☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||||
For the quarterly period ended March 31, | |||||||||||
Or | |||||||||||
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Bermuda | 98-0374481 | ||||||||||||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||||||||
Waterloo House, Ground Floor | |||||||||||||||||
100 Pitts Bay Road, | Pembroke | HM 08, | Bermuda | (441) | 278-9250 | ||||||||||||
(Address of principal executive offices) | (Registrant’s telephone number, including area code) |
Title of each class | Trading Symbol (s) | Name of each exchange on which registered | |||||||||||||||
Common shares, $0.0011 par value per share | ACGL | NASDAQ | Stock Market | ||||||||||||||
Depositary shares, each representing a 1/1000th interest in a 5.25% Series E preferred share | ACGLP | NASDAQ | Stock Market | ||||||||||||||
Depositary shares, each representing a 1/1000th interest in a 5.45% Series F preferred share | ACGLO | NASDAQ | Stock Market |
Page No. | |||||||||||
PART I | |||||||||||
Item 1. | |||||||||||
Item 2. | |||||||||||
Item 3. | |||||||||||
Item 4. | |||||||||||
PART II | |||||||||||
Item 1. | |||||||||||
Item 1A. | |||||||||||
Item | |||||||||||
Item 3. | |||||||||||
Item 4. | |||||||||||
Item 5. | |||||||||||
Item 6. | |||||||||||
ARCH CAPITAL | 1 |
ARCH CAPITAL | 2 | 2021 FIRST QUARTER FORM 10-Q |
•the other matters set forth under Item 1A “Risk Factors”, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of our Annual Report on Form 10-K for the year ended December 31, 2020, as well as the other factors set forth in our other documents on file with the SEC, and management’s response to any of the aforementioned factors. |
ARCH CAPITAL | 3 | 2021 FIRST QUARTER FORM 10-Q |
Page No. | ||||||||
March 31, | ||||||||
For the three month periods ended March 31, 2021 and 2020 | ||||||||
For the three month periods ended March 31, 2021 and 2020 | ||||||||
For the three month periods ended March 31, 2021 and 2020 | ||||||||
For the three month periods ended March 31, 2021 and 2020 | ||||||||
Notes to Consolidated Financial Statements (unaudited) | ||||||||
ARCH CAPITAL | 4 |
ARCH CAPITAL | 5 |
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands, except share data) | |||||||
(Unaudited) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
Assets | |||||||
Investments: | |||||||
Fixed maturities available for sale, at fair value (amortized cost: $16,757,086 and $16,598,808); net of allowance for credit losses: $9,909 at March 31, 2020) | $ | 16,841,571 | $ | 16,894,526 | |||
Short-term investments available for sale, at fair value (amortized cost: $944,878 and $957,283); net of allowance for credit losses: $29 at March 31, 2020) | 944,531 | 956,546 | |||||
Collateral received under securities lending, at fair value (amortized cost: $182,274 and $388,366) | 182,284 | 388,376 | |||||
Equity securities, at fair value | 1,181,903 | 838,925 | |||||
Investments accounted for using the fair value option | 3,310,517 | 3,663,477 | |||||
Investments accounted for using the equity method | 1,676,055 | 1,660,396 | |||||
Total investments | 24,136,861 | 24,402,246 | |||||
Cash | 882,284 | 726,230 | |||||
Accrued investment income | 118,089 | 117,937 | |||||
Securities pledged under securities lending, at fair value (amortized cost: $175,218 and $378,738) | 177,442 | 379,868 | |||||
Premiums receivable (net of allowance for credit losses: $27,990 and $21,003) | 2,155,204 | 1,778,717 | |||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses (net of allowance for credit losses: $13,700 and $1,364) | 4,303,135 | 4,346,816 | |||||
Contractholder receivables (net of allowance for credit losses: $9,038 and $0) | 2,140,724 | 2,119,460 | |||||
Ceded unearned premiums | 1,357,284 | 1,234,683 | |||||
Deferred acquisition costs | 708,848 | 633,400 | |||||
Receivable for securities sold | 221,573 | 24,133 | |||||
Goodwill and intangible assets | 705,450 | 738,083 | |||||
Other assets | 1,509,232 | 1,383,788 | |||||
Total assets | $ | 38,416,126 | $ | 37,885,361 | |||
Liabilities | |||||||
Reserve for losses and loss adjustment expenses | $ | 14,309,580 | $ | 13,891,842 | |||
Unearned premiums | 4,817,191 | 4,339,549 | |||||
Reinsurance balances payable | 737,597 | 667,072 | |||||
Contractholder payables | 2,149,762 | 2,119,460 | |||||
Collateral held for insured obligations | 211,597 | 206,698 | |||||
Senior notes | 1,871,869 | 1,871,626 | |||||
Revolving credit agreement borrowings | 500,587 | 484,287 | |||||
Securities lending payable | 182,274 | 388,366 | |||||
Payable for securities purchased | 327,359 | 87,579 | |||||
Other liabilities | 1,392,905 | 1,513,330 | |||||
Total liabilities | 26,500,721 | 25,569,809 | |||||
Commitments and Contingencies | |||||||
Redeemable noncontrolling interests | 55,376 | 55,404 | |||||
Shareholders' Equity | |||||||
Non-cumulative preferred shares | 780,000 | 780,000 | |||||
Common shares ($0.0011 par, shares issued: 577,386,799 and 574,617,195) | 642 | 638 | |||||
Additional paid-in capital | 1,921,487 | 1,889,683 | |||||
Retained earnings | 11,132,268 | 11,021,006 | |||||
Accumulated other comprehensive income (loss), net of deferred income tax | 21,944 | 212,091 | |||||
Common shares held in treasury, at cost (shares: 171,776,932 and 168,997,994) | (2,489,097 | ) | (2,406,047 | ) | |||
Total shareholders' equity available to Arch | 11,367,244 | 11,497,371 | |||||
Non-redeemable noncontrolling interests | 492,785 | 762,777 | |||||
Total shareholders' equity | 11,860,029 | 12,260,148 | |||||
Total liabilities, noncontrolling interests and shareholders' equity | $ | 38,416,126 | $ | 37,885,361 |
(Unaudited) | |||||||||||
March 31, 2021 | December 31, 2020 | ||||||||||
Assets | |||||||||||
Investments: | |||||||||||
Fixed maturities available for sale, at fair value (amortized cost: $18,447,720 and $18,143,305; net of allowance for credit losses: $3,830 and $2,397 ) | $ | 18,723,035 | $ | 18,717,825 | |||||||
Short-term investments available for sale, at fair value (amortized cost: $1,269,312 and $1,924,292; net of allowance for credit losses: $0 and $0) | 1,269,631 | 1,924,922 | |||||||||
Collateral received under securities lending, at fair value (amortized cost: $143,886 and $301,089) | 143,894 | 301,096 | |||||||||
Equity securities, at fair value | 1,532,906 | 1,444,830 | |||||||||
Other investments (portion measured at fair value: $3,935,354 and $3,824,796) | 4,435,354 | 4,324,796 | |||||||||
Investments accounted for using the equity method | 2,256,327 | 2,047,889 | |||||||||
Total investments | 28,361,147 | 28,761,358 | |||||||||
Cash | 941,951 | 906,448 | |||||||||
Accrued investment income | 101,108 | 103,299 | |||||||||
Securities pledged under securities lending, at fair value (amortized cost: $142,129 and $294,493) | 140,949 | 294,912 | |||||||||
Investment in operating affiliates | 739,783 | 129,291 | |||||||||
Premiums receivable (net of allowance for credit losses: $36,111 and $37,781) | 2,618,175 | 2,064,586 | |||||||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses (net of allowance for credit losses: $10,872 and $11,636) | 4,041,076 | 4,500,802 | |||||||||
Contractholder receivables (net of allowance for credit losses: $5,853 and $8,638) | 1,919,655 | 1,986,924 | |||||||||
Ceded unearned premiums | 1,406,489 | 1,234,075 | |||||||||
Deferred acquisition costs | 919,740 | 790,708 | |||||||||
Receivable for securities sold | 199,424 | 92,743 | |||||||||
Goodwill and intangible assets | 679,509 | 692,863 | |||||||||
Other assets | 2,135,261 | 1,724,288 | |||||||||
Total assets | $ | 44,204,267 | $ | 43,282,297 | |||||||
Liabilities | |||||||||||
Reserve for losses and loss adjustment expenses | $ | 16,443,952 | $ | 16,513,929 | |||||||
Unearned premiums | 5,549,127 | 4,838,965 | |||||||||
Reinsurance balances payable | 919,125 | 683,263 | |||||||||
Contractholder payables | 1,925,508 | 1,995,562 | |||||||||
Collateral held for insured obligations | 222,245 | 215,581 | |||||||||
Senior notes | 2,861,417 | 2,861,113 | |||||||||
Revolving credit agreement borrowings | 155,687 | 155,687 | |||||||||
Securities lending payable | 143,886 | 301,089 | |||||||||
Payable for securities purchased | 386,453 | 218,779 | |||||||||
Other liabilities | 1,565,861 | 1,510,888 | |||||||||
Total liabilities | 30,173,261 | 29,294,856 | |||||||||
Commitments and Contingencies | 0 | 0 | |||||||||
Redeemable noncontrolling interests | 57,670 | 58,548 | |||||||||
Shareholders' Equity | |||||||||||
Non-cumulative preferred shares | 780,000 | 780,000 | |||||||||
Common shares ($0.0011 par, shares issued: 581,226,408 and 579,000,841) | 645 | 643 | |||||||||
Additional paid-in capital | 2,014,741 | 1,977,794 | |||||||||
Retained earnings | 12,790,216 | 12,362,463 | |||||||||
Accumulated other comprehensive income (loss), net of deferred income tax | 205,827 | 488,895 | |||||||||
Common shares held in treasury, at cost (shares: 177,913,031 and 172,280,199) | (2,694,957) | (2,503,909) | |||||||||
Total shareholders' equity available to Arch | 13,096,472 | 13,105,886 | |||||||||
Non-redeemable noncontrolling interests | 876,864 | 823,007 | |||||||||
Total shareholders' equity | 13,973,336 | 13,928,893 | |||||||||
Total liabilities, noncontrolling interests and shareholders' equity | $ | 44,204,267 | $ | 43,282,297 |
ARCH CAPITAL | 6 |
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (U.S. dollars in thousands, except share data) | |||||||
(Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
Revenues | |||||||
Net premiums written | $ | 2,137,246 | $ | 1,525,259 | |||
Change in unearned premiums | (392,802 | ) | (156,393 | ) | |||
Net premiums earned | 1,744,444 | 1,368,866 | |||||
Net investment income | 145,153 | 156,949 | |||||
Net realized gains (losses) | (366,960 | ) | 140,256 | ||||
Other underwriting income | 6,852 | 8,825 | |||||
Equity in net income (loss) of investment funds accounted for using the equity method | (4,209 | ) | 46,867 | ||||
Other income | 8,548 | 1,083 | |||||
Total revenues | 1,533,828 | 1,722,846 | |||||
Expenses | |||||||
Losses and loss adjustment expenses | 1,115,419 | 718,532 | |||||
Acquisition expenses | 247,283 | 197,848 | |||||
Other operating expenses | 234,544 | 201,163 | |||||
Corporate expenses | 20,796 | 17,962 | |||||
Amortization of intangible assets | 16,631 | 20,417 | |||||
Interest expense | 32,555 | 29,065 | |||||
Net foreign exchange (gains) losses | (72,671 | ) | (3,525 | ) | |||
Total expenses | 1,594,557 | 1,181,462 | |||||
Income (loss) before income taxes | (60,729 | ) | 541,384 | ||||
Income tax expense | (27,945 | ) | (45,886 | ) | |||
Net income (loss) | $ | (88,674 | ) | $ | 495,498 | ||
Net (income) loss attributable to noncontrolling interests | 232,791 | (46,970 | ) | ||||
Net income available to Arch | 144,117 | 448,528 | |||||
Preferred dividends | (10,403 | ) | (10,403 | ) | |||
Net income available to Arch common shareholders | $ | 133,714 | $ | 438,125 | |||
Net income per common share and common share equivalent | |||||||
Basic | $ | 0.33 | $ | 1.09 | |||
Diluted | $ | 0.32 | $ | 1.07 | |||
Weighted average common shares and common share equivalents outstanding | |||||||
Basic | 403,892,161 | 400,184,404 | |||||
Diluted | 414,033,570 | 408,971,029 |
(Unaudited) | |||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||
March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Net premiums earned | $ | 1,948,422 | $ | 1,744,444 | |||||||||||||||||||
Net investment income | 98,856 | 145,153 | |||||||||||||||||||||
Net realized gains (losses) | 142,461 | (366,960) | |||||||||||||||||||||
Other underwriting income | 6,110 | 6,852 | |||||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 71,686 | (4,209) | |||||||||||||||||||||
Other income (loss) | (1,741) | 32 | |||||||||||||||||||||
Total revenues | 2,265,794 | 1,525,312 | |||||||||||||||||||||
Expenses | |||||||||||||||||||||||
Losses and loss adjustment expenses | 1,203,100 | 1,115,419 | |||||||||||||||||||||
Acquisition expenses | 304,481 | 247,283 | |||||||||||||||||||||
Other operating expenses | 261,033 | 234,544 | |||||||||||||||||||||
Corporate expenses | 25,384 | 20,796 | |||||||||||||||||||||
Amortization of intangible assets | 14,402 | 16,631 | |||||||||||||||||||||
Interest expense | 38,346 | 32,555 | |||||||||||||||||||||
Net foreign exchange (gains) losses | (20,063) | (72,671) | |||||||||||||||||||||
Total expenses | 1,826,683 | 1,594,557 | |||||||||||||||||||||
Income (loss) before income taxes and income (loss) from operating affiliates | 439,111 | (69,245) | |||||||||||||||||||||
Income tax expense | (38,860) | (27,945) | |||||||||||||||||||||
Income (loss) from operating affiliates | 75,457 | 8,516 | |||||||||||||||||||||
Net income (loss) | $ | 475,708 | $ | (88,674) | |||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | (37,552) | 232,791 | |||||||||||||||||||||
Net income (loss) available to Arch | 438,156 | 144,117 | |||||||||||||||||||||
Preferred dividends | (10,403) | (10,403) | |||||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 427,753 | $ | 133,714 | |||||||||||||||||||
Net income per common share and common share equivalent | |||||||||||||||||||||||
Basic | $ | 1.07 | $ | 0.33 | |||||||||||||||||||
Diluted | $ | 1.05 | $ | 0.32 | |||||||||||||||||||
Weighted average common shares and common share equivalents outstanding | |||||||||||||||||||||||
Basic | 400,807,895 | 403,892,161 | |||||||||||||||||||||
Diluted | 409,223,253 | 414,033,570 |
ARCH CAPITAL | 7 |
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (U.S. dollars in thousands) | |||||||
(Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
Comprehensive Income | |||||||
Net income (loss) | $ | (88,674 | ) | $ | 495,498 | ||
Other comprehensive income (loss), net of deferred income tax | |||||||
Unrealized appreciation (decline) in value of available-for-sale investments: | |||||||
Unrealized holding gains (losses) arising during period | (57,287 | ) | 225,887 | ||||
Reclassification of net realized (gains) losses, included in net income (loss) | (121,229 | ) | (10,221 | ) | |||
Foreign currency translation adjustments | (44,689 | ) | 5,516 | ||||
Comprehensive income (loss) | (311,879 | ) | 716,680 | ||||
Net (income) loss attributable to noncontrolling interests | 232,791 | (46,970 | ) | ||||
Other comprehensive (income) loss attributable to noncontrolling interests | 33,058 | (4,139 | ) | ||||
Comprehensive income (loss) available to Arch | $ | (46,030 | ) | $ | 665,571 |
(Unaudited) | |||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||
March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Comprehensive Income | |||||||||||||||||||||||
Net income (loss) | $ | 475,708 | $ | (88,674) | |||||||||||||||||||
Other comprehensive income (loss), net of deferred income tax | |||||||||||||||||||||||
Unrealized appreciation (decline) in value of available-for-sale investments: | |||||||||||||||||||||||
Unrealized holding gains (losses) arising during period | (261,750) | (57,287) | |||||||||||||||||||||
Reclassification of net realized (gains) losses, included in net income (loss) | 2,697 | (121,229) | |||||||||||||||||||||
Foreign currency translation adjustments | (28,584) | (44,689) | |||||||||||||||||||||
Comprehensive income (loss) | 188,071 | (311,879) | |||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | (37,552) | 232,791 | |||||||||||||||||||||
Other comprehensive (income) loss attributable to noncontrolling interests | 4,570 | 33,058 | |||||||||||||||||||||
Comprehensive income (loss) available to Arch | $ | 155,089 | $ | (46,030) |
ARCH CAPITAL | 8 |
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (U.S. dollars in thousands) | |||||||
(Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
Non-cumulative preferred shares | |||||||
Balance at beginning and end of period | 780,000 | 780,000 | |||||
Common shares | |||||||
Balance at beginning of period | 638 | 634 | |||||
Common shares issued, net | 4 | 2 | |||||
Balance at end of period | 642 | 636 | |||||
Additional paid-in capital | |||||||
Balance at beginning of period | 1,889,683 | 1,793,781 | |||||
Amortization of share-based compensation | 28,602 | 25,908 | |||||
Other changes | 3,202 | (84 | ) | ||||
Balance at end of period | 1,921,487 | 1,819,605 | |||||
Retained earnings | |||||||
Balance at beginning of period | 11,021,006 | 9,426,299 | |||||
Cumulative effect of an accounting change (1) | (22,452 | ) | — | ||||
Balance at beginning of period, as adjusted | 10,998,554 | 9,426,299 | |||||
Net income (loss) | (88,674 | ) | 495,498 | ||||
Net (income) loss attributable to noncontrolling interests | 232,791 | (46,970 | ) | ||||
Preferred share dividends | (10,403 | ) | (10,403 | ) | |||
Balance at end of period | 11,132,268 | 9,864,424 | |||||
Accumulated other comprehensive income (loss), net of deferred income tax | |||||||
Balance at beginning of period | 212,091 | (178,720 | ) | ||||
Unrealized appreciation (decline) in value of available-for-sale investments, net of deferred income tax: | |||||||
Balance at beginning of period | 258,486 | (114,178 | ) | ||||
Unrealized holding gains (losses) during period, net of reclassification adjustment | (178,516 | ) | 215,666 | ||||
Unrealized holding gains (losses) during period attributable to noncontrolling interests | 33,179 | (4,286 | ) | ||||
Balance at end of period | 113,149 | 97,202 | |||||
Foreign currency translation adjustments, net of deferred income tax: | |||||||
Balance at beginning of period | (46,395 | ) | (64,542 | ) | |||
Foreign currency translation adjustments | (44,689 | ) | 5,516 | ||||
Foreign currency translation adjustments attributable to noncontrolling interests | (121 | ) | 147 | ||||
Balance at end of period | (91,205 | ) | (58,879 | ) | |||
Balance at end of period | 21,944 | 38,323 | |||||
Common shares held in treasury, at cost | |||||||
Balance at beginning of period | (2,406,047 | ) | (2,382,167 | ) | |||
Shares repurchased for treasury | (83,050 | ) | (6,225 | ) | |||
Balance at end of period | (2,489,097 | ) | (2,388,392 | ) | |||
Total shareholders’ equity available to Arch | 11,367,244 | 10,114,596 | |||||
Non-redeemable noncontrolling interests | 492,785 | 838,081 | |||||
Total shareholders’ equity | $ | 11,860,029 | $ | 10,952,677 |
(Unaudited) | |||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||
March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Non-cumulative preferred shares | |||||||||||||||||||||||
Balance at beginning and end of period | $ | 780,000 | $ | 780,000 | |||||||||||||||||||
Common shares | |||||||||||||||||||||||
Balance at beginning of period | 643 | 638 | |||||||||||||||||||||
Common shares issued, net | 2 | 4 | |||||||||||||||||||||
Balance at end of period | 645 | 642 | |||||||||||||||||||||
Additional paid-in capital | |||||||||||||||||||||||
Balance at beginning of period | 1,977,794 | 1,889,683 | |||||||||||||||||||||
Amortization of share-based compensation | 40,573 | 28,050 | |||||||||||||||||||||
Other changes | (3,626) | 3,754 | |||||||||||||||||||||
Balance at end of period | 2,014,741 | 1,921,487 | |||||||||||||||||||||
Retained earnings | |||||||||||||||||||||||
Balance at beginning of period | 12,362,463 | 11,021,006 | |||||||||||||||||||||
Cumulative effect of an accounting change (1) | 0 | (22,452) | |||||||||||||||||||||
Balance at beginning of period, as adjusted | 12,362,463 | 10,998,554 | |||||||||||||||||||||
Net income (loss) | 475,708 | (88,674) | |||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | (37,552) | 232,791 | |||||||||||||||||||||
Preferred share dividends | (10,403) | (10,403) | |||||||||||||||||||||
Balance at end of period | 12,790,216 | 11,132,268 | |||||||||||||||||||||
Accumulated other comprehensive income (loss), net of deferred income tax | |||||||||||||||||||||||
Balance at beginning of period | 488,895 | 212,091 | |||||||||||||||||||||
Unrealized appreciation (decline) in value of available-for-sale investments, net of deferred income tax: | |||||||||||||||||||||||
Balance at beginning of period | 501,295 | 258,486 | |||||||||||||||||||||
Unrealized holding gains (losses) during period, net of reclassification adjustment | (259,053) | (178,516) | |||||||||||||||||||||
Unrealized holding gains (losses) during period attributable to noncontrolling interests | 4,469 | 33,179 | |||||||||||||||||||||
Balance at end of period | 246,711 | 113,149 | |||||||||||||||||||||
Foreign currency translation adjustments, net of deferred income tax: | |||||||||||||||||||||||
Balance at beginning of period | (12,400) | (46,395) | |||||||||||||||||||||
Foreign currency translation adjustments | (28,584) | (44,689) | |||||||||||||||||||||
Foreign currency translation adjustments attributable to noncontrolling interests | 100 | (121) | |||||||||||||||||||||
Balance at end of period | (40,884) | (91,205) | |||||||||||||||||||||
Balance at end of period | 205,827 | 21,944 | |||||||||||||||||||||
Common shares held in treasury, at cost | |||||||||||||||||||||||
Balance at beginning of period | (2,503,909) | (2,406,047) | |||||||||||||||||||||
Shares repurchased for treasury | (191,048) | (83,050) | |||||||||||||||||||||
Balance at end of period | (2,694,957) | (2,489,097) | |||||||||||||||||||||
Total shareholders’ equity available to Arch | 13,096,472 | 11,367,244 | |||||||||||||||||||||
Non-redeemable noncontrolling interests | 876,864 | 492,785 | |||||||||||||||||||||
Total shareholders’ equity | $ | 13,973,336 | $ | 11,860,029 |
ARCH CAPITAL | 9 |
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. dollars in thousands) | |||||||
(Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
Operating Activities | |||||||
Net income (loss) | $ | (88,674 | ) | $ | 495,498 | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Net realized (gains) losses | 362,964 | (144,091 | ) | ||||
Equity in net income or loss of investment funds accounted for using the equity method and other income or loss | 29,034 | (29,752 | ) | ||||
Amortization of intangible assets | 16,631 | 20,417 | |||||
Share-based compensation | 28,549 | 25,891 | |||||
Changes in: | |||||||
Reserve for losses and loss adjustment expenses, net of unpaid losses and loss adjustment expenses recoverable | 506,057 | (6,005 | ) | ||||
Unearned premiums, net of ceded unearned premiums | 392,802 | 156,393 | |||||
Premiums receivable | (418,457 | ) | (285,137 | ) | |||
Deferred acquisition costs | (75,135 | ) | (23,168 | ) | |||
Reinsurance balances payable | 79,807 | 62,605 | |||||
Other items, net | (223,124 | ) | (37,253 | ) | |||
Net cash provided by (used for) operating activities | 610,454 | 235,398 | |||||
Investing Activities | |||||||
Purchases of fixed maturity investments | (11,965,995 | ) | (7,444,470 | ) | |||
Purchases of equity securities | (760,683 | ) | (203,810 | ) | |||
Purchases of other investments | (228,471 | ) | (324,593 | ) | |||
Proceeds from sales of fixed maturity investments | 11,723,123 | 7,076,590 | |||||
Proceeds from sales of equity securities | 266,301 | 95,017 | |||||
Proceeds from sales, redemptions and maturities of other investments | 216,131 | 216,483 | |||||
Proceeds from redemptions and maturities of fixed maturity investments | 198,356 | 100,424 | |||||
