Elevated catastrophe losses weighed on underwriting income at Arch Capital Group Ltd. in the second quarter of 2026, pushing the consolidated combined ratio to 83.5%.
Underwriting income fell 19.7% year-on-year to US$657 million for the three months ending in June 30. Net premiums written declined 6.9% to US$4.05 billion, while net premiums earned were 8.1% lower at US$3.99 billion. Gross premiums written were broadly flat at US$6.13 billion, down 1.1%, as commercial rates continued their eighth consecutive quarterly decline globally.
The loss ratio rose two percentage points to 55.1%, with the underwriting expense ratio up 0.3 points to 28.4%. The combined ratio excluding catastrophic activity and prior year development came in at 82.5%, compared with 80.9% in the second quarter of 2025. Chubb, which also reported second-quarter results last week, posted a comparable combined ratio of 83.8% over the same period.
Pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums, were US$201 million. Favourable development in prior year loss reserves provided US$165 million of relief.
The insurance segment posted a combined ratio of 98.5%, up from 93.4% a year earlier. Catastrophic activity added 7.6 points to the insurance loss ratio, against 2.9 points in the prior-year period. Underwriting income in the segment fell sharply to US$27 million, from US$129 million in the second quarter of last year.
The insurance segment's underwriting expense ratio rose to 35.5% from 33.6%. The increase partly reflected transitional costs from the 2024 acquisition of the US MidCorp and Entertainment insurance businesses from Allianz. Net premiums written in the segment were 5.1% lower, though excluding non-renewals of certain acquired programmes, the underlying decline was 1.8%.
The reinsurance segment posted a combined ratio of 77.5%, an improvement from 78.5% a year earlier. Underwriting income was US$410 million, down from US$451 million in the same period of 2025. Catastrophic activity contributed 3.0 loss ratio points, against 5.5 points in the prior-year quarter.
Net income available to common shareholders was US$1.05 billion, or US$3 per diluted share, for the quarter. That compares with US$1.23 billion, or US$3.23 per diluted share, in the second quarter of 2025. After-tax operating income was US$893 million, or US$2.56 per diluted share, against US$979 million a year earlier.
Chief executive Nicolas Papadopoulo said the company delivered results across all three segments. He pointed to Arch's positions in specialty insurance, reinsurance and mortgage as factors in its market positioning.
The annualised net income return on average common equity was 18.0%, compared with 22.9% a year earlier. Annualised operating return on average common equity was 15.3%, against 18.2% in the second quarter of 2025.
The mortgage segment posted a combined ratio of 22.8%, against 15.2% in the prior-year period. Net premiums written rose 7.5% to US$272 million. Net investment income was US$417 million, up from US$405 million a year earlier.
The company repurchased US$1.2 billion of common shares during the period. Book value per common share was US$68.04 at June 30, a 2.8% increase from the first quarter of the year.
Arch Capital Group Ltd. had approximately US$28.3 billion in capital at June 30.
