ACGL - Earnings call transcript Q4 2024

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Operator

Good day, ladies and gentlemen, and welcome to the Q4 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.

differ those may or results actual materially expressed from implied. Consequently,

are and information should that that including company our on XX-K to more on the from other the review by SEC with the reports annual investors For time, performance, XXXX risks factors fiscal time the future may periodic Form report filed for affect year.

forward-looking non-GAAP current Reform the contained the be in company forward-looking based safe and the of facts yesterday, subject also press non-GAAP at certain are The a Management not financial is Private on The call on measures of report which www.sec.gov. of will earnings on to performance. thereby. SEC's website meaning Litigation to measures each are contains Additionally, the reference to found financial the company's statements reconciliation release that at available X-K in intends the Certain for statements Act call www.archgroup.com statements the XXXX. in Form furnished the Securities GAAP within company's to SEC make and created historical on the harbor website the the can company's be to

and for like today's Please Morin. now your And Nicolas Papadopoulo, I to ahead. introduce Mr. conference, would host Francois Mr. go

Nicolas Alain Papadopoulo

course, welcome recover in that of we event many, the affected of affected terrible have by those the And and earnings and fulfill call. wildfires. thought all these to our is efforts. insurance rebuild. as I'll require fourth a including morning, to Good quarter to effort our the our sympathies begin communities role by will, companies and offering will This of California

loss in million billion to expect press result to between based industry $XXX $XX loss noted we million $XX release, a yesterday's the billion. of an on As $XXX estimate wildfires and in net

year, The $X.X over cat quarter, second $XXX net Turning same quarter had is solid related billion year. increase XX% our is half last the underwriting the down due income writing activities now results. XXXX. in Arch from to a fourth a the of quarter primarily which last losses million in of of to premium, XX% to

Our $X.X common XX.X% operating increased catastrophes. return of with despite operating excellent, after-tax level results full billion an and average equity of income an on year were natural of

Arch's Book value $X XXXX creation, XX% adjusting measure excellent The effective for to we returning to the pay of a capital $XX.XX, special and increase our impact financial per of share, per performance paid result and a dividend December. and special represented the position was nearly preferred shareholders. of share ended in excess value strong decision an our XX% at capital for increase year the dividend representing after the of means

and Both dividend the within repurchased segments fourth million repurchase shares effective commitment in our capital ahead remain the $XX also quarter. a the with ongoing We share us. opportunities of of select Market to our conditions number growth favorable active reflect and worth management.

other. peers As loss by underwriting All on of same broadly hour hands quarter, line and and may from each vary not trends heard the business our offset have you to do point this block. rate the

Lloyd's For risk-adjusted attractive insurance lines, producing as to and deploying example, selectively reinsurance. such business specialty reinsurance the we are return, capital at liability property area and cat

business across and adequate, the cycle to to reallocate where to to excess competitive both execute are will shareholders In minimum agility threshold, improving our profitable capital lines the those where our management, retaining within we each our Alternatively, And have incentives diversified our hesitate on met. targets. margin on the classes focused mix to teams opportunities have underwriters our platform. business minimum of we business pressures we and below return of and without strategy history, lines have in do requires empowering key demonstrated awarded our Effective are profitability our our to underwriting to ensure the throughout to attractive meet appropriate. production level sourcing targets of returns not when subclasses constraints not as more capital

will property, Arch's about The performance were needs, net $X.X $X.X underwriting million premium. billion income starting combined is in selectively underwriting scrutiny the its excellent. At grew as vigilance which segment increasing result of broker with offer quarter, year I while reinsurance delivered lines. group liability segments, for a full high a a billion the January business. record with our leading of of Now the underwriting a X our reinsurance, specialty addressing delivering writing highlights clients' $XXX few by finished reinsurer, underwriting of a of its of focus fourth on degree renewal, with performance year status and the the writings result and of business and on the over The reinsurance we global strong its income.

when teams has the to its clients, support brokers capacity. and relevance more partner our a market, hard had weathered reinsurers variable some the in Throughout withdrew conviction other even Arch collaborative and and with increase making case,

income Now ceased which Helene to also $XX XXXX. insurance, hurricane on to and Milton fourth strong in limited moving quarter million. opportunity growth Overall, underwriting

billion group MidCorp underwriting our from acquisition by million Growth net For XXXX was a the the Entertainment insurance income. increase and of of enhanced premium, was full business. $XXX and year, of delivered the XX% $X.X U.S.