Net settlements of derivative instruments | 195,488 | 29,737 | |||||
Net (purchases) sales of short-term investments | (11,777 | ) | 292,601 | ||||
Change in cash collateral related to securities lending | 55,001 | (29,618 | ) | ||||
Purchases of fixed assets | (8,470 | ) | (9,423 | ) | |||
Other | 42,500 | (93,731 | ) | ||||
Net cash provided by (used for) investing activities | (278,496 | ) | (294,793 | ) | |||
Financing Activities | |||||||
Purchases of common shares under share repurchase program | (75,486 | ) | (2,871 | ) | |||
Proceeds from common shares issued, net | (4,527 | ) | (1,901 | ) | |||
Proceeds from borrowings | 16,300 | 59,000 | |||||
Repayments of borrowings | — | (26,038 | ) | ||||
Change in cash collateral related to securities lending | (55,001 | ) | 29,618 | ||||
Third party investment in non-redeemable noncontrolling interests | (2,867 | ) | — | ||||
Dividends paid to redeemable noncontrolling interests | (1,181 | ) | (4,497 | ) | |||
Other | (1,331 | ) | (1,389 | ) | |||
Preferred dividends paid | (10,403 | ) | (10,403 | ) | |||
Net cash provided by (used for) financing activities | (134,496 | ) | 41,519 | ||||
Effects of exchange rate changes on foreign currency cash and restricted cash | (30,723 | ) | 3,449 | ||||
Increase (decrease) in cash and restricted cash | 166,739 | (14,427 | ) | ||||
Cash and restricted cash, beginning of year | 903,698 | 724,643 | |||||
Cash and restricted cash, end of period | $ | 1,070,437 | $ | 710,216 |
(Unaudited) | |||||||||||
Three Months Ended | |||||||||||
March 31, | |||||||||||
2021 | 2020 | ||||||||||
Operating Activities | |||||||||||
Net income (loss) | $ | 475,708 | $ | (88,674) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Net realized (gains) losses | (161,007) | 362,964 | |||||||||
Equity in net (income) or loss of investment funds accounted for using the equity method and other income or loss | (135,939) | 29,034 | |||||||||
Amortization of intangible assets | 14,402 | 16,631 | |||||||||
Share-based compensation | 40,812 | 28,549 | |||||||||
Changes in: | |||||||||||
Reserve for losses and loss adjustment expenses, net of unpaid losses and loss adjustment expenses recoverable | 560,153 | 506,057 | |||||||||
Unearned premiums, net of ceded unearned premiums | 560,035 | 392,802 | |||||||||
Premiums receivable | (608,250) | (418,457) | |||||||||
Deferred acquisition costs | (126,701) | (75,135) | |||||||||
Reinsurance balances payable | 240,206 | 79,807 | |||||||||
Other items, net | (96,574) | (223,124) | |||||||||
Net cash provided by (used for) operating activities | 762,845 | 610,454 | |||||||||
Investing Activities | |||||||||||
Purchases of fixed maturity investments | (11,530,968) | (11,965,995) | |||||||||
Purchases of equity securities | (309,419) | (760,683) | |||||||||
Purchases of other investments | (430,961) | (228,471) | |||||||||
Proceeds from sales of fixed maturity investments | 10,917,134 | 11,723,123 | |||||||||
Proceeds from sales of equity securities | 284,986 | 266,301 | |||||||||
Proceeds from sales, redemptions and maturities of other investments | 323,591 | 216,131 | |||||||||
Proceeds from redemptions and maturities of fixed maturity investments | 421,042 | 198,356 | |||||||||
Net settlements of derivative instruments | 47,660 | 195,488 | |||||||||
Net (purchases) sales of short-term investments | 589,175 | (11,777) | |||||||||
Change in cash collateral related to securities lending | 0 | 55,001 | |||||||||
Purchase of operating affiliate | (546,349) | 0 | |||||||||
Purchases of fixed assets | (12,490) | (8,470) | |||||||||
Other | (246,590) | 42,500 | |||||||||
Net cash provided by (used for) investing activities | (493,189) | (278,496) | |||||||||
Financing Activities | |||||||||||
Purchases of common shares under share repurchase program | (179,266) | (75,486) | |||||||||
Proceeds from common shares issued, net | (10,008) | (4,527) | |||||||||
Proceeds from borrowings | 0 | 16,300 | |||||||||
Change in cash collateral related to securities lending | 0 | (55,001) | |||||||||
Third party investment in non-redeemable noncontrolling interests | 15,971 | (2,867) | |||||||||
Dividends paid to redeemable noncontrolling interests | (948) | (1,181) | |||||||||
Other | (1,948) | (1,331) | |||||||||
Preferred dividends paid | (10,403) | (10,403) | |||||||||
Net cash provided by (used for) financing activities | (186,602) | (134,496) | |||||||||
Effects of exchange rate changes on foreign currency cash and restricted cash | (6,084) | (30,723) | |||||||||
Increase (decrease) in cash and restricted cash | 76,970 | 166,739 | |||||||||
Cash and restricted cash, beginning of year | 1,290,544 | 903,698 | |||||||||
Cash and restricted cash, end of period | $ | 1,367,514 | $ | 1,070,437 |
ARCH CAPITAL | 10 |
ARCH CAPITAL | 11 |
Three Months Ended | |||||||||||||||||||||||
March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income (loss) | $ | 475,708 | $ | (88,674) | |||||||||||||||||||
Amounts attributable to noncontrolling interests | (37,552) | 232,791 | |||||||||||||||||||||
Net income (loss) available to Arch | 438,156 | 144,117 | |||||||||||||||||||||
Preferred dividends | (10,403) | (10,403) | |||||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 427,753 | $ | 133,714 | |||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted average common shares and common share equivalents outstanding — basic | 400,807,895 | 403,892,161 | |||||||||||||||||||||
Effect of dilutive common share equivalents: | |||||||||||||||||||||||
Nonvested restricted shares | 2,230,794 | 2,275,473 | |||||||||||||||||||||
Stock options (1) | 6,184,564 | 7,865,936 | |||||||||||||||||||||
Weighted average common shares and common share equivalents outstanding — diluted | 409,223,253 | 414,033,570 | |||||||||||||||||||||
Earnings per common share: | |||||||||||||||||||||||
Basic | $ | 1.07 | $ | 0.33 | |||||||||||||||||||
Diluted | $ | 1.05 | $ | 0.32 |
ARCH CAPITAL | 12 | 2021 FIRST QUARTER FORM 10-Q |
ARCH CAPITAL | 13 | 2021 FIRST QUARTER FORM 10-Q |
Three Months Ended | |||||||||||||||||||||||||||||||||||
March 31, 2021 | |||||||||||||||||||||||||||||||||||
Insurance | Reinsurance | Mortgage | Sub-Total | Other | Total | ||||||||||||||||||||||||||||||
Gross premiums written (1) | $ | 1,415,886 | $ | 1,471,060 | $ | 391,246 | $ | 3,277,293 | $ | 216,523 | $ | 3,397,206 | |||||||||||||||||||||||
Premiums ceded | (421,047) | (471,948) | (56,051) | (948,147) | (37,212) | (888,749) | |||||||||||||||||||||||||||||
Net premiums written | 994,839 | 999,112 | 335,195 | 2,329,146 | 179,311 | 2,508,457 | |||||||||||||||||||||||||||||
Change in unearned premiums | (175,365) | (354,212) | 1,122 | (528,455) | (31,580) | (560,035) | |||||||||||||||||||||||||||||
Net premiums earned | 819,474 | 644,900 | 336,317 | 1,800,691 | 147,731 | 1,948,422 | |||||||||||||||||||||||||||||
Other underwriting income (loss) | 0 | (1,198) | 6,897 | 5,699 | 411 | 6,110 | |||||||||||||||||||||||||||||
Losses and loss adjustment expenses | (535,747) | (484,870) | (63,689) | (1,084,306) | (118,794) | (1,203,100) | |||||||||||||||||||||||||||||
Acquisition expenses | (128,222) | (118,025) | (30,082) | (276,329) | (28,152) | (304,481) | |||||||||||||||||||||||||||||
Other operating expenses | (137,113) | (60,514) | (49,131) | (246,758) | (14,275) | (261,033) | |||||||||||||||||||||||||||||
Underwriting income (loss) | $ | 18,392 | $ | (19,707) | $ | 200,312 | 198,997 | (13,079) | 185,918 | ||||||||||||||||||||||||||
Net investment income | 78,729 | 20,127 | 98,856 | ||||||||||||||||||||||||||||||||
Net realized gains (losses) | 101,336 | 41,125 | 142,461 | ||||||||||||||||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 71,686 | 0 | 71,686 | ||||||||||||||||||||||||||||||||
Other income (loss) | (1,741) | 0 | (1,741) | ||||||||||||||||||||||||||||||||
Corporate expenses (2) | (23,468) | 0 | (23,468) | ||||||||||||||||||||||||||||||||
Transaction costs and other (2) | (1,201) | (715) | (1,916) | ||||||||||||||||||||||||||||||||
Amortization of intangible assets | (14,402) | 0 | (14,402) | ||||||||||||||||||||||||||||||||
Interest expense | (34,197) | (4,149) | (38,346) | ||||||||||||||||||||||||||||||||
Net foreign exchange gains (losses) | 21,505 | (1,442) | 20,063 | ||||||||||||||||||||||||||||||||
Income (loss) before income taxes and income (loss) from operating affiliates | 397,244 | 41,867 | 439,111 | ||||||||||||||||||||||||||||||||
Income tax (expense) benefit | (38,852) | (8) | (38,860) | ||||||||||||||||||||||||||||||||
Income (loss) from operating affiliates | 75,457 | 0 | 75,457 | ||||||||||||||||||||||||||||||||
Net income (loss) | 433,849 | 41,859 | 475,708 | ||||||||||||||||||||||||||||||||
Amounts attributable to redeemable noncontrolling interests | 117 | (972) | (855) | ||||||||||||||||||||||||||||||||
Amounts attributable to nonredeemable noncontrolling interests | 0 | (36,697) | (36,697) | ||||||||||||||||||||||||||||||||
Net income (loss) available to Arch | 433,966 | 4,190 | 438,156 | ||||||||||||||||||||||||||||||||
Preferred dividends | (10,403) | 0 | (10,403) | ||||||||||||||||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 423,563 | $ | 4,190 | $ | 427,753 | |||||||||||||||||||||||||||||
Underwriting Ratios | |||||||||||||||||||||||||||||||||||
Loss ratio | 65.4 | % | 75.2 | % | 18.9 | % | 60.2 | % | 80.4 | % | 61.7 | % | |||||||||||||||||||||||
Acquisition expense ratio | 15.6 | % | 18.3 | % | 8.9 | % | 15.3 | % | 19.1 | % | 15.6 | % | |||||||||||||||||||||||
Other operating expense ratio | 16.7 | % | 9.4 | % | 14.6 | % | 13.7 | % | 9.7 | % | 13.4 | % | |||||||||||||||||||||||
Combined ratio | 97.7 | % | 102.9 | % | 42.4 | % | 89.2 | % | 109.2 | % | 90.7 | % | |||||||||||||||||||||||
Goodwill and intangible assets | $ | 276,211 | $ | 17,807 | $ | 377,841 | $ | 671,859 | $ | 7,650 | $ | 679,509 |
ARCH CAPITAL | 14 | 2021 FIRST QUARTER FORM 10-Q |
Three Months Ended | |||||||||||||||||||||||||||||||||||
March 31, 2020 | |||||||||||||||||||||||||||||||||||
Insurance | Reinsurance | Mortgage | Sub-Total | Other | Total | ||||||||||||||||||||||||||||||
Gross premiums written (1) | $ | 1,207,645 | $ | 1,122,519 | $ | 368,945 | $ | 2,698,537 | $ | 234,902 | $ | 2,832,830 | |||||||||||||||||||||||
Premiums ceded | (378,897) | (325,339) | (44,327) | (747,991) | (48,202) | (695,584) | |||||||||||||||||||||||||||||
Net premiums written | 828,748 | 797,180 | 324,618 | 1,950,546 | 186,700 | 2,137,246 | |||||||||||||||||||||||||||||
Change in unearned premiums | (112,829) | (253,720) | 20,408 | (346,141) | (46,661) | (392,802) | |||||||||||||||||||||||||||||
Net premiums earned | 715,919 | 543,460 | 345,026 | 1,604,405 | 140,039 | 1,744,444 | |||||||||||||||||||||||||||||
Other underwriting income (loss) | 0 | 2,120 | 4,599 | 6,719 | 133 | 6,852 | |||||||||||||||||||||||||||||
Losses and loss adjustment expenses | (507,108) | (430,069) | (67,566) | (1,004,743) | (110,676) | (1,115,419) | |||||||||||||||||||||||||||||
Acquisition expenses | (107,337) | (79,606) | (38,536) | (225,479) | (21,804) | (247,283) | |||||||||||||||||||||||||||||
Other operating expenses | (129,649) | (45,297) | (45,896) | (220,842) | (13,702) | (234,544) | |||||||||||||||||||||||||||||
Underwriting income (loss) | $ | (28,175) | $ | (9,392) | $ | 197,627 | 160,060 | (6,010) | 154,050 | ||||||||||||||||||||||||||
Net investment income | 113,028 | 32,125 | 145,153 | ||||||||||||||||||||||||||||||||
Net realized gains (losses) | (72,109) | (294,851) | (366,960) | ||||||||||||||||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | (4,209) | 0 | (4,209) | ||||||||||||||||||||||||||||||||
Other income (loss) | 32 | 0 | 32 | ||||||||||||||||||||||||||||||||
Corporate expenses (2) | (18,201) | 0 | (18,201) | ||||||||||||||||||||||||||||||||
Transaction costs and other (2) | (2,595) | 0 | (2,595) | ||||||||||||||||||||||||||||||||
Amortization of intangible assets | (16,631) | 0 | (16,631) | ||||||||||||||||||||||||||||||||
Interest expense | (25,245) | (7,310) | (32,555) | ||||||||||||||||||||||||||||||||
Net foreign exchange gains (losses) | 63,307 | 9,364 | 72,671 | ||||||||||||||||||||||||||||||||
Income (loss) before income taxes and income (loss) from operating affiliates | 197,437 | (266,682) | (69,245) | ||||||||||||||||||||||||||||||||
Income tax (expense) benefit | (27,945) | 0 | (27,945) | ||||||||||||||||||||||||||||||||
Income (loss) from operating affiliates | 8,516 | 0 | 8,516 | ||||||||||||||||||||||||||||||||
Net income (loss) | 178,008 | (266,682) | (88,674) | ||||||||||||||||||||||||||||||||
Amounts attributable to redeemable noncontrolling interests | (57) | (1,096) | (1,153) | ||||||||||||||||||||||||||||||||
Amounts attributable to nonredeemable noncontrolling interests | 0 | 233,944 | 233,944 | ||||||||||||||||||||||||||||||||
Net income (loss) available to Arch | 177,951 | (33,834) | 144,117 | ||||||||||||||||||||||||||||||||
Preferred dividends | (10,403) | 0 | (10,403) | ||||||||||||||||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 167,548 | $ | (33,834) | $ | 133,714 | |||||||||||||||||||||||||||||
Underwriting Ratios | |||||||||||||||||||||||||||||||||||
Loss ratio | 70.8 | % | 79.1 | % | 19.6 | % | 62.6 | % | 79.0 | % | 63.9 | % | |||||||||||||||||||||||
Acquisition expense ratio | 15.0 | % | 14.6 | % | 11.2 | % | 14.1 | % | 15.6 | % | 14.2 | % | |||||||||||||||||||||||
Other operating expense ratio | 18.1 | % | 8.3 | % | 13.3 | % | 13.8 | % | 9.8 | % | 13.4 | % | |||||||||||||||||||||||
Combined ratio | 103.9 | % | 102.0 | % | 44.1 | % | 90.5 | % | 104.4 | % | 91.5 | % | |||||||||||||||||||||||
Goodwill and intangible assets | $ | 268,296 | $ | 2,516 | $ | 426,988 | $ | 697,800 | $ | 7,650 | $ | 705,450 |
ARCH CAPITAL | 15 | 2021 FIRST QUARTER FORM 10-Q |
Three Months Ended | |||||||||||||||||||||||
March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Reserve for losses and loss adjustment expenses at beginning of period | $ | 16,513,929 | $ | 13,891,842 | |||||||||||||||||||
Unpaid losses and loss adjustment expenses recoverable | 4,314,855 | 4,082,650 | |||||||||||||||||||||
Net reserve for losses and loss adjustment expenses at beginning of period | 12,199,074 | 9,809,192 | |||||||||||||||||||||
Net incurred losses and loss adjustment expenses relating to losses occurring in: | |||||||||||||||||||||||
Current year | 1,244,772 | 1,134,442 | |||||||||||||||||||||
Prior years | (41,672) | (19,023) | |||||||||||||||||||||
Total net incurred losses and loss adjustment expenses | 1,203,100 | 1,115,419 | |||||||||||||||||||||
Retroactive reinsurance transactions (1) | (183,893) | 60,635 | |||||||||||||||||||||
Net foreign exchange (gains) losses | (46,877) | (142,573) | |||||||||||||||||||||
Net paid losses and loss adjustment expenses relating to losses occurring in: | |||||||||||||||||||||||
Current year | (58,984) | (41,260) | |||||||||||||||||||||
Prior years | (585,118) | (561,947) | |||||||||||||||||||||
Total net paid losses and loss adjustment expenses | (644,102) | (603,207) | |||||||||||||||||||||
Net reserve for losses and loss adjustment expenses at end of period | 12,527,302 | 10,239,466 | |||||||||||||||||||||
Unpaid losses and loss adjustment expenses recoverable | 3,916,650 | 4,070,114 | |||||||||||||||||||||
Reserve for losses and loss adjustment expenses at end of period | $ | 16,443,952 | $ | 14,309,580 |
ARCH CAPITAL | 16 | 2021 FIRST QUARTER FORM 10-Q |
Premium Receivables, Net of Allowance | Allowance for Expected Credit Losses | |||||||||||||
March 31, 2021 | ||||||||||||||
Balance at beginning of period | $ | 2,064,586 | $ | 37,781 | ||||||||||
Change for provision of expected credit losses (1) | (1,670) | |||||||||||||
Balance at end of period | $ | 2,618,175 | $ | 36,111 | ||||||||||
December 31, 2020 | ||||||||||||||
Balance at beginning of period | $ | 1,778,717 | $ | 21,003 | ||||||||||
Cumulative effect of accounting change (2) | 6,539 | |||||||||||||
Change for provision of expected credit losses (1) | 10,239 | |||||||||||||
Balance at end of period | $ | 2,064,586 | $ | 37,781 | ||||||||||
Reinsurance Recoverables, Net of Allowance | Allowance for Expected Credit Losses | |||||||||||||
March 31, 2021 | ||||||||||||||
Balance at beginning of period | $ | 4,500,802 | $ | 11,636 | ||||||||||
Change for provision of expected credit losses | (764) | |||||||||||||
Balance at end of period | $ | 4,041,076 | $ | 10,872 | ||||||||||
December 31, 2020 | ||||||||||||||
Balance at beginning of period | $ | 4,346,816 | $ | 1,364 | ||||||||||
Cumulative effect of accounting change (1) | 12,010 | |||||||||||||
Change for provision of expected credit losses | (1,738) | |||||||||||||
Balance at end of period | $ | 4,500,802 | $ | 11,636 | ||||||||||
ARCH CAPITAL | 17 | 2021 FIRST QUARTER FORM 10-Q |
March 31, | December 31 | ||||||||||
2021 | 2020 | ||||||||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | $ | 4,041,076 | $ | 4,500,802 | |||||||
% due from carriers with A.M. Best rating of “A-” or better | 64.5 | % | 63.9 | % | |||||||
% due from all other carriers with no A.M. Best rating (1) | 35.5 | % | 36.1 | % | |||||||
Largest balance due from any one carrier as % of total shareholders’ equity | 1.7 | % | 1.8 | % |
Premium Receivables, Net of Allowance | Allowance for Expected Credit Losses | |||||||||||||
March 31, 2021 | ||||||||||||||
Balance at beginning of period | $ | 2,064,586 | $ | 37,781 | ||||||||||
Change for provision of expected credit losses (1) | (1,670) | |||||||||||||
Balance at end of period | $ | 2,618,175 | $ | 36,111 | ||||||||||
December 31, 2020 | ||||||||||||||
Balance at beginning of period | $ | 1,778,717 | $ | 21,003 | ||||||||||
Cumulative effect of accounting change (2) | 6,539 | |||||||||||||
Change for provision of expected credit losses (1) | 10,239 | |||||||||||||
Balance at end of period | $ | 2,064,586 | $ | 37,781 | ||||||||||
Reinsurance Recoverables, Net of Allowance | Allowance for Expected Credit Losses | |||||||||||||
March 31, 2021 | ||||||||||||||
Balance at beginning of period | $ | 4,500,802 | $ | 11,636 | ||||||||||
Change for provision of expected credit losses | (764) | |||||||||||||
Balance at end of period | $ | 4,041,076 | $ | 10,872 | ||||||||||
December 31, 2020 | ||||||||||||||
Balance at beginning of period | $ | 4,346,816 | $ | 1,364 | ||||||||||
Cumulative effect of accounting change (1) | 12,010 | |||||||||||||
Change for provision of expected credit losses | (1,738) | |||||||||||||
Balance at end of period | $ | 4,500,802 | $ | 11,636 | ||||||||||
ARCH CAPITAL | |
March 31, | December 31 | ||||||||||
2021 | 2020 | ||||||||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | $ | 4,041,076 | $ | 4,500,802 | |||||||
% due from carriers with A.M. Best rating of “A-” or better | 64.5 | % | 63.9 | % | |||||||
% due from all other carriers with no A.M. Best rating (1) | 35.5 | % | 36.1 | % | |||||||
Largest balance due from any one carrier as % of total shareholders’ equity | 1.7 | % | 1.8 | % |
Three Months Ended | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
Numerator: | |||||||
Net income (loss) | $ | (88,674 | ) | $ | 495,498 | ||
Amounts attributable to noncontrolling interests | 232,791 | (46,970 | ) | ||||
Net income available to Arch | 144,117 | 448,528 | |||||
Preferred dividends | (10,403 | ) | (10,403 | ) | |||
Net income available to Arch common shareholders | $ | 133,714 | $ | 438,125 | |||
Denominator: | |||||||
Weighted average common shares and common share equivalents outstanding — basic | 403,892,161 | 400,184,404 | |||||
Effect of dilutive common share equivalents: | |||||||
Nonvested restricted shares | 2,275,473 | 1,807,488 | |||||
Stock options (1) | 7,865,936 | 6,979,137 | |||||
Weighted average common shares and common share equivalents outstanding — diluted | 414,033,570 | 408,971,029 | |||||
Earnings per common share: | |||||||
Basic | $ | 0.33 | $ | 1.09 | |||
Diluted | $ | 0.32 | $ | 1.07 |
Three Months Ended | |||||||||||||||||||||||
March 31, 2020 | |||||||||||||||||||||||
Insurance | Reinsurance | Mortgage | Sub-Total | Other | Total | ||||||||||||||||||
Gross premiums written (1) | $ | 1,207,645 | $ | 1,122,519 | $ | 368,945 | $ | 2,698,537 | $ | 234,902 | $ | 2,832,830 | |||||||||||
Premiums ceded | (378,897 | ) | (325,339 | ) | (44,327 | ) | (747,991 | ) | (48,202 | ) | (695,584 | ) | |||||||||||
Net premiums written | 828,748 | 797,180 | 324,618 | 1,950,546 | 186,700 | 2,137,246 | |||||||||||||||||
Change in unearned premiums | (112,829 | ) | (253,720 | ) | 20,408 | (346,141 | ) | (46,661 | ) | (392,802 | ) | ||||||||||||
Net premiums earned | 715,919 | 543,460 | 345,026 | 1,604,405 | 140,039 | 1,744,444 | |||||||||||||||||
Other underwriting income (loss) | — | 2,120 | 4,599 | 6,719 | 133 | 6,852 | |||||||||||||||||
Losses and loss adjustment expenses | (507,108 | ) | (430,069 | ) | (67,566 | ) | (1,004,743 | ) | (110,676 | ) | (1,115,419 | ) | |||||||||||
Acquisition expenses | (107,337 | ) | (79,606 | ) | (38,536 | ) | (225,479 | ) | (21,804 | ) | (247,283 | ) | |||||||||||
Other operating expenses | (129,649 | ) | (45,297 | ) | (45,896 | ) | (220,842 | ) | (13,702 | ) | (234,544 | ) | |||||||||||
Underwriting income (loss) | $ | (28,175 | ) | $ | (9,392 | ) | $ | 197,627 | 160,060 | (6,010 | ) | 154,050 | |||||||||||
Net investment income | 113,028 | 32,125 | 145,153 | ||||||||||||||||||||
Net realized gains (losses) | (72,109 | ) | (294,851 | ) | (366,960 | ) | |||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | (4,209 | ) | — | (4,209 | ) | ||||||||||||||||||
Other income (loss) | 8,548 | — | 8,548 | ||||||||||||||||||||
Corporate expenses (2) | (18,201 | ) | — | (18,201 | ) | ||||||||||||||||||
Transaction costs and other (2) | (2,595 | ) | — | (2,595 | ) | ||||||||||||||||||
Amortization of intangible assets | (16,631 | ) | — | (16,631 | ) | ||||||||||||||||||
Interest expense | (25,245 | ) | (7,310 | ) | (32,555 | ) | |||||||||||||||||
Net foreign exchange gains (losses) | 63,307 | 9,364 | 72,671 | ||||||||||||||||||||
Income (loss) before income taxes | 205,953 | (266,682 | ) | (60,729 | ) | ||||||||||||||||||
Income tax expense | (27,945 | ) | — | (27,945 | ) | ||||||||||||||||||
Net income (loss) | 178,008 | (266,682 | ) | (88,674 | ) | ||||||||||||||||||
Amounts attributable to redeemable noncontrolling interests | (57 | ) | (1,096 | ) | (1,153 | ) | |||||||||||||||||
Amounts attributable to nonredeemable noncontrolling interests | — | 233,944 | 233,944 | ||||||||||||||||||||
Net income (loss) available to Arch | 177,951 | (33,834 | ) | 144,117 | |||||||||||||||||||
Preferred dividends | (10,403 | ) | — | (10,403 | ) | ||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 167,548 | $ | (33,834 | ) | $ | 133,714 | ||||||||||||||||
Underwriting Ratios | |||||||||||||||||||||||
Loss ratio | 70.8 | % | 79.1 | % | 19.6 | % | 62.6 | % | 79.0 | % | 63.9 | % | |||||||||||
Acquisition expense ratio | 15.0 | % | 14.6 | % | 11.2 | % | 14.1 | % | 15.6 | % | 14.2 | % | |||||||||||
Other operating expense ratio | 18.1 | % | 8.3 | % | 13.3 | % | 13.8 | % | 9.8 | % | 13.4 | % | |||||||||||
Combined ratio | 103.9 | % | 102.0 | % | 44.1 | % | 90.5 | % | 104.4 | % | 91.5 | % | |||||||||||
