353 15,239 14,641 13,988 
Total liabilities, noncontrolling interests and shareholders’ equity$62,768 $58,906 $55,227 $53,856 $51,103 
Common shares and common share equivalents outstanding, net of treasury shares375.3 373.3 373.1 372.9 372.2 
Book value per common share (1)$49.36 $46.94 $38.62 $37.04 $35.35 
(1) Excludes the effects of stock options and restricted stock units outstanding.
5
Arch Capital Group Ltd. and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity

(U.S. Dollars in millions)Three Months Ended
March 31,December 31,September 30,June 30,March 31,
20242023202320232023
Non-cumulative preferred shares     
Balance at beginning and end of period$830 $830 $830 $830 $830 
Common shares
Balance at beginning and end of period1 1 1 1 1 
Additional paid-in capital
Balance at beginning of period2,327 2,297 2,278 2,260 2,211 
Amortization of share-based compensation68 20 15 17 41 
All other6 10 4 1 8 
Balance at end of period2,401 2,327 2,297 2,278 2,260 
Retained earnings
Balance at beginning of period20,295 17,971 17,258 16,597 15,892 
Net income1,120 2,333 723 669 717 
Amounts attributable to noncontrolling interests— 1 — 2 (2)
Preferred share dividends(10)(10)(10)(10)(10)
Balance at end of period21,405 20,295 17,971 17,258 16,597 
Accumulated other comprehensive income (loss), net of deferred income tax
Balance at beginning of period(676)(1,453)(1,319)(1,297)(1,646)
Change in unrealized appreciation (decline) in value of available-for-sale investments(112)721 (94)(24)344 
Change in foreign currency translation adjustments(33)56 (40)2 5 
Balance at end of period(821)(676)(1,453)(1,319)(1,297)
Common shares held in treasury, at cost
Balance at beginning of period(4,424)(4,407)(4,407)(4,403)(4,378)
Shares repurchased for treasury(37)(17)— (4)(25)
Balance at end of period(4,461)(4,424)(4,407)(4,407)(4,403)
Total shareholders’ equity$19,355 $18,353 $15,239 $14,641 $13,988 

6
Arch Capital Group Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
(U.S. Dollars in millions)Three Months Ended
March 31,December 31,September 30,June 30,March 31,
20242023202320232023
Operating Activities     
Net income (loss)$1,120 $2,333 $723 $669 $717 
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized (gains) losses(52)(185)257 127 (17)
Equity in net (income) or loss of investment funds accounted for using the equity method and other income or loss(112)(111)(55)17 (66)
Amortization of intangible assets21 24 24 24 23 
Share-based compensation68 20 15 17 41 
Changes in:
Reserve for losses and loss adjustment expenses, net660 534 584 417 603 
Unearned premiums, net663 (83)107 463 541 
Premiums receivable(1,159)352 315 (777)(871)
Deferred acquisition costs(82)(45)(38)(77)(75)
Reinsurance balances payable521 (237)40 373 279 
Deferred income tax assets, net24 (1,201)(18)24 34 
Other items, net(108)264 16 (126)(246)
Net cash provided by operating activities1,564 1,665 1,970 1,151 963 
Investing Activities     
Purchases of fixed maturity investments(8,325)(5,038)(4,184)(4,939)(3,901)
Purchases of equity securities(509)(280)(72)(96)(8)
Purchases of other investments(494)(1,059)(555)(291)(266)
Proceeds from sales of fixed maturity investments7,529 4,450 2,576 4,045 3,034 
Proceeds from sales of equity securities65 72 55 86 75 
Proceeds from sales, redemptions and maturities of other investments116 423 144 105 96 
Proceeds from redemptions and maturities of fixed maturity investments363 192 221 188 180 
Net settlements of derivative instruments5 119 (115)32 14 
Net (purchases) sales of short-term investments(90)(373)10 (125)(208)
Purchases of fixed assets(15)(15)(11)(15)(11)
Other(54)(23)(4)5 (1)
Net cash provided by (used for) investing activities(1,409)(1,532)(1,935)(1,005)(996)
Financing Activities     
Purchases of common shares under share repurchase program— — — — — 
Proceeds from common shares issued, net(32)(7)5 18 (18)
Change in third party investment in redeemable noncontrolling interests — — — (22)— 
Other— — (2)(1)(2)
Preferred dividends paid(10)(10)(10)(10)(10)
Net cash provided by (used for) financing activities(42)(17)(7)(15)(30)
Effects of exchange rate changes on foreign currency cash and restricted cash(11)27 (26)7 5 
Increase (decrease) in cash and restricted cash102 143 2 138 (58)
Cash and restricted cash, beginning of period1,498 1,355 1,353 1,215 1,273 
Cash and restricted cash, end of period$1,600 $1,498 $1,355 $1,353 $1,215 
Income taxes paid (received)$(6)$140 $54 $69 $4 
Interest paid$— $64 $— $63 $— 
7
Arch Capital Group Ltd. and Subsidiaries
Segment Information — Overview

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, the Chief Financial Officer and Treasurer and the President and Chief Underwriting Officer. 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 and, accordingly, investment income is not allocated to each underwriting segment.
The Company determined its reportable operating 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.
Insurance 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, standalone 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.

Reinsurance Segment
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: primarily includes life reinsurance business.
Mortgage Segment
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 Arch Mortgage Guaranty Company, 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.
Corporate Segment
The corporate segment results include net investment income, net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains and losses on derivative instruments and changes in the allowance for credit losses on financial assets), equity in net income or loss of investment funds 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 items (which for the 2023 fourth quarter reflects the establishment of a net deferred tax asset related to the enactment of Bermuda’s new corporate income tax), income or loss from operating affiliates and items related to the Company’s non cumulative preferred shares.
8
Arch Capital Group Ltd. and Subsidiaries
Segment Information
(U.S. Dollars in millions)Three Months Ended
March 31, 2024
 InsuranceReinsuranceMortgageTotal
Gross premiums written (1)$2,126 $3,467 $341 $5,933 
Premiums ceded (1)(584)(1,201)(64)(1,848)
Net premiums written1,542 2,266 277 4,085 
Change in unearned premiums(91)(600)28 (663)
Net premiums earned1,451 1,666 305 3,422 
Other underwriting income (loss)— 2 10 12 
Losses and loss adjustment expenses(854)(883)9 (1,728)
Acquisition expenses(276)(331)— (607)
Other operating expenses(235)(75)(53)(363)
Underwriting income (loss)$86 $379 $271 736 
Net investment income327 
Net realized gains (losses)67 
Equity in net income (loss) of investment funds accounted for using the equity method99 
Other income (loss)14 
Corporate expenses (2)(46)
Transaction costs and other (2)(7)
Amortization of intangible assets(21)
Interest expense(34)
Net foreign exchange gains (losses)31 
Income (loss) before income taxes and income (loss) from operating affiliates1,166 
Income tax (expense) benefit(101)
Income (loss) from operating affiliates55 
Net income (loss) available to Arch1,120 
Preferred dividends(10)
Net income (loss) available to Arch common shareholders$1,110 
Underwriting Ratios
Loss ratio58.9 %53.0 %(3.0)%50.5 %
Acquisition expense ratio19.0 %19.9 %— %17.7 %
Other operating expense ratio16.2 %4.5 %17.5 %10.6 %
Combined ratio94.1 %77.4 %14.5 %78.8 %
Net premiums written to gross premiums written72.5 %65.4 %81.2 %68.9 %
Total investable assets$35,944 
Total assets62,768 
Total liabilities43,411 

