ACGL - Earnings call transcript Q2 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Q2 2024 Arch Capital Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

Before the company gets started with its 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. Consequently, actual results may differ materially from those expressed or implied.

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

the statements Additionally, be of not on harbor certain intends XXXX. safe within meaning The historical are Securities subject Private forward-looking statements based of forward-looking company statements the the in are Litigation thereby. that to in the contained to the call call facts Reform created the Act

Management make the earnings performance. to be furnished report will release press website financial for reference also current measures to available X-K company's and www.archgroup.com at can of The each the SEC's and is certain SEC financial on found measure company's GAAP company's the Form non-GAAP in yesterday, the reconciliations on www.sec.gov. website which to on the non-GAAP at contains

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

Marc Grandisson

Jericho. Good earnings and second quarter to call. Arch's you, Thank welcome morning,

We to report all due from contributions and pleased underwriting profitable highly segments significant investment X to strong quarter results. another are

and strategy returns annualized risk-adjusted the this Our has an excellent market capital an of cycle in a returns. resulted with enterprise of and on management income ability operating Coupling million into extended emphasis consistent underwriting fueled disciplined our throughout to deploy successfully hard execution XX.X%. $XXX record ROE

results. diligently teams work experience our thanks with capability these results Our record to long that of and deep are to earn a track

market cost increases disciplined cycle back. on this broadly competition primary excellent, while of to of and goal, normalizes. one's been of several overly the know are P&C attractive even that keep how margins. eroding Broadly come growth the for could push of as underwriting are the returns rate years aggressive last breadth remains rests and at we and part environment has on art for duration trend, underwriting pull An returns. opportunities in to the appetite exceptional the above hard of requires speaking, current to shareholder hard a underwriting and eye our The The ability when plentiful

participant At an patience. is Arch, most that powerful and disciplined believe We one market we to allocation restraint capital of active practicing yet be our strive differentiators.

is priority better first, to price our capital to we the deploy Our knowledge into where experience underwriting risk. have and units

always businesses. Allianz's However, other acquire Entertainment value-creating is One previously and U.S. we assessing opportunities. example our announced intent MidCorp are to

strategic the MidCorp relationships in With expanding a I'm while able the talented share The addition toolkit. management regulatory market about and to on of their team few middle U.S. primary approval greater acquisition. secured, cycle client the presence thoughts a our us gives

say the teams. will opportunities We integrate have about to middle in we our as market more the

the this to a few I'll our quarter. underwriting past highlight moments units now take of performance

events Second property deliver reinsurance from billion underwriting quarter throughout leadership income, casualty the demonstrate catastrophic to from million in internationally. perils, ongoing The higher generated combined results million secondary gross of segments $XXX strong Reinsurance just over market. of frequency insurance underwriting and $X our segments income and and and both despite U.S. of the our of the of hard $XXX benefits premium.

why at learned being the but cat midyear underwriting many XXXX as XXXX the unlucky. last of returns overall Due hard good for grow diversified underwriting in chose our cat which to to excellent we book platform. grown year, the when the writings not during we few in risk across things property years, meaningfully chase renewal. market, resilient, business at this enabled a report of stable exposure view storm cat so our over there built to platform, our rates the premium us to results has heightened We've this are risk Higher segment, happening property of

very Property want priced. in just general, have well right across the is portfolio. our to We balance

to from area interest industry. of heard lines have continue ongoing that we'll we an others, across taking you observe remain as reserve rate monitor the strengthening As place casualty increases and

important and Insurance underwriting equipped opportunities to competitive rates written where our do a to quarter. $XXX year million more of as in grew growth quarter premiums this We in quarter to was income relative second X% in Net casualty return future contributed the we improving. quickly past the reallocate able the In in and have are ago. meaningfully segment best remain it's market, well Our to to capital done quarters. be compared business the programs a in premium E&S

from lead a where in Our continues benefit to international insurance as a Lloyd's, providing market opportunities is attractive lines. specialty disciplined its position unit underwriter at growth

and base is P&C risk income one mortgage sustained solid and of industry quarter-over-quarter to the risk. underwriting a consistently repeating earnings. our the shareholders MI solid mortgage current At value myself, the our the into environment of underwriting segment significant on Moving by companies delivered business. the for provides rewards excellent producing that been by MI since XXXX, across underwriting has our the

and income and million quarter insurance mortgage ago. The our low credit year remains quarter, the of of generated with a compared This segment quality written remains while XX% at of U.S. strong same new positions. the MI from policyholders the increasing portfolio to high historical underwriting the $XXX U.S. equity delinquency by norms rate