Goodwill and intangible assets | $ | 268,296 | $ | 2,516 | $ | 426,988 | $ | 697,800 | $ | 7,650 | $ | 705,450 |
Three Months Ended | |||||||||||||||||||||||
March 31, 2019 | |||||||||||||||||||||||
Insurance | Reinsurance | Mortgage | Sub-Total | Other | Total | ||||||||||||||||||
Gross premiums written (1) | $ | 941,954 | $ | 682,855 | $ | 356,050 | $ | 1,980,453 | $ | 186,689 | $ | 2,077,879 | |||||||||||
Premiums ceded | (320,622 | ) | (231,567 | ) | (48,798 | ) | (600,581 | ) | (41,302 | ) | (552,620 | ) | |||||||||||
Net premiums written | 621,332 | 451,288 | 307,252 | 1,379,872 | 145,387 | 1,525,259 | |||||||||||||||||
Change in unearned premiums | (67,827 | ) | (104,923 | ) | 15,650 | (157,100 | ) | 707 | (156,393 | ) | |||||||||||||
Net premiums earned | 553,505 | 346,365 | 322,902 | 1,222,772 | 146,094 | 1,368,866 | |||||||||||||||||
Other underwriting income (loss) | — | 4,377 | 3,856 | 8,233 | 592 | 8,825 | |||||||||||||||||
Losses and loss adjustment expenses | (356,723 | ) | (239,810 | ) | (11,149 | ) | (607,682 | ) | (110,850 | ) | (718,532 | ) | |||||||||||
Acquisition expenses | (82,824 | ) | (54,326 | ) | (31,672 | ) | (168,822 | ) | (29,026 | ) | (197,848 | ) | |||||||||||
Other operating expenses | (113,396 | ) | (35,704 | ) | (39,875 | ) | (188,975 | ) | (12,188 | ) | (201,163 | ) | |||||||||||
Underwriting income (loss) | $ | 562 | $ | 20,902 | $ | 244,062 | 265,526 | (5,378 | ) | 260,148 | |||||||||||||
Net investment income | 121,249 | 35,700 | 156,949 | ||||||||||||||||||||
Net realized gains (losses) | 111,124 | 29,132 | 140,256 | ||||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 46,867 | — | 46,867 | ||||||||||||||||||||
Other income (loss) | 1,083 | — | 1,083 | ||||||||||||||||||||
Corporate expenses (2) | (16,772 | ) | — | (16,772 | ) | ||||||||||||||||||
Transaction costs and other (2) | (1,190 | ) | — | (1,190 | ) | ||||||||||||||||||
Amortization of intangible assets | (20,417 | ) | — | (20,417 | ) | ||||||||||||||||||
Interest expense | (23,482 | ) | (5,583 | ) | (29,065 | ) | |||||||||||||||||
Net foreign exchange gains (losses) | 5,175 | (1,650 | ) | 3,525 | |||||||||||||||||||
Income before income taxes | 489,163 | 52,221 | 541,384 | ||||||||||||||||||||
Income tax expense | (45,886 | ) | — | (45,886 | ) | ||||||||||||||||||
Net income | 443,277 | 52,221 | 495,498 | ||||||||||||||||||||
Amounts attributable to redeemable noncontrolling interests | — | (4,588 | ) | (4,588 | ) | ||||||||||||||||||
Amounts attributable to nonredeemable noncontrolling interests | — | (42,382 | ) | (42,382 | ) | ||||||||||||||||||
Net income available to Arch | 443,277 | 5,251 | 448,528 | ||||||||||||||||||||
Preferred dividends | (10,403 | ) | — | (10,403 | ) | ||||||||||||||||||
Net income available to Arch common shareholders | $ | 432,874 | $ | 5,251 | $ | 438,125 | |||||||||||||||||
Underwriting Ratios | |||||||||||||||||||||||
Loss ratio | 64.4 | % | 69.2 | % | 3.5 | % | 49.7 | % | 75.9 | % | 52.5 | % | |||||||||||
Acquisition expense ratio | 15.0 | % | 15.7 | % | 9.8 | % | 13.8 | % | 19.9 | % | 14.5 | % | |||||||||||
Other operating expense ratio | 20.5 | % | 10.3 | % | 12.3 | % | 15.5 | % | 8.3 | % | 14.7 | % | |||||||||||
Combined ratio | 99.9 | % | 95.2 | % | 25.6 | % | 79.0 | % | 104.1 | % | 81.7 | % | |||||||||||
Goodwill and intangible assets | $ | 156,735 | $ | — | $ | 494,830 | $ | 651,565 | $ | 7,650 | $ | 659,215 |
Three Months Ended | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
Reserve for losses and loss adjustment expenses at beginning of period | $ | 13,891,842 | $ | 11,853,297 | |||
Unpaid losses and loss adjustment expenses recoverable | 4,082,650 | 2,814,291 | |||||
Net reserve for losses and loss adjustment expenses at beginning of period | 9,809,192 | 9,039,006 | |||||
Net incurred losses and loss adjustment expenses relating to losses occurring in: | |||||||
Current year | 1,134,442 | 757,964 | |||||
Prior years | (19,023 | ) | (39,432 | ) | |||
Total net incurred losses and loss adjustment expenses | 1,115,419 | 718,532 | |||||
Retroactive reinsurance transactions (1) | 60,635 | (225,500 | ) | ||||
Net foreign exchange (gains) losses and other | (142,573 | ) | (504 | ) | |||
Net paid losses and loss adjustment expenses relating to losses occurring in: | |||||||
Current year | (41,260 | ) | (64,340 | ) | |||
Prior years | (561,947 | ) | (427,312 | ) | |||
Total net paid losses and loss adjustment expenses | (603,207 | ) | (491,652 | ) | |||
Net reserve for losses and loss adjustment expenses at end of period | 10,239,466 | 9,039,882 | |||||
Unpaid losses and loss adjustment expenses recoverable | 4,070,114 | 2,970,159 | |||||
Reserve for losses and loss adjustment expenses at end of period | $ | 14,309,580 | $ | 12,010,041 |
March 31, 2020 | ||||||||
Premium Receivables, Net of Allowance | Allowance for Expected Credit Losses | |||||||
Balance at beginning of period | $ | 1,778,717 | $ | 21,003 | ||||
Cumulative effect of accounting change (1) | 6,539 | |||||||
Change for provision for expected credit losses | 448 | |||||||
Write-offs charged against the allowance | — | |||||||
Balance at end of period | $ | 2,155,204 | $ | 27,990 |
Premium Receivables, Net of Allowance | Allowance for Expected Credit Losses | |||||||||||||
March 31, 2021 | ||||||||||||||
Balance at beginning of period | $ | 2,064,586 | $ | 37,781 | ||||||||||
Change for provision of expected credit losses (1) | (1,670) | |||||||||||||
Balance at end of period | $ | 2,618,175 | $ | 36,111 | ||||||||||
December 31, 2020 | ||||||||||||||
Balance at beginning of period | $ | 1,778,717 | $ | 21,003 | ||||||||||
Cumulative effect of accounting change (2) | 6,539 | |||||||||||||
Change for provision of expected credit losses (1) | 10,239 | |||||||||||||
Balance at end of period | $ | 2,064,586 | $ | 37,781 | ||||||||||
March 31, 2020 | ||||||||
Reinsurance Recoverables, Net of Allowance | Allowance for Expected Credit Losses | |||||||
Balance at beginning of period | $ | 4,346,816 | $ | 1,364 | ||||
Cumulative effect of accounting change (1) | 12,010 | |||||||
Additions for current-period provision for expected credit losses | 326 | |||||||
Write-offs charged against the allowance | — | |||||||
Balance at end of period | $ | 4,303,135 | $ | 13,700 |
Reinsurance Recoverables, Net of Allowance | Allowance for Expected Credit Losses | |||||||||||||
March 31, 2021 | ||||||||||||||
Balance at beginning of period | $ | 4,500,802 | $ | 11,636 | ||||||||||
Change for provision of expected credit losses | (764) | |||||||||||||
Balance at end of period | $ | 4,041,076 | $ | 10,872 | ||||||||||
December 31, 2020 | ||||||||||||||
Balance at beginning of period | $ | 4,346,816 | $ | 1,364 | ||||||||||
Cumulative effect of accounting change (1) | 12,010 | |||||||||||||
Change for provision of expected credit losses | (1,738) | |||||||||||||
Balance at end of period | $ | 4,500,802 | $ | 11,636 | ||||||||||
ARCH CAPITAL | 17 | 2021 FIRST QUARTER FORM 10-Q |
March 31, | December 31 | ||||||||||
2021 | 2020 | ||||||||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | $ | 4,041,076 | $ | 4,500,802 | |||||||
% due from carriers with A.M. Best rating of “A-” or better | 64.5 | % | 63.9 | % | |||||||
% due from all other carriers with no A.M. Best rating (1) | 35.5 | % | 36.1 | % | |||||||
Largest balance due from any one carrier as % of total shareholders’ equity | 1.7 | % | 1.8 | % |
Contract-holder Receivables, Net of Allowance | Allowance for Expected Credit Losses | |||||||||||||||||||||
March 31, 2021 | March 31, 2021 | |||||||||||||||||||||
Balance at beginning of period | Balance at beginning of period | $ | 1,986,924 | $ | 8,638 | |||||||||||||||||
Change for provision of expected credit losses | Change for provision of expected credit losses | (2,785) | ||||||||||||||||||||
Balance at end of period | Balance at end of period | $ | 1,919,655 | $ | 5,853 | |||||||||||||||||
December 31, 2020 | December 31, 2020 | |||||||||||||||||||||
Balance at beginning of period | Balance at beginning of period | $ | 2,119,460 | $ | 0 | |||||||||||||||||
Cumulative effect of accounting change (1) | Cumulative effect of accounting change (1) | 6,663 | ||||||||||||||||||||
Change for provision of expected credit losses | Change for provision of expected credit losses | 1,975 | ||||||||||||||||||||
Balance at end of period | Balance at end of period | $ | 1,986,924 | $ | 8,638 | |||||||||||||||||
March 31, 2020 | ||||||||||||||||||||||
Contractholder Receivables, Net of Allowance | Allowance for Expected Credit Losses | |||||||||||||||||||||
Balance at beginning of period | $ | 2,119,460 | $ | — | ||||||||||||||||||
Cumulative effect of accounting change (1) | 6,663 | |||||||||||||||||||||
Additions for current-period provision for expected credit losses | 2,375 | |||||||||||||||||||||
Write-offs charged against the allowance | — | |||||||||||||||||||||
Balance at end of period | $ | 2,140,724 | $ | 9,038 |
ARCH CAPITAL | |
Estimated Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Allowance for Expected Credit Losses (2) | Cost or Amortized Cost | |||||||||||||||||||||||||||||||
March 31, 2021 | |||||||||||||||||||||||||||||||||||
Fixed maturities (1): | |||||||||||||||||||||||||||||||||||
Corporate bonds | $ | 8,072,883 | $ | 242,832 | $ | (83,961) | $ | (2,569) | $ | 7,916,581 | |||||||||||||||||||||||||
Mortgage backed securities | 571,071 | 7,066 | (11,165) | (325) | 575,495 | ||||||||||||||||||||||||||||||
Municipal bonds | 457,329 | 19,942 | (4,814) | (2) | 442,203 | ||||||||||||||||||||||||||||||
Commercial mortgage backed securities | 255,373 | 2,755 | (1,721) | (5) | 254,344 | ||||||||||||||||||||||||||||||
U.S. government and government agencies | 5,042,208 | 15,102 | (30,545) | 0 | 5,057,651 | ||||||||||||||||||||||||||||||
Non-U.S. government securities | 2,425,882 | 127,886 | (19,267) | (51) | 2,317,314 | ||||||||||||||||||||||||||||||
Asset backed securities | 2,028,441 | 18,817 | (4,962) | (878) | 2,015,464 | ||||||||||||||||||||||||||||||
Total | 18,853,187 | 434,400 | (156,435) | (3,830) | 18,579,052 | ||||||||||||||||||||||||||||||
Short-term investments | 1,269,631 | 920 | (601) | 0 | 1,269,312 | ||||||||||||||||||||||||||||||
Total | $ | 20,122,818 | $ | 435,320 | $ | (157,036) | $ | (3,830) | $ | 19,848,364 | |||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||
Fixed maturities (1): | |||||||||||||||||||||||||||||||||||
Corporate bonds | $ | 7,856,571 | $ | 414,247 | $ | (34,388) | $ | (896) | $ | 7,477,608 | |||||||||||||||||||||||||
Mortgage backed securities | 630,001 | 8,939 | (5,028) | (278) | 626,368 | ||||||||||||||||||||||||||||||
Municipal bonds | 494,522 | 27,291 | (3,835) | (11) | 471,077 | ||||||||||||||||||||||||||||||
Commercial mortgage backed securities | 389,900 | 8,722 | (2,954) | (122) | 384,254 | ||||||||||||||||||||||||||||||
U.S. government and government agencies | 5,557,077 | 22,612 | (12,611) | 0 | 5,547,076 | ||||||||||||||||||||||||||||||
Non-U.S. government securities | 2,433,733 | 153,891 | (8,060) | 0 | 2,287,902 | ||||||||||||||||||||||||||||||
Asset backed securities | 1,634,804 | 19,225 | (10,715) | (1,090) | 1,627,384 | ||||||||||||||||||||||||||||||
Total | 18,996,608 | 654,927 | (77,591) | (2,397) | 18,421,669 | ||||||||||||||||||||||||||||||
Short-term investments | 1,924,922 | 2,693 | (2,063) | 0 | 1,924,292 | ||||||||||||||||||||||||||||||
Total | $ | 20,921,530 | $ | 657,620 | $ | (79,654) | $ | (2,397) | $ | 20,345,961 |
Estimated Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Allowance for Expected Credit Losses (2) | Cost or Amortized Cost | |||||||||||||||
March 31, 2020 | |||||||||||||||||||
Fixed maturities (1): | |||||||||||||||||||
Corporate bonds | $ | 6,552,825 | $ | 176,246 | $ | (118,340 | ) | $ | (7,233 | ) | $ | 6,502,152 | |||||||
Mortgage backed securities | 466,045 | 16,006 | (6,208 | ) | (208 | ) | 456,455 | ||||||||||||
Municipal bonds | 862,415 | 27,287 | (7,550 | ) | (23 | ) | 842,701 | ||||||||||||
Commercial mortgage backed securities | 780,358 | 11,657 | (18,410 | ) | (306 | ) | 787,417 | ||||||||||||
U.S. government and government agencies | 4,574,630 | 143,987 | (300 | ) | — | 4,430,943 | |||||||||||||
Non-U.S. government securities | 2,035,459 | 57,289 | (105,533 | ) | — | 2,083,703 | |||||||||||||
Asset backed securities | 1,747,281 | 12,155 | (91,668 | ) | (2,139 | ) | 1,828,933 | ||||||||||||
Total | 17,019,013 | 444,627 | (348,009 | ) | (9,909 | ) | 16,932,304 | ||||||||||||
Short-term investments | 944,531 | 2,461 | (2,779 | ) | (29 | ) | 944,878 | ||||||||||||
Total | $ | 17,963,544 | $ | 447,088 | $ | (350,788 | ) | $ | (9,938 | ) | $ | 17,877,182 | |||||||
December 31, 2019 | |||||||||||||||||||
Fixed maturities (1): | |||||||||||||||||||
Corporate bonds | $ | 6,406,591 | $ | 191,889 | $ | (12,793 | ) | $ | 6,227,495 | ||||||||||
Mortgage backed securities | 562,309 | 9,669 | (931 | ) | 553,571 | ||||||||||||||
Municipal bonds | 881,926 | 24,628 | (2,213 | ) | 859,511 | ||||||||||||||
Commercial mortgage backed securities | 733,108 | 14,951 | (2,330 | ) | 720,487 | ||||||||||||||
U.S. government and government agencies | 4,916,592 | 36,600 | (10,134 | ) | 4,890,126 | ||||||||||||||
Non-U.S. government securities | 2,078,757 | 48,549 | (20,330 | ) | 2,050,538 | ||||||||||||||
Asset backed securities | 1,683,753 | 24,017 | (4,724 | ) | 1,664,460 | ||||||||||||||
Total | 17,263,036 | 350,303 | (53,455 | ) | 16,966,188 | ||||||||||||||
Short-term investments | 956,546 | 811 | (1,548 | ) | 957,283 | ||||||||||||||
Total | $ | 18,219,582 | $ | 351,114 | $ | (55,003 | ) | $ | 17,923,471 |
(2) Effective January 1, 2020, the Company adopted ASU 2016-13 and as a result any credit impairment losses on the Company’s available-for-sale investments are recorded as an allowance, subject to reversal. |
ARCH CAPITAL | |
Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||||||||||||||
Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||
March 31, 2021 | |||||||||||||||||||||||||||||||||||
Fixed maturities (1): | |||||||||||||||||||||||||||||||||||
Corporate bonds | $ | 3,253,030 | $ | (82,735) | $ | 15,894 | $ | (1,226) | $ | 3,268,924 | $ | (83,961) | |||||||||||||||||||||||
Mortgage backed securities | 383,760 | (10,271) | 20,648 | (894) | 404,408 | (11,165) | |||||||||||||||||||||||||||||
Municipal bonds | 90,634 | (4,737) | 1,827 | (77) | 92,461 | (4,814) | |||||||||||||||||||||||||||||
Commercial mortgage backed securities | 39,863 | (759) | 23,421 | (962) | 63,284 | (1,721) | |||||||||||||||||||||||||||||
U.S. government and government agencies | 3,920,377 | (30,545) | 0 | 0 | 3,920,377 | (30,545) | |||||||||||||||||||||||||||||
Non-U.S. government securities | 911,609 | (18,433) | 16,841 | (834) | 928,450 | (19,267) | |||||||||||||||||||||||||||||
Asset backed securities | 502,300 | (2,391) | 142,331 | (2,571) | 644,631 | (4,962) | |||||||||||||||||||||||||||||
Total | 9,101,573 | (149,871) | 220,962 | (6,564) | 9,322,535 | (156,435) | |||||||||||||||||||||||||||||
Short-term investments | 95,579 | (601) | 0 | 0 | 95,579 | (601) | |||||||||||||||||||||||||||||
Total | $ | 9,197,152 | $ | (150,472) | $ | 220,962 | $ | (6,564) | $ | 9,418,114 | $ | (157,036) | |||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||
Fixed maturities (1): | |||||||||||||||||||||||||||||||||||
Corporate bonds | $ | 747,442 | $ | (33,086) | $ | 3,934 | $ | (1,302) | $ | 751,376 | $ | (34,388) | |||||||||||||||||||||||
Mortgage backed securities | 284,619 | (4,788) | 3,637 | (240) | 288,256 | (5,028) | |||||||||||||||||||||||||||||
Municipal bonds | 67,937 | (3,835) | 0 | 0 | 67,937 | (3,835) | |||||||||||||||||||||||||||||
Commercial mortgage backed securities | 126,624 | (2,916) | 2,655 | (38) | 129,279 | (2,954) | |||||||||||||||||||||||||||||
U.S. government and government agencies | 1,285,907 | (12,611) | 0 | 0 | 1,285,907 | (12,611) | |||||||||||||||||||||||||||||
Non-U.S. government securities | 543,844 | (7,658) | 2,441 | (402) | 546,285 | (8,060) | |||||||||||||||||||||||||||||
Asset backed securities | 634,470 | (9,110) | 57,737 | (1,605) | 692,207 | (10,715) | |||||||||||||||||||||||||||||
Total | 3,690,843 | (74,004) | 70,404 | (3,587) | 3,761,247 | (77,591) | |||||||||||||||||||||||||||||
Short-term investments | 97,920 | (2,063) | 0 | 0 | 97,920 | (2,063) | |||||||||||||||||||||||||||||
Total | $ | 3,788,763 | $ | (76,067) | $ | 70,404 | $ | (3,587) | $ | 3,859,167 | $ | (79,654) |
Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||
Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | ||||||||||||||||||
March 31, 2020 | |||||||||||||||||||||||
Fixed maturities (1): | |||||||||||||||||||||||
Corporate bonds | $ | 2,377,206 | $ | (116,795 | ) | $ | 7,865 | $ | (1,545 | ) | $ | 2,385,071 | $ | (118,340 | ) | ||||||||
Mortgage backed securities | 99,108 | (6,183 | ) | 116 | (25 | ) | 99,224 | (6,208 | ) | ||||||||||||||
Municipal bonds | 278,557 | (7,550 | ) | — | — | 278,557 | (7,550 | ) | |||||||||||||||
Commercial mortgage backed securities | 419,028 | (18,075 | ) | 2,342 | (335 | ) | 421,370 | (18,410 | ) | ||||||||||||||
U.S. government and government agencies | 216,620 | (300 | ) | 2,000 | — | 218,620 | (300 | ) | |||||||||||||||
Non-U.S. government securities | 1,484,987 | (105,533 | ) | — | — | 1,484,987 | (105,533 | ) | |||||||||||||||
Asset backed securities | 1,003,251 | (86,283 | ) | 28,724 | (5,385 | ) | 1,031,975 | (91,668 | ) | ||||||||||||||
Total | 5,878,757 | (340,719 | ) | 41,047 | (7,290 | ) | 5,919,804 | (348,009 | ) | ||||||||||||||
Short-term investments | 83,196 | (2,779 | ) | — | — | 83,196 | (2,779 | ) | |||||||||||||||
Total | $ | 5,961,953 | $ | (343,498 | ) | $ | 41,047 | $ | (7,290 | ) | $ | 6,003,000 | $ | (350,788 | ) | ||||||||
December 31, 2019 | |||||||||||||||||||||||
Fixed maturities (1): | |||||||||||||||||||||||
Corporate bonds | $ | 675,131 | $ | (12,350 | ) | $ | 37,671 | $ | (443 | ) | $ | 712,802 | $ | (12,793 | ) | ||||||||
Mortgage backed securities | 102,887 | (927 | ) | 203 | (4 | ) | 103,090 | (931 | ) | ||||||||||||||
Municipal bonds | 220,296 | (2,213 | ) | — | — | 220,296 | (2,213 | ) | |||||||||||||||
Commercial mortgage backed securities | 147,290 | (2,302 | ) | 2,683 | (28 | ) | 149,973 | (2,330 | ) | ||||||||||||||
U.S. government and government agencies | 1,373,127 | (10,089 | ) | 32,058 | (45 | ) | 1,405,185 | (10,134 | ) | ||||||||||||||
Non-U.S. government securities | 1,224,243 | (20,163 | ) | 37,610 | (167 | ) | 1,261,853 | (20,330 | ) | ||||||||||||||
Asset backed securities | 441,522 | (3,334 | ) | 48,313 | (1,390 | ) | 489,835 | (4,724 | ) | ||||||||||||||
Total | 4,184,496 | (51,378 | ) | 158,538 | (2,077 | ) | 4,343,034 | (53,455 | ) | ||||||||||||||
Short-term investments | 95,777 | (1,548 | ) | — | — | 95,777 | (1,548 | ) | |||||||||||||||
Total | $ | 4,280,273 | $ | (52,926 | ) | $ | 158,538 | $ | (2,077 | ) | $ | 4,438,811 | $ | (55,003 | ) |
ARCH CAPITAL | |
March 31, 2021 | December 31, 2020 | |||||||||||||||||||||||||
Maturity | Estimated Fair Value | Amortized Cost | Estimated Fair Value | Amortized Cost | ||||||||||||||||||||||
Due in one year or less | $ | 381,212 | $ | 370,798 | $ | 348,200 | $ | 339,951 | ||||||||||||||||||
Due after one year through five years | 11,124,344 | 10,918,279 | 10,629,959 | 10,340,819 | ||||||||||||||||||||||
Due after five years through 10 years | 4,052,472 | 4,008,520 | 4,881,564 | 4,654,754 | ||||||||||||||||||||||
Due after 10 years | 440,274 | 436,152 | 482,180 | 448,139 | ||||||||||||||||||||||
15,998,302 | 15,733,749 | 16,341,903 | 15,783,663 | |||||||||||||||||||||||
Mortgage backed securities | 571,071 | 575,495 | 630,001 | 626,368 | ||||||||||||||||||||||
Commercial mortgage backed securities | 255,373 | 254,344 | 389,900 | 384,254 | ||||||||||||||||||||||
Asset backed securities | 2,028,441 | 2,015,464 | 1,634,804 | 1,627,384 | ||||||||||||||||||||||
Total (1) | $ | 18,853,187 | $ | 18,579,052 | $ | 18,996,608 | $ | 18,421,669 |
March 31, 2020 | December 31, 2019 | |||||||||||||||
Maturity | Estimated Fair Value | Amortized Cost | Estimated Fair Value | Amortized Cost | ||||||||||||
Due in one year or less | $ | 445,134 | $ | 445,701 | $ | 428,659 | $ | 423,617 | ||||||||
Due after one year through five years | 9,622,046 | 9,558,975 | 10,126,403 | 9,996,206 | ||||||||||||
Due after five years through 10 years | 3,435,903 | 3,358,574 | 3,317,535 | 3,219,567 | ||||||||||||
Due after 10 years | 522,246 | 496,249 | 411,269 | 388,280 | ||||||||||||
14,025,329 | 13,859,499 | 14,283,866 | 14,027,670 | |||||||||||||
Mortgage backed securities | 466,045 | 456,455 | 562,309 | 553,571 | ||||||||||||
Commercial mortgage backed securities | 780,358 | 787,417 | 733,108 | 720,487 | ||||||||||||
Asset backed securities | 1,747,281 | 1,828,933 | 1,683,753 | 1,664,460 | ||||||||||||
Total (1) | $ | 17,019,013 | $ | 16,932,304 | $ | 17,263,036 | $ | 16,966,188 |
Remaining Contractual Maturity of the Agreements | ||||||||||||||||||||||||||||||||
Overnight and Continuous | Less than 30 Days | 30-90 Days | 90 Days or More | Total | ||||||||||||||||||||||||||||
March 31, 2021 | ||||||||||||||||||||||||||||||||
U.S. government and government agencies | $ | 16,397 | $ | 0 | $ | 102,743 | $ | 0 | $ | 119,140 | ||||||||||||||||||||||
Corporate bonds | 13,724 | 0 | 0 | 0 | 13,724 | |||||||||||||||||||||||||||
Equity securities | 11,022 | 0 | 0 | 0 | 11,022 | |||||||||||||||||||||||||||
Total | $ | 41,143 | $ | 0 | $ | 102,743 | $ | 0 | $ | 143,886 | ||||||||||||||||||||||
Gross amount of recognized liabilities for securities lending in offsetting disclosure in note 9 | $ | 0 | ||||||||||||||||||||||||||||||
Amounts related to securities lending not included in offsetting disclosure in note 9 | $ | 143,886 | ||||||||||||||||||||||||||||||
December 31, 2020 | ||||||||||||||||||||||||||||||||
U.S. government and government agencies | $ | 142,317 | $ | 0 | $ | 139,290 | $ | 0 | $ | 281,607 | ||||||||||||||||||||||
Corporate bonds | 3,021 | 0 | 0 | 0 | 3,021 | |||||||||||||||||||||||||||
Equity securities | 16,461 | 0 | 0 | 0 | 16,461 | |||||||||||||||||||||||||||
Total | $ | 161,799 | $ | 0 | $ | 139,290 | $ | 0 | $ | 301,089 | ||||||||||||||||||||||
Gross amount of recognized liabilities for securities lending in offsetting disclosure in note 9 | $ | 0 | ||||||||||||||||||||||||||||||
Amounts related to securities lending not included in offsetting disclosure in note 9 | $ | 301,089 |
Remaining Contractual Maturity of the Agreements | ||||||||||||||||||||
Overnight and Continuous | Less than 30 Days | 30-90 Days | 90 Days or More | Total | ||||||||||||||||
March 31, 2020 | ||||||||||||||||||||
U.S. government and government agencies | $ | 144,375 | $ | — | $ | 14,316 | $ | — | $ | 158,691 | ||||||||||
Corporate bonds | 11,715 | — | — | — | 11,715 | |||||||||||||||
Equity securities | 11,868 | — | — | — | 11,868 | |||||||||||||||
Total | $ | 167,958 | $ | — | $ | 14,316 | $ | — | $ | 182,274 | ||||||||||
Gross amount of recognized liabilities for securities lending in offsetting disclosure in note 9 | $ | — | ||||||||||||||||||
Amounts related to securities lending not included in offsetting disclosure in note 9 | $ | 182,274 | ||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||
