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Arch profit falls by 40% in the second quarter



Arch Capital Group Ltd. reported second quarter net income of $394.16 million, down 40.622% from the same period last year.

Net premium income rose 20.7% to $2.68 billion, and Arch’s total expense ratio for the second quarter improved to 77.1% from 79.8% in the second quarter of 2021, the company said in its earnings report Wednesday after the market closed.

Net investment income increased 19% to $106.39 million.

The company recorded a net realized loss of $266.58 million on its balance sheet.

In the insurance segment, net premium income increased 27.5% to $1.228 billion, with growth driven by rate increases, new business opportunities and growth in existing accounts, the statement said.

North American premium growth was broad-based, driven by surplus and excess lines and professional lines including cyber, according to Arch CEO Marc Grandisson, who spoke on the company̵

7;s Thursday earnings call with analysts.

The tightening of property/casualty levels continues in many quarters, Mr. Grandisson. “For the vast majority of property/casualty lines, we have been able to achieve compound rate increases meaningfully over loss cost trends for the past two or three annual renewals,” he said.

In the reinsurance segment, net premium income grew 25.7% to $1.162 billion, driven by specialty, property catastrophe and property excluding property catastrophe lines. Writing more quota share deals, he said, has allowed Arch to “participate in the rate increases that our cedants have seen.”

Reinsurance renewals in June and July showed a market that “seems to want significant rate increases to accept catastrophe exposures,” as catastrophe exposures in Florida commanded rate hikes of 30% on average, a momentum that Mr. Grandisson says he believes will extend to January 1 renewals.


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