quarter. successfully closed the in have our acquisition We're second of RMIC to pleased

business of $XXX of no generated cash quarter billion, Primarily by income strong profitable yields continue in portfolio Although capital. which comes can to move we underwriting investment new run-up in our our portfolio. our block opportunities to higher this operations, as investments the to pursuit ongoing million net flows through $XX.X due deploy generating finding with emblematic our of increased is

this as The world are the Olympics full get swing. focused Paris on into week of eyes the

individual XX days. the are X disciplines, One is points an around days, X with range events all of over the most end toughest incredible featuring winner. test mental the events the the decathlon events over is and the XX a all of points of physical is the athletics spread The that maximum test an up in performance At and every requires for event. totaled decathlon

ability market, consistently long-term perform enterprise a excel and in the to level across Similar dynamic multi-disciplined success, for to a built the to a decathlon, market. Arch crucial is is across insurance at the high

Our capital give on the the lines best that focus points. can ensure we chance that helps allocation score us to

XXX-meter The our ability quickly early. first us gates decathlon event this beginning position of hard market in the to sprint, is out score and the to of at get the

in and mortgage medal, have have and the an you gold Since investments contention as the for racking up we points, lots pole adding leadership us expect then, that performance a would world-class clearing been P&C vault, our in all-around the team our of teams from bar team. serious puts

his Dinos, it this over trademark and calls June. I was need an years. for I kind. hand these to Dinos with of our beliefs tremendous legend, leader of and Before over company industry led passing this not he the only Dinos insights, also humor. He mention past XX Francois, steered earnings keen was a to principle who was truly one mentor friend, a

anything please tonight, Dinos. So raise ouzo your or it be or of a to choosing glass, retsina

missed, You my friend. are

Francois?

François Morin

good to and Marc, all. you, Thank morning

for per annualized up was share for excellent XX, after-tax of operating XX% by XX.X% second know as with XXXX an equity return quarter of share and $XX.XX of the June last operating average quarter night of a you on per on income up basis. from $X.XX quarter reported Book now, the value X.X% year-to-date common second results As we XX.X%.

basis. in our cat an on again, ex segments Once outstanding a million underlying results, business by highlighted X combined year accident and delivered XX.X% $XXX income underwriting ratio, XX.X%

confidence benefit from to strong giving generate us We continue across solid environment market pricing businesses to our as our the returns quarters. over in the ability remains coming disciplined, conditions

Our basis across X.X strong our mortgage recognize on $XXX in our activity. of short underwriting lines favorable were in X generating segments. combined across across globe, catastrophe lines in ratio Catastrophe business, loss income series with the favorable on of but prior year of a reflected line property current tail was casualty and to $XXX activity accident quarter. and the pretax events in development many losses in our points million primarily of or development the million we as for group cure the segments a by year expectations impacted We due

our this from a related events. of perils of the secondary catastrophe international quarter rest are series losses coming XX% with U.S. to Approximately

single stands at now X, natural zone PML peak our July and level well cat shareholders' of return a X-in-XXX-year on slightly tangible of event for X.X% equity, As basis internal declined net limits. our a below

acquired comprise a that segment, mortgage Companies the insurance I'd since and business mortgage subsidiaries are Republic, since of runoff For like items there is together this Old to Inc. that first highlight. quarter end certain the the we RMIC

force of the primary $X.X X.X% at a mortgage the end book quarter. increase in the represented of or First, business billion to U.S. our acquired insurance

XX in MI. this delinquency older vintages from its risk given our in points last basis in since reported would to since resulted slightly Absent our has Second, is rate incremental XXXX, U.S. at makeup quarter. runoff force delinquency have the improved and reported been an transaction, rate

front, investment we share. net combined income $X.XX million pretax $XXX or income accounted funds earned equity using the a from investment the from and per On method

the on result have asset X.XX% for basis, of investment came operations portfolio quarter. for should level a the an remained return Total in year-to-date investable $X.X Cash income. at base, seen a our growth we in billion material and increasing strong, in flow from which

X% was quarter, for an with current tax XXXX. rate X.X% operating range effective of the Our our second to XX% for pretax income expected on year full a expense the of

segment's of of update do acquire insurance share this As time, forward-looking early to MidCorp quarter, Allianz. to impact Starting we disclosed expect financial and the we the provided April. insurance August to what view we have At U.S. in X to business. information the including an last close week, a help businesses the developing from next of transaction we the estimated new transaction new now expect beyond this on information this Entertainment results, not in

slightly in with a debt equity in, our to preferred approaching above $XX excellent is balance sheet our net ratio shareholders' billion, common capital plus All XX%. health