U.S. government and government agencies | $ | 240,332 | $ | — | $ | 115,973 | $ | — | $ | 356,305 | ||||||||||
Corporate bonds | 2,570 | — | — | — | 2,570 | |||||||||||||||
Equity securities | 29,491 | — | — | — | 29,491 | |||||||||||||||
Total | $ | 272,393 | $ | — | $ | 115,973 | $ | — | $ | 388,366 | ||||||||||
Gross amount of recognized liabilities for securities lending in offsetting disclosure in note 9 | $ | — | ||||||||||||||||||
Amounts related to securities lending not included in offsetting disclosure in note 9 | $ | 388,366 |
ARCH CAPITAL | 21 | 2021 FIRST QUARTER FORM 10-Q |
March 31, 2021 | December 31, 2020 | ||||||||||
Fixed maturities | $ | 900,304 | $ | 843,354 | |||||||
Other investments | 2,318,185 | 2,331,885 | |||||||||
Short-term investments | 623,930 | 557,008 | |||||||||
Equity securities | 92,935 | 92,549 | |||||||||
Investments accounted for using the fair value option | $ | 3,935,354 | $ | 3,824,796 | |||||||
Other investable assets (1) | 500,000 | 500,000 | |||||||||
Total other investments | $ | 4,435,354 | $ | 4,324,796 |
March 31, 2020 | December 31, 2019 | March 31, 2021 | December 31, 2020 | |||||||||||||||
Term loan investments | $ | 1,135,584 | $ | 1,326,018 | Term loan investments | $ | 1,187,752 | $ | 1,231,731 | |||||||||
Lending | 544,308 | 602,841 | Lending | 606,207 | 572,636 | |||||||||||||
Credit related funds | 111,874 | 123,020 | Credit related funds | 79,355 | 90,780 | |||||||||||||
Energy | 63,057 | 97,402 | Energy | 78,500 | 65,813 | |||||||||||||
Investment grade fixed income | 137,370 | 151,594 | Investment grade fixed income | 142,630 | 138,646 | |||||||||||||
Infrastructure | 33,644 | 61,786 | Infrastructure | 152,352 | 165,516 | |||||||||||||
Private equity | 51,284 | 49,376 | Private equity | 52,064 | 48,750 | |||||||||||||
Real estate | 14,296 | 17,279 | Real estate | 19,325 | 18,013 | |||||||||||||
Total | $ | 2,091,417 | $ | 2,429,316 | Total | $ | 2,318,185 | $ | 2,331,885 |
March 31, 2021 | December 31, 2020 | ||||||||||
Credit related funds | $ | 818,344 | $ | 740,060 | |||||||
Equities | 357,641 | 343,058 | |||||||||
Real estate | 292,424 | 258,518 | |||||||||
Lending | 199,913 | 179,629 | |||||||||
Private equity | 288,657 | 235,289 | |||||||||
Infrastructure | 179,225 | 175,882 | |||||||||
Energy | 120,123 | 115,453 | |||||||||
Total | $ | 2,256,327 | $ | 2,047,889 |
March 31, 2020 | December 31, 2019 | ||||||
Credit related funds | $ | 421,943 | $ | 428,437 | |||
Equities | 256,249 | 293,686 | |||||
Real estate | 254,957 | 246,851 | |||||
Lending | 194,132 | 202,690 | |||||
Private equity | 154,322 | 144,983 | |||||
Infrastructure | 283,147 | 235,033 | |||||
Energy | 111,305 | 108,716 | |||||
Total | $ | 1,676,055 | $ | 1,660,396 |
March 31, 2020 | December 31, 2019 | ||||||
Fixed maturities | $ | 734,694 | $ | 754,452 | |||
Other investments | 2,091,417 | 2,429,316 | |||||
Short-term investments | 396,409 | 377,014 | |||||
Equity securities | 87,997 | 102,695 | |||||
Investments accounted for using the fair value option | $ | 3,310,517 | $ | 3,663,477 |
March 31, 2021 | December 31, 2020 | ||||||||||
Investments accounted for using the equity method (1) | 2,256,327 | 2,047,889 | |||||||||
Investments accounted for using the fair value option (2) | 196,087 | 184,720 | |||||||||
Total | $ | 2,452,414 | $ | 2,232,609 |
March 31, 2020 | December 31, 2019 | ||||||
Investments accounted for using the equity method (1) | 1,676,055 | 1,660,396 | |||||
Investments accounted for using the fair value option (2) | 170,515 | 188,283 | |||||
Total | $ | 1,846,570 | $ | 1,848,679 |
22 | |||
March 31, | |||||||||||
2021 | 2020 | ||||||||||
Three Months Ended | |||||||||||
Fixed maturities | $ | 90,626 | $ | 114,847 | |||||||
Term loans | 14,728 | 23,170 | |||||||||
Equity securities | 5,650 | 6,007 | |||||||||
Short-term investments | 607 | 4,896 | |||||||||
Other (1) | 14,355 | 19,406 | |||||||||
Gross investment income | 125,966 | 168,326 | |||||||||
Investment expenses | (27,110) | (23,173) | |||||||||
Net investment income | $ | 98,856 | $ | 145,153 | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
Three Months Ended | |||||||
Fixed maturities | $ | 114,847 | $ | 129,799 | |||
Term loans | 23,170 | 24,616 | |||||
Equity securities | 6,007 | 2,988 | |||||
Short-term investments | 4,896 | 4,179 | |||||
Other (1) | 19,406 | 21,196 | |||||
Gross investment income | 168,326 | 182,778 | |||||
Investment expenses | (23,173 | ) | (25,829 | ) | |||
Net investment income | $ | 145,153 | $ | 156,949 |
March 31, | |||||||||||
2021 | 2020 | ||||||||||
Three Months Ended | |||||||||||
Available for sale securities: | |||||||||||
Gross gains on investment sales | $ | 65,002 | $ | 178,200 | |||||||
Gross losses on investment sales | (62,998) | (31,968) | |||||||||
Change in fair value of assets and liabilities accounted for using the fair value option: | |||||||||||
Fixed maturities | 16,553 | (127,666) | |||||||||
Other investments | 46,855 | (307,800) | |||||||||
Equity securities | 2,065 | (4,909) | |||||||||
Short-term investments | 736 | (8,681) | |||||||||
Equity securities, at fair value: | |||||||||||
Net realized gains (losses) on sales during the period | 37,849 | (539) | |||||||||
Net unrealized gains (losses) on equity securities still held at reporting date | 19,708 | (175,566) | |||||||||
Allowance for credit losses: | |||||||||||
Investments related | (1,648) | (9,320) | |||||||||
Underwriting related | 5,268 | (3,270) | |||||||||
Net impairment losses | 0 | (533) | |||||||||
Derivative instruments (1) | 36,116 | 127,189 | |||||||||
Other | (23,045) | (2,097) | |||||||||
Net realized gains (losses) | $ | 142,461 | $ | (366,960) | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
Three Months Ended | |||||||
Available for sale securities: | |||||||
Gross gains on investment sales | $ | 178,200 | $ | 43,365 | |||
Gross losses on investment sales | (31,968 | ) | (31,656 | ) | |||
Change in fair value of assets and liabilities accounted for using the fair value option: | |||||||
Fixed maturities | (127,666 | ) | 31,148 | ||||
Other investments | (307,800 | ) | 18,195 | ||||
Equity securities | (4,909 | ) | 4,266 | ||||
Short-term investments | (8,681 | ) | 720 | ||||
Equity securities, at fair value: | |||||||
Net realized gains (losses) on sales during the period | (539 | ) | 10,930 | ||||
Net unrealized gains (losses) on equity securities still held at reporting date | (175,566 | ) | 37,136 | ||||
Allowance for credit losses: | |||||||
Investments related | (9,320 | ) | — | ||||
Underwriting related | (3,270 | ) | — | ||||
Net impairment losses | (533 | ) | (1,309 | ) | |||
Derivative instruments (1) | 127,189 | 35,871 | |||||
Other | (2,097 | ) | (8,410 | ) | |||
Net realized gains (losses) | $ | (366,960 | ) | $ | 140,256 |
ARCH CAPITAL | 23 | 2021 FIRST QUARTER FORM 10-Q |
Structured Securities (1) | Municipal Bonds | Corporate Bonds | Total | |||||||||||||||||||||||||||||
March 31, 2021 | ||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | 1,490 | $ | 11 | $ | 896 | $ | 2,397 | ||||||||||||||||||||||||
Additions for current-period provision for expected credit losses | 182 | 0 | 2,421 | 2,603 | ||||||||||||||||||||||||||||
Additions (reductions) for previously recognized expected credit losses | (382) | (9) | (540) | (931) | ||||||||||||||||||||||||||||
Reductions due to disposals | (83) | 0 | (156) | (239) | ||||||||||||||||||||||||||||
Write-offs charged against the allowance | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
Balance at end of period | $ | 1,207 | $ | 2 | $ | 2,621 | $ | 3,830 | ||||||||||||||||||||||||
December 31, 2020 | ||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||||||||
Cumulative effect of accounting change (2) | 517 | 0 | 117 | 634 | ||||||||||||||||||||||||||||
Additions for current-period provision for expected credit losses | 2,942 | 67 | 7,644 | 10,653 | ||||||||||||||||||||||||||||
Additions (reductions) for previously recognized expected credit losses | (1,398) | 6 | (5,638) | (7,030) | ||||||||||||||||||||||||||||
Reductions due to disposals | (571) | (62) | (1,227) | (1,860) | ||||||||||||||||||||||||||||
Write-offs charged against the allowance | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
Balance at end of period | $ | 1,490 | $ | 11 | $ | 896 | $ | 2,397 | ||||||||||||||||||||||||
March 31, 2020 | ||||||||||||||||||||
Structured Securities (1) | Municipal Bonds | Corporate Bonds | Short Term Investments | Total | ||||||||||||||||
Three Months Ended | ||||||||||||||||||||
Balance at beginning of period | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Cumulative effect of accounting change | 517 | — | 117 | — | 634 | |||||||||||||||
Additions for current-period provision for expected credit losses | 2,146 | 23 | 7,151 | 29 | 9,349 | |||||||||||||||
Additions (reductions) for previously recognized expected credit losses | (2 | ) | — | (21 | ) | — | (23 | ) | ||||||||||||
Reductions due to disposals | (7 | ) | — | (15 | ) | — | (22 | ) | ||||||||||||
Write-offs charged against the allowance | — | — | — | — | — | |||||||||||||||
Balance at end of period | $ | 2,654 | $ | 23 | $ | 7,232 | $ | 29 | $ | 9,938 |
(1) Includes asset backed securities, mortgage backed securities and commercial mortgage backed securities. |
March 31, 2021 | December 31, 2020 | ||||||||||
Assets used for collateral or guarantees: | |||||||||||
Affiliated transactions | $ | 4,815,120 | $ | 4,643,334 | |||||||
Third party agreements | 3,366,016 | 3,083,324 | |||||||||
Deposits with U.S. regulatory authorities | 819,444 | 827,552 | |||||||||
Deposits with non-U.S. regulatory authorities | 330,197 | 179,099 | |||||||||
Total restricted assets | $ | 9,330,777 | $ | 8,733,309 |
March 31, 2020 | December 31, 2019 | ||||||
Assets used for collateral or guarantees: | |||||||
Affiliated transactions | $ | 4,540,455 | $ | 4,526,761 | |||
Third party agreements | 2,277,298 | 2,278,248 | |||||
Deposits with U.S. regulatory authorities | 831,411 | 797,371 | |||||
Deposits with non-U.S. regulatory authorities | 162,336 | 119,238 | |||||
Total restricted assets | $ | 7,811,500 | $ | 7,721,618 |
March 31, 2021 | December 31, 2020 | ||||||||||
Cash | $ | 941,951 | $ | 906,448 | |||||||
Restricted cash (included in ‘other assets’) | $ | 425,563 | $ | 384,096 | |||||||
Cash and restricted cash | $ | 1,367,514 | $ | 1,290,544 |
March 31, 2020 | December 31, 2019 | ||||||
Cash | $ | 882,284 | $ | 726,230 | |||
Restricted cash (included in ‘other assets’) | $ | 188,153 | $ | 177,468 | |||
Cash and restricted cash | $ | 1,070,437 | $ | 903,698 |
ARCH CAPITAL | |
Level 1: | Inputs to the valuation methodology are observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets |
Level 2: | Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument |
Level 3: | Inputs to the valuation methodology are unobservable and significant to the fair value measurement |
ARCH CAPITAL | 25 | 2021 FIRST QUARTER FORM 10-Q |
ARCH CAPITAL | 26 | 2021 FIRST QUARTER FORM 10-Q |
ARCH CAPITAL | |
Estimated Fair Value Measurements Using: | Estimated Fair Value Measurements Using: | |||||||||||||||||||||||||||||||||||||
Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||||||||||
Assets measured at fair value (1): | Assets measured at fair value (1): | |||||||||||||||||||||||||||||||||||||
Available for sale securities: | Available for sale securities: | |||||||||||||||||||||||||||||||||||||
Fixed maturities: | Fixed maturities: | |||||||||||||||||||||||||||||||||||||
Corporate bonds | $ | 6,552,825 | $ | — | $ | 6,550,845 | $ | 1,980 | Corporate bonds | $ | 8,072,883 | $ | 0 | $ | 8,072,870 | $ | 13 | |||||||||||||||||||||
Mortgage backed securities | 466,045 | — | 465,821 | 224 | Mortgage backed securities | 571,071 | 0 | 571,071 | 0 | |||||||||||||||||||||||||||||
Municipal bonds | 862,415 | — | 862,415 | — | Municipal bonds | 457,329 | 0 | 457,329 | 0 | |||||||||||||||||||||||||||||
Commercial mortgage backed securities | 780,358 | — | 780,358 | — | Commercial mortgage backed securities | 255,373 | 0 | 255,373 | 0 | |||||||||||||||||||||||||||||
U.S. government and government agencies | 4,574,630 | 4,480,074 | 94,556 | — | U.S. government and government agencies | 5,042,208 | 4,949,217 | 92,991 | 0 | |||||||||||||||||||||||||||||
Non-U.S. government securities | 2,035,459 | — | 2,035,459 | — | Non-U.S. government securities | 2,425,882 | 0 | 2,425,882 | 0 | |||||||||||||||||||||||||||||
Asset backed securities | 1,747,281 | — | 1,743,659 | 3,622 | Asset backed securities | 2,028,441 | 0 | 2,024,969 | 3,472 | |||||||||||||||||||||||||||||
Total | 17,019,013 | 4,480,074 | 12,533,113 | 5,826 | Total | 18,853,187 | 4,949,217 | 13,900,485 | 3,485 | |||||||||||||||||||||||||||||
Short-term investments | 944,531 | 884,527 | 60,004 | — | Short-term investments | 1,269,631 | 1,252,535 | 17,096 | 0 | |||||||||||||||||||||||||||||
Equity securities, at fair value | 1,181,903 | 1,122,694 | 3,577 | 55,632 | Equity securities, at fair value | 1,543,703 | 1,476,504 | 24,087 | 43,112 | |||||||||||||||||||||||||||||
Derivative instruments (4) | 92,052 | — | 92,052 | — | Derivative instruments (4) | 156,160 | 0 | 156,160 | 0 | |||||||||||||||||||||||||||||
Residential mortgage loans | Residential mortgage loans | 5,693 | 0 | 5,693 | 0 | |||||||||||||||||||||||||||||||||
Fair value option: | Fair value option: | |||||||||||||||||||||||||||||||||||||
Corporate bonds | 493,639 | — | 492,674 | 965 | Corporate bonds | 724,316 | 0 | 723,327 | 989 | |||||||||||||||||||||||||||||
Non-U.S. government bonds | 79,209 | — | 79,209 | — | Non-U.S. government bonds | 23,996 | 0 | 23,996 | 0 | |||||||||||||||||||||||||||||
Mortgage backed securities | 13,293 | — | 13,293 | — | Mortgage backed securities | 2,828 | 0 | 2,828 | 0 | |||||||||||||||||||||||||||||
Municipal bonds | 251 | — | 251 | — | ||||||||||||||||||||||||||||||||||
Commercial mortgage backed securities | 1,059 | — | 1,059 | — | Commercial mortgage backed securities | 1,225 | 0 | 1,225 | 0 | |||||||||||||||||||||||||||||
Asset backed securities | 146,646 | — | 146,646 | — | Asset backed securities | 147,666 | 0 | 147,666 | 0 | |||||||||||||||||||||||||||||
U.S. government and government agencies | 597 | 484 | 113 | — | U.S. government and government agencies | 273 | 164 | 109 | 0 | |||||||||||||||||||||||||||||
Short-term investments | 396,409 | 321,401 | 75,008 | — | Short-term investments | 623,930 | 482,869 | 141,061 | 0 | |||||||||||||||||||||||||||||
Equity securities | 87,997 | 27,825 | 157 | 60,015 | Equity securities | 92,935 | 21,512 | 247 | 71,176 | |||||||||||||||||||||||||||||
Other investments | 1,177,508 | 24,930 | 1,097,958 | 54,620 | Other investments | 1,078,505 | 31,268 | 979,307 | 67,930 | |||||||||||||||||||||||||||||
Other investments measured at net asset value (2) | 913,909 | Other investments measured at net asset value (2) | 1,239,680 | |||||||||||||||||||||||||||||||||||
Total | 3,310,517 | 374,640 | 1,906,368 | 115,600 | Total | 3,935,354 | 535,813 | 2,019,766 | 140,095 | |||||||||||||||||||||||||||||
Total assets measured at fair value | $ | 22,548,016 | $ | 6,861,935 | $ | 14,595,114 | $ | 177,058 | Total assets measured at fair value | $ | 25,763,728 | $ | 8,214,069 | $ | 16,123,287 | $ | 186,692 | |||||||||||||||||||||
Liabilities measured at fair value: | Liabilities measured at fair value: | |||||||||||||||||||||||||||||||||||||
Contingent consideration liabilities | $ | (7,967 | ) | $ | — | $ | — | $ | (7,967 | ) | Contingent consideration liabilities | $ | (465) | $ | 0 | $ | 0 | $ | (465) | |||||||||||||||||||
Securities sold but not yet purchased (3) | (30,076 | ) | — | (30,076 | ) | — | Securities sold but not yet purchased (3) | (34,097) | 0 | (34,097) | 0 | |||||||||||||||||||||||||||
Derivative instruments (4) | (116,572 | ) | — | (116,572 | ) | — | Derivative instruments (4) | (98,103) | 0 | (98,103) | 0 | |||||||||||||||||||||||||||
Total liabilities measured at fair value | $ | (154,615 | ) | $ | — | $ | (146,648 | ) | $ | (7,967 | ) | Total liabilities measured at fair value | $ | (132,665) | $ | 0 | $ | (132,200) | $ | (465) |
(1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See note 7, “—Securities Lending Agreements.” (2) In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. (3) Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. |
ARCH CAPITAL | |
Estimated Fair Value Measurements Using: | |||||||||||||||||||||||
Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
Assets measured at fair value (1): | |||||||||||||||||||||||
Available for sale securities: | |||||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
Corporate bonds | $ | 7,856,571 | $ | 0 | $ | 7,856,558 | $ | 13 | |||||||||||||||
Mortgage backed securities | 630,001 | 0 | 630,001 | 0 | |||||||||||||||||||
Municipal bonds | 494,522 | 0 | 494,522 | 0 | |||||||||||||||||||
Commercial mortgage backed securities | 389,900 | 0 | 389,900 | 0 | |||||||||||||||||||
U.S. government and government agencies | 5,557,077 | 5,463,356 | 93,721 | 0 | |||||||||||||||||||
Non-U.S. government securities | 2,433,733 | 0 | 2,433,733 | 0 | |||||||||||||||||||
Asset backed securities | 1,634,804 | 0 | 1,631,378 | 3,426 | |||||||||||||||||||
Total | 18,996,608 | 5,463,356 | 13,529,813 | 3,439 | |||||||||||||||||||
Short-term investments | 1,924,922 | 1,920,565 | 4,357 | 0 | |||||||||||||||||||
Equity securities, at fair value | 1,460,959 | 1,401,653 | 17,291 | 42,015 | |||||||||||||||||||
Derivative instruments (4) | 177,383 | 0 | 177,383 | 0 | |||||||||||||||||||
Fair value option: | |||||||||||||||||||||||
Corporate bonds | 651,294 | 0 | 650,309 | 985 | |||||||||||||||||||
Non-U.S. government bonds | 35,263 | 0 | 35,263 | 0 | |||||||||||||||||||
Mortgage backed securities | 3,282 | 0 | 3,282 | 0 | |||||||||||||||||||
Commercial mortgage backed securities | 1,090 | 0 | 1,090 | 0 | |||||||||||||||||||
Asset backed securities | 152,151 | 0 | 152,151 | 0 | |||||||||||||||||||
U.S. government and government agencies | 274 | 164 | 110 | 0 | |||||||||||||||||||
Short-term investments | 557,008 | 420,131 | 136,877 | 0 | |||||||||||||||||||
Equity securities | 92,549 | 23,373 | 188 | 68,988 | |||||||||||||||||||
Other investments | 1,134,229 | 51,149 | 1,015,977 | 67,103 | |||||||||||||||||||
Other investments measured at net asset value (2) | 1,197,656 | ||||||||||||||||||||||
Total | 3,824,796 | 494,817 | 1,995,247 | 137,076 | |||||||||||||||||||
Total assets measured at fair value | $ | 26,384,668 | $ | 9,280,391 | $ | 15,724,091 | $ | 182,530 | |||||||||||||||
Liabilities measured at fair value: | |||||||||||||||||||||||
Contingent consideration liabilities | $ | (461) | $ | 0 | $ | 0 | $ | (461) | |||||||||||||||
Securities sold but not yet purchased (3) | (21,679) | 0 | (21,679) | 0 | |||||||||||||||||||
Derivative instruments (4) | (108,705) | 0 | (108,705) | 0 | |||||||||||||||||||
Total liabilities measured at fair value | $ | (130,845) | $ | 0 | $ | (130,384) | $ | (461) |
Estimated Fair Value Measurements Using: | |||||||||||||||
Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets measured at fair value (1): | |||||||||||||||
Available for sale securities: | |||||||||||||||
Fixed maturities: | |||||||||||||||
Corporate bonds | $ | 6,406,591 | $ | — | $ | 6,397,740 | $ | 8,851 | |||||||
Mortgage backed securities | 562,309 | — | 562,055 | 254 | |||||||||||
Municipal bonds | 881,926 | — | 881,926 | — | |||||||||||
Commercial mortgage backed securities | 733,108 | — | 733,108 | — | |||||||||||
U.S. government and government agencies | 4,916,592 | 4,805,581 | 111,011 | — | |||||||||||
Non-U.S. government securities | 2,078,757 | — | 2,078,757 | — | |||||||||||
Asset backed securities | 1,683,753 | — | 1,678,791 | 4,962 | |||||||||||
Total | 17,263,036 | 4,805,581 | 12,443,388 | 14,067 | |||||||||||
Equity securities | 850,283 | 789,596 | 4,798 | 55,889 | |||||||||||
Short-term investments | 956,546 | 904,804 | 51,742 | — | |||||||||||
Derivative instruments (4) | 48,946 | — | 48,946 | — | |||||||||||
Fair value option: | |||||||||||||||
Corporate bonds | 488,402 | — | 487,470 | 932 | |||||||||||
Non-U.S. government bonds | 50,465 | — | 50,465 | — | |||||||||||
Mortgage backed securities | 11,947 | — | 11,947 | — | |||||||||||
Municipal bonds | 377 | — | 377 | — | |||||||||||
Commercial mortgage backed securities | 1,134 | — | 1,134 | — | |||||||||||
Asset backed securities | 200,163 | — | 200,163 | — | |||||||||||
U.S. government and government agencies | 1,962 | 1,852 | 110 | — | |||||||||||
Short-term investments | 377,014 | 333,320 | 43,694 | — | |||||||||||
Equity securities | 102,697 | 43,962 | 641 | 58,094 | |||||||||||
Other investments | 1,418,273 | 53,287 | 1,296,169 | 68,817 | |||||||||||
Other investments measured at net asset value (2) | 1,011,043 | ||||||||||||||
Total | 3,663,477 | 432,421 | 2,092,170 | 127,843 | |||||||||||
Total assets measured at fair value | $ | 22,782,288 | $ | 6,932,402 | $ | 14,641,044 | $ | 197,799 | |||||||
Liabilities measured at fair value: | |||||||||||||||
Contingent consideration liabilities | $ | (7,998 | ) | $ | — | $ | — | $ | (7,998 | ) | |||||
Securities sold but not yet purchased (3) | (66,257 | ) | — | (66,257 | ) | — | |||||||||
Derivative instruments (4) | (39,750 | ) | — | (39,750 | ) | — | |||||||||
Total liabilities measured at fair value | $ | (114,005 | ) | $ | — | $ | (106,007 | ) | $ | (7,998 | ) |
(1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See note 7 |
ARCH CAPITAL | |
Assets | Liabilities | ||||||||||||||||||||||||||||||||||||||||
s | Available For Sale | Fair Value Option | Fair Value | ||||||||||||||||||||||||||||||||||||||
Structured Securities (1) | Corporate Bonds | Corporate Bonds | Other Investments | Equity Securities | Equity Securities | Contingent Consideration Liabilities | |||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | 3,426 | $ | 13 | $ | 985 | $ | 67,103 | $ | 68,988 | $ | 42,015 | $ | (461) | |||||||||||||||||||||||||||
Total gains or (losses) (realized/unrealized) | |||||||||||||||||||||||||||||||||||||||||
Included in earnings (2) | (68) | 0 | 4 | 248 | 2,188 | 904 | 0 | ||||||||||||||||||||||||||||||||||
Included in other comprehensive income | 114 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||||||||||||||||||||||||||
Purchases | 0 | 0 | 0 | 7,365 | 0 | 193 | 0 | ||||||||||||||||||||||||||||||||||
Issuances | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||
Sales | 0 | 0 | 0 | (6,786) | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||
Settlements | 0 | 0 | 0 | 0 | 0 | 0 | (4) | ||||||||||||||||||||||||||||||||||
Transfers in and/or out of Level 3 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||
Balance at end of period | $ | 3,472 | $ | 13 | $ | 989 | $ | 67,930 | $ | 71,176 | $ | 43,112 | $ | (465) | |||||||||||||||||||||||||||
Three Months Ended March 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | 5,216 | $ | 8,851 | $ | 932 | $ | 68,817 | $ | 58,094 | $ | 55,889 | $ | (7,998) | |||||||||||||||||||||||||||
Total gains or (losses) (realized/unrealized) | |||||||||||||||||||||||||||||||||||||||||
Included in earnings (2) | 9 | 7 | 0 | (27) | 1,921 | (3,721) | (54) | ||||||||||||||||||||||||||||||||||
