ACGL - Earnings call 4 2023 | Arch Capital Group Ltd.

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Operator

Good day, ladies and gentlemen, and welcome to the Q4 2023 Arch Capital Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

Before the company gets started with this update, management wants to first remind everyone that certain statements in today's press release and discussed on this call may constitute forward-looking statements under the federal securities laws. These statements are based upon management's current assessments and assumptions and are subject to a number of risks and uncertainties. differ those may or results actual materially expressed from implied. Consequently,

are and information should that that company on to more from other the review by SEC with the reports investors For time. performance, risks factors time the future may periodic filed affect

statements based Act intends the Additionally, the meaning reference contained not Private call the of of measures are company facts in Securities that the statements financial historical be certain forward-looking to thereby. forward-looking the Reform XXXX. to of the The harbor certain safe performance. non-GAAP are make Management Litigation subject in on call statements within also will to created

on GAAP financial available the each non-GAAP to www.archgroup.com to the found SEC website measure yesterday, reconciliation the which in company's www.sec.gov. earnings the for and is X-K current and Form on press release SEC's contains furnished be The at report website company's on can the company's at

to for now Morin. begin. would and today's Sirs, you your Francois Grandisson Marc like Mr. I Mr. may conference, introduce host

Marc Grandisson

for Good you and thank earnings our you, Gigi. Thank call. morning, joining

in Our property another results year conditions as fourth and continued lean into favorable underwriting quarter casualty to sectors. record broadly we conclude the

an deferred financial from the fourth was XX.X% exceptional benefit year remains of we XX.X% per if with XX.X% value onetime operating an and asset we the the increase annual impressive on full booked Our performance which quarter. share, an average excellent exclude return common equity tax in in book

a And current billion quality in gross steady capital group. of showed billion casualty all opportunities year $XX.X most recognize $XX underwriting in to it's made sector, allocated Arch's strong net year-to-date. income profitable over are of important of performance Growth mortgage reported operating while of to and our we most and over was teams, our premium. the property billion XXXX $X.X The P&C we growth premium as it

growth, the income fewer totaling the line meant $X.X underwriting generate opportunities business unit for [ conditions to MI for significant profits year. top continues of nearly market mortgage Although ] billion

calls, on capital have that the best helped we mentioned are underwriting opportunities active cycle. and essential risk-adjusted previous the on As with have throughout in those the approach returns, allocation demonstrating the segments earnings disciplined growth

in ability a to deploy as the a aggressively ways, the opportunity. in turn with this was cycle quite throughout hard markets should won leader capitalize market to Our Paul I hard, capital Ingrey, you puts who we Paul more early position This What decisive growth paying and which your of [indiscernible] success a then the part early mentor learned the When dividends early personal self-sustaining, is becomes the from phrase business fully of do renewals, Arch. own in strong foundational simple. our write on to explains market you. market. In business you underwriters cycle. By want hard making become moves some meant

on Arch, primary always At focus been rate of regardless our market conditions. adequacy has

also take that especially of we of longer softer a a in safety Our margin we our underwriting conditions. rates. pricing, dictates culture view in and include inflation And meaningful

underweight to XX%. as soccer in XXXX I a cumulative current reasons, thought by borrow casualty these was from rates as explain were For XXXX Arch analogy cut much to market. casualty the I'd when premium help

will card. make cautiously market disadvantage. entire error their not market yellow disadvantage. wanting from an participants the and though a match field match, deliberate that as remainder of put is the on card commit yellow with some They're took playing in to a Today's a players the soccer, a foul continues often with player team X game. to mean yellow their who feels prior at but ejected card casualty are a In given a team one-player the

remain we've drawing aggressively, plays a yellow sometimes disciplined parts whilst card. and avoided So

level, remediate to than At property. must that a longer high remember take lines casualty we

of next experience their if and to adding years. we safety, market cautious could the several for being profitable insurers an underwriting are So margin improving opportunities casualty in

provide performance reinsurance units, operating the nothing of some our performance of of year reinsurance. with The last additional color segment I'll Now stellar. short about our was starting

an $X.X reinsurance $X.X improvement significant for we the ended premium ex a cat XXXX. improvements year, ratio XXXX. a For significant combined segment income net an XX.X% increase remained results year and development, underwriting and over of record XXXX. from heavy with from were both Underwriting over XX.X% $X.X overall ratio the written of billion, the and Reinsurance billion as is nearly combined cat the excellent billion year a prior

$X.X to a now nearly our growth trajectory prior writing increase XXXX, year. premium net billion by its in Insurance Turning segment, XX% from of continued the which

our While look model a meaningful group, where shifts for means that the dramatic insurance as at not appear view allocated market the business into of as primary our reinsurance opportunities. capital year-over-year a may provides insight we've

XXXX, delivered gains our years the XX.X% and XX.X%, on and a in notable premium healthy early property, excluding most national prior marine, combined year in results during output the solid of the growth and the year the in generated this XXXX, Underwriting accounts. underwriting construction as XXXX our deliberate insurance from insurance we came as of earn million a ratio development. market. doubled to hard remained cat $XXX segment segment The In of by from income continue

Now on to mortgage.