We we are well to of advantage positioned forward. that opportunities arise as may move take

word also build take for Dinos others had share the Arch, a moment the employees conclude across my Marc's I impact remarks, sincere its and industry. wanted appreciation Before to on on and comments many to I a of

While an and Dinos. truly grateful he will for are Thank his captivate audience, ability you, certainly at and career for guidance, energetic we remembered Arch. his to his personality leadership during his be vision

Marc?

Marc Grandisson

lunch, to we important their from anyone on which keep don't know we Dinos, questions. very was to so your No,

Operator

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

Elyse Greenspan

I from it's the leading year been -- since talking October right? think side, My of Marc, this transpiring you evolve, to seems Insurance guess, it's last lines. it's relative through just QX price kind expectations, it of industry casualty it's of the probably do maybe earnings, And in you terms see slow late slow turn. that in those been October first casualty but price been here market about to your were lines? with line I get on to question, in is with increases How

Marc Grandisson

-- the while. how take has said before well, and the you're quarter think X casualty last tail I takes realizing it. made X that well the like a we years. point quarter, casualty I It Well, could line in actually is to doing turn Elyse, that It a or much

think the trying late. while. trying as will they look to good the at So more in by And start think inflation being as used we it that the take not are of signs saw triangles we're that more adjust. -- the impacted bit actually to seeing recent of are early People that to a We're I a we be. to years numbers the I see

space. a I the or quarters there's stable better of us to think industry. to the view it will several uncertainty a And of take more a So in lot come

it have started the that and So price and about XXXX the to sort last turn running in increase casualty out -- XXXX and having after really hard rate took of to of market in see until to point. impact

years. several the goods that least known. at fall, takes at are people the well, of or it the cap in sold right property XXXX the right are something Unlike So because losses away cost happened bottom adjusting

We're more. So We're surprising bit expecting reinsurance more. I'm to me. our expecting not it a submissions. through this seeing bit is a

some years, bad takes these I but are while. think surely it recognizing a of people slowly but

Elyse Greenspan

right, then that trend, on given run just like And XXs the margin, in price the you does of the quarter, think rate and kind guess, in here? views low of about side, insurance your as feel kind from the terms loss of level I underlying,

Marc Grandisson

on mix based years. you we the a as over rough least. couple we at know, the as it to Well, of sort of report also be emerging numbers on going Elyse, seems the see sort see. that data of the There's we That last average

time. to time from know, you as shifting, are things So

So of to our now, are believe our the compare returns we based we expectation returns on excess in ratio. of are, it's well getting hard on combined insurance, and where it's target. But right long-term within

Elyse Greenspan

above provide, mortgage the level book? held more could on QX kind releases bit the then Francois, what's the think releases we Can And color of rate there QX a maybe on was going level. have steady, little potential you within of and just about MI run how

François Morin

Great question.

think many or of forward-looking favorable about view others I mortgage and I on -- taking mean, been a -- we I development in general. wrong releases on have

I -- think, turned stepping attaching we state and another fact we economy cures better back, view out cautious expected about just to a XXXX new cure these 'XX, late better be more about were right, 'XX reserves of this early that didn't quarter were the more accident at out think quarter that They these to to to a lot a don't notices had time. case, be of year. I'd that that 'XX, The notices right? bit what related in activity, I that say were had turn of than we the we and was that the -- average the early took

think, So say general we're positive, I'd in market. housing the about I more

attaching So the that to was it new level lower we're of than is year a delinquencies a ago. bit reserving the

et expect we impact sure have going directionally, that again, cure releases would to are that reserve quickly the not the how people mean, be will I an not of of will knowing maybe same level level releases. -- to going on So But forward. have reserve for cetera, unemployment,

Operator

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

Jamminder Bhullar

So reserves. on first, just a question

maybe the the of Watford development not development in had as or susceptible years. peers. like that for the book seem favorable second had competitors to development but on did also, had detail some your of you You and you do inherited? quarter. your overall. either then the in into go But bit issues, older little as so of -- in why could and a And casualty that, in many competitors all casualty the adverse that But Doesn't you're both feel lot maybe block the you a recent you

François Morin

Yes.