Included in other comprehensive income | (22) | (5,416) | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||||||||||||||||||||||||||
Purchases | 0 | 0 | 33 | 21 | 0 | 3,464 | 0 | ||||||||||||||||||||||||||||||||||
Issuances | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||
Sales | 0 | 0 | 0 | (17,175) | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||
Settlements | (1,357) | (1,462) | 0 | 0 | 0 | 0 | 85 | ||||||||||||||||||||||||||||||||||
Transfers in and/or out of Level 3 | 0 | 0 | 0 | 2,984 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||
Balance at end of period | $ | 3,846 | $ | 1,980 | $ | 965 | $ | 54,620 | $ | 60,015 | $ | 55,632 | $ | (7,967) | |||||||||||||||||||||||||||
Assets | Liabilities | ||||||||||||||||||||||||||
s | Available For Sale | Fair Value Option | Fair Value | ||||||||||||||||||||||||
Structured Securities (1) | Corporate Bonds | Corporate Bonds | Other Investments | Equity Securities | Equity Securities | Contingent Consideration Liabilities | |||||||||||||||||||||
Three Months Ended March 31, 2020 | |||||||||||||||||||||||||||
Balance at beginning of period | $ | 5,216 | $ | 8,851 | $ | 932 | $ | 68,817 | $ | 58,094 | $ | 55,889 | $ | (7,998 | ) | ||||||||||||
Total gains or (losses) (realized/unrealized) | |||||||||||||||||||||||||||
Included in earnings (2) | 9 | 7 | — | (27 | ) | 1,921 | (3,721 | ) | (54 | ) | |||||||||||||||||
Included in other comprehensive income | (22 | ) | (5,416 | ) | — | — | — | — | — | ||||||||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||||||||||||
Purchases | — | — | 33 | 21 | — | 3,464 | — | ||||||||||||||||||||
Issuances | — | — | — | — | — | — | — | ||||||||||||||||||||
Sales | — | — | — | (17,175 | ) | — | — | — | |||||||||||||||||||
Settlements | (1,357 | ) | (1,462 | ) | — | — | — | — | 85 | ||||||||||||||||||
Transfers in and/or out of Level 3 | — | — | — | 2,984 | — | — | — | ||||||||||||||||||||
Balance at end of period | $ | 3,846 | $ | 1,980 | $ | 965 | $ | 54,620 | $ | 60,015 | $ | 55,632 | $ | (7,967 | ) | ||||||||||||
Three Months Ended March 31, 2019 | |||||||||||||||||||||||||||
Balance at beginning of period | $ | 313 | $ | 8,141 | $ | 5,758 | $ | 62,705 | $ | — | $ | — | $ | (66,665 | ) | ||||||||||||
Total gains or (losses) (realized/unrealized) | |||||||||||||||||||||||||||
Included in earnings (2) | 1,757 | — | (290 | ) | 298 | — | — | (908 | ) | ||||||||||||||||||
Included in other comprehensive income | 4 | (118 | ) | — | — | — | — | — | |||||||||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||||||||||||
Purchases | — | — | — | — | — | — | — | ||||||||||||||||||||
Issuances | — | — | — | — | — | — | (548 | ) | |||||||||||||||||||
Sales | (1,757 | ) | — | (3,235 | ) | (74 | ) | — | — | — | |||||||||||||||||
Settlements | (15 | ) | (456 | ) | — | (600 | ) | — | — | — | |||||||||||||||||
Transfers in and/or out of Level 3 | — | — | — | — | — | — | — | ||||||||||||||||||||
Balance at end of period | $ | 302 | $ | 7,567 | $ | 2,233 | $ | 62,329 | $ | — | $ | — | $ | (68,121 | ) |
ARCH CAPITAL | 30 | 2021 FIRST QUARTER FORM 10-Q |
Estimated Fair Value | |||||||||||||||||
Asset Derivatives | Liability Derivatives | Notional Value (1) | |||||||||||||||
March 31, 2021 | |||||||||||||||||
Futures contracts (2) | $ | 85,379 | $ | (54,615) | $ | 7,116,745 | |||||||||||
Foreign currency forward contracts (2) | 17,898 | (29,887) | 2,190,031 | ||||||||||||||
TBAs (3) | 0 | 0 | 0 | ||||||||||||||
Other (2) | 52,883 | (13,601) | 6,324,926 | ||||||||||||||
Total | $ | 156,160 | $ | (98,103) | |||||||||||||
December 31, 2020 | |||||||||||||||||
Futures contracts (2) | $ | 11,046 | $ | (4,496) | $ | 3,099,796 | |||||||||||
Foreign currency forward contracts (2) | 52,716 | (6,202) | 1,656,729 | ||||||||||||||
TBAs (3) | 0 | 0 | 0 | ||||||||||||||
Other (2) | 113,621 | (98,007) | 5,763,919 | ||||||||||||||
Total | $ | 177,383 | $ | (108,705) |
Estimated Fair Value | |||||||||||
Asset Derivatives | Liability Derivatives | Notional Value (1) | |||||||||
March 31, 2020 | |||||||||||
Futures contracts (2) | $ | 17,696 | $ | (24,714 | ) | $ | 2,444,851 | ||||
Foreign currency forward contracts (2) | 12,164 | (27,015 | ) | 1,490,266 | |||||||
TBAs (3) | 14,403 | — | 13,483 | ||||||||
Other (2) | 62,192 | (64,843 | ) | 3,062,419 | |||||||
Total | $ | 106,455 | $ | (116,572 | ) | ||||||
December 31, 2019 | |||||||||||
Futures contracts (2) | $ | 10,065 | $ | (13,722 | ) | $ | 4,104,559 | ||||
Foreign currency forward contracts (2) | 5,352 | (5,327 | ) | 686,878 | |||||||
TBAs (3) | 55,010 | — | 53,229 | ||||||||
Other (2) | 33,529 | (20,701 | ) | 4,356,300 | |||||||
Total | $ | 103,956 | $ | (39,750 | ) |
Derivatives not designated as | March 31, | |||||||
hedging instruments: | 2020 | 2019 | ||||||
Three Months Ended | ||||||||
Net realized gains (losses): | ||||||||
Futures contracts | $ | 95,944 | $ | 27,336 | ||||
Foreign currency forward contracts | (10,870 | ) | (13,709 | ) | ||||
TBAs | 745 | 190 | ||||||
Other | 41,370 | 22,054 | ||||||
Total | $ | 127,189 | $ | 35,871 |
Derivatives not designated as | March 31, | |||||||||||||
hedging instruments: | 2021 | 2020 | ||||||||||||
Three Months Ended | ||||||||||||||
Net realized gains (losses): | ||||||||||||||
Futures contracts | $ | 47,438 | $ | 95,944 | ||||||||||
Foreign currency forward contracts | (22,071) | (10,870) | ||||||||||||
TBAs | 0 | 745 | ||||||||||||
Other (1) | 10,749 | 41,370 | ||||||||||||
Total | $ | 36,116 | $ | 127,189 | ||||||||||
March 31, | ||||||||
Three Months Ended | 2020 | 2019 | ||||||
Operating lease costs | $ | 7,992 | $ | 7,616 | ||||
Cash payments included in the measurement of lease liabilities reported in operating cash flows | $ | 8,462 | $ | 6,900 | ||||
Right-of-use assets obtained in exchange for new lease liabilities | $ | 3,560 | $ | — | ||||
Right-of-use assets (1) | $ | 127,766 | $ | 140,741 | ||||
Operating lease liability (1) | $ | 145,956 | $ | 157,729 | ||||
Weighted average discount rate | 3.9 | % | 3.9 | % | ||||
Weighted average remaining lease term | 6.3 years | 7.2 years |
Years Ending December 31, | ||||
2020 (remainder) | $ | 23,994 | ||
2021 | 31,279 | |||
2022 | 28,198 | |||
2023 | 23,692 | |||
2024 | 17,473 | |||
2025 and thereafter | 40,124 | |||
Total undiscounted lease liability | $ | 164,760 | ||
Less: present value adjustment | (18,804 | ) | ||
Operating lease liability | $ | 145,956 |
ARCH CAPITAL | 31 | 2021 FIRST QUARTER FORM 10-Q |
March 31, | December 31, | ||||||||||
2021 | 2020 | ||||||||||
Assets | |||||||||||
Investments accounted for using the fair value option (1) | $ | 1,880,768 | $ | 1,790,385 | |||||||
Fixed maturities available for sale, at fair value | 627,387 | 655,249 | |||||||||
Equity securities, at fair value | 62,314 | 52,410 | |||||||||
Cash | 236,164 | 211,451 | |||||||||
Accrued investment income | 14,325 | 14,679 | |||||||||
Premiums receivable | 252,523 | 224,377 | |||||||||
Reinsurance recoverable on unpaid and paid losses and LAE | 291,485 | 286,590 | |||||||||
Ceded unearned premiums | 113,180 | 122,339 | |||||||||
Deferred acquisition costs | 62,224 | 53,705 | |||||||||
Receivable for securities sold | 68,076 | 37,423 | |||||||||
Goodwill and intangible assets | 7,650 | 7,650 | |||||||||
Other assets | 87,358 | 75,801 | |||||||||
Total assets of consolidated VIE | $ | 3,703,454 | $ | 3,532,059 | |||||||
Liabilities | |||||||||||
Reserve for losses and loss adjustment expenses | $ | 1,568,243 | $ | 1,519,583 | |||||||
Unearned premiums | 426,975 | 407,714 | |||||||||
Reinsurance balances payable | 77,041 | 63,269 | |||||||||
Revolving credit agreement borrowings | 155,687 | 155,687 | |||||||||
Senior notes | 172,757 | 172,689 | |||||||||
Payable for securities purchased | 59,230 | 25,881 | |||||||||
Other liabilities | 214,103 | 193,494 | |||||||||
Total liabilities of consolidated VIE | $ | 2,674,036 | $ | 2,538,317 | |||||||
Redeemable noncontrolling interests | $ | 52,421 | $ | 52,398 |
March 31, | December 31, | ||||||
2020 | 2019 | ||||||
Assets | |||||||
Investments accounted for using the fair value option | $ | 1,732,086 | $ | 1,898,091 | |||
Fixed maturities available for sale, at fair value | 717,552 | 745,708 | |||||
Equity securities, at fair value | 63,169 | 65,338 | |||||
Cash | 96,580 | 102,437 | |||||
Accrued investment income | 16,344 | 14,025 | |||||
Premiums receivable | 281,541 | 273,657 | |||||
Reinsurance recoverable on unpaid and paid losses and LAE | 197,458 | 170,973 | |||||
Ceded unearned premiums | 128,570 | 132,577 | |||||
Deferred acquisition costs | 71,402 | 64,044 | |||||
Receivable for securities sold | 26,789 | 16,287 | |||||
Goodwill and intangible assets | 7,650 | 7,650 | |||||
Other assets | 67,493 | 60,070 | |||||
Total assets of consolidated VIE | $ | 3,406,634 | $ | 3,550,857 | |||
Liabilities | |||||||
Reserve for losses and loss adjustment expenses | $ | 1,300,249 | $ | 1,263,628 | |||
Unearned premiums | 478,663 | 438,907 | |||||
Reinsurance balances payable | 71,204 | 77,066 | |||||
Revolving credit agreement borrowings | 500,587 | 484,287 | |||||
Senior notes | 172,486 | 172,418 | |||||
Payable for securities purchased | 63,829 | 18,180 | |||||
Other liabilities (1) | 203,234 | 171,714 | |||||
Total liabilities of consolidated VIE | $ | 2,790,252 | $ | 2,626,200 | |||
Redeemable noncontrolling interests | $ | 52,328 | $ | 52,305 |
ARCH CAPITAL | 32 | 2021 FIRST QUARTER FORM 10-Q |
March 31, | |||||||
2020 | 2019 | ||||||
Three Months Ended | |||||||
Balance, beginning of year | $ | 762,777 | $ | 791,560 | |||
Additional paid in capital attributable to noncontrolling interests | (123 | ) | — | ||||
Repurchases attributable to non-redeemable noncontrolling interests (1) | (2,867 | ) | — | ||||
Amounts attributable to noncontrolling interests | (233,944 | ) | 42,382 | ||||
Other comprehensive income (loss) attributable to noncontrolling interests | (33,058 | ) | 4,139 | ||||
Balance, end of period | $ | 492,785 | $ | 838,081 |
March 31, | |||||||||||
2021 | 2020 | ||||||||||
Three Months Ended | |||||||||||
Balance, beginning of period | $ | 823,007 | $ | 762,777 | |||||||
Additional paid in capital attributable to noncontrolling interests | 21,730 | (123) | |||||||||
Repurchases attributable to non-redeemable noncontrolling interests (1) | 0 | (2,867) | |||||||||
Amounts attributable to noncontrolling interests | 36,697 | (233,944) | |||||||||
Other comprehensive income (loss) attributable to noncontrolling interests | (4,570) | (33,058) | |||||||||
Balance, end of period | $ | 876,864 | $ | 492,785 | |||||||
March 31, | ||||||||||||||||||
2021 | 2020 | |||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||
Balance, beginning of period | Balance, beginning of period | $ | 58,548 | $ | 55,404 | |||||||||||||
Accretion of preference share issuance costs | Accretion of preference share issuance costs | 23 | 23 | |||||||||||||||
Other | Other | (901) | (51) | |||||||||||||||
Balance, end of period | Balance, end of period | $ | 57,670 | $ | 55,376 | |||||||||||||
March 31, | ||||||||||||||||||
2020 | 2019 | |||||||||||||||||
Three Months Ended | ||||||||||||||||||
Balance, beginning of year | $ | 55,404 | $ | 206,292 | ||||||||||||||
Accretion of preference share issuance costs | 23 | 91 | ||||||||||||||||
Other | (51 | ) | — | |||||||||||||||
Balance, end of period | $ | 55,376 | $ | 206,383 |
March 31, | |||||||||||
2021 | 2020 | ||||||||||
Three Months Ended | |||||||||||
Amounts attributable to non-redeemable noncontrolling interests | $ | (36,697) | $ | 233,944 | |||||||
Amounts attributable to redeemable noncontrolling interests | (855) | (1,153) | |||||||||
Net (income) loss attributable to noncontrolling interests | $ | (37,552) | $ | 232,791 | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
Three Months Ended | |||||||
Amounts attributable to non-redeemable noncontrolling interests | $ | 233,944 | $ | (42,382 | ) | ||
Amounts attributable to redeemable noncontrolling interests | (1,153 | ) | (4,588 | ) | |||
Net (income) loss attributable to noncontrolling interests | $ | 232,791 | $ | (46,970 | ) |
ARCH CAPITAL | 33 | 2021 FIRST QUARTER FORM 10-Q |
March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
Maximum Exposure to Loss | Maximum Exposure to Loss | ||||||||||||||||||||||||||||||||||||||||||||||
Bellemeade Entities (Issue Date) | Total VIE Assets | On-Balance Sheet (Asset) Liability | Off-Balance Sheet | Total | Total VIE Assets | On-Balance Sheet (Asset) Liability | Off-Balance Sheet | Total | |||||||||||||||||||||||||||||||||||||||
Bellemeade 2017-1 Ltd. (Oct-17) | $ | 145,573 | $ | (306) | $ | 1,152 | $ | 846 | $ | 145,573 | $ | (245) | $ | 844 | $ | 599 | |||||||||||||||||||||||||||||||
Bellemeade 2018-1 Ltd. (Apr-18) | 250,095 | (1,081) | 2,885 | 1,804 | 250,095 | (903) | 2,245 | 1,342 | |||||||||||||||||||||||||||||||||||||||
Bellemeade 2018-2 Ltd. (Aug-18) | 66,747 | (32) | 62 | 30 | 108,395 | (138) | 280 | 142 | |||||||||||||||||||||||||||||||||||||||
Bellemeade 2018-3 Ltd. (Oct-18) | 302,563 | (1,604) | 4,277 | 2,673 | 302,563 | (1,320) | 3,262 | 1,942 | |||||||||||||||||||||||||||||||||||||||
Bellemeade 2019-1 Ltd. (Mar-19) | 219,256 | (1,117) | 7,991 | 6,874 | 219,256 | (1,361) | 8,461 | 7,100 | |||||||||||||||||||||||||||||||||||||||
Bellemeade 2019-2 Ltd. (Apr-19) | 398,316 | (780) | 6,577 | 5,797 | 398,316 | (730) | 5,201 | 4,471 | |||||||||||||||||||||||||||||||||||||||
Bellemeade 2019-3 Ltd. (Jul-19) | 528,084 | (898) | 6,047 | 5,149 | 528,084 | (861) | 5,079 | 4,218 | |||||||||||||||||||||||||||||||||||||||
Bellemeade 2019-4 Ltd. (Oct-19) | 468,737 | (908) | 8,034 | 7,126 | 468,737 | (890) | 6,676 | 5,786 | |||||||||||||||||||||||||||||||||||||||
Bellemeade 2020-1 Ltd. (Jun-20) (1) | 132,881 | (58) | 294 | 236 | 275,068 | (178) | 1,012 | 834 | |||||||||||||||||||||||||||||||||||||||
Bellemeade 2020-2 Ltd. (Sep-20) (2) | 368,797 | (370) | 6,077 | 5,707 | 423,420 | (556) | 6,839 | 6,283 | |||||||||||||||||||||||||||||||||||||||
Bellemeade 2020-3 Ltd. (Nov-20) (3) | 418,158 | (433) | 9,527 | 9,094 | 418,158 | (631) | 9,605 | 8,974 | |||||||||||||||||||||||||||||||||||||||
Bellemeade 2020-4 Ltd. (Dec-20) (4) | 321,393 | (23) | 5,969 | 5,946 | 321,393 | (156) | 6,816 | 6,660 | |||||||||||||||||||||||||||||||||||||||
Bellemeade 2021-1 Ltd. (Mar-21) (5) | 579,717 | 0 | 4,767 | 4,767 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||
Total | $ | 4,200,317 | $ | (7,610) | $ | 63,659 | $ | 56,049 | $ | 3,859,058 | $ | (7,969) | $ | 56,320 | $ | 48,351 | |||||||||||||||||||||||||||||||
Maximum Exposure to Loss | |||||||||||||||
Bellemeade Entities (Issue Date) | Total VIE Assets | On-Balance Sheet (Asset) Liability | Off-Balance Sheet | Total | |||||||||||
Mar 31, 2020 | |||||||||||||||
Bellemeade 2017-1 Ltd. (Oct-17) | $ | 190,324 | $ | 204 | $ | 1,491 | $ | 1,695 | |||||||
Bellemeade 2018-1 Ltd. (Apr-18) | 299,909 | (132 | ) | 3,790 | 3,658 | ||||||||||
Bellemeade 2018-2 Ltd. (Aug-18) | 380,986 | 83 | 2,787 | 2,870 | |||||||||||
Bellemeade 2018-3 Ltd. (Oct-18) | 383,268 | (116 | ) | 4,272 | 4,156 | ||||||||||
Bellemeade 2019-1 Ltd. (Mar-19) | 228,940 | 396 | 3,072 | 3,468 | |||||||||||
Bellemeade 2019-2 Ltd. (Apr-19) | 462,057 | 814 | 4,373 | 5,187 | |||||||||||
Bellemeade 2019-3 Ltd. (Jul-19) | 603,465 | 1,033 | 8,449 | 9,482 | |||||||||||
Bellemeade 2019-4 Ltd. (Oct-19) | 563,160 | 1,420 | 10,320 | 11,740 | |||||||||||
Total | $ | 3,112,109 | $ | 3,702 | $ | 38,554 | $ | 42,256 | |||||||
Dec 31, 2019 | |||||||||||||||
Bellemeade 2017-1 Ltd. (Oct-17) | $ | 216,429 | $ | (442 | ) | $ | 2,794 | $ | 2,352 | ||||||
Bellemeade 2018-1 Ltd. (Apr-18) | 328,482 | (1,574 | ) | 5,757 | 4,183 | ||||||||||
Bellemeade 2018-2 Ltd. (Aug-18) | 437,009 | (877 | ) | 2,524 | 1,647 | ||||||||||
Bellemeade 2018-3 Ltd. (Oct-18) | 426,806 | (1,113 | ) | 3,937 | 2,824 | ||||||||||
Bellemeade 2019-1 Ltd. (Mar-19) | 257,358 | (226 | ) | 3,027 | 2,801 | ||||||||||
Bellemeade 2019-2 Ltd. (Apr-19) | 525,959 | (78 | ) | 2,579 | 2,501 | ||||||||||
Bellemeade 2019-3 Ltd. (Jul-19) | 656,523 | (585 | ) | 9,273 | 8,688 | ||||||||||
Bellemeade 2019-4 Ltd. (Oct-19) | 577,267 | (302 | ) | 12,193 | 11,891 | ||||||||||
Total | $ | 3,425,833 | $ | (5,197 | ) | $ | 42,084 | $ | 36,887 |
ARCH CAPITAL | |
Amounts Reclassified from AOCI | ||||||||||
Consolidated Statement of Income | Three Months Ended | |||||||||
Details About | Line Item That Includes | March 31, | ||||||||
AOCI Components | Reclassification | 2020 | 2019 | |||||||
Unrealized appreciation on available-for-sale investments | ||||||||||
Net realized gains (losses) | $ | 146,232 | $ | 11,709 | ||||||
Provision for credit losses | (9,320 | ) | ||||||||
Other-than-temporary impairment losses | (533 | ) | (1,309 | ) | ||||||
Total before tax | 136,379 | 10,400 | ||||||||
Income tax (expense) benefit | (15,150 | ) | (179 | ) | ||||||
Net of tax | $ | 121,229 | $ | 10,221 |
Amounts Reclassified from AOCI | ||||||||||||||||||||||||||||||||
Consolidated Statement of Income | Three Months Ended | |||||||||||||||||||||||||||||||
Details About | Line Item That Includes | March 31, | ||||||||||||||||||||||||||||||
AOCI Components | Reclassification | 2021 | 2020 | |||||||||||||||||||||||||||||
Unrealized appreciation on available-for-sale investments | ||||||||||||||||||||||||||||||||
Net realized gains (losses) | $ | 2,004 | $ | 146,232 | ||||||||||||||||||||||||||||
Provision for credit losses | (1,647) | (9,320) | ||||||||||||||||||||||||||||||
Other-than-temporary impairment losses | 0 | (533) | ||||||||||||||||||||||||||||||
Total before tax | 357 | 136,379 | ||||||||||||||||||||||||||||||
Income tax (expense) benefit | (3,054) | (15,150) | ||||||||||||||||||||||||||||||
Net of tax | $ | (2,697) | $ | 121,229 |
Before Tax Amount | Tax Expense (Benefit) | Net of Tax Amount | |||||||||
Three Months Ended March 31, 2020 | |||||||||||
Unrealized appreciation (decline) in value of investments: | |||||||||||
Unrealized holding gains (losses) arising during period | $ | (63,451 | ) | $ | (6,164 | ) | $ | (57,287 | ) | ||
Less reclassification of net realized gains (losses) included in net income | 136,379 | 15,150 | 121,229 | ||||||||
Foreign currency translation adjustments | (45,424 | ) | (735 | ) | (44,689 | ) | |||||
Other comprehensive income (loss) | $ | (245,254 | ) | $ | (22,049 | ) | $ | (223,205 | ) | ||
Three Months Ended March 31, 2019 | |||||||||||
Unrealized appreciation (decline) in value of investments: | |||||||||||
Unrealized holding gains (losses) arising during period | $ | 254,990 | $ | 29,103 | $ | 225,887 | |||||
Less reclassification of net realized gains (losses) included in net income | 10,400 | 179 | 10,221 | ||||||||
Foreign currency translation adjustments | 5,644 | 128 | 5,516 | ||||||||
Other comprehensive income (loss) | $ | 250,234 | $ | 29,052 | $ | 221,182 |
Before Tax Amount | Tax Expense (Benefit) | Net of Tax Amount | |||||||||||||||
Three Months Ended March 31, 2021 | |||||||||||||||||
Unrealized appreciation (decline) in value of investments: | |||||||||||||||||
Unrealized holding gains (losses) arising during period | $ | (294,360) | $ | (32,610) | $ | (261,750) | |||||||||||
Less reclassification of net realized gains (losses) included in net income | 357 | 3,054 | (2,697) | ||||||||||||||
Foreign currency translation adjustments | (28,415) | 169 | (28,584) | ||||||||||||||
Other comprehensive income (loss) | $ | (323,132) | $ | (35,495) | $ | (287,637) | |||||||||||
Three Months Ended March 31, 2020 | |||||||||||||||||
Unrealized appreciation (decline) in value of investments: | |||||||||||||||||
Unrealized holding gains (losses) arising during period | $ | (63,451) | $ | (6,164) | $ | (57,287) | |||||||||||
Less reclassification of net realized gains (losses) included in net income | 136,379 | 15,150 | 121,229 | ||||||||||||||
Foreign currency translation adjustments | (45,424) | (735) | (44,689) | ||||||||||||||
Other comprehensive income (loss) | $ | (245,254) | $ | (22,049) | $ | (223,205) | |||||||||||
ARCH CAPITAL | |
ARCH CAPITAL | 36 | 2021 FIRST QUARTER FORM 10-Q |
ARCH CAPITAL | 37 | 2021 FIRST QUARTER FORM 10-Q |
Arch Portfolio | Benchmark Return | ||||||||||
Pre-tax total return (before investment expenses): | |||||||||||
2021 First Quarter | (0.18) | % | (0.51) | % | |||||||
2020 First Quarter | (0.86) | % | (4.55) | % | |||||||
Arch Portfolio | Benchmark Return | ||||
Pre-tax total return (before investment expenses): | |||||
2020 First Quarter | (0.86 | )% | (4.55 | )% | |
2019 First Quarter | 2.70 | % | 2.82 | % |
ARCH CAPITAL | |
% | |||||
ICE BoAML | % | ||||
ICE BoAML 5-10 Year A - AAA U.S. Corporate Index | 11.00 | ||||
ICE BoAML 1-5 Year U.S. Treasury Index | |||||
MSCI ACWI Net Total Return USD Index | |||||
ICE BoAML 1-10 Year BBB U.S. Corporate Index | |||||
JPM CLOIE Investment Grade | 5.00 | ||||
S&P/LSTA Leveraged Loan Total Return Index | 4.965 | ||||
ICE BoAML U.S. Mortgage Backed Securities Index | 4.00 | ||||
ICE BoAML AAA US Fixed Rate CMBS | 4.00 | ||||
ICE BoAML 1-5 Year U.K. Gilt Index | 4.00 | ||||
ICE BoAML German Government 1-10 Year Index | 3.50 | ||||
ICE BoAML 0-3 | 3.25 | ||||
ICE BoAML 5-10 Year U.S. Treasury Index | 3.00 | ||||
ICE BoAML 1-10 Year U.S. Municipal Securities Index | 3.00 | ||||
3.00 | |||||
ICE BoAML 1-5 Year Australia Government Index | 2.75 | ||||
ICE BoAML U.S. High Yield Constrained Index | 2.50 | ||||
ICE BoAML 1-5 Year Canada Government Index | 2.00 | ||||
ICE BofA CCC and Lower US High Yield Constrained Index | 1.38 | ||||
Bloomberg Barclays Global High Yield | |||||
FTSE Nareit All Mortgage Capped Index Total Return USD | |||||
Bloomberg Barclays CMBS: Erisa Eligible Unhedged USD | |||||
ICE BoAML | 0.50 | ||||
Total | 100.00 | % |
ARCH CAPITAL | 39 | 2021 FIRST QUARTER FORM 10-Q |
ARCH CAPITAL | |
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||
March 31, | March 31, | |||||||||||||||||||||||||||||
2020 | 2019 | 2021 | 2020 | |||||||||||||||||||||||||||
Net income available to Arch common shareholders | $ | 133,714 | $ | 438,125 | Net income available to Arch common shareholders | $ | 427,753 | $ | 133,714 | |||||||||||||||||||||
Net realized (gains) losses | 109,364 | (114,335 | ) | Net realized (gains) losses | (105,551) | 109,364 | ||||||||||||||||||||||||
Equity in net (income) loss of investment funds accounted for using the equity method | 4,209 | (46,867 | ) | Equity in net (income) loss of investment funds accounted for using the equity method | (71,686) | 4,209 | ||||||||||||||||||||||||
Net foreign exchange (gains) losses | (64,491 | ) | (4,994 | ) | Net foreign exchange (gains) losses | (21,332) | (64,491) | |||||||||||||||||||||||
Transaction costs and other | 2,595 | 1,190 | Transaction costs and other | 1,274 | 2,595 | |||||||||||||||||||||||||
Income tax expense (1) | 4,365 | 2,778 | Income tax expense (1) | 9,311 | 4,365 | |||||||||||||||||||||||||
After-tax operating income available to Arch common shareholders | $ | 189,756 | $ | 275,897 | After-tax operating income available to Arch common shareholders | $ | 239,769 | $ | 189,756 | |||||||||||||||||||||
