Arch Capital Group Ltd. reported net profit for the first quarter of $ 185.6 million, a 57% decrease from $ 427.8 million over the same period last year.
Net premium income increased 5.0% to $ 2.63 billion, and the company’s total expense ratio improved to 78.7% from 90.7% in the first quarter of 2021, the insurer and reinsurer reported on Wednesday after the stock market closed.
Net investment income increased by 2.2% to $ 80.4 million, from $ 88.0 million in the first quarter of 2021.
In the insurance segment, net premium income increased by 21.3% to USD 1.21 billion, from USD 995 million during the same period last year. Growth was due to interest rate increases, new business and growth in existing accounts.
“The underlying conditions for our business continue to improve as we take advantage of better market conditions in the real estate / claims industry,”; Archs CEO Marc Grandisson said on Thursday in a results interview with analysts.
Arch’s property / accident units remain in a “growth phase of the insurance cycle … as we continue to profit from the last 24 months’ rate hikes”, said Mr. Grandisson.
U.S. operations, he said, saw “meaningful” growth, primarily in professional lines including cyber and travel.
In the reinsurance segment, net premium income increased by 14.0% to $ 1.14 billion, from $ 999 million in the first quarter of last year. Arch said in its income statement that the increases came in specialties, accidents and property excluding property disaster lines.
In the reinsurance segment, “the emphasis remains on quota re-insurance quotas for excess loss,” allowing Arch to participate in increases in primary insurance, said Mr. Grandisson.
Mr. Grandisson noted that global inflation and supply chain problems pushed up interest rates, “which in turn led to investment declines during the quarter.”
“Inflation is top of mind for everyone in the real estate / claims industry,” he said.
Arch had a realized net loss of $ 292,414 million on its financial report, defined as the accumulated amount of realized gains and losses resulting from the sale of securities.