stab something business have. on business part a take question, sure me have write liability commercial on I'm I'd call standard don't I'd book of Let that add. that. the the will to to X your say Jimmy, Marc say of some it a example. that commercial whole we -- have wouldn't is I autos, a for lot general book of competitors other We

good business of a been to there. a line another that's that's trends So difficult line and on the has in handle inflation how up get picked

books of -- XX% business. smaller. the I GL consider in those is it, Roughly traditional of we speaking, in what underweight than we general liability like, less think, casualty our be a, call in have consider to that business. lines We're insurance our of think, we certainly, the what to premium, be are we overall So book lines

where that. areas the write we I Certainly, mean book international matters. we matters. have an within mix the So the business

where not I pain. only think we've seen U.S., So more it's

in terms the in -- lines. aggregate, movements the the I then think, mostly in we of were yes, the And quarter, in short-tail favorable, favorable

On the think which flat. lines, were primarily longer tail we GL, I is pretty

I something at look think carefully. it's we

Some the noise level comfortable there. collectively, of here with aggregate, reserves. and we're in But very

up far, pretty And our are so well. holding numbers

Marc Grandisson

Jimmy, know, manager. we're what And as Francois and a to said, what you add I just would cycle

that write are we're very now also -- even year. that as We much soft the still believe didn't in year we

you to outsized -- surprise. no that from So also prevents having having

Jamminder Bhullar

about or that nicely, it's the growth. given do is couple your done your you building buybacks Okay. to a you instituting And enough think and a acquisitions. up on a have? assuming have dividend potentially But And capital then you I'm how of levels capital pretty different topic, fund

François Morin

the -- I I'd not we the Yes. acquisition mean say, that are philosophy certainly, close on has changed, right? tomorrow. to track Allianz

certainly we will a capital that that base that So on be draw have.

we to -- look business very absolutely, been how also take historically think, the are do fact -- at We form of we deploy can. a will return we -- opportunities have good But if it I going active stewards what the share that other front we forward, there But very capital, that we to in us, we'll it of we'll be want wind where capital, in could we've always what or and no season, of entering beyond like coming what's buybacks -- the in is done what the in that develops. are so months, any dividends or the method.

Operator

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

Joshua Shanker

Marc, So, decelerated the pricing but for than to early. I and XXXX, a you're said that thought market pulled great it of back longer stayed here, in would, the deal. has clearly, the that we mean too big surprise sometime we the was pulling think a not me lot XXXX growth I from one past, was hard you good thing back

XX/XX long this at Given knew and looking that you that what hindsight, past? you you the it from compared last have might with how market are opportunity how

Marc Grandisson

from Josh, probably reminding would in 'XX, did my I Josh, we Yes. is Well, underwriting XXXX erased what and we memory about you, first, is talk tell I'd thanks me. What this for meetings. at but rolling

are underwriting phenomenon. Our our underwriters of aware and executives acutely that

going to as the acute remind which that We more specifically talked be up seems also to area. pricing about non-casualty, we want is ourselves

longer escalator. to take will and to it take It goes go goes down down an it a think I time down, longer or an takes elevator up right.

So would be. the why that's expect we to market probably

I think we're aware of this.

data, years. underwriters, been we more many of have those have there experience, have platform, them existing we have more an Now through

that will, more the if of softer. little you when line the judicious, be So gets we market will in holding very terms bit confident a

said which growth. heard already, probably like very, a feat. bit I reaching you in Josh, in my have comments, very It's the and risk. big still in supply to demand terms market But still is little we P&C, XX% of In the and it's a is a good terms equilibrium more close growth, -- as for of growth

to that broader all question have ourselves we in and is, push we ask too the return expectations if dilute the So margin the the hard, we time might marketplace.

not only they and maybe the sure take we very right wants out running way. jeopardize, is us, to it will way, probably by very, the but or So the this. that behaving People And to same and be take not nobody that expectations. think widely make one want the returns something the down market jeopardize I first doing get broadly

So The coming state. the market, to is in and supply more capacity side just Josh. equilibrium normal demand a equilibrium underwriters, more that more of on it's It's the for a on clearly the of kind moving but it's just back still level.