(1)    Certain assumed and ceded amounts related to intersegment transactions are included in individual segment results. Accordingly, the sum of such transactions for each segment does not agree to the total due to eliminations.
(2)    Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘Transaction costs and other.’ See ‘Comments on Regulation G - Non-GAAP Financial Measures’ for a further discussion of such items.
9
Arch Capital Group Ltd. and Subsidiaries
Segment Information
(U.S. Dollars in millions)Three Months Ended
March 31, 2023
 InsuranceReinsuranceMortgageTotal
Gross premiums written (1)$1,979 $2,460 $343 $4,780 
Premiums ceded (1)(542)(734)(82)(1,356)
Net premiums written1,437 1,726 261 3,424 
Change in unearned premiums(180)(396)35 (541)
Net premiums earned1,257 1,330 296 2,883 
Other underwriting income (loss)— 4 6 10 
Losses and loss adjustment expenses(703)(766)(2)(1,471)
Acquisition expenses(245)(281)(7)(533)
Other operating expenses(195)(74)(50)(319)
Underwriting income (loss)$114 $213 $243 570 
Net investment income199 
Net realized gains (losses)17 
Equity in net income (loss) of investment funds accounted for using the equity method48 
Other income (loss)11 
Corporate expenses (2)(29)
Transaction costs and other (2)(1)
Amortization of intangible assets(23)
Interest expense(32)
Net foreign exchange gains (losses)(18)
Income (loss) before income taxes and income (loss) from operating affiliates742 
Income tax (expense) benefit(64)
Income (loss) from operating affiliates39 
Net income (loss)717 
Net (income) loss attributable to noncontrolling interests(2)
Net income (loss) available to Arch715 
Preferred dividends(10)
Net income (loss) available to Arch common shareholders$705 
Underwriting Ratios
Loss ratio55.9 %57.6 %0.6 %51.0 %
Acquisition expense ratio19.5 %21.1 %2.5 %18.5 %
Other operating expense ratio15.5 %5.6 %16.9 %11.1 %
Combined ratio90.9 %84.3 %20.0 %80.6 %
Net premiums written to gross premiums written72.6 %70.2 %76.1 %71.6 %
Total investable assets$29,401 
Total assets51,103 
Total liabilities37,104 
(1)    Certain assumed and ceded amounts related to intersegment transactions are included in individual segment results. Accordingly, the sum of such transactions for each segment does not agree to the total due to eliminations.
(2)    Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘Transaction costs and other.’ See ‘Comments on Regulation G - Non-GAAP Financial Measures’ for a further discussion of such items.
10
Arch Capital Group Ltd. and Subsidiaries
Segment Information — Insurance Segment
(U.S. Dollars in millions)Three Months Ended
 March 31,December 31,September 30,June 30,March 31,
 20242023202320232023
Gross premiums written$2,126 $1,934 $2,043 $1,955 $1,979 
Premiums ceded(584)(485)(521)(501)(542)
Net premiums written1,542 1,449 1,522 1,454 1,437 
Change in unearned premiums(91)— (110)(126)(180)
Net premiums earned1,451 1,449 1,412 1,328 1,257 
Losses and loss adjustment expenses(854)(846)(812)(761)(703)
Acquisition expenses(276)(277)(269)(264)(245)
Other operating expenses(235)(227)(202)(195)(195)
Underwriting income (loss)$86 $99 $129 $108 $114 
Underwriting Ratios
Loss ratio58.9 %58.4 %57.5 %57.3 %55.9 %
Acquisition expense ratio19.0 %19.1 %19.1 %19.9 %19.5 %
Other operating expense ratio16.2 %15.6 %14.3 %14.7 %15.5 %
Combined ratio94.1 %93.1 %90.9 %91.9 %90.9 %
Catastrophic activity and prior year development:
Current accident year catastrophic events, net of reinsurance and reinstatement premiums1.9 %3.8 %2.6 %2.6 %1.6 %
Net (favorable) adverse development in prior year loss reserves, net of related adjustments(0.5)%(0.5)%(0.8)%(0.5)%(0.5)%
Combined ratio excluding catastrophic activity and prior year development (1)92.7 %89.8 %89.1 %89.8 %89.8 %
Net premiums written to gross premiums written72.5 %74.9 %74.5 %74.4 %72.6 %
 
(1)See ‘Comments on Regulation G - Non-GAAP Financial Measures’ for further discussion.

11
Arch Capital Group Ltd. and Subsidiaries
Segment Information — Insurance Segment
(U.S. Dollars in millions)Three Months Ended
 March 31,December 31,September 30,June 30,March 31,
 20242023202320232023
Net Premiums Written by Underwriting Unit
Professional lines$369 23.9 %$356 24.6 %$375 24.6 %$342 23.5 %$328 22.8 %
Property, energy, marine and aviation311 20.2 %282 19.5 %342 22.5 %320 22.0 %275 19.1 %
Programs187 12.1 %189 13.0 %202 13.3 %210 14.4 %141 9.8 %
Construction and national accounts179 11.6 %182 12.6 %129 8.5 %144 9.9 %173 12.0 %
Travel, accident and health179 11.6 %127 8.8 %126 8.3 %126 8.7 %180 12.5 %
Excess and surplus casualty148 9.6 %144 9.9 %130 8.5 %135 9.3 %131 9.1 %
Warranty and lenders solutions39 2.5 %53 3.7 %51 3.4 %42 2.9 %89 6.2 %
Other130 8.4 %116 8.0 %167 11.0 %135 9.3 %120 8.4 %
Total$1,542 100.0 %$1,449 100.0 %$1,522 100.0 %$1,454 100.0 %$1,437 100.0 %
Net Premiums Written by Underwriting Location
United States$981 63.6 %$936 64.6 %$986 64.8 %$965 66.4 %$893 62.1 %
Europe488 31.6 %423 29.2 %455 29.9 %416 28.6 %480 33.4 %
Other73 4.7 %90 6.2 %81 5.3 %73 5.0 %64 4.5 %
Total$1,542 100.0 %$1,449 100.0 %$1,522 100.0 %$1,454 100.0 %$1,437 100.0 %
Net Premiums Earned by Underwriting Unit
Professional lines$347 23.9 %$352 24.3 %$363 25.7 %$355 26.7 %$349 27.8 %
Property, energy, marine and aviation301 20.7 %312 21.5 %288 20.4 %237 17.8 %227 18.1 %
Programs195 13.4 %185 12.8 %167 11.8 %162 12.2 %144 11.5 %
Construction and national accounts157 10.8 %155 10.7 %147 10.4 %133 10.0 %126 10.0 %
Travel, accident and health133 9.2 %134 9.2 %148 10.5 %147 11.1 %128 10.2 %
Excess and surplus casualty134 9.2 %133 9.2 %126 8.9 %116 8.7 %111 8.8 %
Warranty and lenders solutions49 3.4 %43 3.0 %43 3.0 %49 3.7 %50 4.0 %
Other135 9.3 %135 9.3 %130 9.2 %129 9.7 %122 9.7 %
Total$1,451 100.0 %$1,449 100.0 %$1,412 100.0 %$1,328 100.0 %$1,257 100.0 %

12
Arch Capital Group Ltd. and Subsidiaries
Segment Information — Reinsurance Segment
(U.S. Dollars in millions)Three Months Ended
 March 31,December 31,September 30,June 30,March 31,
 20242023202320232023
Gross premiums written$3,467 $1,971 $2,138 $2,544 $2,460 
Premiums ceded(1,201)(414)(576)(835)(734)
Net premiums written2,266 1,557 1,562 1,709 1,726 
Change in unearned premiums(600)63 (19)(366)(396)
Net premiums earned1,666 1,620 1,543 1,343 1,330 
Other underwriting income (loss)2 8 2 3 4 
Losses and loss adjustment expenses(883)(848)(870)(743)(766)
Acquisition expenses(331)(365)(304)(290)(281)
Other operating expenses(75)(85)(61)(68)(74)
Underwriting income (loss)$379 $330 $310 $245 $213 
Underwriting Ratios
Loss ratio53.0 %52.3 %56.4 %55.3 %57.6 %
Acquisition expense ratio19.9 %22.5 %19.7 %21.6 %21.1 %
Other operating expense ratio4.5 %5.2 %3.9 %5.0 %5.6 %
Combined ratio77.4 %80.0 %80.0 %81.9 %84.3 %
Catastrophic activity and prior year development:
Current accident year catastrophic events, net of reinsurance and reinstatement premiums1.8 %5.1 %9.3 %6.3 %4.4 %
Net (favorable) adverse development in prior year loss reserves, net of related adjustments(2.5)%(1.3)%(2.8)%(1.8)%(3.4)%
Combined ratio excluding catastrophic activity and prior year development (1)78.1 %76.2 %73.5 %77.4 %83.3 %
Net premiums written to gross premiums written65.4 %79.0 %73.1 %67.2 %70.2 %
 
(1)See ‘Comments on Regulation G - Non-GAAP Financial Measures’ for further discussion.