Beginning common shareholders’ equity | $ | 10,717,371 | $ | 8,659,827 | Beginning common shareholders’ equity | $ | 12,325,886 | $ | 10,717,371 | |||||||||||||||||||||
Ending common shareholders’ equity | 10,587,244 | 9,334,596 | Ending common shareholders’ equity | 12,316,472 | 10,587,244 | |||||||||||||||||||||||||
Average common shareholders’ equity | $ | 10,652,308 | $ | 8,997,212 | Average common shareholders’ equity | $ | 12,321,179 | $ | 10,652,308 | |||||||||||||||||||||
Annualized return on average common equity % | 5.0 | 19.5 | Annualized return on average common equity % | 13.9 | 5.0 | |||||||||||||||||||||||||
Annualized operating return on average common equity % | 7.1 | 12.3 | Annualized operating return on average common equity % | 7.8 | 7.1 |
Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||||||||||||||||
2020 | 2019 | % Change | 2021 | 2020 | % Change | ||||||||||||||||||||||
Gross premiums written | $ | 1,207,645 | $ | 941,954 | 28.2 | Gross premiums written | $ | 1,415,886 | $ | 1,207,645 | 17.2 | ||||||||||||||||
Premiums ceded | (378,897 | ) | (320,622 | ) | Premiums ceded | (421,047) | (378,897) | ||||||||||||||||||||
Net premiums written | 828,748 | 621,332 | 33.4 | Net premiums written | 994,839 | 828,748 | 20.0 | ||||||||||||||||||||
Change in unearned premiums | (112,829 | ) | (67,827 | ) | Change in unearned premiums | (175,365) | (112,829) | ||||||||||||||||||||
Net premiums earned | 715,919 | 553,505 | 29.3 | Net premiums earned | 819,474 | 715,919 | 14.5 | ||||||||||||||||||||
Other underwriting income (loss) | Other underwriting income (loss) | — | — | ||||||||||||||||||||||||
Losses and loss adjustment expenses | (507,108 | ) | (356,723 | ) | Losses and loss adjustment expenses | (535,747) | (507,108) | ||||||||||||||||||||
Acquisition expenses | (107,337 | ) | (82,824 | ) | Acquisition expenses | (128,222) | (107,337) | ||||||||||||||||||||
Other operating expenses | (129,649 | ) | (113,396 | ) | Other operating expenses | (137,113) | (129,649) | ||||||||||||||||||||
Underwriting income (loss) | $ | (28,175 | ) | $ | 562 | n/m | Underwriting income (loss) | $ | 18,392 | $ | (28,175) | 165.3 | |||||||||||||||
Underwriting Ratios | % Point Change | Underwriting Ratios | % Point Change | ||||||||||||||||||||||||
Loss ratio | 70.8 | % | 64.4 | % | 6.4 | Loss ratio | 65.4 | % | 70.8 | % | (5.4) | ||||||||||||||||
Acquisition expense ratio | 15.0 | % | 15.0 | % | — | Acquisition expense ratio | 15.6 | % | 15.0 | % | 0.6 | ||||||||||||||||
Other operating expense ratio | 18.1 | % | 20.5 | % | (2.4 | ) | Other operating expense ratio | 16.7 | % | 18.1 | % | (1.4) | |||||||||||||||
Combined ratio | 103.9 | % | 99.9 | % | 4.0 | Combined ratio | 97.7 | % | 103.9 | % | (6.2) |
ARCH CAPITAL | 41 | 2021 FIRST QUARTER FORM 10-Q |
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||||||||||||||||||||||||||
Property, energy, marine and aviation | $ | 170,498 | 17.1 | $ | 127,585 | 15.4 | |||||||||||||||||||||||||||||||||||||||||
Professional lines | 238,246 | 23.9 | 169,118 | 20.4 | |||||||||||||||||||||||||||||||||||||||||||
Programs | 158,401 | 15.9 | 112,532 | 13.6 | |||||||||||||||||||||||||||||||||||||||||||
Construction and national accounts | 134,792 | 13.5 | 115,999 | 14.0 | |||||||||||||||||||||||||||||||||||||||||||
Excess and surplus casualty | 85,593 | 8.6 | 65,419 | 7.9 | |||||||||||||||||||||||||||||||||||||||||||
Travel, accident and health | 92,306 | 9.3 | 126,046 | 15.2 | |||||||||||||||||||||||||||||||||||||||||||
Lenders products | 34,860 | 3.5 | 33,292 | 4.0 | |||||||||||||||||||||||||||||||||||||||||||
Other | 80,143 | 8.1 | 78,757 | 9.5 | |||||||||||||||||||||||||||||||||||||||||||
Total | $ | 994,839 | 100.0 | $ | 828,748 | 100.0 |
Three Months Ended March 31, | |||||||||||||
2020 | 2019 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Professional lines | $ | 169,118 | 20.4 | $ | 129,234 | 20.8 | |||||||
Property, energy, marine and aviation | 127,585 | 15.4 | 70,486 | 11.3 | |||||||||
Travel, accident and health | 126,046 | 15.2 | 88,104 | 14.2 | |||||||||
Construction and national accounts | 115,999 | 14.0 | 95,355 | 15.3 | |||||||||
Programs | 112,532 | 13.6 | 101,172 | 16.3 | |||||||||
Excess and surplus casualty | 65,419 | 7.9 | 45,165 | 7.3 | |||||||||
Lenders products | 33,292 | 4.0 | 22,415 | 3.6 | |||||||||
Other | 78,757 | 9.5 | 69,401 | 11.2 | |||||||||
Total | $ | 828,748 | 100.0 | $ | 621,332 | 100.0 |
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||||||||||||||||||||||||||
Property, energy, marine and aviation | $ | 157,259 | 19.2 | $ | 111,183 | 15.5 | |||||||||||||||||||||||||||||||||||||||||
Professional lines | 199,671 | 24.4 | 151,700 | 21.2 | |||||||||||||||||||||||||||||||||||||||||||
Programs | 112,840 | 13.8 | 108,878 | 15.2 | |||||||||||||||||||||||||||||||||||||||||||
Construction and national accounts | 102,671 | 12.5 | 99,700 | 13.9 | |||||||||||||||||||||||||||||||||||||||||||
Excess and surplus casualty | 75,367 | 9.2 | 65,097 | 9.1 | |||||||||||||||||||||||||||||||||||||||||||
Travel, accident and health | 49,666 | 6.1 | 77,375 | 10.8 | |||||||||||||||||||||||||||||||||||||||||||
Lenders products | 40,081 | 4.9 | 25,343 | 3.5 | |||||||||||||||||||||||||||||||||||||||||||
Other | 81,919 | 10.0 | 76,643 | 10.7 | |||||||||||||||||||||||||||||||||||||||||||
Total | $ | 819,474 | 100.0 | $ | 715,919 | 100.0 |
Three Months Ended March 31, | |||||||||||||
2020 | 2019 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Professional lines | $ | 151,700 | 21.2 | $ | 114,791 | 20.7 | |||||||
Property, energy, marine and aviation | 111,183 | 15.5 | 59,638 | 10.8 | |||||||||
Travel, accident and health | 77,375 | 10.8 | 71,575 | 12.9 | |||||||||
Construction and national accounts | 99,700 | 13.9 | 75,931 | 13.7 | |||||||||
Programs | 108,878 | 15.2 | 97,486 | 17.6 | |||||||||
Excess and surplus casualty | 65,097 | 9.1 | 42,369 | 7.7 | |||||||||
Lenders products | 25,343 | 3.5 | 23,232 | 4.2 | |||||||||
Other | 76,643 | 10.7 | 68,483 | 12.4 | |||||||||
Total | $ | 715,919 | 100.0 | $ | 553,505 | 100.0 |
ARCH CAPITAL | 42 | 2021 FIRST QUARTER FORM 10-Q |
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||
March 31, | March 31, | |||||||||||||||||||||||||||
2020 | 2019 | 2021 | 2020 | |||||||||||||||||||||||||
Current year | 71.0 | % | 65.2 | % | Current year | 65.9 | % | 71.0 | % | |||||||||||||||||||
Prior period reserve development | (0.2 | )% | (0.8 | )% | Prior period reserve development | (0.5) | % | (0.2) | % | |||||||||||||||||||
Loss ratio | 70.8 | % | 64.4 | % | Loss ratio | 65.4 | % | 70.8 | % |
Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||||||||||||||||
2020 | 2019 | % Change | 2021 | 2020 | % Change | ||||||||||||||||||||||
Gross premiums written | $ | 1,122,519 | $ | 682,855 | 64.4 | Gross premiums written | $ | 1,471,060 | $ | 1,122,519 | 31.0 | ||||||||||||||||
Premiums ceded | (325,339 | ) | (231,567 | ) | Premiums ceded | (471,948) | (325,339) | ||||||||||||||||||||
Net premiums written | 797,180 | 451,288 | 76.6 | Net premiums written | 999,112 | 797,180 | 25.3 | ||||||||||||||||||||
Change in unearned premiums | (253,720 | ) | (104,923 | ) | Change in unearned premiums | (354,212) | (253,720) | ||||||||||||||||||||
Net premiums earned | 543,460 | 346,365 | 56.9 | Net premiums earned | 644,900 | 543,460 | 18.7 | ||||||||||||||||||||
Other underwriting income | 2,120 | 4,377 | |||||||||||||||||||||||||
Other underwriting income (loss) | Other underwriting income (loss) | (1,198) | 2,120 | ||||||||||||||||||||||||
Losses and loss adjustment expenses | (430,069 | ) | (239,810 | ) | Losses and loss adjustment expenses | (484,870) | (430,069) | ||||||||||||||||||||
Acquisition expenses | (79,606 | ) | (54,326 | ) | Acquisition expenses | (118,025) | (79,606) | ||||||||||||||||||||
Other operating expenses | (45,297 | ) | (35,704 | ) | Other operating expenses | (60,514) | (45,297) | ||||||||||||||||||||
Underwriting income | $ | (9,392 | ) | $ | 20,902 | (144.9 | ) | ||||||||||||||||||||
Underwriting income (loss) | Underwriting income (loss) | $ | (19,707) | $ | (9,392) | (109.8) | |||||||||||||||||||||
Underwriting Ratios | % Point Change | Underwriting Ratios | % Point Change | ||||||||||||||||||||||||
Loss ratio | 79.1 | % | 69.2 | % | 9.9 | Loss ratio | 75.2 | % | 79.1 | % | (3.9) | ||||||||||||||||
Acquisition expense ratio | 14.6 | % | 15.7 | % | (1.1 | ) | Acquisition expense ratio | 18.3 | % | 14.6 | % | 3.7 | |||||||||||||||
Other operating expense ratio | 8.3 | % | 10.3 | % | (2.0 | ) | Other operating expense ratio | 9.4 | % | 8.3 | % | 1.1 | |||||||||||||||
Combined ratio | 102.0 | % | 95.2 | % | 6.8 | Combined ratio | 102.9 | % | 102.0 | % | 0.9 |
ARCH CAPITAL | 43 | 2021 FIRST QUARTER FORM 10-Q |
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||||||||||||||||||||||||||
Property excluding property catastrophe | $ | 292,833 | 29.3 | $ | 158,924 | 19.9 | |||||||||||||||||||||||||||||||||||||||||
Property catastrophe | 117,207 | 11.7 | 89,092 | 11.2 | |||||||||||||||||||||||||||||||||||||||||||
Other specialty | 284,331 | 28.5 | 284,952 | 35.7 | |||||||||||||||||||||||||||||||||||||||||||
Casualty | 218,256 | 21.8 | 190,880 | 23.9 | |||||||||||||||||||||||||||||||||||||||||||
Marine and aviation | 61,638 | 6.2 | 49,785 | 6.2 | |||||||||||||||||||||||||||||||||||||||||||
Other | 24,847 | 2.5 | 23,547 | 3.0 | |||||||||||||||||||||||||||||||||||||||||||
Total | $ | 999,112 | 100.0 | $ | 797,180 | 100.0 | |||||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||
2020 | 2019 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Other Specialty | $ | 284,952 | 35.7 | $ | 140,477 | 31.1 | |||||||
Casualty | 190,880 | 23.9 | 168,484 | 37.3 | |||||||||
Property excluding property catastrophe | 158,924 | 19.9 | 102,740 | 22.8 | |||||||||
Property catastrophe | 89,092 | 11.2 | 3,383 | 0.7 | |||||||||
Marine and aviation | 49,785 | 6.2 | 15,958 | 3.5 | |||||||||
Other | 23,547 | 3.0 | 20,246 | 4.5 | |||||||||
Total | $ | 797,180 | 100.0 | $ | 451,288 | 100.0 |
Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | 2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | Amount | % | Amount | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount | % | Amount | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Specialty | $ | 203,385 | 37.4 | $ | 121,521 | 35.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Casualty | 135,071 | 24.9 | 91,624 | 26.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property excluding property catastrophe | 112,652 | 20.7 | 83,792 | 24.2 | Property excluding property catastrophe | $ | 187,782 | 29.1 | $ | 112,652 | 20.7 | |||||||||||||||||||||||||||||||||||||||||||||||||
Property catastrophe | 53,000 | 9.8 | 18,732 | 5.4 | Property catastrophe | 88,011 | 13.6 | 53,000 | 9.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other specialty | Other specialty | 163,898 | 25.4 | 203,385 | 37.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Casualty | Casualty | 149,031 | 23.1 | 135,071 | 24.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marine and aviation | 24,858 | 4.6 | 11,059 | 3.2 | Marine and aviation | 40,108 | 6.2 | 24,858 | 4.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other | 14,494 | 2.7 | 19,637 | 5.7 | Other | 16,070 | 2.5 | 14,494 | 2.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 543,460 | 100.0 | $ | 346,365 | 100.0 | Total | $ | 644,900 | 100.0 | $ | 543,460 | 100.0 |
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||
March 31, | March 31, | |||||||||||||||||||||||||||
2020 | 2019 | 2021 | 2020 | |||||||||||||||||||||||||
Current year | 81.2 | % | 68.7 | % | Current year | 79.4 | % | 81.2 | % | |||||||||||||||||||
Prior period reserve development | (2.1 | )% | 0.5 | % | Prior period reserve development | (4.2) | % | (2.1) | % | |||||||||||||||||||
Loss ratio | 79.1 | % | 69.2 | % | Loss ratio | 75.2 | % | 79.1 | % |
ARCH CAPITAL | 44 | 2021 FIRST QUARTER FORM 10-Q |
Three Months Ended March 31, | |||||||||||||||||
2021 | 2020 | % Change | |||||||||||||||
Gross premiums written | $ | 391,246 | $ | 368,945 | 6.0 | ||||||||||||
Premiums ceded | (56,051) | (44,327) | |||||||||||||||
Net premiums written | 335,195 | 324,618 | 3.3 | ||||||||||||||
Change in unearned premiums | 1,122 | 20,408 | |||||||||||||||
Net premiums earned | 336,317 | 345,026 | (2.5) | ||||||||||||||
Other underwriting income | 6,897 | 4,599 | |||||||||||||||
Losses and loss adjustment expenses | (63,689) | (67,566) | |||||||||||||||
Acquisition expenses | (30,082) | (38,536) | |||||||||||||||
Other operating expenses | (49,131) | (45,896) | |||||||||||||||
Underwriting income | $ | 200,312 | $ | 197,627 | 1.4 | ||||||||||||
Underwriting Ratios | % Point Change | ||||||||||||||||
Loss ratio | 18.9 | % | 19.6 | % | (0.7) | ||||||||||||
Acquisition expense ratio | 8.9 | % | 11.2 | % | (2.3) | ||||||||||||
Other operating expense ratio | 14.6 | % | 13.3 | % | 1.3 | ||||||||||||
Combined ratio | 42.4 | % | 44.1 | % | (1.7) |
Three Months Ended March 31, | ||||||||||
2020 | 2019 | % Change | ||||||||
Gross premiums written | $ | 368,945 | $ | 356,050 | 3.6 | |||||
Premiums ceded | (44,327 | ) | (48,798 | ) | ||||||
Net premiums written | 324,618 | 307,252 | 5.7 | |||||||
Change in unearned premiums | 20,408 | 15,650 | ||||||||
Net premiums earned | 345,026 | 322,902 | 6.9 | |||||||
Other underwriting income | 4,599 | 3,856 | ||||||||
Losses and loss adjustment expenses | (67,566 | ) | (11,149 | ) | ||||||
Acquisition expenses | (38,536 | ) | (31,672 | ) | ||||||
Other operating expenses | (45,896 | ) | (39,875 | ) | ||||||
Underwriting income | $ | 197,627 | $ | 244,062 | (19.0 | ) | ||||
Underwriting Ratios | % Point Change | |||||||||
Loss ratio | 19.6 | % | 3.5 | % | 16.1 | |||||
Acquisition expense ratio | 11.2 | % | 9.8 | % | 1.4 | |||||
Other operating expense ratio | 13.3 | % | 12.3 | % | 1.0 | |||||
Combined ratio | 44.1 | % | 25.6 | % | 18.5 |
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||||||||||||||||||||||||||
Underwriting location: | |||||||||||||||||||||||||||||||||||||||||||||||
United States | $ | 247,529 | 73.8 | $ | 264,108 | 81.4 | |||||||||||||||||||||||||||||||||||||||||
Other | 87,666 | 26.2 | 60,510 | 18.6 | |||||||||||||||||||||||||||||||||||||||||||
Total | $ | 335,195 | 100.0 | $ | 324,618 | 100.0 |
Three Months Ended March 31, | |||||||||||||
2020 | 2019 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Underwriting location: | |||||||||||||
United States | $ | 264,108 | 81.4 | $ | 255,380 | 83.1 | |||||||
Other | 60,510 | 18.6 | 51,872 | 16.9 | |||||||||
Total | $ | 324,618 | 100.0 | $ | 307,252 | 100.0 |
ARCH CAPITAL | 45 | 2021 FIRST QUARTER FORM 10-Q |
(U.S. Dollars in millions) | Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||||||||||||||
Total new insurance written (NIW) (1) | $ | 27,019 | $ | 16,778 | |||||||||||||||||||||||||||||||
Credit quality (FICO): | |||||||||||||||||||||||||||||||||||
>=740 | $ | 17,818 | 65.9 | $ | 10,069 | 60.0 | |||||||||||||||||||||||||||||
680-739 | 8,418 | 31.2 | 5,787 | 34.5 | |||||||||||||||||||||||||||||||
620-679 | 783 | 2.9 | 922 | 5.5 | |||||||||||||||||||||||||||||||
Total | $ | 27,019 | 100.0 | $ | 16,778 | 100.0 | |||||||||||||||||||||||||||||
Loan-to-value (LTV): | |||||||||||||||||||||||||||||||||||
95.01% and above | $ | 1,608 | 6.0 | $ | 1,668 | 9.9 | |||||||||||||||||||||||||||||
90.01% to 95.00% | 12,288 | 45.5 | 7,199 | 42.9 | |||||||||||||||||||||||||||||||
85.01% to 90.00% | 8,312 | 30.8 | 5,329 | 31.8 | |||||||||||||||||||||||||||||||
85.00% and below | 4,811 | 17.8 | 2,582 | 15.4 | |||||||||||||||||||||||||||||||
Total | $ | 27,019 | 100.0 | $ | 16,778 | 100.0 | |||||||||||||||||||||||||||||
Monthly vs. single: | |||||||||||||||||||||||||||||||||||
Monthly | $ | 24,989 | 92.5 | $ | 15,692 | 93.5 | |||||||||||||||||||||||||||||
Single | 2,030 | 7.5 | 1,086 | 6.5 | |||||||||||||||||||||||||||||||
Total | $ | 27,019 | 100.0 | $ | 16,778 | 100.0 | |||||||||||||||||||||||||||||
Purchase vs. refinance: | |||||||||||||||||||||||||||||||||||
Purchase | $ | 20,505 | 75.9 | $ | 12,299 | 73.3 | |||||||||||||||||||||||||||||
Refinance | 6,514 | 24.1 | 4,479 | 26.7 | |||||||||||||||||||||||||||||||
Total | $ | 27,019 | 100.0 | $ | 16,778 | 100.0 |
(U.S. Dollars in millions) | Three Months Ended March 31, | ||||||||||||
2020 | 2019 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Total new insurance written (NIW) (1) | $ | 16,778 | $ | 11,207 | |||||||||
Credit quality (FICO): | |||||||||||||
>=740 | $ | 10,069 | 60.0 | $ | 6,350 | 56.7 | |||||||
680-739 | 5,787 | 34.5 | 4,041 | 36.1 | |||||||||
620-679 | 922 | 5.5 | 816 | 7.3 | |||||||||
Total | $ | 16,778 | 100.0 | $ | 11,207 | 100.0 | |||||||
Loan-to-value (LTV): | |||||||||||||
95.01% and above | $ | 1,668 | 9.9 | $ | 1,808 | 16.1 | |||||||
90.01% to 95.00% | 7,199 | 42.9 | 4,975 | 44.4 | |||||||||
85.01% to 90.00% | 5,329 | 31.8 | 3,149 | 28.1 | |||||||||
85.01% and below | 2,582 | 15.4 | 1,275 | 11.4 | |||||||||
Total | $ | 16,778 | 100.0 | $ | 11,207 | 100.0 | |||||||
Monthly vs. single: | |||||||||||||
Monthly | $ | 15,692 | 93.5 | $ | 10,263 | 91.6 | |||||||
Single | 1,086 | 6.5 | 944 | 8.4 | |||||||||
Total | $ | 16,778 | 100.0 | $ | 11,207 | 100.0 | |||||||
Purchase vs. refinance: | |||||||||||||
Purchase | $ | 12,299 | 73.3 | $ | 10,289 | 91.8 | |||||||
Refinance | 4,479 | 26.7 | 918 | 8.2 | |||||||||
Total | $ | 16,778 | 100.0 | $ | 11,207 | 100.0 |
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||||||||||||||||||||||||||
Underwriting location: | |||||||||||||||||||||||||||||||||||||||||||||||
United States | $ | 262,550 | 78.1 | $ | 289,162 | 83.8 | |||||||||||||||||||||||||||||||||||||||||
Other | 73,767 | 21.9 | 55,864 | 16.2 | |||||||||||||||||||||||||||||||||||||||||||
Total | $ | 336,317 | 100.0 | $ | 345,026 | 100.0 |
Three Months Ended March 31, | |||||||||||||
2020 | 2019 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Underwriting location: | |||||||||||||
United States | $ | 289,162 | 83.8 | $ | 274,473 | 85.0 | |||||||
Other | 55,864 | 16.2 | 48,429 | 15.0 | |||||||||
Total | $ | 345,026 | 100.0 | $ | 322,902 | 100.0 |
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||
March 31, | March 31, | |||||||||||||||||||||||||||
2020 | 2019 | 2021 | 2020 | |||||||||||||||||||||||||
Current year | 21.4 | % | 14.8 | % | Current year | 22.1 | % | 21.4 | % | |||||||||||||||||||
Prior period reserve development | (1.8 | )% | (11.3 | )% | Prior period reserve development | (3.2) | % | (1.8) | % | |||||||||||||||||||
Loss ratio | 19.6 | % | 3.5 | % | Loss ratio | 18.9 | % | 19.6 | % |
ARCH CAPITAL | 46 | 2021 FIRST QUARTER FORM 10-Q |
Three Months Ended | |||||||||||||||||||||||
March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Fixed maturities | $ | 79,017 | $ | 101,763 | |||||||||||||||||||
Equity securities | 5,650 | 5,630 | |||||||||||||||||||||
Short-term investments | 644 | 3,385 | |||||||||||||||||||||
Other (1) | 15,559 | 20,479 | |||||||||||||||||||||
Gross investment income | 100,870 | 131,257 | |||||||||||||||||||||
Investment expenses (2) | (22,141) | (18,229) | |||||||||||||||||||||
Net investment income | $ | 78,729 | $ | 113,028 |
Three Months Ended | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
Fixed maturities | $ | 101,763 | $ | 110,651 | |||
Equity securities | 5,630 | 2,246 | |||||
Short-term investments | 3,385 | 4,298 | |||||
Other (1) | 20,479 | 22,944 | |||||
Gross investment income | 131,257 | 140,139 | |||||
Investment expenses (2) | (18,229 | ) | (18,890 | ) | |||
Net investment income | $ | 113,028 | $ | 121,249 |
ARCH CAPITAL | 47 | 2021 FIRST QUARTER FORM 10-Q |
Investable assets (1): | Estimated Fair Value | % of Total | |||||||||||||||
March 31, 2021 | |||||||||||||||||
Fixed maturities (2) | $ | 18,627,372 | 70.7 | ||||||||||||||
Short-term investments (2) | 1,409,960 | 5.4 | |||||||||||||||
Cash | 705,787 | 2.7 | |||||||||||||||
Equity securities (2) | 1,507,029 | 5.7 | |||||||||||||||
Other investments (2) | 1,527,999 | 5.8 | |||||||||||||||
Other investable assets (3) | 500,000 | 1.9 | |||||||||||||||
Investments accounted for using the equity method | 2,256,327 | 8.6 | |||||||||||||||
Securities transactions entered into but not settled at the balance sheet date | (195,875) | (0.7) | |||||||||||||||
Total investable assets held by Arch | $ | 26,338,599 | 100.0 | ||||||||||||||
Average effective duration (in years) | 2.71 | ||||||||||||||||
Average S&P/Moody’s credit ratings (4) | AA-/Aa3 | ||||||||||||||||
Embedded book yield (5) | 1.59 | % | |||||||||||||||
December 31, 2020 | |||||||||||||||||
Fixed maturities (2) | $ | 18,771,296 | 69.9 | ||||||||||||||
Short-term investments (2) | 2,063,240 | 7.7 | |||||||||||||||
Cash | 694,997 | 2.6 | |||||||||||||||
Equity securities (2) | 1,436,104 | 5.3 | |||||||||||||||
Other investments (2) | 1,480,347 | 5.5 | |||||||||||||||
Other investable assets (3) | 500,000 | 1.9 | |||||||||||||||
Investments accounted for using the equity method | 2,047,889 | 7.6 | |||||||||||||||
Securities transactions entered into but not settled at the balance sheet date | (137,578) | (0.5) | |||||||||||||||
Total investable assets held by Arch | $ | 26,856,295 | 100.0 | ||||||||||||||
Average effective duration (in years) | 3.01 | ||||||||||||||||
Average S&P/Moody’s credit ratings (4) | AA/Aa2 | ||||||||||||||||
Embedded book yield (5) | 1.56 | % |
Investable assets (1): | Estimated Fair Value | % of Total | ||||
March 31, 2020 | ||||||
Fixed maturities (2) | $ | 16,683,385 | 74.6 | |||
Short-term investments (2) | 997,079 | 4.5 | ||||
Cash | 785,704 | 3.5 | ||||
Equity securities (2) | 1,148,639 | 5.1 | ||||
Other investments (2) | 1,153,737 | 5.2 | ||||
Investments accounted for using the equity method | 1,676,055 | 7.5 | ||||
Securities transactions entered into but not settled at the balance sheet date | (68,747 | ) | (0.3 | ) | ||
Total investable assets held by Arch | $ | 22,375,852 | 100.0 | |||
Average effective duration (in years) | 3.19 | |||||
Average S&P/Moody’s credit ratings (3) | AA/Aa2 | |||||
Embedded book yield (4) | 2.34 | % | ||||
December 31, 2019 | ||||||
Fixed maturities (2) | $ | 16,894,021 | 75.8 | |||
Short-term investments (2) | 1,004,257 | 4.5 | ||||
Cash | 623,793 | 2.8 | ||||
Equity securities (2) | 827,842 | 3.7 | ||||
Other investments (2) | 1,336,920 | 6.0 | ||||
Investments accounted for using the equity method | 1,660,396 | 7.5 | ||||
Securities transactions entered into but not settled at the balance sheet date | (61,553 | ) | (0.3 | ) | ||
Total investable assets held by Arch | $ | 22,285,676 | 100.0 | |||
Average effective duration (in years) | 3.40 | |||||
Average S&P/Moody’s credit ratings (3) | AA/Aa2 | |||||
Embedded book yield (4) | 2.55 | % |
2021 FIRST QUARTER FORM 10-Q |
Estimated Fair Value | % of Total | ||||||||||
March 31, 2021 | |||||||||||
Corporate bonds | $ | 8,233,771 | 44.2 | ||||||||
Residential mortgage backed securities | 558,584 | 3.0 | |||||||||
Municipal bonds | 455,550 | 2.4 | |||||||||
Commercial mortgage backed securities | 256,598 | 1.4 | |||||||||
U.S. government and government agencies | 4,876,796 | 26.2 | |||||||||
Non-U.S. government securities | 2,287,921 | 12.3 | |||||||||
Asset backed securities | 1,958,152 | 10.5 | |||||||||