remains deliver the profitable consistently an in industry-leading industry-wide help profile high be The earnings serve The mortgage for the a to of unique mortgage U.S. as These despite carries insurance year. mortgage reduction its version enabled of valuable our in to owning to excellent, results force renewals, segment portfolio, and market of of MI which earnings significant persistency remains continued credit the conditions diversification segment continues engine shareholders. Arch. overall last own originations primary Our and segment for focus. to MI our our return that our disciplined ensure portfolio source a should

to the investment rates interest to significant to Arch's rising creative a billion earnings our investments. from that increase group base over provide increases for income due from flows year to our asset earnings. increasing to contributions enhanced by float Net generated its investment On our underwriting. grew the further for $X to tailwind The cash

Over and hard a several our role has years, past the the the both leader market insurance as into Arch in market leaned specialty space.

and We lines, have to new deployed analytics. diversified fuel and our operating into operational while into making technology substantial into making including new data segments investments successfully platform, capital enhancements new our also underwriting entering to teams, expanding geographies growth

who much customers value around a want Finally, and as adieu to deliver take to moment than the our thank help shareholders. we so our world to I more XXXX, to X,XXX bid employees

are creativity, advantage. be integrity, none dedication people of And competitive Our our will without this possible. their and

Francois? Arch. So thank you Team to

François Morin

good you, Thank for joining all. morning us and Thanks today. Marc, to

corporate will a for and by and operating As quarter mentioned, moment. related the share annualized for Bermuda which year XX.X% an was of common per XX.X%. net as we the on XX, on $X.XX share introduced the asset expand equity the operating aided up establishment income quarter December year, the for to on $XX.XX for Marc a per of Book the closed average tax recently note XX.X% high with a return in of I deferred income of after-tax value tax

in resulted $XXX quarter . business underwriting excellent Our from outstanding an across X income. our segments, performance million highlighted by

insurance quarter over written of delivered and reinsurance We a discussed premium for growth fourth the for the XX% last XXXX adjusting reinsurance and XX.X% our segments, across net group. large excellent a transactions increase year ratio and of nonrecurring an we strong after combined

ratio in segments of strong and million and prior $XXX the favorable primarily combined lines mortgage short a reflected due in income across activity. X.X We Property units, underwriting favorable or development Our in segments. development year Casualty our observed tail pretax many across three basis our to cure points on but on

across of our Overall, catastrophe While that catastrophe this quarter. there million the in the group quarter, the we for events of series resulted below year a load. year catastrophe were globe losses current recognized catastrophe no the the accident events major were smaller $XXX in expected losses throughout occurred industry

has cat equity X.X% offer shareholders' natural below single internal well January XX% and limits. As now peak a X tangible increased event, capital but a basis, relative our at of X-in-XXX-year PML net from our declined October level return our X, of on stands zone to

net approaching money XX% from rates up front, returns. investable investment $XX billion $X.XX XXXX million and flow earned the we we method, supported using base should X%, represents per an in quarter. of positive see near $X.X amount investment record $XXX momentum from from income income investment new This from combined asset On last equity continued funds activities billion operating cash the our with and by share in a accounted

shares preferred that sheet strong, ratio billion flexibility retain with $XX.X our Our significant XX.X% capital debt Overall, base pursue a we arise. total grew represented remains of as plus opportunities leverage any low to balance capital. extremely and financial to to

Moving corporate tax. to Bermuda income the introduced recently corporate --

those in the in with All expect our starting to higher As mentioned things deferred period asset the excluded have nature. our change, operating a tax tax $X.XX XXXX our due a be connection payments we range will asset in release in to in equal, X% mostly amortize expected in its net law which earnings tax XX% we XX-year our cash years. and this recognized nonrecurring we financials, from rate effective a reducing rate for to billion quarter, with of over income This XXXX.

our in of deferred items income that attributable As nonrecurring of regards with and it's mentioning this at operating a to connection income as from the quarter's Coface approximately such IFRS summers XX XX% Bermuda to income worth corporate establishment the affiliates, tax. asset is tax of adoption

With prepared questions. these to now we comments, your introductory take are

Operator

question line first Fargo. the Elyse of Wells Greenspan Our Instructions] [Operator from from comes

Elyse Greenspan

introductory additions that the market think quarter started going expand was the some you on quarter. alluded to to drive on comments, last see as right? We've this being of I to turn. wanted some question, what first reserve My your just casualty And side, to I

here? us this how think do map Could emerging for see a little out you about know playing from how years. you road you give bit several just play next said out of opportunity Arch? So should I the it over it and you a

Marc Grandisson

Yes. question. Great

I that we're absorbing own think business. of our book

also all information the on. look at We

we've a between think actuarial the with at what X on data last uncertainty seen from I the then really path that's what rely courts I else closed being Francois everything comfortable down should our in all there's that's diplomas, to the dusting years, get think for make pandemic, an predictability. largely to the pin have over counter X, both stable of the result your prediction and and you as in be perspective, pricing and you And data business. the some of off inflation, maybe lot I least of have historically actuaries and hard a or

right, pricing, you your virtue of the As reserving then we that having by feed to all know, for number right reserving, and the reserving leads the into pricing.