13
Arch Capital Group Ltd. and Subsidiaries
Segment Information — Reinsurance Segment
(U.S. Dollars in millions)Three Months Ended
 March 31,December 31,September 30,June 30,March 31,
 20242023202320232023
Net Premiums Written by Underwriting Unit
Other specialty$840 37.1 %$787 50.5 %$527 33.7 %$479 28.0 %$619 35.9 %
Property excluding property catastrophe567 25.0 %414 26.6 %593 38.0 %457 26.7 %446 25.8 %
Property catastrophe350 15.4 %63 4.0 %76 4.9 %469 27.4 %257 14.9 %
Casualty343 15.1 %215 13.8 %273 17.5 %231 13.5 %283 16.4 %
Marine and aviation129 5.7 %42 2.7 %54 3.5 %55 3.2 %99 5.7 %
Other37 1.6 %36 2.3 %39 2.5 %18 1.1 %22 1.3 %
Total$2,266 100.0 %$1,557 100.0 %$1,562 100.0 %$1,709 100.0 %$1,726 100.0 %
Net Premiums Written by Underwriting Location
Bermuda$1,039 45.9 %$723 46.4 %$708 45.3 %$958 56.1 %$899 52.1 %
United States484 21.4 %466 29.9 %461 29.5 %408 23.9 %421 24.4 %
Europe and other743 32.8 %368 23.6 %393 25.2 %343 20.1 %406 23.5 %
Total$2,266 100.0 %$1,557 100.0 %$1,562 100.0 %$1,709 100.0 %$1,726 100.0 %
Net Premiums Earned by Underwriting Unit
Other specialty$587 35.2 %$598 36.9 %$505 32.7 %$483 36.0 %$511 38.4 %
Property excluding property catastrophe486 29.2 %484 29.9 %449 29.1 %358 26.7 %354 26.6 %
Property catastrophe234 14.0 %215 13.3 %219 14.2 %169 12.6 %139 10.5 %
Casualty247 14.8 %230 14.2 %264 17.1 %258 19.2 %253 19.0 %
Marine and aviation74 4.4 %56 3.5 %66 4.3 %56 4.2 %51 3.8 %
Other38 2.3 %37 2.3 %40 2.6 %19 1.4 %22 1.7 %
Total$1,666 100.0 %$1,620 100.0 %$1,543 100.0 %$1,343 100.0 %$1,330 100.0 %
                    
14
Arch Capital Group Ltd. and Subsidiaries
Segment Information — Mortgage Segment
(U.S. Dollars in millions)Three Months Ended
 March 31,December 31,September 30,June 30,March 31,
20242023202320232023
Gross premiums written$341 $350 $347 $347 $343 
Premiums ceded(64)(95)(76)(82)(82)
Net premiums written277 255 271 265 261 
Change in unearned premiums28 20 22 29 35 
Net premiums earned305 275 293 294 296 
Other underwriting income10 2 3 3 6 
Losses and loss adjustment expenses9 57 35 13 (2)
Acquisition expenses— (1)(2)(7)(7)
Other operating expenses(53)(47)(47)(50)(50)
Underwriting income$271 $286 $282 $253 $243 
Underwriting Ratios
Loss ratio(3.0)%(20.6)%(12.1)%(4.5)%0.6 %
Acquisition expense ratio— %0.2 %0.6 %2.4 %2.5 %
Other operating expense ratio17.5 %17.1 %16.2 %17.1 %16.9 %
Combined ratio14.5 %(3.3)%4.7 %15.0 %20.0 %
Net (favorable) adverse development in prior year loss reserves, net of related adjustments(25.7)%(39.0)%(33.5)%(28.7)%(24.6)%
Combined ratio excluding prior year development (1)40.2 %35.7 %38.2 %43.7 %44.6 %
Net premiums written to gross premiums written81.2 %72.9 %78.1 %76.4 %76.1 %

(1)    See ‘Comments on Regulation G - Non-GAAP Financial Measures’ for further discussion.
15
Arch Capital Group Ltd. and Subsidiaries
Segment Information — Mortgage Segment
(U.S. Dollars in millions)Three Months Ended
 March 31,December 31,September 30,June 30,March 31,
 20242023202320232023
Net Premiums Written by Underwriting Unit
U.S. primary mortgage insurance$202 72.9 %$175 68.6 %$190 70.1 %$186 70.2 %$186 71.3 %
U.S. credit risk transfer (CRT) and other56 20.2 %56 22.0 %57 21.0 %54 20.4 %53 20.3 %
International mortgage insurance/reinsurance19 6.9 %24 9.4 %24 8.9 %25 9.4 %22 8.4 %
Total$277 100.0 %$255 100.0 %$271 100.0 %$265 100.0 %$261 100.0 %
Net Premiums Written by Underwriting Location
United States$203 73.3 %$176 69.0 %$192 70.8 %$187 70.6 %$188 72.0 %
Other74 26.7 %79 31.0 %79 29.2 %78 29.4 %73 28.0 %
Total$277 100.0 %$255 100.0 %$271 100.0 %$265 100.0 %$261 100.0 %
Net Premiums Earned by Underwriting Unit
U.S. primary mortgage insurance$206 67.5 %$177 64.4 %$192 65.5 %$194 66.0 %$196 66.2 %
U.S. credit risk transfer (CRT) and other56 18.4 %55 20.0 %58 19.8 %54 18.4 %53 17.9 %
International mortgage insurance/reinsurance43 14.1 %43 15.6 %43 14.7 %46 15.6 %47 15.9 %
Total$305 100.0 %$275 100.0 %$293 100.0 %$294 100.0 %$296 100.0 %

(U.S. Dollars in millions)
March 31, 2024December 31, 2023September 30, 2023June 30, 2023March 31, 2023
Insurance In Force (IIF) (1)
U.S. primary mortgage insurance$288,385 56.9 %$290,764 57.1 %$292,903 57.4 %$293,902 56.6 %$294,244 57.3 %
U.S. credit risk transfer (CRT) and other148,623 29.3 %149,098 29.3 %152,453 29.9 %154,983 29.9 %147,731 28.8 %
International mortgage insurance/reinsurance69,811 13.8 %69,473 13.6 %65,107 12.8 %70,117 13.5 %71,327 13.9 %
Total$506,819 100.0 %$509,335 100.0 %$510,463 100.0 %$519,002 100.0 %$513,302 100.0 %
Risk In Force (RIF) (2)
U.S. primary mortgage insurance$75,194 84.7 %$75,527 84.6 %$75,850 84.9 %$75,941 84.5 %$75,770 84.8 %
U.S. credit risk transfer and other6,112 6.9 %6,156 6.9 %6,478 7.2 %6,556 7.3 %6,286 7.0 %
International mortgage insurance/reinsurance7,430 8.4 %7,562 8.5 %7,034 7.9 %7,385 8.2 %7,333 8.2 %
Total$88,736 100.0 %$89,245 100.0 %$89,362 100.0 %$89,882 100.0 %$89,389 100.0 %