Joshua Shanker

utilized bit might capital a -- incorrect going source the need some have continuing to about trajectory, that a that's pace I capital have and be does the then order. the wouldn't But a to that seem capital asked. the little may there. on that sizable be Can excess anyone And else it. causing Jimmy very that assumption it thought capital capital be sitting order? I guess, additionally, you're real premium decelerating, on my at plug a short short Allianz really may fairly be at you you, that's that recommend crude buildup correct a going a am I I like uses -- in it how is that in be model, to the use talk transaction Or

François Morin

the on numbers the rough to first, in capital also business and the the mean, transaction of the which were we acquire going were we ramp-up renewals new immediately coming support of that is that premium then our on transaction, the end I that billion, balance is our we that's and need to will up LPT that deploy Allianz capital deploy we -- sheet. way to paying that we're Well, $X.X or disclosed to the asset the the

be So of we track things and far that there's level. kind far, number, is on that -- as so mean, at mean, sizable are I to I as know,

capital we're -- that just we very going point, but we yes, deploy have to your -- proud And not returns excellent, To I that. accumulate of and can't -- forever. we're we're mean, been

it give of is have been Marc a will where couple of year. has quarters talking maybe, I of the by but we'll about things casualty another So definitely And pick kind better us then the up reality this mean, later potentially. view stand

the in accelerates the we third fourth So next to to year, that ready deploy capital and early and quarters there. want have then

think that's we picture, big discussion we about an but certainly how a have it's ongoing here. So

Operator

Our next question from BMO. comes from Zaremski Michael

Michael Zaremski

since be this. on keep the related, reserve the last past I on I said have part, more, in you your small others I'll value the accounts the see you to we you've but more that that year, with so the Arch's months. two reserves are remind so. too been small that casualty summer had not recall especially pressures believe geared than kind far theme the that just we bit you've large they book account that account, guess, players more have -- now said inflation, and your casualty really but social Marc, And little industry can more data reviews added I thoughts the the a appears and said, and to us, casualty be do towards studying would thought of

there's thoughts So I any if don't there. know

Marc Grandisson

second the of question. your with part start I'll

exactly right. You're

large the accounts, it for But even deeper to everyone commercial obviously, the -- points portfolio. are as more sizes the similar auto pressure on you're impacts, through as as pockets, that also zero pressure the said limits, a I bigger larger lawyers. that plaintiff enterprises, attractive right? else, right, they're more cases there building all we've going and ground are And losses think seen of well complex I They umbrella because well, process. the

this well. but sort we're round policies of sort second ripples and have limits. to zero, slowly, a account, and surely quite well Smaller market, larger effect which you're lower rippling the of packages see sort starting the as right. ground smaller a always We're is through in as the starting But of on impact it's the

to too, seems to heard -- currently the used the not limit million what it you it well, sure, space, $X So be. be I'm this is it's probably easier in

to limit So was changed. there's before the the probably fight $X has of because opposed more push maybe again, to to back. or million all a the pressure willing full as more pay of industry But inflation the

reserve business do. we every line do of of we terms of of I'll say that review, a In quarterly reserving but it, review our

Our is single developing actuaries at high have for thing I, the what reported able it the insurance that a Arch we we we every at and we company, quarterly get looking have the -- trends ratio benefit the The that and business Francois holding reinsurance And every as at. so of time. review of have the loss an the one to they're change added line like. all units look we're group of on we are also compare that and sub-line to company, we have what level as and

an a analysis. it's annual we I may have to trend think constant used -- So to what do you used is -- said we what we

time, analysis assume a pricing. might most Now because and are we it's And feed as about same using accelerate would frequency into the it all people well. twice-a-year that I to becoming reserving as talk the

François Morin

against just Yes. quarterly. expectations, That's monitor versus only our monitor we not of do external a own actuaries The And expected big it expectations. our process. against on part reserving, the to one but do we add experience actual we quick thing

time. over in certainly So the done take quarter. got And all point, independent the Marc's how X that's to actions groups of develop of And business informs actuaries should that reserves business every we or we regularly. units views think the

Michael Zaremski

Understood. last on helpful. And levels. That's quickly Okay. catastrophe just

over The have quarter, you kind are cat of I open guys the than others property on you is reinsurance grown that normal-ish segment think ratio since ratio, "normal." years? this guys more into the loss

Marc Grandisson

No, yes, before, I'm reinsurance think has sure, -- to it's into that -- more it. is volatility appreciate said the and from always repeating think I yes. again, perspective, your we no, what I hard

So a average. we look at longer-term to tend this on

combined and but we here, sometimes, reinsurance. quarter. combined in ex have see accident bit. ratio little a a quarter where I year, the reinsurance very current -- goes a hard remind cap say trend, up So this and have we the to people sometimes everyone it's it's a

it's Sometimes below. it's above, sometimes

portfolio. a we a basis, had you across look quarter, it's this think not that. Reinsurance is what this XX-month explains this I move. the if as frankly, And attritional losses what But on lower -- drastic no of