So to. we're will lesser a reserving develop what have or situation people visibility where in about the ultimately

that So can little having our casualty, and having you our if to while adjust do. competitors takes Elyse, to made bit information issue understand some enough even know, on did actions, you is evaluate totally what a the what was you The progressively had and as to still need incumatively. corrective or adjust a clients fly. to was with whether I it you you We're

And industry inflation, rate right factor. XXXX. uncertainty, we it's realizing than now, bit we're I a certainly, is increases But already a and little thought. all more big we worse of now had couple an maybe I we think lot in that in a we starting have casualty know, lot think that more collectively as a So there's as -- a

will So will people is try reunderwrite expect now refining and I away would lines. They start book what business. inflation their impacted from of the to source right

They'll probably rates. push for

if emerges market -- XXXX. to some has of from now XXXX the 'XX history XXXX, why business relates that, pricing the as more them 'XX-'XX reserving higher, at to 'XXs, stability X was it of market years it in to even -- then have E&S. any fact, was. assumptions And much takes start in might clarity get such it what ] AX casualty, loss it look years. the you the took in really it indication, back Until to in [ or and if as Some kick And year we of the time even a X middle and the than in got your that's initial to several XXXX the the

our So clients, and think going the collectively see just thought. with to through, it the we're happening. did what you do are industry what and you have seeing we're actions that's And as because an what's and action going what that's I to really

Elyse Greenspan

guys within on in of the year. cat book? underlying earning a ratio sustainability sub-XX. then right, the your think reinsurance business question last business And seen we strong obviously should in we've And loss loss second you your underlying its within my second reinsurance quarter wages right a come ratio sub-XX row, in about are within How

François Morin

Well, I question. we great mean, -- is sustainability a

absolutely a right, It's you're right more tail lower than loss cat market. we compared is to a good more ex should have other and premium think I not, that have lines. property that short ratio

there's we So obviously, profitability kind book even it, better option be we should embedded have sometimes as the of strong. not, of to of you it. profitability a where in a sent we how is to to way going than, look rolling We we sometimes it. quarterly it business it But in volatility normal was the should us But be call said better it back the and order the and volatility. at strong. kind the XX-month remain that's a to see certainly, book And like average before, again,

Marc Grandisson

Yes. is One market the the probably X/X tell reinsurance somewhat Elyse, thing calls other continuing improve I renewal. heard to into is on will the you,

is still good very marketplace. it So very, a

it know, don't loss but certainly, improvement. seeing we're means I ratio, for So what the

Elyse Greenspan

capital, then you capital, business? hand just your on the positive see And X to relative opportunities right? the from us think you believe help growth your position year? just at but over mortgage Can next relative be and on your to through last pulls capital should were capital organic S&P there some changes and just pushes X I

François Morin

Well, mean, certainly, thing -- look at. at I one many S&P looks look different different We mean, is we at capital I have way that we adequacy.

it. our drives that's agencies I S&P really give view, the say, of We benefit a we think a which are have about point I'd excess you're us, mean, we decisions. how more But question we our make did think how of reduced the own view, important was is from right. capital. net I in internal importantly an I that factor, and model Rating -- change mean, but the more bit kind no

to be -- We XXXX. able But of sure that at we to we're very seize look make will we want plenty opportunities front for we it us, carefully. in see the and and that

we'll deploying the year us. of growing capital the So focus into business plays out. we're right in see now, very and how main rest the kind of what's -- our is front that of And then

Operator

Our Cowen. next from from of comes the line question Kligerman Andrew TD

Andrew Kligerman

What's acquired. about First the question lot would when specialty do you that be be. could give could time. to return a on around M&A. We've seen know you've a lot specific us mentioned players parameters might companies. in the talked be on other over can't color and a But comment transactions, other along you do transactions XX% when capital and media been you what I about has really little Arch important you deals? Arch with that And

Marc Grandisson

Yes.

the healthy. We're there's desire on capital. fairly as very fact certainly track in prudent We'll we is with we're makes really do I where opportunities way for earn have a something opportunities And careful to opportunities record at Francois bit has the mentioned, margin think XX% look -- return hard. proper marketplace historical do anything. a we the -- in more grow historically, this M&A And look if and do safety, the best not company. above sake On growth's our for front, to of is it is to this. the probably to return little It with to when this we no that our

as product, or other might mix there but be -- strategic, that might team we a on basis. maybe an we this, expertise exceptions, some geography not underwriting a the different relates to that a considerations, bring -- a can prefer maybe be maybe maybe all really said counter it might Having new and maybe

luxury we have because So take. us. disciplined growth have to it's And we plenty the of available approach very a to M&A we that organic we're -- very,

we for be and adamant take in And something necessarily. culture. to know, that's want to So are number one don't the us the the that that we you has and The to in is as difference probably the risks, -- it all very, way very compelling something is, that our whether makes those keeping thing makes other very on engage also most most or we'll times, quite the one really the or not culture M&A is often an that not. entertain about

Andrew Kligerman

of a sense. lot makes That

that developments on property tail a was the big mentioned favorable You driver. short

favorable. So looking $XX reinsurance at insurance is at million favorable, $X million

any casualty so, Just large be? if trying what there have they to and offset would played, that might understand were

François Morin

mean there's in be on to I its no, every there's pluses each we and offsets. own Yes. line always the to I'd We the quarter. we single data, look going data. react look at say, at minuses

approach imagine I the business much that in reinsurance, years. few think, we've user property. methodology, a of very I side. short as In we've bit grown this can We've mean the the releases or you on to a and function reserve quarter taken a written or that little in our type particular, usual redundancies same tail last lot same generated in of of

line mean, come end We But when of any we we it's little had. own. noise not a is it of We call reacted an and business. of adverse they've its bit we a sells what Yes, have then had a -- of always casualty sub-lines book the on work, There's kind wouldn't I number or of couple absolutely. offset. little with. line single and up every on I data bit up