(1) The aggregate dollar amount of each insured mortgage loan’s current principal balance. Such amounts are shown before external reinsurance.
(2) 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 risk-sharing or reinsurance transactions. Such amounts are shown before external reinsurance.
16
Arch Capital Group Ltd. and Subsidiaries
Segment Information — Mortgage Segment
The following table provides supplemental disclosures for the Company’s U.S. primary mortgage insurance operations:
(U.S. Dollars in millions)
March 31, 2024December 31, 2023September 30, 2023June 30, 2023March 31, 2023
Total RIF by credit quality (FICO score):
>=740$46,693 62.1 %$46,796 62.0 %$46,990 62.0 %$46,978 61.9 %$46,788 61.8 %
680-73924,827 33.0 %24,990 33.1 %25,055 33.0 %25,083 33.0 %25,016 33.0 %
620-6793,439 4.6 %3,497 4.6 %3,554 4.7 %3,622 4.8 %3,699 4.9 %
<620235 0.3 %244 0.3 %251 0.3 %258 0.3 %267 0.4 %
Total$75,194 100.0 %$75,527 100.0 %$75,850 100.0 %$75,941 100.0 %$75,770 100.0 %
Weighted average FICO score748 748 748 748 748 
Total RIF by Loan-To-Value (LTV):
95.01% and above$7,005 9.3 %$7,067 9.4 %$7,113 9.4 %$7,151 9.4 %$7,215 9.5 %
90.01% to 95.00%44,742 59.5 %44,669 59.1 %44,675 58.9 %44,496 58.6 %44,066 58.2 %
85.01% to 90.00%20,352 27.1 %20,490 27.1 %20,565 27.1 %20,627 27.2 %20,665 27.3 %
85.00% and below3,095 4.1 %3,301 4.4 %3,497 4.6 %3,667 4.8 %3,824 5.0 %
Total$75,194 100.0 %$75,527 100.0 %$75,850 100.0 %$75,941 100.0 %$75,770 100.0 %
Weighted average LTV93.1 %93.0 %93.0 %93.0 %92.9 %
Total RIF by State:
California$6,105 8.1 %$6,162 8.2 %$6,235 8.2 %$6,317 8.3 %$6,369 8.4 %
Texas5,859 7.8 %5,972 7.9 %6,081 8.0 %6,159 8.1 %6,179 8.2 %
North Carolina3,245 4.3 %3,248 4.3 %3,258 4.3 %3,239 4.3 %3,191 4.2 %
Minnesota3,056 4.1 %3,069 4.1 %3,060 4.0 %3,023 4.0 %2,994 4.0 %
Georgia3,043 4.0 %3,081 4.1 %3,116 4.1 %3,155 4.2 %3,167 4.2 %
Illinois2,979 4.0 %2,986 4.0 %2,994 3.9 %3,010 4.0 %3,054 4.0 %
Florida2,929 3.9 %3,007 4.0 %3,086 4.1 %3,167 4.2 %3,225 4.3 %
Massachusetts2,852 3.8 %2,858 3.8 %2,841 3.7 %2,834 3.7 %2,822 3.7 %
Michigan2,796 3.7 %2,773 3.7 %2,722 3.6 %2,661 3.5 %2,626 3.5 %
Virginia2,562 3.4 %2,578 3.4 %2,605 3.4 %2,619 3.4 %2,634 3.5 %
Other39,768 52.9 %39,793 52.7 %39,852 52.5 %39,757 52.4 %39,509 52.1 %
Total$75,194 100.0 %$75,527 100.0 %$75,850 100.0 %$75,941 100.0 %$75,770 100.0 %
Weighted average coverage (end of period RIF divided by IIF)26.1 %26.0 %25.9 %25.8 %25.8 %
U.S. mortgage insurance total RIF, net of reinsurance (1)$57,882 $58,146 $56,946 $57,019 $57,001 
Analysts’ persistency (2)83.6 %83.6 %83.9 %83.0 %81.7 %
Risk-to-capital ratio -- Arch MI U.S. (3)7.0:1 7.3:1 6.6:1 6.9:1 6.9:1
PMIER sufficiency ratio -- Arch MI U.S. (4)223 %213 %245 %245 %248 %

(1) Total RIF for the U.S. mortgage insurance operations after external reinsurance.
(2) Represents the % of IIF at the beginning of a 12-mo. period that remained in force at the end of the period.
(3) Represents current (non-delinquent) RIF, net of reinsurance, divided by statutory capital (estimate for March 31, 2024).
(4) Calculated as available assets divided by required assets as defined within PMIERs (estimate for March 31, 2024). There was approximately $2.1 billion of excess available assets at March 31, 2024.
17
Arch Capital Group Ltd. and Subsidiaries
Segment Information — Mortgage Segment
The following table provides supplemental disclosures for the Company’s U.S. primary mortgage insurance operations:
(U.S. Dollars in millions, except policy/loan/claim count)Three Months Ended
March 31, 2024December 31, 2023September 30, 2023June 30, 2023March 31, 2023
Total new insurance written (NIW) (1)$9,336 $9,351 $11,494 $12,292 $10,394 
Total NIW by credit quality (FICO score):
>=740$6,364 68.2 %$6,058 64.8 %$7,646 66.5 %$8,151 66.3 %$6,672 64.2 %
680-7392,660 28.5 %2,990 32.0 %3,520 30.6 %3,832 31.2 %3,490 33.6 %
620-679311 3.3 %301 3.2 %326 2.8 %308 2.5 %229 2.2 %
<6201 0.0 %2 0.0 %2 0.0 %1 0.0 %3 0.0 %
  Total$9,336 100.0 %$9,351 100.0 %$11,494 100.0 %$12,292 100.0 %$10,394 100.0 %
Total NIW by LTV:
95.01% and above$542 5.8 %$548 5.9 %$880 7.7 %$635 5.2 %$519 5.0 %
90.01% to 95.00%5,240 56.1 %5,095 54.5 %6,306 54.9 %6,855 55.8 %6,043 58.1 %
85.01% to 90.00%2,624 28.1 %2,746 29.4 %3,126 27.2 %3,516 28.6 %2,772 26.7 %
85.00% and below930 10.0 %962 10.3 %1,182 10.3 %1,286 10.5 %1,060 10.2 %
  Total$9,336 100.0 %$9,351 100.0 %$11,494 100.0 %$12,292 100.0 %$10,394 100.0 %
Total NIW monthly vs. single:
Monthly$8,916 95.5 %$8,827 94.4 %$10,712 93.2 %$11,870 96.6 %$10,106 97.2 %
Single420 4.5 %524 5.6 %782 6.8 %422 3.4 %288 2.8 %
  Total$9,336 100.0 %$9,351 100.0 %$11,494 100.0 %$12,292 100.0 %$10,394 100.0 %
Total NIW purchase vs. refinance:
Purchase$9,167 98.2 %$9,224 98.6 %$11,334 98.6 %$12,063 98.1 %$10,201 98.1 %
Refinance169 1.8 %127 1.4 %160 1.4 %229 1.9 %193 1.9 %
  Total$9,336 100.0 %$9,351 100.0 %$11,494 100.0 %$12,292 100.0 %$10,394 100.0 %
Ending number of policies in force (PIF) (2)1,104,746 1,117,480 1,129,351 1,138,681 1,147,081 
Rollforward of insured loans in default:
Beginning delinquent number of loans19,457 18,644 18,286 18,975 20,567 
Plus: new notices10,371 10,854 10,138 9,028 9,476 
Less: cures(11,253)(9,801)(9,545)(9,505)(10,853)
Less: paid claims(306)(240)(235)(212)(215)
Ending delinquent number of loans (2)18,269 19,457 18,644 18,286 18,975 
Ending percentage of loans in default (2)1.65 %1.74 %1.65 %1.61 %1.65 %
Losses:
Number of claims paid306 240 235 212 215 
Total paid claims (in thousands)$10,785 $7,401 $6,602 $5,715 $7,185 
Average paid per claim (in thousands)$35.2 $30.8 $28.1 $27.0 $33.4 
Severity (3)78.6 %77.8 %64.0 %61.5 %81.8 %
Average case reserve per default (in thousands)$18.2 $17.7 $21.2 $23.1 $23.0 
(1)    The original principal balance of all loans that received coverage during the period.
(2)    Includes first lien primary and pool policies.    
(3)    Represents total paid claims divided by RIF of loans for which claims were paid.
18
Arch Capital Group Ltd. and Subsidiaries
Segment Information — Mortgage Segment
The following table provides supplemental disclosures for the Company’s U.S. primary mortgage insurance operations:
(U.S. Dollars in millions)
March 31, 2024December 31, 2023
Loss Reserves, Net (1)Primary IIF (2)Primary RIF (3)Delinquency RateLoss Reserves, Net (1)Primary IIF (2)Primary RIF (3)Delinquency Rate
% of TotalTotal% of TotalTotal% of Total% of TotalTotal% of TotalTotal% of Total
Policy year:
2014 and prior30.1 %$12,791 4.4 %$3,254 4.3 %5.60 %31.0 %$13,301 4.6 %$3,387 4.5 %6.01 %
20152.0 %4,299 1.5 %1,131 1.5 %1.95 %2.0 %4,691 1.6 %1,244 1.6 %1.98 %
20164.7 %7,039 2.4 %1,887 2.5 %2.35 %4.8 %7,525 2.6 %2,025 2.7 %2.50 %
20176.7 %7,172 2.5 %1,912 2.5 %2.95 %7.0 %7,600 2.6 %2,023 2.7 %3.13 %
20188.7 %8,173 2.8 %2,122 2.8 %3.76 %9.0 %8,512 2.9 %2,207 2.9 %4.04 %
20198.8 %14,976 5.2 %3,900 5.2 %2.30 %9.1 %15,767 5.4 %4,074 5.4 %2.40 %
202011.7 %48,509 16.8 %12,727 16.9 %1.14 %12.1 %51,349 17.7 %13,357 17.7 %1.17 %
202115.6 %73,167 25.4 %19,039 25.3 %1.14 %14.8 %76,667 26.4 %19,812 26.2 %1.12 %
20229.6 %62,612 21.7 %16,444 21.9 %0.93 %8.8 %63,899 22.0 %16,755 22.2 %0.89 %
20232.2 %40,369 14.0 %10,382 13.8 %0.42 %1.3 %41,453 14.3 %10,643 14.1 %0.26 %
20240.1 %9,278 3.2 %2,396 3.2 %0.02 %
Total100.0 %$288,385 100.0 %$75,194 100.0 %1.65 %100.0 %$290,764 100.0 %$75,527 100.0 %1.74 %

(1)    Total reserves for losses and loss adjustment expenses, net of recoverables, was $311.8 million at March 31, 2024, compared to $323.6 million at December 31, 2023.
(2)    The aggregate dollar amount of each insured mortgage loan’s current principal balance.
(3)    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 risk-sharing transactions.