François Morin

different I again, a of seasonality data Yes. given may we types cat international growth experienced reported not support we Was to hit. that. what what we to broader, that on of Does also, may it But quarter? it's was within big we U.S., of of when was kind second we book, yes. little Does the have mean year, picture, It's earlier or a of it lot quarter that much size historical primarily, this mean, I and third reinsure in the exposures thought these very view the reasonable only -- losses fact I'd or add bit -- happen quoted not a there's it unexpected. not the was the it's quarter? that a this the that not load imprecise. it's happen

Michael Zaremski

or maybe factor Would And that healthy level mortgage any continues the if -- high that, release in from unexpected? last a pace with kind is Okay. macro think appreciation it price there That's home anything we of sneak can a guess, a healthy pace at reserve very about? quickly as perspective. on Is at there I I'll was helpful. on just one resumes

Marc Grandisson

is far Because the the lack right? leading increase X.X% your expecting, home price policies, home. most the if And equity to you're equity we're your indicator therefore were policy. thereof by would, of X%, your built. whatever of going the to virtue as in you next another have it a having in equity a the even appreciation, Yes, you is house a foreclosure loss to appreciation, HPA by And of X% in had year or maybe whether

equity somebody it's is and market recapture trouble, the you simple, you're and not That's else at demand all is you the because, do into well, and matters home turn don't home, something you've equity the market reason to expenses. and you're then built if your with capture in can will the portion, the job, sell be it. -- right? after to healthy happens running equity into able a just equity sell of why lose even very what people And that you'll around if and to want The that it such least then divorce, losing your that -- and some that supply

So that's HPA. different 'XX, reasons on into but did it for got what wild goes it like If altogether. it 'XX, too happens trouble in

and several be going space HPA provider. the us think last definitely helpful. credit years. for up I It's the MI the right as mortgages originated weighted over now have been would helpful

Operator

question David from Evercore. next Our Motemaden from comes

David Motemaden

And question a insurance color that It loss talk having earned are up on underlying maybe premium baking had year-over-year. Could ratio Or year-on-year? business a loss casualty would was despite mix was short the you higher about on the bit a in tail there you mix. ratio little business. of the lines? a the in of driving That's what little I within helpful. up was conservatism bit guys be the

Marc Grandisson

any judgment often call increase. small -- pretty is this those ascribe want And we more precision quite to don't a It's Yes. to times. They're numbers.

more really is may loss a line. of mix bit to the certain a year conservative I business put the business, the a and -- or think certain reflection That's prudent take all one or perhaps it's of little of more product it. or actuaries there a on a the stance and for just line increase bit ratio a

we're on specialty I insurance this think level, even writer. a the variability around an

the not could at going a -- of is in there's guess, predicted, portfolio. all It's be. wish this uncertainty believe things because pick. it from it's just as also as time in lot we attribute selecting time that once why more to there's as ratio to noise as we we a loss on I happens returns I would But not we can attract very So lot our higher mix. well

anything Francois, add? to

David Motemaden

bit just Great. it the appears your changed mentioned if a claims if have the of And had expected we then that little expected. guys like patterns And quarter? payment actual then color been losses, Wondering Francois, you more to given have just for extending. view get on you could

expectations? in as been that's well if wondering -- I'm expected So reflected your

François Morin

Yes.

work, E line, by versus A year. done the it's by think I

favorable, are There's pockets takes, segment, up yes, it's So But ahead claim and puts both in I to for didn't we take there's there which we both the running for a quarter-to-date be show and of could when that it's credit and year year-to-date, that. some run aggregate, going that right. shows expectations, where mean, some adverse. by full we --

Some a our of prior favorable year and that base showing are our actually in comfort giving reserve that favorable the experience to lot development. is reserve indications adequate the But pay are of levels us their claims. up

-- a is attempt good-faith there's we external that your experience the patterns question on Absolutely, from or internally the good get to adjust actuaries. advice we -- that I Again, mean, the the opinions attempt with and patterns, both have.

numbers. And into So the develop. that's seems I longer changing we take but that fully of time, understand that over those mean it's considered to claims that factored expectations patterns are in an may that be situation. -- may that evolving kind the is

Operator

Citigroup. with comes question next from Lederer Charlie Our

Charles Lederer

Marc's better -- you out you on Would heard much of a in the could flattening an is growth. you property weather I had MidCorp how business comments pricing Definitely, see reverse the the cat reasons impact forecast have And and X/X could of say we you're that? if view and reaccelerate of course keeping? you the good on still for