Marc Grandisson

news recognize typically bad One high is time. is news approach this quickly our would to add reserving a good to and thing over level I at

philosophy all years. at So again, changed those hasn't in all our

Andrew Kligerman

I maybe one if quick one And sneak it. in. could Got

insurance what do accounts, that national call areas growth of of in during mentioned on national type the the accounts? with you write You one limits

Marc Grandisson

Well, lot experience required -- structure worker's that XX%-plus need comp. is sharing tend of people as sort. in workers' or We it's because protection, be allow a paper able statutory. a an of of it's basis. that So clients. sort the document to their the demonstrate to self-insured are right? statutory, a of to The on clients. accounts you've loss and plus really with to national the insurance these operate -- excess you state They provide comp and It's the there's be And to actually is this larger thing minuses

some that really some is. capping. protect By it the it's definition, have we reinsurance So of unlimited. That's what

Operator

Our comes next of the line from Bhullar JPMorgan. question Jimmy from

Jamminder Bhullar

since a on the with We've So in hardening significant the on significant enough you hard that just with casualty of are What last the first, side? just business. seen terms And year. pricing on in question your are the in increase the views -- casualty trends market property your or since the market growth exposures volumes comfortable market to early in hardening area? overall

Marc Grandisson

Yes.

on a -- in on general, I professional lines. think exclude casualty, question great comfort I the or right? liability general comfort liability, on

the pressure we're is primary -- think on has side. or I the market turning more

we're that see in delayed our we the and some in happening course, is some that reinsurance the reacting the a point real mentioned. right little inflation that bit on primary, as think we of increase market and I focus think in for what's in So we the the can of reinsurance, the We now did of to development year. as is in you reinsurance last see what

an see to suit. And will market market probably that Like think takes us insurance follow need the probably do. we'll first reinsurance the really that I think all I they mentioned, to that I heart. remediation So

own prior look -- possibly the any if are way this, hard With markets their to own their indication. at

industry this commission, in reacting as to reason little that are -- reinsurance side, city the trying we point probably one thing there's not clients as they a to changes. the are in at that's time. why in that abruptly our possibly as those make as understand collectively bit And reinsurers beneficial as a On an should, regards is

with along and whether that's to them trying enough. support them efforts. see go we're their them help We'll in So and

expect waiting provide little a that opportunity also this is whether for also I grow. Our us team and develops. see to do around to come bit to But another

Jamminder Bhullar

driving I COVID. And and favorable. they've be moderate releases then last stuff insurance, over would on written in And a become it's and mortgage more assumed post actually time, would what's shift to I that. It there's have now think even COVID year used that reserve reserves

As assume I way book on -- you're Or go the with the seeing market? idea to in now? want there's to reserves what you in you more you of just releases? experience room you're to the reserve it assuming is think Are an what your is, about stays environment reasonable assuming if that get the that are on commensurate in putting right it terms

François Morin

somewhat you housing back this year, driven -- Great we releases say question. of home prices at start the cetera. right? the our were concerned general on we about by I'd landing, roll the reserve the So in year dropping the market soft had were et no if the year, more fairly views rapidly recession, a tape

call set, function of we just a year a throughout and reserves ago, very they materialize assumptions the did those year. were much the So it,

unemployment So throughout we'd are holding People very are year, strong and hearing than we well-performing the forecasted, housing remains much very -- higher delinquencies relatively market. prices a home low. up their actually or saw

what together, of thought the year a in releases reserve is things 'XX put mean, we would kind all function they much a I played it So out of what you very ago. relative it's transpired how reflect to -- really how better -- much

sense Where 'XX certainly the it, the is 'XX. we mean, I and in good call housing prices home wouldn't see a I start we more, that solid market are today at bit of for optimistic a

holding that reserves were the a as today not So high we're they a ago. on year as are basis, relative

releases of much how going -- and will don't there versus ago. compare know. it that sit and react today mean understand data as the where So we from extrapolate that, But forward? but hopefully, you year does in kind you is a we to not, Probably it. we'll as play if I room helps again just for out reserve

Jamminder Bhullar

your book the the that from amount your Does lastly, comfort casualty. the in that had a well? over all reserves just decent came issues. exposure of And your Okay. to with company Because that as despite industry-wide business -- casualty Watford apply obviously to

Marc Grandisson

here. easy Watford Well, one. underwriting managed just really team is our the an by

and So reserving [indiscernible] approach the

Operator

for next question. moment our One

of question comes the from next line Michael from Zaremski Our BMO.

Michael Zaremski

Okay.

First in Francois question for on to regards capital mortgage specifically.

my obviously is mortgage of a amount you reserving releasing or a isn't understanding mortgage can now. of rules So that growing reserves, the decade after material so, start

So there, I I -- it's know, think but you some also Bermuda, have a captives too.