19
Arch Capital Group Ltd. and Subsidiaries
Segment Information - Consolidated

(U.S. Dollars in millions)Three Months Ended
 March 31,December 31,September 30,June 30,March 31,
 20242023202320232023
Gross premiums written$5,933 $4,251 $4,527 $4,845 $4,780 
Premiums ceded(1,848)(990)(1,172)(1,417)(1,356)
Net premiums written4,085 3,261 3,355 3,428 3,424 
Change in unearned premiums(663)83 (107)(463)(541)
Net premiums earned3,422 3,344 3,248 2,965 2,883 
Other underwriting income (loss)12 10 5 6 10 
Losses and loss adjustment expenses(1,728)(1,637)(1,647)(1,491)(1,471)
Acquisition expenses(607)(643)(575)(561)(533)
Other operating expenses(363)(359)(310)(313)(319)
Underwriting income (loss) (1)$736 $715 $721 $606 $570 
Underwriting Ratios
Loss ratio50.5 %49.0 %50.7 %50.3 %51.0 %
Acquisition expense ratio17.7 %19.2 %17.7 %18.9 %18.5 %
Other operating expense ratio10.6 %10.7 %9.5 %10.6 %11.1 %
Combined ratio78.8 %78.9 %77.9 %79.8 %80.6 %
Catastrophic activity and prior year development:
Current accident year catastrophic events, net of reinsurance and reinstatement premiums1.7 %4.1 %5.6 %4.0 %2.7 %
Net (favorable) adverse development in prior year loss reserves, net of related adjustments(3.7)%(4.1)%(4.7)%(3.9)%(4.3)%
Combined ratio excluding catastrophic activity and prior year development (1)80.8 %78.9 %77.0 %79.7 %82.2 %
Components of losses and loss adjustment expenses incurred
Paid losses and loss adjustment expenses$1,070 $1,096 $1,058 $1,072 $867 
Change in unpaid losses and loss adjustment expenses658 541 589 419 604 
Total losses and loss adjustment expenses$1,728 $1,637 $1,647 $1,491 $1,471 
Net premiums written to gross premiums written68.9 %76.7 %74.1 %70.8 %71.6 %
 
(1)See ‘Comments on Regulation G - Non-GAAP Financial Measures’ for further discussion.


20
Arch Capital Group Ltd. and Subsidiaries
Segment Information — Selected Information on Losses and Loss Adjustment Expenses

(U.S. Dollars in millions)Three Months Ended
 March 31,December 31,September 30,June 30,March 31,
 20242023202320232023
Estimated net (favorable) adverse development in prior year loss reserves, net of related adjustments
Net impact on underwriting results:
Insurance$(7)$(7)$(11)$(7)$(7)
Reinsurance(41)(21)(43)(25)(46)
Mortgage(78)(107)(98)(84)(73)
Total $(126)$(135)$(152)$(116)$(126)
Impact on losses and loss adjustment expenses:
Insurance$(10)$(8)$(10)$(12)$(12)
Reinsurance(40)(26)(44)(29)(53)
Mortgage(74)(101)(92)(80)(71)
Total$(124)$(135)$(146)$(121)$(136)
Impact on acquisition expenses:
Insurance$3 $1 $(1)$5 $5 
Reinsurance(1)5 1 4 7 
Mortgage(4)(6)(6)(4)(2)
Total$(2)$— $(6)$5 $10 
Impact on combined ratio:
Insurance(0.5)%(0.5)%(0.8)%(0.5)%(0.5)%
Reinsurance(2.5)%(1.3)%(2.8)%(1.8)%(3.4)%
Mortgage(25.7)%(39.0)%(33.5)%(28.7)%(24.6)%
Total (3.7)%(4.1)%(4.7)%(3.9)%(4.3)%
Impact on loss ratio:
Insurance(0.7)%(0.6)%(0.7)%(0.9)%(0.9)%
Reinsurance(2.4)%(1.6)%(2.8)%(2.2)%(4.0)%
Mortgage(24.4)%(36.6)%(31.4)%(27.2)%(23.9)%
Total(3.6)%(4.0)%(4.5)%(4.1)%(4.7)%
Impact on acquisition expense ratio:
Insurance0.2 %0.1 %(0.1)%0.4 %0.4 %
Reinsurance(0.1)%0.3 %0.0 %0.4 %0.6 %
Mortgage(1.3)%(2.4)%(2.1)%(1.5)%(0.7)%
Total (0.1)%(0.1)%(0.2)%0.2 %0.4 %
Estimated net losses incurred from current accident year catastrophic events (1)
Insurance$27 $55 $37 $35 $20 
Reinsurance31 82 143 84 59 
Total$58 $137 $180 $119 $79 
Impact on combined ratio:
Insurance1.9 %3.8 %2.6 %2.6 %1.6 %
Reinsurance1.8 %5.1 %9.3 %6.3 %4.4 %
Total1.7 %4.1 %5.6 %4.0 %2.7 %
(1)Equals estimated losses from catastrophic events occurring in the current accident year (e.g. natural catastrophes, man-made events, pandemic events), net of reinsurance and reinstatement premiums. As regards the natural catastrophe estimates included within, amounts shown for the insurance segment are for named catastrophic events only, while amounts shown for the reinsurance segment include (i) named events with over $5 million of losses incurred by its Bermuda and Europe operations and (ii) all catastrophe losses incurred by its U.S. operations. Amounts not applicable for the mortgage segment.
21
Arch Capital Group Ltd. and Subsidiaries
Investment Information — Investable Asset Summary and Investment Portfolio Metrics
The following table summarizes the Company’s investable assets and portfolio metrics:
(U.S. Dollars in millions)March 31,December 31,September 30,June 30,March 31,
20242023202320232023
Investable assets:
Fixed maturities available for sale, at fair value$23,628 65.7 %$23,553 68.1 %$22,485 70.5 %$21,434 70.4 %$20,692 70.4 %
Fixed maturities—fair value option (1)930 2.6 %683 2.0 %644 2.0 %659 2.2 %631 2.1 %
Total fixed maturities24,558 68.3 %24,236 70.1 %23,129 72.5 %22,093 72.6 %21,323 72.5 %
Equity securities, at fair value1,720 4.8 %1,186 3.4 %894 2.8 %911 3.0 %859 2.9 %
Equity securities—fair value option (1)7 0.0 %7 0.0 %7 0.0 %7 0.0 %7 0.0 %
Total equity securities1,727 4.8 %1,193 3.4 %901 2.8 %918 3.0 %866 2.9 %
Other investments—fair value option (1)1,914 5.3 %1,777 5.1 %1,404 4.4 %1,172 3.9 %1,121 3.8 %
Investments accounted for using the equity method (2)4,842 13.5 %4,566 13.2 %4,251 13.3 %4,073 13.4 %3,896 13.3 %
Short-term investments available for sale, at fair value2,142 6.0 %2,063 6.0 %1,682 5.3 %1,702 5.6 %1,553 5.3 %
Short-term investments—fair value option (1)35 0.1 %21 0.1 %13 0.0 %8 0.0 %17 0.1 %
Total short-term investments2,177 6.1 %2,084 6.0 %1,695 5.3 %1,710 5.6 %1,570 5.3 %
Cash993 2.8 %917 2.7 %859 2.7 %904 3.0 %803 2.7 %
Securities transactions entered into but not settled at the balance sheet date(267)(0.7)%(184)(0.5)%(358)(1.1)%(429)(1.4)%(178)(0.6)%
Total investable assets held by the Company$35,944 100.0 %$34,589 100.0 %$31,881 100.0 %$30,441 100.0 %$29,401 100.0 %
Average effective duration (in years)2.70 2.91 2.97 3.03 2.89  
Average S&P/Moody’s credit ratings (3) AA-/Aa3  AA-/Aa3  AA-/Aa3  AA-/Aa3  AA-/Aa3  
(1)     Included in “other investments” on the balance sheet.
(2)    Changes in the carrying value of investment funds accounted for using the equity method are recorded as “equity in net income (loss) of investment funds accounted for using the equity method” rather than as                 an unrealized gain or loss component of accumulated other comprehensive income.
(3)    Average credit ratings on the Company’s investment portfolio on securities with ratings assigned by Standard & Poor’s (“S&P”) and Moody’s Investors Service (“Moody’s”).
22
Arch Capital Group Ltd. and Subsidiaries
Investment Information — Composition of Net Investment Income, Yield and Total Return