Total | $ | 18,627,372 | 100.0 | ||||||||
December 31, 2020 | |||||||||||
Corporate bonds | $ | 8,039,745 | 42.8 | ||||||||
Residential mortgage backed securities | 616,619 | 3.3 | |||||||||
Municipal bonds | 492,734 | 2.6 | |||||||||
Commercial mortgage backed securities | 390,990 | 2.1 | |||||||||
U.S. government and government agencies | 5,354,863 | 28.5 | |||||||||
Non-U.S. government securities | 2,310,157 | 12.3 | |||||||||
Asset backed securities | 1,566,188 | 8.3 | |||||||||
Total | $ | 18,771,296 | 100.0 |
Estimated Fair Value | % of Total | |||||
March 31, 2020 | ||||||
Corporate bonds | $ | 6,678,007 | 40.0 | |||
Mortgage backed securities | 449,024 | 2.7 | ||||
Municipal bonds | 860,593 | 5.2 | ||||
Commercial mortgage backed securities | 781,417 | 4.7 | ||||
U.S. government and government agencies | 4,309,804 | 25.8 | ||||
Non-U.S. government securities | 1,964,810 | 11.8 | ||||
Asset backed securities | 1,639,730 | 9.8 | ||||
Total | $ | 16,683,385 | 100.0 | |||
December 31, 2019 | ||||||
Corporate bonds | $ | 6,561,354 | 38.8 | |||
Mortgage backed securities | 541,800 | 3.2 | ||||
Municipal bonds | 880,119 | 5.2 | ||||
Commercial mortgage backed securities | 734,244 | 4.3 | ||||
U.S. government and government agencies | 4,632,947 | 27.4 | ||||
Non-U.S. government securities | 1,995,813 | 11.8 | ||||
Asset backed securities | 1,547,744 | 9.2 | ||||
Total | $ | 16,894,021 | 100.0 |
Estimated Fair Value | % of Total | ||||||||||
March 31, 2021 | |||||||||||
U.S. government and gov’t agencies (1) | $ | 5,432,191 | 29.2 | ||||||||
AAA | 3,145,642 | 16.9 | |||||||||
AA | 2,069,764 | 11.1 | |||||||||
A | 3,878,113 | 20.8 | |||||||||
BBB | 2,829,202 | 15.2 | |||||||||
BB | 622,448 | 3.3 | |||||||||
B | 331,144 | 1.8 | |||||||||
Lower than B | 57,659 | 0.3 | |||||||||
Not rated | 261,209 | 1.4 | |||||||||
Total | $ | 18,627,372 | 100.0 | ||||||||
December 31, 2020 | |||||||||||
U.S. government and gov’t agencies (1) | $ | 5,963,758 | 31.8 | ||||||||
AAA | 3,117,046 | 16.6 | |||||||||
AA | 2,063,738 | 11.0 | |||||||||
A | 3,760,280 | 20.0 | |||||||||
BBB | 2,699,201 | 14.4 | |||||||||
BB | 574,189 | 3.1 | |||||||||
B | 268,095 | 1.4 | |||||||||
Lower than B | 54,795 | 0.3 | |||||||||
Not rated | 270,194 | 1.4 | |||||||||
Total | $ | 18,771,296 | 100.0 |
Estimated Fair Value | % of Total | |||||
March 31, 2020 | ||||||
U.S. government and gov’t agencies (1) | $ | 4,804,048 | 28.8 | |||
AAA | 3,486,700 | 20.9 | ||||
AA | 1,994,127 | 12.0 | ||||
A | 3,937,053 | 23.6 | ||||
BBB | 1,565,912 | 9.4 | ||||
BB | 366,759 | 2.2 | ||||
B | 205,181 | 1.2 | ||||
Lower than B | 51,712 | 0.3 | ||||
Not rated | 271,893 | 1.6 | ||||
Total | $ | 16,683,385 | 100.0 | |||
December 31, 2019 | ||||||
U.S. government and gov’t agencies (1) | $ | 5,215,489 | 30.9 | |||
AAA | 3,392,341 | 20.1 | ||||
AA | 2,115,828 | 12.5 | ||||
A | 3,849,458 | 22.8 | ||||
BBB | 1,495,467 | 8.9 | ||||
BB | 355,803 | 2.1 | ||||
B | 216,663 | 1.3 | ||||
Lower than B | 56,865 | 0.3 | ||||
Not rated | 196,107 | 1.2 | ||||
Total | $ | 16,894,021 | 100.0 |
Severity of gross unrealized losses: | Estimated Fair Value | Gross Unrealized Losses | % of Total Gross Unrealized Losses | ||||||||||||||
March 31, 2021 | |||||||||||||||||
0-10% | $ | 9,047,946 | $ | (139,904) | 93.0 | ||||||||||||
10-20% | 58,325 | (7,860) | 5.2 | ||||||||||||||
20-30% | 8,556 | (2,095) | 1.4 | ||||||||||||||
Greater than 30% | 193 | (570) | 0.4 | ||||||||||||||
Total | $ | 9,115,020 | $ | (150,429) | 100.0 | ||||||||||||
December 31, 2020 | |||||||||||||||||
0-10% | $ | 3,583,981 | $ | (55,542) | 79.4 | ||||||||||||
10-20% | 95,495 | (12,183) | 17.4 | ||||||||||||||
20-30% | 1,061 | (406) | 0.6 | ||||||||||||||
Greater than 30% | 1,249 | (1,785) | 2.6 | ||||||||||||||
Total | $ | 3,681,786 | $ | (69,916) | 100.0 |
Severity of gross unrealized losses: | Estimated Fair Value | Gross Unrealized Losses | % of Total Gross Unrealized Losses | |||||||
March 31, 2020 | ||||||||||
0-10% | $ | 4,816,094 | $ | (157,556 | ) | 52.3 | ||||
10-20% | 682,411 | (106,756 | ) | 35.4 | ||||||
20-30% | 60,705 | (19,804 | ) | 6.6 | ||||||
Greater than 30% | 20,411 | (17,142 | ) | 5.7 | ||||||
Total | $ | 5,579,621 | $ | (301,258 | ) | 100.0 | ||||
December 31, 2019 | ||||||||||
0-10% | $ | 4,136,798 | $ | (49,072 | ) | 95.3 | ||||
10-20% | 12,405 | (1,796 | ) | 3.5 | ||||||
20-30% | 830 | (273 | ) | 0.5 | ||||||
Greater than 30% | 315 | (363 | ) | 0.7 | ||||||
Total | $ | 4,150,348 | $ | (51,504 | ) | 100.0 |
ARCH CAPITAL | 49 | 2021 FIRST QUARTER FORM 10-Q |
Estimated Fair Value | Credit Rating (1) | ||||
Bank of America Corporation | $ | 267,690 | A-/A2 | ||
Wells Fargo & Company | 266,260 | A-/A2 | |||
JPMorgan Chase & Co. | 231,644 | A-/A2 | |||
Apple Inc. | 188,372 | AA+/Aa1 | |||
Morgan Stanley | 139,910 | BBB+/A3 | |||
Citigroup Inc. | 126,042 | A-/A2 | |||
The Walt Disney Company | 125,294 | A/A2 | |||
BP p.l.c. | 110,570 | A-/A1 | |||
The Goldman Sachs Group, Inc. | 108,376 | BBB+/A3 | |||
Oracle Corporation | 108,266 | A+/A3 | |||
Total | $ | 1,672,424 |
Credit Rating (1) | |||||||||||
JPMorgan Chase & Co. | $ | 389,799 | A-/A2 | ||||||||
Bank of America Corporation | 312,603 | A-/A2 | |||||||||
Wells Fargo & Company | 237,410 | BBB+/A2 | |||||||||
Citigroup Inc. | 231,573 | BBB+/A3 | |||||||||
Morgan Stanley | 214,190 | BBB+/A1 | |||||||||
The Goldman Sachs Group, Inc. | 174,407 | BBB+/A2 | |||||||||
Nestlé S.A. | 158,152 | AA-/Aa3 | |||||||||
Apple Inc. | 131,135 | AA+/Aa1 | |||||||||
Chevron Corporation | 110,767 | AA-/Aa2 | |||||||||
AT&T Inc. | 103,918 | BBB/Baa2 | |||||||||
Total | $ | 2,063,954 |
Agencies | Investment Grade | Below Investment Grade | Total | ||||||||||||
Mar 31, 2020 | |||||||||||||||
RMBS | $ | 413,311 | $ | 6,014 | $ | 29,699 | $ | 449,024 | |||||||
CMBS | 80,933 | 654,819 | 45,665 | 781,417 | |||||||||||
ABS | — | 1,585,648 | 54,082 | 1,639,730 | |||||||||||
Total | $ | 494,244 | $ | 2,246,481 | $ | 129,446 | $ | 2,870,171 | |||||||
Dec 31, 2019 | |||||||||||||||
RMBS | $ | 503,929 | $ | 7,770 | $ | 30,101 | $ | 541,800 | |||||||
CMBS | 78,612 | 629,424 | 26,208 | 734,244 | |||||||||||
ABS | — | 1,483,449 | 64,295 | 1,547,744 | |||||||||||
Total | $ | 582,541 | $ | 2,120,643 | $ | 120,604 | $ | 2,823,788 |
Agencies | Investment Grade | Below Investment Grade | Total | ||||||||||||||||||||
Mar 31, 2021 | |||||||||||||||||||||||
RMBS | $ | 525,144 | $ | 1,627 | $ | 31,813 | $ | 558,584 | |||||||||||||||
CMBS | 30,251 | 201,132 | 25,215 | 256,598 | |||||||||||||||||||
ABS | — | 1,765,074 | 193,078 | 1,958,152 | |||||||||||||||||||
Total | $ | 555,395 | $ | 1,967,833 | $ | 250,106 | $ | 2,773,334 | |||||||||||||||
Dec 31, 2020 | |||||||||||||||||||||||
RMBS | $ | 584,499 | $ | 4,102 | $ | 28,018 | $ | 616,619 | |||||||||||||||
CMBS | 24,396 | 342,491 | 24,103 | 390,990 | |||||||||||||||||||
ABS | — | 1,403,137 | 163,051 | 1,566,188 | |||||||||||||||||||
Total | $ | 608,895 | $ | 1,749,730 | $ | 215,172 | $ | 2,573,797 |
March 31, 2021 | December 31, 2020 | ||||||||||
Equities (1) | $ | 782,747 | $ | 676,437 | |||||||
Exchange traded funds | |||||||||||
Fixed income (2) | 235,606 | 341,139 | |||||||||
Equity and other (3) | 488,676 | 418,528 | |||||||||
Total | $ | 1,507,029 | $ | 1,436,104 |
March 31, 2020 | December 31, 2019 | ||||||
Equities (1) | $ | 311,081 | $ | 375,067 | |||
Exchange traded funds | |||||||
Fixed income (2) | 474,870 | 7,237 | |||||
Equity and other (3) | 362,688 | 445,538 | |||||
Total | $ | 1,148,639 | $ | 827,842 |
March 31, 2020 | December 31, 2019 | March 31, 2021 | December 31, 2020 | |||||||||||||||
Lending | $ | 544,308 | $ | 602,841 | Lending | $ | 606,207 | $ | 572,636 | |||||||||
Term loan investments | 228,586 | 264,083 | Term loan investments | 397,566 | 380,193 | |||||||||||||
Energy | 63,057 | 97,402 | Energy | 78,500 | 65,813 | |||||||||||||
Credit related funds | 111,874 | 123,020 | Credit related funds | 79,355 | 90,780 | |||||||||||||
Investment grade fixed income | 137,370 | 151,594 | Investment grade fixed income | 142,630 | 138,646 | |||||||||||||
Infrastructure | 33,644 | 61,786 | Infrastructure | 152,352 | 165,516 | |||||||||||||
Private equity | 20,602 | 18,915 | Private equity | 52,064 | 48,750 | |||||||||||||
Real estate | 14,296 | 17,279 | Real estate | 19,325 | 18,013 | |||||||||||||
Total | $ | 1,153,737 | $ | 1,336,920 | ||||||||||||||
Total fair value option | Total fair value option | $ | 1,527,999 | $ | 1,480,347 | |||||||||||||
Other investable assets | Other investable assets | $ | 500,000 | $ | 500,000 | |||||||||||||
Total other investments | Total other investments | $ | 2,027,999 | $ | 1,980,347 |
ARCH CAPITAL | 50 | 2021 FIRST QUARTER FORM 10-Q |
March 31, 2020 | December 31, 2019 | March 31, 2021 | December 31, 2020 | |||||||||||||||
Investments accounted for using the fair value option: | Investments accounted for using the fair value option: | |||||||||||||||||
Other investments | $ | 937,680 | $ | 1,092,396 | Other investments | $ | 790,186 | $ | 851,538 | |||||||||
Fixed maturities | 392,453 | 416,592 | Fixed maturities | 539,688 | 455,163 | |||||||||||||
Short-term investments | 343,861 | 329,303 | Short-term investments | 483,601 | 418,690 | |||||||||||||
Equity securities | 58,092 | 59,799 | Equity securities | 67,295 | 64,994 | |||||||||||||
Total | 1,732,086 | 1,898,090 | Total | 1,880,770 | 1,790,385 | |||||||||||||
Fixed maturities available for sale, at fair value | 677,869 | 706,875 | Fixed maturities available for sale, at fair value | 586,431 | 613,503 | |||||||||||||
Equity securities, at fair value | 63,169 | 65,337 | Equity securities, at fair value | 62,314 | 52,410 | |||||||||||||
Cash | 96,580 | 102,437 | Cash | 236,164 | 211,451 | |||||||||||||
Securities sold but not yet purchased | (30,076 | ) | (66,257 | ) | Securities sold but not yet purchased | (34,097) | (21,679) | |||||||||||
Securities transactions entered into but not settled at the balance sheet date | (37,039 | ) | (1,893 | ) | Securities transactions entered into but not settled at the balance sheet date | 8,846 | 11,542 | |||||||||||
Total investable assets included in ‘other’ segment | $ | 2,502,589 | $ | 2,704,589 | Total investable assets included in ‘other’ segment | $ | 2,740,428 | $ | 2,657,612 |
Three Months Ended | |||||||||||||||||||||||
March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Premiums written: | |||||||||||||||||||||||
Direct | $ | 1,892,245 | $ | 1,688,798 | |||||||||||||||||||
Assumed | 1,504,961 | 1,144,032 | |||||||||||||||||||||
Ceded | (888,749) | (695,584) | |||||||||||||||||||||
Net | $ | 2,508,457 | $ | 2,137,246 | |||||||||||||||||||
Premiums earned: | |||||||||||||||||||||||
Direct | $ | 1,712,925 | $ | 1,545,825 | |||||||||||||||||||
Assumed | 947,614 | 761,074 | |||||||||||||||||||||
Ceded | (712,117) | (562,455) | |||||||||||||||||||||
Net | $ | 1,948,422 | $ | 1,744,444 | |||||||||||||||||||
Losses and LAE: | |||||||||||||||||||||||
Direct | $ | 985,933 | $ | 985,083 | |||||||||||||||||||
Assumed | 667,311 | 545,869 | |||||||||||||||||||||
Ceded | (450,144) | (415,533) | |||||||||||||||||||||
Net | $ | 1,203,100 | $ | 1,115,419 |
Three Months Ended | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
Premiums written: | |||||||
Direct | $ | 1,688,798 | $ | 1,363,506 | |||
Assumed | 1,144,032 | 714,373 | |||||
Ceded | (695,584 | ) | (552,620 | ) | |||
Net | $ | 2,137,246 | $ | 1,525,259 | |||
Premiums earned: | |||||||
Direct | $ | 1,545,825 | $ | 1,266,063 | |||
Assumed | 761,074 | 533,279 | |||||
Ceded | (562,455 | ) | (430,476 | ) | |||
Net | $ | 1,744,444 | $ | 1,368,866 | |||
Losses and LAE: | |||||||
Direct | $ | 985,083 | $ | 616,062 | |||
Assumed | 545,869 | 338,400 | |||||
Ceded | (415,533 | ) | (235,930 | ) | |||
Net | $ | 1,115,419 | $ | 718,532 |
March 31, 2021 | |||||||||||||||||
Initial Coverage at Issuance | Current Coverage | Remaining Retention, Net | |||||||||||||||
Bellemeade 2017-1 Ltd. (1) | $ | 368,114 | $ | 145,573 | $ | 124,281 | |||||||||||
Bellemeade 2018-1 Ltd. (2) | 374,460 | 250,095 | 121,963 | ||||||||||||||
Bellemeade 2018-2 Ltd. (3) | 653,278 | 66,747 | 303,766 | ||||||||||||||
Bellemeade 2018-3 Ltd. (4) | 506,110 | 302,563 | 125,226 | ||||||||||||||
Bellemeade 2019-1 Ltd. (5) | 341,790 | 219,256 | 104,221 | ||||||||||||||
Bellemeade 2019-2 Ltd. (6) | 621,022 | 398,316 | 158,732 | ||||||||||||||
Bellemeade 2019-3 Ltd. (7) | 700,920 | 528,084 | 178,241 | ||||||||||||||
Bellemeade 2019-4 Ltd. (8) | 577,267 | 468,737 | 114,325 | ||||||||||||||
Bellemeade 2020-1 Ltd. (9) | 528,540 | 141,262 | 750,797 | ||||||||||||||
Bellemeade 2020-2 Ltd. (10) | 449,167 | 380,888 | 235,372 | ||||||||||||||
Bellemeade 2020-3 Ltd. (11) | 451,816 | 451,816 | 167,556 | ||||||||||||||
Bellemeade 2020-4 Ltd. (12) | 337,013 | 337,013 | 142,435 | ||||||||||||||
Bellemeade 2021-1 Ltd. (13) | 643,577 | 643,577 | 169,634 | ||||||||||||||
Total | $ | 6,553,074 | $ | 4,333,927 | $ | 2,696,549 |
Initial Coverage at Issuance | Coverage at Mar. 31, 2020 | First Layer Retention | |||||||||
Bellemeade 2017-1 Ltd. (1) | $ | 368,114 | $ | 190,324 | $ | 165,652 | |||||
Bellemeade 2018-1 Ltd. (2) | 374,460 | 299,909 | 168,510 | ||||||||
Bellemeade 2018-2 Ltd. (3) | 653,278 | 380,986 | 352,258 | ||||||||
Bellemeade 2018-3 Ltd. (4) | 506,110 | 383,268 | 179,331 | ||||||||
Bellemeade 2019-1 Ltd. (5) | 341,790 | 228,940 | 208,046 | ||||||||
Bellemeade 2019-2 Ltd. (6) | 621,022 | 462,057 | 221,794 | ||||||||
Bellemeade 2019-3 Ltd. (7) | 700,920 | 603,465 | 232,093 | ||||||||
Bellemeade 2019-4 Ltd. (8) | 577,267 | 563,160 | 162,357 | ||||||||
Total | $ | 4,142,961 | $ | 3,112,109 | $ | 1,690,041 |
2021 FIRST QUARTER FORM 10-Q |
March 31, 2021 | December 31, 2020 | ||||||||||
Insurance segment: | |||||||||||
Case reserves | $ | 1,998,483 | $ | 2,051,640 | |||||||
IBNR reserves | 4,036,207 | 3,889,823 | |||||||||
Total net reserves | 6,034,690 | 5,941,463 | |||||||||
Reinsurance segment: | |||||||||||
Case reserves | 1,503,315 | 1,560,523 | |||||||||
Additional case reserves | 368,458 | 280,472 | |||||||||
IBNR reserves | 2,351,015 | 2,253,953 | |||||||||
Total net reserves | 4,222,788 | 4,094,948 | |||||||||
Mortgage segment: | |||||||||||
Case reserves | 688,005 | 631,921 | |||||||||
IBNR reserves | 277,739 | 271,702 | |||||||||
Total net reserves | 965,744 | 903,623 | |||||||||
Other segment: | |||||||||||
Case reserves | 588,036 | 566,587 | |||||||||
Additional case reserves | 39,312 | 32,321 | |||||||||
IBNR reserves | 676,732 | 660,132 | |||||||||
Total net reserves | 1,304,080 | 1,259,040 | |||||||||
Total: | |||||||||||
Case reserves | 4,777,839 | 4,810,671 | |||||||||
Additional case reserves | 407,770 | 312,793 | |||||||||
IBNR reserves | 7,341,693 | 7,075,610 | |||||||||
Total net reserves | $ | 12,527,302 | $ | 12,199,074 |
March 31, 2020 | December 31, 2019 | ||||||
Insurance segment: | |||||||
Case reserves | $ | 1,626,058 | $ | 1,601,627 | |||
IBNR reserves | 3,541,959 | 3,403,051 | |||||
Total net reserves | 5,168,017 | 5,004,678 | |||||
Reinsurance segment: | |||||||
Case reserves | 1,403,792 | 1,273,523 | |||||
Additional case reserves | 159,972 | 166,251 | |||||
IBNR reserves | 1,935,726 | 1,835,993 | |||||
Total net reserves | 3,499,490 | 3,275,767 | |||||
Mortgage segment: | |||||||
Case reserves | 247,766 | 266,030 | |||||
IBNR reserves | 208,236 | 157,712 | |||||
Total net reserves (1) | 456,002 | 423,742 | |||||
Other segment: | |||||||
Case reserves | 501,107 | 478,036 | |||||
Additional case reserves | 5,598 | 29,059 | |||||
IBNR reserves | 609,252 | 597,910 | |||||
Total net reserves | 1,115,957 | 1,105,005 | |||||
Total: | |||||||
Case reserves | 3,778,723 | 3,619,216 | |||||
Additional case reserves | 165,570 | 195,310 | |||||
IBNR reserves | 6,295,173 | 5,994,666 | |||||
Total net reserves | $ | 10,239,466 | $ | 9,809,192 |
March 31, 2021 | December 31, 2020 | ||||||||||
Insurance segment: | |||||||||||
Professional lines (1) | $ | 1,457,723 | $ | 1,482,820 | |||||||
Construction and national accounts | 1,433,994 | 1,395,067 | |||||||||
Excess and surplus casualty (2) | 833,272 | 816,495 | |||||||||
Programs | 733,193 | 699,354 | |||||||||
Property, energy, marine and aviation | 506,565 | 517,692 | |||||||||
Travel, accident and health | 86,135 | 98,910 | |||||||||
Lenders products | 56,964 | 48,946 | |||||||||
Other (3) | 926,844 | 882,179 | |||||||||
Total net reserves | $ | 6,034,690 | $ | 5,941,463 |
March 31, 2020 | December 31, 2019 | ||||||
Insurance segment: | |||||||
Professional lines (1) | $ | 1,347,333 | $ | 1,322,969 | |||
Construction and national accounts | 1,282,120 | 1,248,750 | |||||
Excess and surplus casualty (2) | 601,344 | 564,254 | |||||
Programs | 587,511 | 571,926 | |||||
Property, energy, marine and aviation | 400,605 | 371,822 | |||||
Travel, accident and health | 118,754 | 109,613 | |||||
Lenders products | 27,387 | 28,233 | |||||
Other (3) | 802,963 | 787,111 | |||||
Total net reserves | $ | 5,168,017 | $ | 5,004,678 |
ARCH CAPITAL | |
March 31, 2021 | December 31, 2020 | ||||||||||
Reinsurance segment: | |||||||||||
Casualty (1) | $ | 1,937,311 | $ | 1,995,849 | |||||||
Other specialty (2) | 942,302 | 917,178 | |||||||||
Property excluding property catastrophe | 628,305 | 594,033 | |||||||||
Marine and aviation | 201,813 | 204,205 | |||||||||
Property catastrophe | 396,878 | 268,858 | |||||||||
Other (3) | 116,179 | 114,825 | |||||||||
Total net reserves | $ | 4,222,788 | $ | 4,094,948 |
March 31, 2021 | December 31, 2020 | ||||||||||
U.S. primary mortgage insurance (1) | $ | 700,169 | $ | 649,748 | |||||||
Other | 265,575 | 253,875 | |||||||||
Total net reserves | $ | 965,744 | $ | 903,623 |
March 31, 2020 | December 31, 2019 | ||||||
Reinsurance segment: | |||||||
Casualty (1) | $ | 1,845,832 | $ | 1,796,073 | |||
Other specialty (2) | 748,824 | 649,309 | |||||
Property excluding property catastrophe | 504,005 | 471,775 | |||||
Marine and aviation | 176,987 | 160,930 | |||||
Property catastrophe | 131,343 | 113,565 | |||||
Other (3) | 92,499 | 84,115 | |||||
Total net reserves | $ | 3,499,490 | $ | 3,275,767 |
(U.S. Dollars in millions) | March 31, 2021 | December 31, 2020 | |||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Insurance In Force (IIF) (1): | |||||||||||||||||||||||
U.S. primary mortgage insurance | $ | 276,179 | 64.7 | $ | 280,579 | 66.2 | |||||||||||||||||
Mortgage reinsurance | 31,699 | 7.4 | 31,220 | 7.4 | |||||||||||||||||||
Other (2) | 119,138 | 27.9 | 111,740 | 26.4 | |||||||||||||||||||
Total | $ | 427,016 | 100.0 | $ | 423,539 | 100.0 | |||||||||||||||||
Risk In Force (RIF) (3): | |||||||||||||||||||||||
U.S. primary mortgage insurance | $ | 69,234 | 89.9 | $ | 70,522 | 90.5 | |||||||||||||||||
Mortgage reinsurance | 2,214 | 2.9 | 2,226 | 2.9 | |||||||||||||||||||
Other (2) | 5,573 | 7.2 | 5,146 | 6.6 | |||||||||||||||||||
Total | $ | 77,021 | 100.0 | $ | 77,894 | 100.0 |
(U.S. Dollars in millions) | March 31, 2020 | December 31, 2019 | |||||||||||
Amount | % | Amount | % | ||||||||||
Insurance In Force (IIF) (1): | |||||||||||||
U.S. primary mortgage insurance | $ | 284,203 | 68.9 | $ | 287,150 | 68.7 | |||||||
Mortgage reinsurance | 24,335 | 5.9 | 26,768 | 6.4 | |||||||||
Other (2) | 103,731 | 25.2 | 104,346 | 24.9 | |||||||||
Total | $ | 412,269 | 100.0 | $ | 418,264 | 100.0 | |||||||
Risk In Force (RIF) (3): | |||||||||||||
U.S. primary mortgage insurance | $ | 72,566 | 92.0 | $ | 73,388 | 91.9 | |||||||
Mortgage reinsurance | 1,961 | 2.5 | 2,129 | 2.7 | |||||||||
Other (2) | 4,387 | 5.6 | 4,380 | 5.5 | |||||||||
Total | $ | 78,914 | 100.0 | $ | 79,897 | 100.0 |
(U.S. Dollars in millions) | IIF | RIF | Delinquency | ||||||||||||||||||||||||||
Amount | % | Amount | % | Rate (1) | |||||||||||||||||||||||||
Policy year: | |||||||||||||||||||||||||||||
2011 and prior | $ | 13,569 | 4.9 | $ | 3,086 | 4.5 | 11.16 | % | |||||||||||||||||||||
2012 | 2,769 | 1.0 | 734 | 1.1 | 3.17 | % | |||||||||||||||||||||||
2013 | 6,522 | 2.4 | 1,817 | 2.6 | 3.17 | % | |||||||||||||||||||||||
2014 | 7,250 | 2.6 | 1,993 | 2.9 | 3.96 | % | |||||||||||||||||||||||
2015 | 12,971 | 4.7 | 3,495 | 5.0 | 3.64 | % | |||||||||||||||||||||||
2016 | 21,354 | 7.7 | 5,718 | 8.3 | 4.66 | % | |||||||||||||||||||||||
2017 | 20,826 | 7.5 | 5,413 | 7.8 | 5.46 | % | |||||||||||||||||||||||
2018 | 22,856 | 8.3 | 5,794 | 8.4 | 6.98 | % | |||||||||||||||||||||||
2019 | 40,743 | 14.8 | 10,157 | 14.7 | 4.72 | % | |||||||||||||||||||||||
2020 | 100,435 | 36.4 | 24,460 | 35.3 | 0.91 | % | |||||||||||||||||||||||
2021 | 26,884 | 9.7 | 6,567 | 9.5 | 0.03 | % | |||||||||||||||||||||||
Total | $ | 276,179 | 100.0 | $ | 69,234 | 100.0 | 3.86 | % |
(U.S. Dollars in millions) | IIF | RIF | Delinquency | |||||||||||||
Amount | % | Amount | % | Rate (1) | ||||||||||||
Policy year: | ||||||||||||||||
2010 and prior | $ | 16,352 | 5.8 | $ | 3,763 | 5.2 | 8.17 | % | ||||||||
2011 | 1,533 | 0.5 | 422 | 0.6 | 1.80 | % | ||||||||||
2012 | 5,777 | 2.0 | 1,604 | 2.2 | 0.86 | % | ||||||||||
2013 | 11,265 | 4.0 | 3,156 | 4.3 | 0.92 | % | ||||||||||
2014 | 12,733 | 4.5 | 3,511 | 4.8 | 1.14 | % | ||||||||||
2015 | 23,866 | 8.4 | 6,395 | 8.8 | 0.81 | % | ||||||||||
2016 | 38,155 | 13.4 | 9,997 | 13.8 | 1.01 | % | ||||||||||
2017 | 40,621 | 14.3 | 10,454 | 14.4 | 0.96 | % | ||||||||||
2018 | 47,068 | 16.6 | 11,914 | 16.4 | 0.91 | % | ||||||||||
2019 | 70,130 | 24.7 | 17,246 | 23.8 | 0.21 | % | ||||||||||
2020 | 16,703 | 5.9 | 4,104 | 5.7 | 0.01 | % | ||||||||||
Total | $ | 284,203 | 100.0 | $ | 72,566 | 100.0 | 1.42 | % |
2021 FIRST QUARTER FORM 10-Q |
(U.S. Dollars in millions) | IIF | RIF | Delinquency | ||||||||||||||||||||||||||
Amount | % | Amount | % | Rate (1) | |||||||||||||||||||||||||
Policy year: | |||||||||||||||||||||||||||||
2011 and prior | $ | 14,588 | 5.2 | $ | 3,327 | 4.7 | 11.36 | % | |||||||||||||||||||||
2012 | 3,651 | 1.3 | 992 | 1.4 | 2.98 | % | |||||||||||||||||||||||
2013 | 7,546 | 2.7 | 2,107 | 3.0 | 3.30 | % | |||||||||||||||||||||||
2014 | 8,261 | 2.9 | 2,273 | 3.2 | 4.06 | % | |||||||||||||||||||||||
2015 | 15,032 | 5.4 | 4,048 | 5.7 | 3.72 | % | |||||||||||||||||||||||
2016 | 24,958 | 8.9 | 6,648 | 9.4 | 4.77 | % | |||||||||||||||||||||||
2017 | 24,748 | 8.8 | 6,413 | 9.1 | 5.52 | % | |||||||||||||||||||||||
2018 | 27,304 | 9.7 | 6,918 | 9.8 | 6.76 | % | |||||||||||||||||||||||
2019 | 48,304 | 17.2 | 12,001 | 17.0 | 4.61 | % | |||||||||||||||||||||||
2020 | 106,187 | 37.8 | 25,795 | 36.6 | 0.76 | % | |||||||||||||||||||||||
Total | $ | 280,579 | 100.0 | $ | 70,522 | 100.0 | 4.19 | % |
(U.S. Dollars in millions) | IIF | RIF | Delinquency | |||||||||||||
Amount | % | Amount | % | Rate (1) | ||||||||||||
Policy year: | ||||||||||||||||
2010 and prior | $ | 17,251 | 6.0 | $ | 3,990 | 5.4 | 8.79 | % | ||||||||
2011 | 1,678 | 0.6 | 464 | 0.6 | 1.59 | % | ||||||||||
2012 | 6,293 | 2.2 | 1,753 | 2.4 | 0.89 | % | ||||||||||
2013 | 12,276 | 4.3 | 3,433 | 4.7 | 0.99 | % | ||||||||||
2014 | 13,714 | 4.8 | 3,778 | 5.1 | 1.16 | % | ||||||||||
2015 | 25,788 | 9.0 | 6,880 | 9.4 | 0.87 | % | ||||||||||
2016 | 40,898 | 14.2 | 10,670 | 14.5 | 1.03 | % | ||||||||||
2017 | 43,896 | 15.3 | 11,262 | 15.3 | 1.00 | % | ||||||||||
