Arch Capital Group reported net income available to common shareholders of $564 million for the first quarter of 2025, reflecting an annualized net income return on average common equity of 11.1%, down from $1.1 billion, in the same period last year.
After-tax operating income available to common shareholders was $587 million, or $1.54 per share, representing an 11.5% annualized operating return on average common equity. This compares to $933 million, or $2.45 per share, reported in the first quarter of 2024.
As it anticipated earlier in the year, Arch Capital found itself hit with major losses, mainly attributed to the California wildfires and impacting both the insurance and reinsurance segments.
Catastrophe losses for the quarter totaled $547 million on a pre-tax basis, net of reinsurance and reinstatement premiums.
The loss ratio for the quarter included 9.5 points of current year catastrophe activity, mainly due to the wildfires. In comparison, the 2024 first quarter reflected 2.1 points related to the Baltimore bridge collapse and 1.9 points of other catastrophe losses.
The 2025 loss ratio was reduced by 0.9 points due to net favorable development of prior year loss reserves, compared to 0.7 points in the prior year. Additional changes in the loss ratio were influenced by the MCE Acquisition business and shifts in the portfolio mix.
Last quarter, the company reported a fourth-quarter net income available to common shareholders of $925 million, reflecting a 17.9% annualized net income return on average common equity. This is significantly lower compared to $2.3 billion in the fourth quarter of 2023.
Favorable development in prior year loss reserves, net of related adjustments, was reported at $167 million.
The company’s combined ratio, excluding catastrophe activity and prior year development, stood at 81.0% for the first quarter, compared to 80.8% in the same period last year.
Arch also repurchased approximately $196 million worth of its common shares during the quarter. Book value per common share was reported at $55.15 as of March 31, 2025, marking a 3.8% increase from year-end 2024.
Arch CEO Nicolas Papadopoulo (pictured above) noted that the company delivered stable results despite losses tied to the California wildfires.
He noted that although the market has become more competitive, Arch continues to see opportunities to generate shareholder value and emphasized the firm's underwriting approach in navigating current conditions.
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