The following table summarizes the Company’s net investment income, yield and total return:
(U.S. Dollars in millions, except per share data)Three Months Ended
 March 31,December 31,September 30,June 30,March 31,
 20242023202320232023
Composition of net investment income:     
Fixed maturities$280 $272 $243 $214 $188 
Short-term investments29 20 19 15 14 
Equity securities (dividends)8 7 5 6 4 
Other (1)33 33 22 25 13 
Gross investment income350 332 289 260 219 
Investment expenses(23)(19)(20)(18)(20)
Net investment income$327 $313 $269 $242 $199 
Per share$0.86 $0.82 $0.71 $0.64 $0.53 
Equity in net income (loss) of investment funds accounted for using the equity method99 102 59 69 48 
Per share$0.26 $0.27 $0.16 $0.18 $0.13 
Investment income yield, at amortized cost (2):
Pre-tax4.14 %4.11 %3.68 %3.50 %3.03 %
After-tax3.61 %3.59 %3.18 %3.05 %2.58 %
Total return on investments (3)0.80 %4.76 %(0.40)%0.56 %2.54 %
(1)Amounts include dividends and other distributions on investment funds, term loan investments, funds held balances, cash balances and other.
(2)Presented on an annualized basis and excluding the impact of investments for which returns are not included within investment income, such as investments accounted for using the equity method and certain equities.
(3)Total return on investments includes investment income, equity in net income or loss of investment funds accounted for using the equity method, net realized gains and losses (excluding changes in allowance for credit losses on non-investment related financial assets) and the change in unrealized gains or losses and is calculated on a pre-tax basis and before investment expenses. See ‘Comments on Regulation G - Non-GAAP Financial Measures’ for a further discussion of the presentation of total return on investments.

23
Arch Capital Group Ltd. and Subsidiaries
Investment Information — Composition of Fixed Maturities
 
The following table summarizes the Company’s fixed maturities:
(U.S. Dollars in millions)
Fair
Value		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Net
Unrealized
Gains (Losses)		Allowance
for Credit Losses		Amortized
Cost		Fair Value /
Amortized Cost		Fair Value
% of Total
At March 31, 2024
Corporates$12,608 $98 $(442)$(344)$(24)$12,976 97.2 %51.3 %
U.S. government and government agencies4,383 6 (109)(103)— 4,486 97.7 %17.8 %
Asset-backed securities2,764 15 (44)(29)(5)2,798 98.8 %11.3 %
Non-U.S. government securities2,200 20 (113)(93)(1)2,294 95.9 %9.0 %
Commercial mortgage-backed securities1,197 3 (30)(27)(2)1,226 97.6 %4.9 %
Residential mortgage-backed securities 1,179 4 (69)(65)— 1,244 94.8 %4.8 %
Municipal bonds227 1 (18)(17)— 244 93.0 %0.9 %
Total$24,558 $147 $(825)$(678)$(32)$25,268 97.2 %100.0 %
At December 31, 2023
Corporates$11,517 $157 $(464)$(307)$(20)$11,844 97.2 %47.5 %
U.S. government and government agencies5,827 63 (86)(23)— 5,850 99.6 %24.0 %
Asset-backed securities2,252 11 (55)(44)(5)2,301 97.9 %9.3 %
Non-U.S. government securities2,068 33 (100)(67)(1)2,136 96.8 %8.5 %
Commercial mortgage-backed securities1,213 3 (34)(31)(2)1,246 97.4 %5.0 %
Residential mortgage-backed securities 1,103 7 (66)(59)— 1,162 94.9 %4.6 %
Municipal bonds256 1 (20)(19)— 275 93.1 %1.1 %
Total$24,236 $275 $(825)$(550)$(28)$24,814 97.7 %100.0 %



24
Arch Capital Group Ltd. and Subsidiaries
Investment Information — Credit Quality Distribution and Maturity Profile

The following table summarizes the credit quality distribution and maturity profile of the Company’s fixed maturities:
(U.S. Dollars in millions)March 31,December 31,September 30,June 30,March 31,
20242023202320232023
Credit quality distribution of total fixed maturities (1):
U.S. government and government agencies (2)$5,106 20.8 %$6,493 26.8 %$6,359 27.5 %$5,282 23.9 %$5,274 24.7 %
AAA4,495 18.3 %4,305 17.8 %4,164 18.0 %3,985 18.0 %3,826 17.9 %
AA2,405 9.8 %2,165 8.9 %2,061 8.9 %2,285 10.3 %2,136 10.0 %
A4,912 20.0 %4,629 19.1 %4,523 19.6 %4,810 21.8 %4,540 21.3 %
BBB5,672 23.1 %5,058 20.9 %4,390 19.0 %4,165 18.9 %3,875 18.2 %
BB920 3.7 %698 2.9 %773 3.3 %770 3.5 %711 3.3 %
B484 2.0 %389 1.6 %352 1.5 %366 1.7 %384 1.8 %
Lower than B30 0.1 %15 0.1 %16 0.1 %16 0.1 %18 0.1 %
Not rated534 2.2 %484 2.0 %491 2.1 %414 1.9 %559 2.6 %
Total fixed maturities, at fair value$24,558 100.0 %$24,236 100.0 %$23,129 100.0 %$22,093 100.0 %$21,323 100.0 %
Maturity profile of total fixed maturities:
Due in one year or less$580 2.4 %$516 2.1 %$706 3.1 %$594 2.7 %$505 2.4 %
Due after one year through five years13,582 55.3 %13,279 54.8 %13,272 57.4 %12,399 56.1 %11,739 55.1 %
Due after five years through ten years4,816 19.6 %5,420 22.4 %4,679 20.2 %4,630 21.0 %4,616 21.6 %
Due after 10 years440 1.8 %453 1.9 %61 0.3 %123 0.6 %242 1.1 %
19,418 79.1 %19,668 81.2 %18,718 80.9 %17,746 80.3 %17,102 80.2 %
Residential mortgage-backed securities1,179 4.8 %1,103 4.6 %965 4.2 %860 3.9 %823 3.9 %
Commercial mortgage-backed securities1,197 4.9 %1,213 5.0 %1,102 4.8 %1,082 4.9 %1,035 4.9 %
Asset-backed securities2,764 11.3 %2,252 9.3 %2,344 10.1 %2,405 10.9 %2,363 11.1 %
Total fixed maturities, at fair value$24,558 100.0 %$24,236 100.0 %$23,129 100.0 %$22,093 100.0 %$21,323 100.0 %

(1)     For individual fixed maturities, S&P ratings are used. In the absence of an S&P rating, ratings from Moody’s are used, followed by ratings from Fitch Ratings.
(2)     Includes U.S. government-sponsored agency mortgage backed securities and agency commercial mortgage backed securities.