So releasing a mortgage capital the from coming amount business? just to expected of curious, there material is or or legacy mortgage from come old

Marc Grandisson

Well, a I'd already in releasing -- we more of be contingency we'll the that in starting and you're 'XX. 'XX short the yes reserves, have say in some the fourth and right, progressively start quarter that this year. the That answer sense bit is will

ratio, a from of So -- extract group. very was in quarter we if USMI in you look regulated that to much dividend fourth were at our function the company why our a the PMIs the quarter it able to dropped

So that think we plan to scheduled dividends it's should and beyond. in -- having keep -- keep and the we 'XX

But somewhat in it on while we a in the basis, and the that on released, one want on is deployed touched being yes, I touch past would already we is is, capital the business. regulatory it's argue point to

level the because kind Arch that it's the group rating regulators in already and the agencies it's being other business. deployed of there Cap sources of been capital. look just not at to aggregate So the not sitting used It's

is So yes, capital not statutory imagine. big better on the overall, location, impact but you here a in to might put as a somewhat basis, an it's the goal as

Michael Zaremski

not on Any about see capital benefit sticking about or Arch? model offers helpful. did how if be with answers much I think help on one with how on think the to or That's gave much appears Elyse diversified. to -- that how paper, but quantitative there a mentioned when asked you we of you a the when S&P Because -- don't benefit of sticking the most we capital benefits. actually any And Okay. of, model, the

Marc Grandisson

requirements. So of to we're their rulings were Yes, no a But a right? as start benefit, we also you're as and quote new that, treat question S&P right. I rules, it's diversification reductions mortgage yes, capital was our number, net number, on being they the debt a in and -- not favorable, but longer didn't $X.XX the No debt final going capital. positive. not charges, putting billion

a positive. how all it's But significant many It's not the one what And all only think the and I need a thing But that's offset. importantly, is everyone is more rate want we the business. we things other So considered among in during again, again, remind matter. agencies thing at. just it's to look we about capital

Michael Zaremski

you're segment. you've lastly, primary about in as potentially And a insurance unless in just since Based Okay. remarks the grow the Can might much made primary everyone more it did as sounds in excited I'm sneaking questions. be else is more it insurance lot on understanding incorrectly, it 'XX 'XX? like growth the

Marc Grandisson

and are Yes, in more. terms great reinsurance -- year. that be we we don't we because It's don't If else more, talent could. have capabilities can question. provide I we between, guidance insurance and there, we everything and the know way I again, could don't we of in will capital absolutely, both But or market do what mean, the on for we conditions a do we'll the this matter. win, talk, opportunities -- know do

Operator

our for next moment question. One

line Bank America. Our next from question comes Shanker from of Josh of the

Joshua Shanker

Mike problem hear to but fine, the Jimmy with We and phone. couldn't heard be Everyone, we a might questions. I think the answers your just there

anyone if hear can know don't -- know I so me. -- don't and you hear I I if

my ask me team. Let

guys you hear me the Can on phone?

They hear me.

corrected. it's somehow So been

Okay.

the I'm know maybe only don't -- I maybe... what So one

Marc Grandisson

you. it's know Yes, if don't recorded. Josh, Hopefully, I it's we been can been hear recorded.

Joshua Shanker

Okay. Very good.

I So of got a quick yes, ones. couple

yet quarter insurance talk the Can looks And the written of pieces went up, in the risk lowest business new the that? least UGC. about utilization the the that at ] went capital you of capital capital So to are up. since it sort moving insurance acquiring ratio premiers driving mortgage in like [

Marc Grandisson

a much of very function of capital well, exercised credit. longer Josh, on that protection Bellemeade called. give we amounts I -- we capital or there's transactions PMI that our Well, significant and no us think the

Joshua Shanker

It things it sense. me stock And easy through strong you about pieces? other there's Definitely, talk a had income little one. in year-end. another what end is. although trip Obviously, to other Can it the in September summers some obviously there. was looks flat that that. That's Coface about Yes. yet and round makes you the very quarter the XX from to quarter. quarter There's moving in

Marc Grandisson

obviously, is us, And but of one has income, ratio. exact to I income, don't right? pretty -- close stock booked thing, but full Coface, much they've payout the we dividend kind their their their dividend, net the for the I been XXX% price annual mean numbers, a declared

they that our we up in what -- book financials. ends So being

So year, stock I'd the and say, the is or up end it price to down move up but going in -- factor directly their in yes, over financials. doesn't

Joshua Shanker

you hear hear you're be Okay. getting they e-mails being people know, you. giving lot me, And It that may now. I'm a me. call Nobody right so but inbound recorded. can hear from answers just They of these volume or don't

Marc Grandisson

fix little Maybe Josh. recorking? Let it. through bit second, Hold quickly. this on we Are a work one can us we

François Morin

happening. we what's And can on get

Joshua Shanker

Okay.