2018 | 51,776 | 18.0 | 13,086 | 17.8 | 0.86 | % | ||||||||||
2019 | 73,580 | 25.6 | 18,072 | 24.6 | 0.14 | % | ||||||||||
Total | $ | 287,150 | 100.0 | $ | 73,388 | 100.0 | 1.54 | % |
(1)Represents the ending percentage |
(U.S. Dollars in millions) | March 31, 2021 | December 31, 2020 | |||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Credit quality (FICO): | |||||||||||||||||||||||
>=740 | $ | 40,230 | 58.1 | $ | 40,774 | 57.8 | |||||||||||||||||
680-739 | 24,006 | 34.7 | 24,498 | 34.7 | |||||||||||||||||||
620-679 | 4,607 | 6.7 | 4,837 | 6.9 | |||||||||||||||||||
<620 | 391 | 0.6 | 413 | 0.6 | |||||||||||||||||||
Total | $ | 69,234 | 100.0 | $ | 70,522 | 100.0 | |||||||||||||||||
Weighted average FICO score | 744 | 743 | |||||||||||||||||||||
Loan-to-value (LTV): | |||||||||||||||||||||||
95.01% and above | $ | 8,310 | 12.0 | $ | 8,643 | 12.3 | |||||||||||||||||
90.01% to 95.00% | 37,193 | 53.7 | 37,877 | 53.7 | |||||||||||||||||||
85.01% to 90.00% | 19,648 | 28.4 | 20,013 | 28.4 | |||||||||||||||||||
85.00% and below | 4,083 | 5.9 | 3,989 | 5.7 | |||||||||||||||||||
Total | $ | 69,234 | 100.0 | $ | 70,522 | 100.0 | |||||||||||||||||
Weighted average LTV | 92.8 | % | 92.8 | % | |||||||||||||||||||
Total RIF, net of external reinsurance | $ | 55,503 | $ | 56,658 |
(U.S. Dollars in millions) | March 31, 2021 | December 31, 2020 | |||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Total RIF by State: | |||||||||||||||||||||||
Texas | $ | 5,569 | 8.0 | $ | 5,636 | 8.0 | |||||||||||||||||
California | 5,343 | 7.7 | 5,261 | 7.5 | |||||||||||||||||||
Florida | 3,544 | 5.1 | 3,632 | 5.2 | |||||||||||||||||||
Georgia | 2,929 | 4.2 | 2,959 | 4.2 | |||||||||||||||||||
Illinois | 2,728 | 3.9 | 2,762 | 3.9 | |||||||||||||||||||
North Carolina | 2,610 | 3.8 | 2,622 | 3.7 | |||||||||||||||||||
Virginia | 2,458 | 3.6 | 2,526 | 3.6 | |||||||||||||||||||
Minnesota | 2,452 | 3.5 | 2,520 | 3.6 | |||||||||||||||||||
Massachusetts | 2,434 | 3.5 | 2,464 | 3.5 | |||||||||||||||||||
Washington | 2,154 | 3.1 | 2,220 | 3.1 | |||||||||||||||||||
Other | 37,013 | 53.5 | 37,920 | 53.8 | |||||||||||||||||||
Total | $ | 69,234 | 100.0 | $ | 70,522 | 100.0 |
(U.S. Dollars in millions) | March 31, 2020 | December 31, 2019 | |||||||||||
Amount | % | Amount | % | ||||||||||
Credit quality (FICO): | |||||||||||||
>=740 | $ | 41,738 | 57.5 | $ | 42,301 | 57.6 | |||||||
680-739 | 25,078 | 34.6 | 25,240 | 34.4 | |||||||||
620-679 | 5,368 | 7.4 | 5,444 | 7.4 | |||||||||
<620 | 382 | 0.5 | 403 | 0.5 | |||||||||
Total | $ | 72,566 | 100.0 | $ | 73,388 | 100.0 | |||||||
Weighted average FICO score | 743 | 743 | |||||||||||
Loan-to-value (LTV): | |||||||||||||
95.01% and above | $ | 9,060 | 12.5 | $ | 9,064 | 12.4 | |||||||
90.01% to 95.00% | 39,594 | 54.6 | 40,136 | 54.7 | |||||||||
85.01% to 90.00% | 20,619 | 28.4 | 20,890 | 28.5 | |||||||||
85.00% and below | 3,293 | 4.5 | 3,298 | 4.5 | |||||||||
Total | $ | 72,566 | 100.0 | $ | 73,388 | 100.0 | |||||||
Weighted average LTV | 93.0 | % | 93.0 | % | |||||||||
Total RIF, net of external reinsurance | $ | 58,693 | $ | 58,512 |
(U.S. Dollars in millions) | March 31, 2020 | December 31, 2019 | |||||||||||
Amount | % | Amount | % | ||||||||||
Total RIF by State: | |||||||||||||
Texas | $ | 5,683 | 7.8 | $ | 5,678 | 7.7 | |||||||
California | 5,106 | 7.0 | 5,187 | 7.1 | |||||||||
Florida | 3,863 | 5.3 | 3,887 | 5.3 | |||||||||
Georgia | 2,819 | 3.9 | 2,753 | 3.8 | |||||||||
Virginia | 2,814 | 3.9 | 2,881 | 3.9 | |||||||||
Illinois | 2,621 | 3.6 | 2,616 | 3.6 | |||||||||
Minnesota | 2,509 | 3.5 | 2,514 | 3.4 | |||||||||
North Carolina | 2,475 | 3.4 | 2,470 | 3.4 | |||||||||
Washington | 2,426 | 3.3 | 2,474 | 3.4 | |||||||||
Maryland | 2,376 | 3.3 | 2,437 | 3.3 | |||||||||
Others | 39,874 | 54.9 | 40,491 | 55.2 | |||||||||
Total | $ | 72,566 | 100.0 | $ | 73,388 | 100.0 |
(U.S. Dollars in thousands, except policy, loan and claim count) | Three Months Ended | ||||||||||
March 31, | |||||||||||
2021 | 2020 | ||||||||||
Roll-forward of insured loans in default: | |||||||||||
Beginning delinquent number of loans | 52,234 | 20,163 | |||||||||
New notices | 10,990 | 9,419 | |||||||||
Cures | (16,131) | (10,541) | |||||||||
Paid claims | (179) | (627) | |||||||||
Ending delinquent number of loans (1) | 46,914 | 18,414 | |||||||||
Ending number of policies in force (1) | 1,214,245 | 1,293,799 | |||||||||
Delinquency rate (1) | 3.86 | % | 1.42 | % | |||||||
Losses: | |||||||||||
Number of claims paid | 179 | 627 | |||||||||
Total paid claims | $ | 6,882 | $ | 26,038 | |||||||
Average per claim | $ | 38.4 | $ | 41.5 | |||||||
Severity (2) | 82.0 | % | 92.8 | % | |||||||
Average case reserve per default (in thousands) | $ | 15.2 | $ | 14.4 |
(U.S. Dollars in thousands, except policy, loan and claim count) | Three Months Ended | ||||||
March 31, | |||||||
2020 | 2019 | ||||||
Roll-forward of insured loans in default: | |||||||
Beginning delinquent number of loans | 20,163 | 20,665 | |||||
New notices | 9,419 | 9,711 | |||||
Cures | (10,541 | ) | (9,706 | ) | |||
Paid claims | (627 | ) | (843 | ) | |||
Ending delinquent number of loans (1) | 18,414 | 19,827 | |||||
Ending number of policies in force (1) | 1,293,799 | 1,286,877 | |||||
Delinquency rate (1) | 1.42 | % | 1.54 | % | |||
Losses: | |||||||
Number of claims paid | 627 | 843 | |||||
Total paid claims | $ | 26,038 | $ | 33,494 | |||
Average per claim | $ | 41.5 | $ | 39.7 | |||
Severity (2) | 92.8 | % | 98.9 | % | |||
Average case reserve per default (in thousands) | $ | 14.4 | $ | 16.6 |
ARCH CAPITAL | 54 | 2021 FIRST QUARTER FORM 10-Q |
(U.S. dollars in thousands, except share data) | March 31, 2021 | December 31, 2020 | |||||||||
Total shareholders’ equity available to Arch | $ | 13,096,472 | $ | 13,105,886 | |||||||
Less preferred shareholders’ equity | 780,000 | 780,000 | |||||||||
Common shareholders’ equity available to Arch | $ | 12,316,472 | $ | 12,325,886 | |||||||
Common shares and common share equivalents outstanding, net of treasury shares (1) | 403,313,377 | 406,720,642 | |||||||||
Book value per share | $ | 30.54 | $ | 30.31 |
(U.S. dollars in thousands, except share data) | March 31, 2020 | December 31, 2019 | |||||
Total shareholders’ equity available to Arch | $ | 11,367,244 | $ | 11,497,371 | |||
Less preferred shareholders’ equity | 780,000 | 780,000 | |||||
Common shareholders’ equity available to Arch | $ | 10,587,244 | $ | 10,717,371 | |||
Common shares and common share equivalents outstanding, net of treasury shares (1) | 405,609,867 | 405,619,201 | |||||
Book value per share | $ | 26.10 | $ | 26.42 |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2021 | 2020 | ||||||||||
Total cash provided by (used for): | |||||||||||
Operating activities | $ | 755,928 | $ | 585,956 | |||||||
Investing activities | (498,658) | (242,766) | |||||||||
Financing activities | (201,625) | (146,856) | |||||||||
Effects of exchange rate changes on foreign currency cash | (3,387) | (23,738) | |||||||||
Increase (decrease) in cash and restricted cash | $ | 52,258 | $ | 172,596 |
Three Months Ended | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
Total cash provided by (used for): | |||||||
Operating activities | $ | 585,956 | $ | 165,411 | |||
Investing activities | (242,766 | ) | (188,853 | ) | |||
Financing activities | (146,856 | ) | 13,055 | ||||
Effects of exchange rate changes on foreign currency cash | (23,738 | ) | 3,188 | ||||
Increase (decrease) in cash and restricted cash | $ | 172,596 | $ | (7,199 | ) |
ARCH CAPITAL | 55 | 2021 FIRST QUARTER FORM 10-Q |
(U.S. dollars in thousands, except share data) | (U.S. dollars in thousands, except share data) | Mar 31, 2021 | Dec 31, 2020 | |||||||||||||||
(U.S. dollars in thousands, except share data) | Mar 31, 2020 | Dec 31, 2019 | ||||||||||||||||
Senior notes | $ | 1,734,384 | $ | 1,734,209 | Senior notes | $ | 2,723,660 | $ | 2,723,423 | |||||||||
Shareholders’ equity available to Arch: | Shareholders’ equity available to Arch: | |||||||||||||||||
Series E non-cumulative preferred shares | $ | 450,000 | $ | 450,000 | Series E non-cumulative preferred shares | $ | 450,000 | $ | 450,000 | |||||||||
Series F non-cumulative preferred shares | 330,000 | 330,000 | Series F non-cumulative preferred shares | 330,000 | 330,000 | |||||||||||||
Common shareholders’ equity | 10,587,244 | 10,717,371 | Common shareholders’ equity | 12,316,472 | 12,325,886 | |||||||||||||
Total | $ | 11,367,244 | $ | 11,497,371 | Total | $ | 13,096,472 | $ | 13,105,886 | |||||||||
Total capital available to Arch | $ | 13,101,628 | $ | 13,231,580 | Total capital available to Arch | $ | 15,820,132 | $ | 15,829,309 | |||||||||
Debt to total capital (%) | 13.2 | 13.1 | Debt to total capital (%) | 17.2 | 17.2 | |||||||||||||
Preferred to total capital (%) | 6.0 | 5.9 | Preferred to total capital (%) | 4.9 | 4.9 | |||||||||||||
Debt and preferred to total capital (%) | 19.2 | 19.0 | Debt and preferred to total capital (%) | 22.1 | 22.1 |
Interest | Principal | Carrying | ||||||||||||||||||
Issuer/Due | (Fixed) | Amount | Amount | |||||||||||||||||
Arch Capital: | ||||||||||||||||||||
May 1, 2034 | 7.350 | % | $ | 300,000 | $ | 297,396 | ||||||||||||||
June 30, 2050 | 3.635 | % | 1,000,000 | 988,554 | ||||||||||||||||
Arch-U.S.: | ||||||||||||||||||||
Nov. 1, 2043 (1) | 5.144 | % | 500,000 | 494,973 | ||||||||||||||||
Arch Finance: | ||||||||||||||||||||
Dec. 15, 2026 (1) | 4.011 | % | 500,000 | 497,314 | ||||||||||||||||
Dec. 15, 2046 (1) | 5.031 | % | 450,000 | 445,423 | ||||||||||||||||
Total | $ | 2,750,000 | $ | 2,723,660 |
Interest | Principal | Carrying | |||||||||
Issuer/Due | (Fixed) | Amount | Amount | ||||||||
Arch Capital: | |||||||||||
May 1, 2034 | 7.350 | % | $ | 300,000 | $ | 297,282 | |||||
Arch-U.S.: | |||||||||||
Nov. 1, 2043 (1) | 5.144 | % | 500,000 | 494,858 | |||||||
Arch Finance: | |||||||||||
Dec. 15, 2026 (1) | 4.011 | % | 500,000 | 496,905 | |||||||
Dec. 15, 2046 (1) | 5.031 | % | 450,000 | 445,339 | |||||||
Total | $ | 1,750,000 | $ | 1,734,384 |
ARCH CAPITAL | |
March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||||||||||||||
Arch Capital | Arch-U.S. | Arch Capital | Arch-U.S. | ||||||||||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||||||||||
Total investments | $ | 357 | $ | 345,224 | $ | 172 | $ | 396,547 | |||||||||||||||||||||||||||||||||
Cash | 8,920 | 11,051 | 18,932 | 11,368 | |||||||||||||||||||||||||||||||||||||
Investment in operating affiliates | 7,408 | — | 7,731 | — | |||||||||||||||||||||||||||||||||||||
Due from subsidiaries and affiliates | — | 200,742 | — | 201,515 | |||||||||||||||||||||||||||||||||||||
Other assets | 12,824 | 57,607 | 10,659 | 34,405 | |||||||||||||||||||||||||||||||||||||
Total assets | $ | 29,509 | $ | 614,624 | $ | 37,494 | $ | 643,835 | |||||||||||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||||||||||||
Senior notes | 1,285,950 | 494,973 | 1,285,867 | 494,944 | |||||||||||||||||||||||||||||||||||||
Due to subsidiaries and affiliates | — | 507,045 | — | 586,805 | |||||||||||||||||||||||||||||||||||||
Other liabilities | 34,586 | 57,889 | 23,270 | 41,876 | |||||||||||||||||||||||||||||||||||||
Total liabilities | $ | 1,320,536 | $ | 1,059,907 | $ | 1,309,137 | $ | 1,123,625 | |||||||||||||||||||||||||||||||||
Non-cumulative preferred shares | $ | 780,000 | — | $ | 780,000 | — | |||||||||||||||||||||||||||||||||||
March 31, 2020 | December 31, 2019 | ||||||||||||||
Arch Capital | Arch-U.S. | Arch Capital | Arch-U.S. | ||||||||||||
Assets | |||||||||||||||
Total investments | $ | 156 | $ | 659,327 | $ | 42 | $ | 692,606 | |||||||
Cash | 6,620 | 53,134 | 18,113 | 54,518 | |||||||||||
Investments in subsidiaries | 11,658,127 | 4,378,196 | 11,786,861 | 4,347,806 | |||||||||||
Due from subsidiaries and affiliates | — | 201,412 | 17 | 200,635 | |||||||||||
Other assets | 20,443 | 32,833 | 20,461 | 32,187 | |||||||||||
Total assets | $ | 11,685,346 | $ | 5,324,902 | $ | 11,825,494 | $ | 5,327,752 | |||||||
Liabilities | |||||||||||||||
Senior notes | 297,282 | 494,858 | 297,254 | 494,831 | |||||||||||
Due to subsidiaries and affiliates | — | 542,220 | — | 536,805 | |||||||||||
Other liabilities | 20,820 | 32,932 | 30,869 | 33,267 | |||||||||||
Total liabilities | 318,102 | 1,070,010 | 328,123 | 1,064,903 | |||||||||||
Shareholders' Equity | |||||||||||||||
Total shareholders' equity available to Arch | 11,367,244 | 4,254,892 | 11,497,371 | 4,262,849 | |||||||||||
Total shareholders' equity | 11,367,244 | 4,254,892 | 11,497,371 | 4,262,849 | |||||||||||
Total liabilities, noncontrolling interests and shareholders' equity | $ | 11,685,346 | $ | 5,324,902 | $ | 11,825,494 | $ | 5,327,752 |
Three Months Ended | Year Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Arch Capital | Arch-U.S. | Arch Capital | Arch-U.S. | ||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $ | 432 | $ | 2,608 | $ | 53 | $ | 18,084 | |||||||||||||||||||||||||||||||||||||||||||||
Net realized gains (losses) | — | 55,108 | (2,110) | 26,096 | |||||||||||||||||||||||||||||||||||||||||||||||||
Equity in net income (loss) of investments accounted for using the equity method | — | (336) | — | 2,507 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total revenues | 432 | 57,380 | (2,057) | 46,687 | |||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate expenses | 23,315 | 1,586 | 65,566 | 7,227 | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | 14,683 | 11,801 | 40,445 | 47,566 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net foreign exchange (gains) losses | 1 | — | 3 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Total expenses | 37,999 | 13,387 | 106,014 | 54,793 | |||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes and income (loss) from operating affiliates | (37,567) | 43,993 | (108,071) | (8,106) | |||||||||||||||||||||||||||||||||||||||||||||||||
Income tax (expense) benefit | — | (8,896) | — | 2,689 | |||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) from operating affiliates | (171) | — | (437) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income available to Arch | (37,738) | 35,097 | (108,508) | (5,417) | |||||||||||||||||||||||||||||||||||||||||||||||||
Preferred dividends | (10,403) | — | (41,612) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income available to Arch common shareholders | $ | (48,141) | $ | 35,097 | $ | (150,120) | $ | (5,417) |
Three Months Ended | Year Ended | ||||||||||||||
March 31, 2020 | December 31, 2019 | ||||||||||||||
Arch Capital | Arch-U.S. | Arch Capital | Arch-U.S. | ||||||||||||
Revenues | |||||||||||||||
Net investment income | $ | 53 | $ | 4,375 | $ | 212 | $ | 14,270 | |||||||
Net realized gains (losses) | — | (42,564 | ) | — | 25,313 | ||||||||||
Equity in net income (loss) of investments accounted for using the equity method | — | 771 | — | 779 | |||||||||||
Other income (loss) | (66 | ) | — | (762 | ) | — | |||||||||
Total revenues | (13 | ) | (37,418 | ) | (550 | ) | 40,362 | ||||||||
Expenses | |||||||||||||||
Corporate expenses | 16,760 | 2,244 | 62,701 | 7,221 | |||||||||||
Interest expense | 5,540 | 11,873 | 22,154 | 47,951 | |||||||||||
Net foreign exchange (gains) losses | 3 | — | 1 | — | |||||||||||
Total expenses | 22,303 | 14,117 | 84,856 | 55,172 | |||||||||||
Income (loss) before income taxes | (22,316 | ) | (51,535 | ) | (85,406 | ) | (14,810 | ) | |||||||
Income tax (expense) benefit | — | 11,116 | — | 3,696 | |||||||||||
Income (loss) before equity in net income of subsidiaries | (22,316 | ) | (40,419 | ) | (85,406 | ) | (11,114 | ) | |||||||
Equity in net income of subsidiaries | 166,433 | 118,300 | 1,721,725 | 564,657 | |||||||||||
Net income available to Arch | 144,117 | 77,881 | 1,636,319 | 553,543 | |||||||||||
Preferred dividends | (10,403 | ) | — | (41,612 | ) | — | |||||||||
Net income available to Arch common shareholders | $ | 133,714 | $ | 77,881 | $ | 1,594,707 | $ | 553,543 |
ARCH CAPITAL | |
ARCH CAPITAL | |
(U.S. dollars in billions) | Interest Rate Shift in Basis Points | (U.S. dollars in billions) | Interest Rate Shift in Basis Points | |||||||||||||||||||||||||||||||||||||||||||||
-100 | -50 | — | +50 | +100 | -100 | -50 | — | +50 | +100 | |||||||||||||||||||||||||||||||||||||||
Mar 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||
Mar 31, 2021 | Mar 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Total fair value | $ | 21.05 | $ | 20.73 | $ | 20.44 | $ | 20.07 | $ | 19.75 | Total fair value | $ | 24.99 | $ | 24.68 | $ | 24.36 | $ | 24.04 | $ | 23.73 | |||||||||||||||||||||||||||
Change from base | 3.0 | % | 1.4 | % | (1.8 | )% | (3.4 | )% | Change from base | 2.6 | % | 1.3 | % | (1.3) | % | (2.6) | % | |||||||||||||||||||||||||||||||
Change in unrealized value | $ | 0.61 | $ | 0.29 | $ | (0.37 | ) | $ | (0.70 | ) | Change in unrealized value | $ | 0.63 | $ | 0.32 | $ | (0.32) | $ | (0.63) | |||||||||||||||||||||||||||||
Dec 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||
Dec 31, 2020 | Dec 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
Total fair value | $ | 21.54 | $ | 21.19 | $ | 20.83 | $ | 20.48 | $ | 20.13 | Total fair value | $ | 25.82 | $ | 25.44 | $ | 25.07 | $ | 24.69 | $ | 24.31 | |||||||||||||||||||||||||||
Change from base | 3.4 | % | 1.7 | % | (1.7 | )% | (3.4 | )% | Change from base | 3.0 | % | 1.5 | % | (1.5) | % | (3.0) | % | |||||||||||||||||||||||||||||||
Change in unrealized value | $ | 0.71 | $ | 0.35 | $ | (0.35 | ) | $ | (0.71 | ) | Change in unrealized value | $ | 0.75 | $ | 0.38 | $ | (0.38) | $ | (0.75) |
ARCH CAPITAL | 59 | 2021 FIRST QUARTER FORM 10-Q |
(U.S. dollars in billions) | Credit Spread Shift in Percentage Points | (U.S. dollars in billions) | Credit Spread Shift in Percentage Points | |||||||||||||||||||||||||||||||||||||||||||||
-100 | -50 | — | +50 | +100 | -100 | -50 | — | +50 | +100 | |||||||||||||||||||||||||||||||||||||||
Mar 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||
Mar 31, 2021 | Mar 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Total fair value | $ | 21.42 | $ | 20.93 | $ | 20.44 | $ | 19.95 | $ | 19.46 | Total fair value | $ | 24.87 | $ | 24.61 | $ | 24.36 | $ | 24.12 | $ | 23.85 | |||||||||||||||||||||||||||
Change from base | 4.8 | % | 2.4 | % | (2.4 | )% | (4.8 | )% | Change from base | 2.1 | % | 1.0 | % | (1.0) | % | (2.1) | % | |||||||||||||||||||||||||||||||
Change in unrealized value | $ | 0.98 | $ | 0.49 | $ | (0.49 | ) | $ | (0.98 | ) | Change in unrealized value | $ | 0.51 | $ | 0.24 | $ | (0.24) | $ | (0.51) | |||||||||||||||||||||||||||||
Dec 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||
Dec 31, 2020 | Dec 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
Total fair value | $ | 21.19 | $ | 21.02 | $ | 20.83 | $ | 20.65 | $ | 20.48 | Total fair value | $ | 25.54 | $ | 25.32 | $ | 25.07 | $ | 24.82 | $ | 24.59 | |||||||||||||||||||||||||||
Change from base | 1.7 | % | 0.9 | % | (0.9 | )% | (1.7 | )% | Change from base | 1.9 | % | 1.0 | % | (1.0) | % | (1.9) | % | |||||||||||||||||||||||||||||||
Change in unrealized value | $ | 0.35 | $ | 0.19 | $ | (0.19 | ) | $ | (0.35 | ) | Change in unrealized value | $ | 0.48 | $ | 0.25 | $ | (0.25) | $ | (0.48) |
ARCH CAPITAL | 60 | 2021 FIRST QUARTER FORM 10-Q |
(U.S. dollars in thousands, except per share data) | March 31, 2021 | December 31, 2020 | |||||||||
Net assets (liabilities), denominated in foreign currencies, excluding shareholders’ equity and derivatives | $ | (30,221) | $ | (309,968) | |||||||
Shareholders’ equity denominated in foreign currencies (1) | 704,173 | 695,355 | |||||||||
Net foreign currency forward contracts outstanding (2) | 477,734 | 1,108,161 | |||||||||
Net exposures denominated in foreign currencies | $ | 1,151,686 | $ | 1,493,548 | |||||||
Pre-tax impact of a hypothetical 10% appreciation of the U.S. Dollar against foreign currencies: | |||||||||||
Shareholders’ equity | $ | (115,169) | $ | (149,355) | |||||||
Book value per share | $ | (0.29) | $ | (0.37) | |||||||
Pre-tax impact of a hypothetical 10% decline of the U.S. Dollar against foreign currencies: | |||||||||||
Shareholders’ equity | $ | 115,169 | $ | 149,355 | |||||||
Book value per share | $ | 0.29 | $ | 0.37 |
(U.S. dollars in thousands, except per share data) | March 31, 2020 | December 31, 2019 | |||||
Net assets (liabilities), denominated in foreign currencies, excluding shareholders’ equity and derivatives | $ | (373,764 | ) | $ | 265,501 | ||
Shareholders’ equity denominated in foreign currencies (1) | 700,469 | 744,690 | |||||
Net foreign currency forward contracts outstanding (2) | (114,838 | ) | 81,731 | ||||
Net exposures denominated in foreign currencies | $ | 211,867 | $ | 1,091,922 | |||
Pre-tax impact of a hypothetical 10% appreciation of the U.S. Dollar against foreign currencies: | |||||||
Shareholders’ equity | $ | (21,187 | ) | $ | (109,192 | ) | |
Book value per share | $ | (0.05 | ) | $ | (0.27 | ) | |
Pre-tax impact of a hypothetical 10% decline of the U.S. Dollar against foreign currencies: | |||||||
Shareholders’ equity | $ | 21,187 | $ | 109,192 | |||
Book value per share | $ | 0.05 | $ | 0.27 |
ARCH CAPITAL | 61 | 2021 FIRST QUARTER FORM 10-Q |
ARCH CAPITAL | 62 | 2021 FIRST QUARTER FORM 10-Q |
Issuer Purchases of Equity Securities | ||||||||||||||
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan or Programs (2) | ||||||||||
1/1/2020 - 1/31/2020 | 34,418 | $ | 43.87 | — | $ | 1,000,000 | ||||||||
2/1/2020 - 2/29/2020 | 135,852 | 42.35 | — | $ | 1,000,000 | |||||||||
3/1/2020 - 3/31/2020 | 2,608,668 | 29.05 | 2,599,388 | $ | 924,514 | |||||||||
Total | 2,778,938 | $ | 29.88 | 2,599,388 |
Issuer Purchases of Equity Securities | ||||||||||||||||||||||||||
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan or Programs (2) | ||||||||||||||||||||||
1/1/2021 - 1/31/2021 | 714,177 | $ | 32.50 | — | $ | 893,591 | ||||||||||||||||||||
2/1/2021 - 2/28/2021 | 4,107,493 | 33.81 | — | $ | 761,583 | |||||||||||||||||||||
3/1/2021 - 3/31/2021 | 811,162 | 35.73 | — | $ | 737,262 | |||||||||||||||||||||
Total | 5,632,832 | $ | 33.92 | — |
ARCH CAPITAL | 63 | 2021 FIRST QUARTER FORM 10-Q |
Incorporated by Reference | ||||||||||||||||||||||||||||||||
Exhibit Number | Exhibit Description | Form | Original Number | Date Filed | Filed Herewith | |||||||||||||||||||||||||||
X | ||||||||||||||||||||||||||||||||
15 | X | |||||||||||||||||||||||||||||||
31.1 | X | |||||||||||||||||||||||||||||||
31.2 | X | |||||||||||||||||||||||||||||||
32.1 | X | |||||||||||||||||||||||||||||||
32.2 | X | |||||||||||||||||||||||||||||||
101.INS | XBRL Instance Document | |||||||||||||||||||||||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | |||||||||||||||||||||||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||||||||||||||||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||||||||||||||||||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||||||||||||||||||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||||||||||||||||||||
ARCH CAPITAL | |
ARCH CAPITAL GROUP LTD. | ||||||||
(REGISTRANT) | ||||||||
/s/ Marc Grandisson | ||||||||
Date: May | Marc Grandisson | |||||||
/s/ François Morin | ||||||||
Date: May | François Morin | |||||||
Executive Vice President, Chief Financial Officer |
ARCH CAPITAL | |