25
Arch Capital Group Ltd. and Subsidiaries
Investment Information — Analysis of Corporate Exposures

The following table summarizes the Company’s corporate bonds by sector:
(U.S. Dollars in millions)March 31,December 31,September 30,June 30,March 31,
20242023202320232023
Sector:
Industrials$6,691 53.1 %$5,525 48.0 %$4,918 46.0 %$4,988 47.0 %$4,672 46.6 %
Financials4,477 35.5 %4,523 39.3 %4,326 40.5 %4,334 40.8 %4,329 43.2 %
Utilities1,065 8.4 %1,039 9.0 %962 9.0 %927 8.7 %798 8.0 %
All other (1)375 3.0 %430 3.7 %478 4.5 %367 3.5 %223 2.2 %
Total$12,608 100.0 %$11,517 100.0 %$10,684 100.0 %$10,616 100.0 %$10,022 100.0 %
Credit quality distribution (2):
AAA$229 1.8 %$295 2.6 %$297 2.8 %$227 2.1 %$176 1.8 %
AA1,067 8.5 %1,038 9.0 %938 8.8 %913 8.6 %869 8.7 %
A4,217 33.4 %4,043 35.1 %3,936 36.8 %4,197 39.5 %3,994 39.9 %
BBB5,362 42.5 %4,744 41.2 %4,118 38.5 %3,885 36.6 %3,628 36.2 %
BB856 6.8 %634 5.5 %715 6.7 %714 6.7 %658 6.6 %
B481 3.8 %389 3.4 %351 3.3 %365 3.4 %383 3.8 %
Lower than B30 0.2 %15 0.1 %16 0.1 %16 0.2 %18 0.2 %
Not rated366 2.9 %359 3.1 %313 2.9 %299 2.8 %296 3.0 %
Total$12,608 100.0 %$11,517 100.0 %$10,684 100.0 %$10,616 100.0 %$10,022 100.0 %

(1)    Includes sovereign securities, supranational securities and other.
(2)    For individual fixed maturities, S&P ratings are used. In the absence of an S&P rating, ratings from Moody’s are used, followed by ratings from Fitch Ratings.

The following table summarizes the Company’s top ten exposures to fixed income corporate issuers by fair value at March 31, 2024:
(U.S. Dollars in millions)Fair
Value		% of Asset Class% of Investable AssetsCredit Quality (1)
Issuer:
JPMorgan Chase & Co.$352 2.8 %1.0 %A-/A1
Morgan Stanley323 2.6 %0.9 %A-/A1
Bank of America Corporation312 2.5 %0.9 %A-/A1
The Goldman Sachs Group, Inc.260 2.1 %0.7 %A-/A2
Blue Owl Capital Inc.197 1.6 %0.5 %BBB-/Baa3
Citigroup Inc.182 1.4 %0.5 %BBB+/A3
Ford Motor Company178 1.4 %0.5 %BBB-/Ba1
Hyundai Motor Company149 1.2 %0.4 %BBB+/A3
Wells Fargo & Company140 1.1 %0.4 %BBB+/A1
Roche Holding AG134 1.1 %0.4 %AA/Aa2
Total$2,227 17.7 %6.2 %
 
(1)    Average credit ratings assigned by S&P and Moody’s, respectively.

26
Arch Capital Group Ltd. and Subsidiaries
Investment Information — Structured Securities

The following table provides the composition of the Company’s structured securities:
(U.S. Dollars in millions)AgenciesAAAAAABBBNon-Investment GradeTotal
At March 31, 2024      
Residential mortgage-backed securities$721 $430 $28 $— $— $— $1,179 
Commercial mortgage-backed securities7 722 212 44 134 78 1,197 
Asset-backed securities— 1,568 308 568 164 156 2,764 
Total$728 $2,720 $548 $612 $298 $234 $5,140 
At December 31, 2023
Residential mortgage-backed securities$658 $416 $29 $— $— $— $1,103 
Commercial mortgage-backed securities7 757 198 45 126 80 1,213 
Asset-backed securities— 1,302 231 440 170 109 2,252 
Total$665 $2,475 $458 $485 $296 $189 $4,568 
27
Arch Capital Group Ltd. and Subsidiaries
Comments on Regulation G - Non GAAP Financial Measures
Throughout this financial supplement, the Company presents its operations in the way it believes will be the most meaningful and useful to investors, analysts, rating agencies and others who use the Company’s financial information in evaluating the performance of the Company. This presentation includes the use of after-tax operating income available to Arch common shareholders, which is defined as net income available to Arch common shareholders, excluding 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 investment funds accounted for using the equity method, net foreign exchange gains or losses, transaction costs and other, net of income taxes (which for the 2023 fourth quarter includes a one-time deferred tax benefit related to the enactment of Bermuda’s new corporate income tax), and the use of annualized operating return on average common equity. The presentation of after-tax operating income available to Arch common shareholders and annualized operating return on average common equity are non-GAAP financial measures as defined in Regulation G. The reconciliation of such measures to net income available to Arch common shareholders and annualized net income return on average common equity (the most directly comparable GAAP financial measures) in accordance with Regulation G is included on the following page.
The Company believes that net realized gains or losses, equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other, in any particular period are not indicative of the performance of, or trends in, the Company’s business. Although net realized gains or losses, equity in net income or loss of investment funds accounted for using the equity method and net foreign exchange gains or losses are an integral part of the Company’s operations, the decision to realize these items are independent of the insurance underwriting process and result, in large part, from general economic and financial market conditions. Furthermore, certain users of the Company’s financial information believe that, for many companies, the timing of the realization of investment gains or losses is largely opportunistic. In addition, changes in the allowance for credit losses and net impairment losses recognized in earnings on the Company’s investments represent other-than-temporary declines in expected recovery values on securities without actual realization.
The use of the equity method on certain of the Company’s investments in certain funds that invest in fixed maturity securities is driven by the ownership structure of such funds (either limited partnerships or limited liability companies). In applying the equity method, these 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 fair value of the underlying securities in the funds). This method of accounting is different from the way the Company accounts for its other fixed maturity securities and the timing of the recognition of equity in net income or loss of investment funds accounted for using the equity method may differ from gains or losses in the future upon sale or maturity of such investments.
Transaction costs and other include advisory, financing, legal, severance, incentive compensation and other transaction costs related to acquisitions. The Company believes that transaction costs and other, due to their non-recurring nature, are not indicative of the performance of, or trends in, the Company’s business performance.
In the 2023 fourth quarter, the Company established a net deferred tax benefit of $1.18 billion consistent with the transition provisions specified in the Bermuda Corporate Income Tax Act of 2023. Due to the non-recurring nature of this one-time item, the Company believes that excluding this item from after-tax operating income or loss available to common shareholders provides the user with a better evaluation of the Company’s ongoing business performance.
The Company believes that showing net income available to Arch common shareholders exclusive of the items referred to above reflects the underlying fundamentals of the Company’s business since the Company evaluates the performance of and manages its business to produce an underwriting profit. In addition to presenting net income available to Arch common shareholders, the Company believes that this presentation enables investors and other users of the Company’s financial information to analyze the Company’s performance in a manner similar to how the Company’s management analyzes performance. The Company also believes that this measure follows industry practice and, therefore, allows the users of the Company’s financial information to compare the Company’s performance with its industry peer group. The Company believes that the equity analysts and certain rating agencies that follow the Company and the insurance industry as a whole generally exclude these items from their analyses for the same reasons.
The Company’s segment information includes the presentation of consolidated underwriting income or loss and a subtotal of underwriting income or loss. Such measures represent the pre-tax profitability of the Company’s underwriting operations and include net premiums earned plus other underwriting income, less losses and loss adjustment expenses, acquisition expenses and other operating expenses. Other operating expenses include those operating expenses that are incremental and/or directly attributable to the Company’s individual underwriting operations. Underwriting income or loss does not incorporate items included in the Company’s corporate segment. While these measures are presented in the Segment Information footnote to the Company’s Consolidated Financial Statements, they are considered non-GAAP financial measures when presented elsewhere on a consolidated basis. The reconciliations of underwriting income or loss to income before income taxes (the most directly comparable GAAP financial measure) on a consolidated basis, in accordance with Regulation G, is shown on pages 9 to 10.
In addition, the Company’s segment information includes the use of a combined ratio excluding catastrophic activity and prior year development, for the insurance and reinsurance segments, and a combined ratio excluding prior year development, for the mortgage segment. These ratios are non-GAAP financial measures as defined in Regulation G. The reconciliation of such measures to the combined ratio (the most directly comparable GAAP financial measure) in accordance with Regulation G are shown on the individual segment pages. The Company’s management utilizes the adjusted combined ratios excluding current accident year catastrophic events and favorable or adverse development in prior year loss reserves in its analysis of the underwriting performance of each of its underwriting segments.
Total return on investments includes investment income, equity in net income or loss of investment funds accounted for using the equity method, net realized gains and losses (excluding changes in the allowance for credit losses on non-investment related financial assets) and the change in unrealized gains and losses generated by the Company’s investment portfolio. Total return is calculated on a pre-tax basis and before investment expenses, and reflects the effect of financial market conditions along with foreign currency fluctuations. Management uses total return on investments as a key measure of the return generated to Arch common shareholders, and compares the return generated by the Company’s investment portfolio against benchmark returns during the periods presented.
28
Arch Capital Group Ltd. and Subsidiaries
Operating Income Reconciliation and Annualized Operating Return on Average Common Equity
The following table summarizes the Company’s consolidated financial data, including a reconciliation of net income (loss) available to Arch common shareholders to after-tax operating income (loss) available to Arch common shareholders and related diluted per share results:
(U.S. Dollars and shares in millions, except per share data)Three Months Ended
 March 31,December 31,September 30,June 30,March 31,
 20242023202320232023
Net income available to Arch common shareholders$1,110 $2,324 $713 $661 $705 
Net realized (gains) losses (1)(67)(189)248 123 (17)
Equity in net (income) loss of investment funds accounted for using the equity method(99)(102)(59)(69)(48)
Net foreign exchange (gains) losses(31)60 (22)6 18 
Transaction costs and other7 4 1 2 (1)
Income tax expense (benefit) (2)13 (1,152)(5)3 (3)
After-tax operating income available to Arch common shareholders$933 $945 $876 $726 $654 
Diluted per common share results:
Net income available to Arch common shareholders$2.92 $6.12 $1.88 $1.75 $1.87 
Net realized (gains) losses (1)(0.18)(0.50)0.65 0.33 (0.05)
Equity in net (income) loss of investment funds accounted for using the equity method(0.26)(0.27)(0.16)(0.18)(0.13)
Net foreign exchange (gains) losses(0.08)0.16 (0.05)0.01 0.05 
Transaction costs and other0.02 0.01 0.00 0.00 0.00 
Income tax expense (benefit) (2)0.03 (3.03)(0.01)0.01 (0.01)
After-tax operating income available to Arch common shareholders$2.45 $2.49 $2.31 $1.92 $1.73 
Weighted average common shares and common share equivalents outstanding - diluted380.5 379.8 379.4 378.4 377.6 
Beginning common shareholders’ equity$17,523 $14,409 $13,811 $13,158 $12,080 
Ending common shareholders’ equity18,525 17,523 14,409 13,811 13,158 
Average common shareholders’ equity$18,024 $15,966 $14,110 $13,485 $12,619 
Annualized net income return on average common equity24.6 %58.2 %20.2 %19.6 %22.3 %
Annualized operating return on average common equity20.7 %23.7 %24.8 %21.5 %20.7 %