Arch They're on just I'm e-mailing can't the I right And it. the working we for are people hear team they're know. hear -- it. People Arch addressing addressing can't saying Anyway, but don't so now team. who

Operator

it be over. will call has available after the everyone call recorded, Please been is note that and this

Our of Yaron from Kinar line comes from the Jeffries. next question

Yaron Kinar

questions should wait until the I is fixed. we Should this ask or issue

Marc Grandisson

continue should we think on. I

your hopefully it's ask Just people can... question, recorded,

François Morin

be There'll replay. a

Marc Grandisson

to a this, be figure it replay hopefully, trying really but for said there'll Yes, apologize everyone, afterwards. out we're

forward. Let's go

Yaron Kinar

Yes. Okay. No problem.

do into when you therefore, 'XX, news get And first step into a I'm update in loss of loss you question, reinsurance trying margins look to in at reflection set here when incorporating those the that or essentially course another a year, loss at in the we 'XX. the step-up heading we over is are than what those of guess for or change expectations and the were your ratio saw should, the see market I 'XX bad reinsurance or they other frequency? So already we is ratios, losses

Marc Grandisson

Yes.

our Remember, much So is. short-tail ratio tendency is when we is easier we're of to what the right? right? Francois than it mentioned property do especially think tail in year effects understand, bit were I more player long on line. we a earlier, a loss It proportion, on,

don't the get loss. the you You get loss,

loss pick year. the the ratio of end do you So at

For you then think need the the there's book be, attrition a what will really no to things cap, you of couple you cap, but can't there's address.

tail -- the or as see and cadences on months can are On then develop you there XX have liability IBNR next a of appreciate. how the we decreasing as property and shorter over the we'll releasing

let of On the to a as margin the little or of a not tendency of bit that ratio to the equation, both liability pick at beginning, all side, we insurance them. on we've while seen, safety XXX% reinsurer recognizing the we and and it potential loss benefits an has a a season that go our in the sides for a actually before change make aisle is

which emerging not phenomenon. we expected. that's life I emergence, longer-term And the have at are obviously, this versus I how look about losses, they do the of heard one, the we is, mentioned throughout what a this And deal, you may -- the of but you mentioned emergence the how about cycle but what

Yaron Kinar

some also Or trends more 'XX being. where were bit do they market Got the may were ended think And that the prepared curious but collectively what still of 'XX for the you the expectations that Marc, that could for I up I'm a my maybe And kind is industry. emerging inflationary market good, conditions years than said question, that lower than it. of expected be think in referencing soft recent of your through you second comments, or of be 'XX? clearly comment, then really years casualty accident worse there

Marc Grandisson

It's a really good question, Yaron.

as I as clearly are within not were in 'XX, because far marketplace. increases ones, years well there, Our but -- in as the That's softer you. already. minuses well all honest can as in were. tell, at reasonable that were you the 'XX The with expected, we look of price not mentioned, surprising and remember, we was expectations. starting think as there why those to to it's action, range really we as soft more that It's a Yaron, soft, -- here that's improvements be or much our years, it's 'XX is see it or it portfolio plus There nothing recent Francois the

Yaron Kinar

and and the years at be, see the you being guess Right. inflationary But if expectation a as even lot X profitable an could -- lot for would if soft so of weren't some getting very I trend of the deterioration up of was getting a that question end were nonetheless. they of you still industry was point X rate at

Marc Grandisson

But could. in with we mind. rate You reserving the level do

in to look market, right instance. XXXX, were for loss longer-term we not more a and recent in ratio years at the that this soft when before the we So tend

higher factor tend initial pick on you liability the that loss will side. -- ourselves all when ratio take we ratio loss to So in,

that been happened were similar than one and it So have those 'XX, -- that things on should the you mentioned people than in was loss did don't they aggressive years. a the probably more have 'XX, before of pick they in ratio

And we the already initial I little we that recognition, lifted was I bit. to trying a the in increases I it deviation get have to a is loss was get kind those and don't think time loss XXXX, think saw I And up the we ratio by think to. a think from market rate the of similar ratio to there years.

Yaron Kinar

Rest by Swiftie saying, a daughter luck. this instead it. of I of of World referencing you Football football including a disappoint Got my end just Anyway, I'll best by quarter. fans, think U.S. lot of

Operator

next question. Our

comes question from Morgan next Stanley. line Our of the Huang Jian Bob from

Jian Huang

quick two Just ones.

call, we insurance about improved we ago the you loss of where trend at X cycle, think implying also when underwriting kind and look the rates were quarters we earnings I XX:XX, were stabilization. said at First, that's on

now? view, curious curious, Is to time kind is think. as you p.m.? Just your X:XX it is of right where in what it XX:XX it XX:XX, or Just

Marc Grandisson

what longest in the seen I'm tell life XX:XX to I've my is going It's you. ever

clock around or the never after X you we're that a again, year the XX:XX, and can you fortunately, would X:XX and X:XX stay the into stay like want. So XX:XX where I is still think roughly which, other, right? can You

perhaps So roughly in XX:XX but around some that it's think that in XX:XX, cases, that roughly level, the I range. still

Jian Huang

placed? management? underwriting have rightfully if Does concern think you about any XX:XX. My MGAs becoming has your regarding question, Not it answered second in general, helpful. this Okay. cautious, seeing? cycle more before. have something been this very you impact to Is that within aggressive. there XX:XX Are That's That's especially Is MGA concern and on helpful. been how sure that increasingly reinsurance? you're your you capacity some

apologies. So

Marc Grandisson

That's a question. great

in I lines think when on mean, It emerge, it's dislocation I plentiful -- as know, But a acute of the demand impact the more is I supply some capacity. in property. And the some is margin. and lines, think for I MGAs more it so think than again, has which than all professional them and probably more we plentiful there's it professional I capacity the was the see that need is between the more -- think it now at probably. we not

Of course, it does.