Marc Grandisson

will of going right, and Yes, yes likelihood new belief higher questions, projection your X/X as we I'm a events. answer, decision over. 'XX yes the we get after help yes of and was short-term Mind even we have you're you, very yes, a -- and conviction increased is that there frequency easiest is the us or this whatever This with a be to new could change. will took is one wind perspective, say the our frequency. and season vision we both this new into believe heightened help inform a business And to of make it yes. still will of and good

right book We balance. So business. it's still have a the very, of to just very good wanted

Charles Lederer

if the out then, arms frame what I'm wondering might the see coming us I impact any yet. you if guess, you guys the of CrowdStrike can losses if cyber it? be? help on environment it. Got cyber pricing you around have event wrapped And your And And

Marc Grandisson

be but and information our there mean still the CrowdStrike, Yes, what's it's I to of well, out on business. other on only figure some might we're out there the cyber, want gathering units, lines the not -- necessarily

of mean claiming going people as kind still through insured. I disentangle. we're So speak. just are some It's They're not it we hard to some losses.

So lot there's a of things going on.

wide billion. think it's a to sort -- point still -- market of broadly million, take a It's range $XXX know that to at in to That's the it with X how this I agree we develops. $XXX time. while tend to going $X.X view million

I want but to a little what risk looks fast reminder big it's evaluate not way, as you will, either a down. And them a If a bit, but haven't -- believe go would to a does the certainly go of terms that down rates portfolio. reinforce mean not expect now, early renewals, pause, points all bit that take going create in ratio the to it still were think they loss seen premium would probably number people cyber, as big going there's not right? risky. in worldwide could can we that as I it's but probably it's more like. for for I And of might CrowdStrike any not a to are a loss, It of it's I if

work unable all malicious, and -- reminder and still I Although, there's having think uncertainty were to a of there. day, out good happened it's was that of which nowhere, people some event, that not of loss like out there's a we potential for

Operator

Kligerman question Securities. next Our TD from Andrew from comes

Andrew Kligerman

lines. And you $XXX looked interested were in premium much cyber? were year-over-year of big at awful or the of lot? in in written Could the D&O how What lines? pickup and do there a see quarter the Was professional flattish takes? some million. like they public was pretty move? net some decrease a share puts It So this I you you Did

Marc Grandisson

that lot like your to from kind We're disentangle lot. a positioning. D&O, exposure. Rates hard reacting level, things of there. of we in It's go the lines. maintaining still so to other go would care, professional out making what's there's we're Health Yes, way. we're our the a Cyber, high down, still perspective. But still a at

re-underwriting we've lines. that professional not at a of you within So there's were grown high that is book of performing some This level the some will, been as areas, business. if And well.

So there's a lot all of once. on things at going

seeing, That's from I into really it number sum can read what you're think decisions is many of the that total this. flattish independent the was one -- not another. you really what were a XXX

Andrew Kligerman

And in quite $XXX property the lines catastrophe, up in property along the reinsurance? area million reinsurance, Got you same ex $XXX year. at in it. it a bit versus was last million What did like

Marc Grandisson

We of -- but there, in lines, it's there's well, risk a some different share, lot there's of quota lot excess. a --

favorable. the accretive have are a very advantage market is there well. And obviously. the and as think facultative of cat exposure the and cat still this returns believe -- to very spots. just But exposed picking these are in hard And is also as all book very, expectations day We taking units very, there, within we return not their some we there

we be are because market right? we think is Some specific the of speak. nature, them as opportunistic in deal doing some We specific payroll hard a might by

of factored So in writing. our that also some was

broad really business. a of it's So line

love we've say, a -- expectations. We knowledge -- do bit exposed that little book more we're underwrite for more that like see, willingness and had can business I this do pure to to line. we would line of the property cat complicated, opportunities business, a time, and of a As we It's that than be -- like there. but to of return you long the we'd in the expertise current really to and and cat the love property

François Morin

Yes. I'll And add to that quickly.

the basis write to mostly is day line of property basis, than versus a side, is all that where accounting where important on evenly premium on business quarter throughout the Just the an period. that XOL the exposure this other on property we premium is remember cat the written share line cat property on it's X component the

premium X premium. they taking we very of quarters be write the X/X, So for place that accounts we wrote example, of there's at could the over as 'XX that well is -- that the ramp-up

accounting of bit a agreements, certainly little an the those a numbers. and kind it that of policy how up in different has of shows So on types quarterly on impact reinsurance