(1)    Net realized gains or losses include realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains and losses on derivative instruments and changes in the allowance for credit losses on financial assets.
(2)    Income tax expense (benefit) on net realized gains or losses, equity in net income (loss) of investment funds accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other reflects the relative mix reported by jurisdiction and the varying tax rates in each jurisdiction. The 2023 fourth quarter results were impacted by the establishment of a net deferred tax asset of $1.18 billion, or $3.10 per share, related to the enactment of Bermuda’s new corporate income tax.


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Arch Capital Group Ltd. and Subsidiaries
Operating Income and Effective Tax Rate Calculations
The following table provides a reconciliation of income (loss) before income taxes to after-tax operating income (loss) available to Arch common shareholders and an analysis of the effective tax rate on pre-tax operating income (loss) available to Arch common shareholders:
(U.S. Dollars in millions)Three Months Ended
March 31,December 31,September 30,June 30,March 31,
 20242023202320232023
Arch Operating Income Components:
Income (loss) before income taxes and income (loss) from operating affiliates$1,166 $1,188 $741 $714 $742 
Net realized (gains) losses(67)(189)248 123 (17)
Equity in net (income) loss of investment funds accounted for using the equity method(99)(102)(59)(69)(48)
Net foreign exchange (gains) losses(31)60 (22)8 16 
Transaction costs and other7 4 1 2 (1)
Income (loss) from operating affiliates
55 69 54 22 39 
Pre-tax operating income available to Arch (b)1,031 1,030 963 800 731 
Income tax (expense) benefit (a)(88)(75)(77)(64)(67)
After-tax operating income available to Arch943 955 886 736 664 
Preferred dividends(10)(10)(10)(10)(10)
After-tax operating income available to Arch common shareholders$933 $945 $876 $726 $654 
Effective tax rate on pre-tax operating income (loss) available to Arch (a)/(b)8.5 %7.3 %8.0 %8.0 %9.2 %

30
Arch Capital Group Ltd. and Subsidiaries
Capital Structure and Share Repurchase Activity
The following table provides an analysis of the Company’s capital structure:
(U.S. Dollars and shares in millions, except per share data)March 31,December 31,September 30,June 30,March 31,
20242023202320232023
Debt:
Arch senior notes, due May 1, 2034 ($300 principal, 7.35%)$300 $300 $300 $300 $300 
Arch-U.S. senior notes, due Nov. 1, 2043 ($500 principal, 5.144%) (1)500 500 500 500 500 
Arch Finance senior notes, due December 15, 2026 ($500 principal, 4.011%) (2)500 500 500 500 500 
Arch Finance senior notes, due December 15, 2046 ($450 principal, 5.031%) (2)450 450 450 450 450 
Arch senior notes, due June 30, 2050 ($1,000 principal, 3.635%)1,000 1,000 1,000 1,000 1,000 
Deferred debt costs on senior notes(23)(24)(24)(24)(24)
Revolving credit agreement borrowings, due August 23, 2028— — — — — 
Total debt$2,727 $2,726 $2,726 $2,726 $2,726 
Shareholders’ equity available to Arch:
Series F non-cumulative preferred shares (5.45%)330 330 330 330 330 
Series G non-cumulative preferred shares (4.55%)500 500 500 500 500 
Common shareholders’ equity (a)18,525 17,523 14,409 13,811 13,158 
Total shareholders’ equity available to Arch$19,355 $18,353 $15,239 $14,641 $13,988 
Total capital available to Arch$22,082 $21,079 $17,965 $17,367 $16,714 
Common shares outstanding, net of treasury shares (b)375.3 373.3 373.1 372.9 372.2 
Book value per common share (3) (a)/(b)$49.36 $46.94 $38.62 $37.04 $35.35 
Leverage ratios:
Senior notes/total capital available to Arch12.3 %12.9 %15.2 %15.7 %16.3 %
Revolving credit agreement borrowings/total capital available to Arch— %— %— %— %— %
Debt/total capital available to Arch12.3 %12.9 %15.2 %15.7 %16.3 %
Preferred/total capital available to Arch3.8 %3.9 %4.6 %4.8 %5.0 %
Debt and preferred/total capital available to Arch16.1 %16.9 %19.8 %20.5 %21.3 %

(1)    Issued by Arch Capital Group (U.S.) Inc. (“Arch-U.S.”), a wholly owned subsidiary of Arch, and fully and unconditionally guaranteed by Arch.
(2)    Issued by Arch Capital Finance LLC (“Arch Finance”), a wholly owned subsidiary of Arch U.S. MI Holdings Inc., and fully and unconditionally guaranteed by Arch.
(3)    Excludes the effects of stock options, restricted and performance stock units outstanding.

The following table provides the impact of share repurchases under the Company’s share repurchase program:
(U.S. Dollars and shares in millions, except per share data)Three Months EndedCumulative
 March 31,December 31,September 30,June 30,March 31,March 31,
 202420232023202320232024
Effect of share repurchases:
Aggregate cost of shares repurchased$— $— $— $— $— $5,872 
Shares repurchased— — — — — 433.6 
Average price per share repurchased$— $— $— $— $— $13.54 
Remaining share repurchase authorization (1)$1,000 
(1)    Repurchases under the share repurchase authorization may be effected from time to time in open market or privately negotiated transactions through December 31, 2024.
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