will returns clients tend going we do same is we which the is the the second are in select our your do we same of is think the portfolio down management. cycle part to better react? which we and we question, pricing do would I it, good, or the have or always if it how answer the as deemphasize we the pick to in do to way way Well, that still not react and

similar an a I hands the On get at need think property think we these But capacity. coverage And of acute that feels we point property capacity I and this for our and the this have all there's sort in right? side, need MGAs MGUs can property guys, on also we time.

not impact. seeing very an strong. The much property of not we're that So still market is

Jian Huang

Okay.

way capacity, line capacity? side, full the plentiful enough about professional not That's it. should think we property So

Operator

from Our next Keefe, the Shields from Meyer line Bruyette Woods. question comes of &

Meyer Shields

we're where only the questions. to same situation people in hear the think their specific I can answers

So here well. as I'm hoping that comes to

And Bob. Or we're when you there question fourth overall in you seen reinsurance, company companies trends? problems in that in a good look something book Similar We've to world? is of some is the seeing is different ceding report have reserve quarter. within of of the a obviously the at nonpublic wondering representation what the number I'm public

Marc Grandisson

my question questions will Well, right? be recorded will the this for good we'll be you'll when be to-- able be recorded, and and I able other able So share, you answers. other this we'll so to think to record, hear price -- the be the

Sorry, is that Yes. okay?

Meyer Shields

that's No, Okay. perfect.

Marc Grandisson

as an where of the you're the I high the as in So is issue the [indiscernible] am, actual I think well with reserving casualty and work. number doing

some themselves. loss have different for So I about they we're pick like our teams think that of may have else, than the it's everything things views at the would ratio looking

I So a one-to-one. wouldn't it's that say

we ratio. may them of a different of will or view of some to renew Some them on not loss not be we participate the because able have ultimate

So each and I and individual underwriter to have own companies opinion come your seeing their own where a make with each your as is. and own it -- you number, individual think to it's really decision company up is

Meyer Shields

seen we've I question, Obviously, a liability guess. over here lines. what similar A is domestic lot of concerns

side, just international that should well we domestic as concern is think that as a worsening casualty On the or concern?

Marc Grandisson

It's the as you courts. down internationally, issue. the has the but some in similar hardening and contiguous similarly kind X to for a still We not that seeing world in It's not X, the same expect. It's as casualty we're as But say acuteness of would level, international last some years. well. closed

hardening So it's similar market. a very the of

at around, talking it's see as issue. If similar reserving a a the U.S., acute of there they're be right? globals But the but internationally is the are And different level not story, issues the issues". in in will they have May terms underwriting not in we internationally, now not I'm U.S. that similar that right to internationally, same all "potential that's

Operator

question next comes of line from from Our Greenspan the Fargo. Wells Elyse

Elyse Greenspan

your call my folks book loss a conference who's writing you and is will that insurance. insurance you're of provider. as casualty E&O on getting follow-up us casualty in trend I a give your you the wondering But you're of lot think what rate insurance have for sense booking to Can say, I well? coverage the casualty

Marc Grandisson

depends the X. X%, numbers the hear the the around that on depends think are on business, you provide risk. the numbers -- around X%, size it's Well, business, depends you phenomenon. Elyse, see on the of but It investment line X%, XX%, numbers sometimes I of heard marketplace, depends It point. you it depends hear we limit the on similar the the that But on

coming said tend speak happening seeing trend this liabilities generally I historically. in we're as back. the coming that It's we it's it increase, -- CPI and think we insurance outpace the -- we will

points basis above. So with or XXX XXX

consistent kinds with largely we're upticks. So of those

Elyse Greenspan

sometimes increase? line So X%, can X%, vary and X%, but by XX%, loss you X%. be put trends, you price would said the Where

Marc Grandisson

on now. line mid-teens, to right business, would depending low say, but we're of Again, I

Elyse Greenspan

folks Okay, can low low repeating, so mid-teens. the also hear listening mid-teens. answer, just so to I'm to

one, your guess, that's cat. your I think on Yes, one one, last I

You rise but said higher, put your the the PML bit given at 'XX. equity went your would right, load percent cat in of start of the is a little quarter. Where you lower the equity

Marc Grandisson

call like, call up of X% it's X% 'XX, I'd looking Well, it, cat from to certainly ratio load. in at the premium of for like somewhere year, right? X% our or we're right, like loss say would so points, the of kind be it,

Elyse Greenspan

X% Okay, load. cat X% to

Operator

Bank. Deutsche from the Cave question Montazeri comes line of Our next from

Cave Montazeri

years? and have attachment probably couple frequency, of on than are points It's took over terms should conditions on reinsurance like reinsurers on to aggregate, feel overall low on risk more the that willing and question And and on the now erms or attachment probably it industry severity price conditions. high a I more past negotiate Does maybe points. have Cave.

Just on tell that topic? me what your view is

Marc Grandisson

Are you CapEx? talking about property

Cave Montazeri

Yes.