Andrew Kligerman

as picked we take one the thinking slightly it. expense you could there? one insurance invest if about sneak by I basis ratio elevated be Allianz Got ratio on Should in up on just XX line, And the the the quick book expense being points. more and

François Morin

that made some we've this opportunities, in. that to invested we not were investments underway that, right? that that So quarter other the tech analytics, efforts through Well, are are they have we other predictive related companies

over But very right strong are. the make to it's us we're time of slow how making. those comfortable feel time, the down investments And investments maybe we with they those we'll given level So we're the road. see returns for for now, how develop the

segment, specifically we you some forward, the going but expenses in through integration just insurance will come information there will we'll In more certainly forward. Allianz, terms move give that be as of

Some as a and of transaction those those expenses report part we'll others. of that probably of will be cost onetime, and kind

that initiatives. digest other quarter once But this after -- investments so a for to have far we time and that we for it. to clarify some will everybody yes, So the close are time

Operator

from comes question from next UBS. Our Brian Meredith

Brian Meredith

couple them for guys. you A of

buyback curious, just still by I'm book stand do comes first, you X-year payback The dilution? all period to it when share the value for

François Morin

That our has been not and practice. rule. a hard It's fast

of it's at again, about the answer I But some the payback kind evaluate various of extending been the part And maybe. is think historically. Could framework practice we how the of point? we alternatives. that's think

Brian Meredith

you capacity have Fireman's guess, point kind M&A. thinking question, the it, and a Got do while? financial And like you're strategic this as reasonable my the kind the call of anything? management amount it, do M&A here about have do business But to it management for I capacity XX That's Fun then, of, here, helpful. to at probably still next you. call the over call business months you it, take to next, of Allianz or a to going a -- You're or pause integrating X looks

Marc Grandisson

people integration. attract can also certainly we of dependent to us us, the we other ahead and help do I Well, it's have any opportunity Brian, on that think,

We in the integrating leading team back on also Allianz 'XX. us a XXXX, guaranteed instrumental between were have effort in way

So have there. already good experience some we

to think was right, enough do happen we what I this. have really Francois, now quickly. find were something and doing So way accretive for if would a to bandwidth we we're And interesting,

to us, that If we'll we're very not to and to there I done. work time. the that at get is the effort think favorable needs work this something the expand

François Morin

-- mean, specific. actually were I and mean I segment opportunities geography-specific these

So the insurance Allianz North acquisition is America. purely

were the if most do world But So taken to reinsurance likely we center stage. different contribute. that in that a that segment, be the team in could absolutely other would has M&A of some parts other

Brian Meredith

it add at Just as in like kind PMLs you to forward? looking going decent you sense. to just about your any give Allianz one looks us, business provided us some the one. there thing. know give on don't quick there's the it areas? other does of think of it cat-exposed how amount then with we us respect map I you a is numbers Makes And color But can

François Morin

much diversified, which peak not zone. our materially Florida, Not peak California, is it's more less book because in The our as is more more Midwest, zone.

impact. marginal terms of in So the X-in-XXX,

Operator

comes Meyer Shields question from KBW. next from Our

Meyer Shields

quick Two questions.

you both premium. Was elevated any frequency and for reshaping frequency not to Francois think I growing Marc, cat predictions portfolio of mentioned the move there further First, from the away events?

Marc Grandisson

may little a at on our more retrocession but you That's level exposure No, of grown bit we reasonable is to how acceptable is And it did. if I high basis, even look have a was gross It I that just a and level, -- stable. back think PML. we we think through what more happened shaped got purchases. more really a what that's

Meyer Shields

being back inflection recovering the D&O activity? sort capital comes Are pricing. Okay. for -- we've events, for just on and more as we've any up-to-date blamed seen come activity And or that public seen back of second, with markets pressure recent coincides That's seeing that helpful. you most

Marc Grandisson

that rationality again, third-party parties, healthy -- the capital hear I mean we the level of those really. third there's a in even Not behavior.

So I pretty a or we the in seen, before, marketplace. said players It's marketplace. mavericks haven't well-behaved like crazy

Operator

any showing proceed with like questions. remarks? to not any further further you I'm Would

Marc Grandisson

October. much, everyone. Thank you in you We'll again very to talk

Operator

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

all may disconnect. You

Arch Capital (ACGL) 31 Jul 242024 Q2 Earnings call transcript