Marc Grandisson

Yes.

was out on. market lot we've we historically X more of dollars mentioned the money, a back you just lot frequency, there reinsurance what to to last lower And a that to layers and perhaps seen is and swapping turn for as trading was think be see continue I X willing the years, activity is take forth. or of

at retention go was natural retaining. sense down more increase should at for in why tendency breaks things But a it actually the buying than up. they point, client you've the realize the reinsurance protection. Spending there That's be some So try that premium those seen then they to to levels. is

make is we've to they a virtue having it higher better then of own their and have to portfolio then and retention, a improving. on in manage seen, try on turn sense, what Now and by and turning to they're

have aggregate there The sorry this. that I'm they about loss --

they that the in because capacity and think level set appreciating of that is are also on means PML. people evaluating loss what on I buying now CapEx and top right the more of are seeing exposure we're total

go bottom So bit buying think to trading in I think a we're sense. people and we people more -- going what more into on away that layers top. what which the seeing is And see I as totally we're 'XX, makes

Cave Montazeri

Okay. follow-up insurance. mortgage My is on

pulling even the to Or line lead came housing grow a of we to the cuts, fast market? do market? been of you it in come, maybe a if in grow to back in to market. less you U.S. the the with halt. should activity Now before expect rate had But Fed kind kind if the be Would activity in pickup you happy

Marc Grandisson

mortgage, would Yes, absolutely, we be.

I think be -- more answer is would yes, happy. we that the

capital able I do to think very, be Absolutely. And would more. deploy. We to capacity, to very be we pleased have

François Morin

-- been been very it's it's as you market, good a very I know, market. -- And rational we mean

where that. -- position do we of and But terms book. the matter able go charge to absolutely for capable our how we're willing to we up, the risk to obviously, we're in will So rates the ability grow, and originations

Operator

line Evercore. next comes from Our question the of Motemaden David from

David Motemaden

the been haven't I hearing Apologies, answer.

market like think to But internally do market. just of writing the manage the reinsurance hardened you false early hardening, the the and any hard potential call how answered of starts? bit that So with go I'm do as just side I strategy about a hasn't it It part starts. you might to how not the at at totally you But quickly little or but manage beginning you've for guess on you you've that that lean sounds between the if potential spoke business of expected. not need in be casualty a Marc, the should sure these false as where already. the

Marc Grandisson

has it where try comes how marking down our about market. to with to is question. good hardening want this clients team and of is think A experience understand to risk, sitting things very hear, you talk right. reinsurance play, also I think do potential the And you with of the very, of And underwriting lot in art and about specifically. right, a the It's now the the I'll is knowing do clients, some

or have really I'm compelled can support develop right help because right -- not your and we lean that spreadsheet becoming have, have experience there healthy to That's the of get get getting you that like can and to And and lean And don't bit this the know point again, market it's signs And think or view database that way I the information. into what heavily. there's over psychology you one are of probably And and of me no else, more I I numbers. we overall to or one be and is what fields hopefully our team we're data and compass how older, use it's you one-for-one markings decision claims to art can't me XXXX. a XX the in as it the and number a important tell also market but that, our for will answer. to own order. is a have we tell It's everyone done, made years we not to as we the also me very me science. -- like all it's own but I going their and more a you than would it's little even fact the here get And into But what sitting if until I pretend in -- XXX%. we everything

François Morin

matters but think best and to cycle, going then the should we're is again, we we're come -- do add I'll is ahead. soft, the that's we we early. David, time never business pull goes and thing the and you play. sometimes reverse back go When what is That's more well. too it, in, only back the you of market true our the might But quickly, it And the perfectly, over the as direction out we game

David Motemaden

understood. XXXX, view at growth on forward improve, X/X, Marc, Yes. the to looking reinsurance your you I property continued as that sense. That sustainability market of mentioned the And makes of what's through market. No, sit then, property property guess in move that as sort and cat. at had today and opportunities the that cat we now we here

Marc Grandisson

we First, se. We can constraints per our know, that at you have is PML X.X%. mentioned grow, also as no growth

So to we room have grow there.

swoop. years very -- think as 'XX to probably does going fell or property but than year good is think I it's and to to 'XX a And to year. go 'XX. I the was XXXX, question that's the were a 'XX, would of the so difficult really the very, But we 'XX we was I not Probably because answer of all if and you to dependent way turn where it it. see on really, 'XX market, point goes what about up market it's 'XX, happens what better one 'XX, this kind about down and better probably in quickly, in know, go because activity

You've little line would want before in what a line sustainability things got while close of a the returns takes to a for or below the we lot of to the get too It while. adjust.

front in have So we some runway us. of

David Motemaden

market Got other. it. capital the there? to the swing past, or are way one the alternative -- I seeing Understood. can has exactly And or you said know What you've in the ILS ability

Marc Grandisson

which demand still that that. 'XX that change, we skepticism near -- as now high 'XX, 'XX, returns some where returns, clearly, might for we hear still but margins also not What the some weight see in that prevents very goes. But of and and demand is will a probably for saw there's high level nowhere increases, but the it's I right

Operator

will Grandisson Arch Marc have Capital like been to in be turn I captured now over for answers conference you. remarks. would Mr. available and Thank closing Group the replay. the to

Marc Grandisson

Yes.

colleagues, First for want to Vinay and in Don up, will There our for obviously. replay. to be be and recording call dropping I And a know follow of thoroughly available to will apologize steemed all, you and available quality the out.

forward very I listening again to you call, for want much. to looking thank Thank I'm April. to in speak our you you to and

Operator

for thank gentlemen, you today's the concludes in and Ladies conference. This participating program.

may You all disconnect.

Arch Capital (ACGL) 15 Feb 242023 Q4 Earnings call transcript