XXXX, and premium integration are it's Entertainment spot, in above flat bright objectives. and MidCorp of than slightly which still the increases margin over Lloyd's primarily casualty of North lines keeping rising expectations consistent out business business trend, more in growth our in America quarter. remained in in performance offset International of $X came decrease written lines. Overall, from platform. our fourth billion rent and Organic the professional premium early, our net specialty loss the units, with a Although remained relatively insurance

for is XXXX. insurance outlook America growth both favorable and North The for international

given conditions we expect primary the competitive ahead, underlying Looking to remain margins. market attractive

in as slowdown increased. billion volumes $X has consecutive business of quarter the over the third insurance a overall million have competition new of in in volumes premium remained income mortgage for years we resulting the underwriting The $XXX contributed $XXX segment while Fundamental billion fourth However, persistency strong positive, including credit portfolio, book of our of quality in remains delivering income. excellent. force plus of the underwriting experienced

attributed high delinquency near industry catastrophes origination supply MI insurance in seasoning The disciplined rates. X% despite the can of force. expected mortgage business the helped the over due mortgage mortgage December Increased U.S. the by natural delinquency our U.S. and historic in but low modestly housing insurance in and rates area end to just be increased defaults remained suppressed of Overall, remain at to to lows.

from income from of asset Finally, to base book cash tailwinds billion provide our yields which and the Investment assets earnings increased after of Rising flows growth. for the accounting that Group, investable to over the nearly annual net $X.X value $XX billion investment strong special additional and growth delivered an investment our dividend. operating for

another XXXX was excellent Arch. year for Overall,

Looking heightened to attractive primary is ahead, goal expected our maintain margin competition. despite

capital data-driven long-term. market maximizing progress in of in navigate objective capabilities track ability Our confidence and the give dynamics over record strong a ever-changing enterprise underwriting culture, of cycle to our management me shareholder return becoming to a date management, with proven clear dynamic

hard demands As share who nearly benefit to the clients our X,XXX dedication excellence we stakeholders. page their in the rewards officially employees entrepreneurial and work to to and of Arch's XXXX, culture, and of turn our I want the recognize

it your turn on will questions. more the I provide returning to Now to Francois? to answer Francois detail financials before

François Morin

to morning Thank you, all. and good Nicolas,

annualized we now, by know for common an fourth after-tax closed $X.XX equity you As of operating average quarter XXXX of return XX.X%. operating on income per share with

For underlying for year quarter our the the the accident and and split Current results Once business our the XX% accident year. year with was were income XX.X% losses excellent group ratio between XX% year, common the roughly XX.X%. segments again, delivered an for XX% overall reinsurance on an catastrophe return combined net quarter, Insurance of segments, X equity for average million excellent ex-cat in and respectively. the $XXX

a claims, date quarter the quarter. losses due with where saw the Most of additional emergence occurrence are Hurricane given Helene, from event, an in contribution Milton, we fourth third delayed some quarter catastrophe of Hurricane late our to this

probable a natural of in X.X% increased loss As tangible shareholders' of XXX-year peak equity. basis on zone stands X, event for net X return single level maximum a cap January slightly at our and now

Our PML remains internal below limits. our well

forward represent X% approximately XXXX, cat and As net expect we MidCorp premium. of business full look year of conditions to our to we in group-wide with recent to market the the addition load X% current earned and our property Entertainment

in our income pretax basis the combined of underwriting a development prior $XXX on across favorable million included on X.X segments. X points or year ratio quarter Our the

strong primarily but segment business, many in our We activity. cure and recognized tail due mortgage of development favorable lines across short to in Reinsurance lines in

impacted As metrics we the has the acquisition of Insurance discussed some businesses quarter, last key insurance and performance for segment. MidCorp our Entertainment

First, Insurance our premium contributing $XXX segment. from the the the was for points businesses net quarter, the million growth XX.X written for quarter-over-quarter acquired reported premium coming to

expense by cat fully business quarter's MidCorp to ratio costs purchase as yet. and X.X lowered the under Second, was lowered ratio segment's business ratio the that was operating lowered write-off X.X up acquired due accident the points deferred acquisition for result quarter. acquired our that closing by acquisition an of this current by the due expense Insurance the combined to points at ex year GAAP X.X points This aren't ramped was operations

intangible loss an year quarter. Partially the which accident communicated On more expense underlying increase Entertainment points, the note, was cat line benefits MidCorp X.X business. million expensed the with This amortization, ratio through last this for acquired offsetting we expectations than ex reflecting of we and as our $XX acquisition. related these in results a was of the quarter in of XX% was

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

was in XX% year, from Cash approximately income XXXX. up remained $X.X investment was liquidate by a a quarter Our portfolio. paid December, investment our the partially dividend of strong impacted entailed net which for from we billion portion and flow operations that $X.X billion this full

pretax tax and the was for operating X.X% income year. expense for effective of rate the quarter an Our on X.X% full

start corporate effective income in the XX% of the benefit a to tax As expect $X.X Bermuda. would tax will deferred of to basis, a introduction XXXX. annualized the be asset we rate the XX% of establishment in we On recognizing some reflecting range our end XX% look at the XXXX, year next accrued the full quarter with cash we billion the of tax we for ahead,

have DTA. may calls, partially other the impact may this As realizable the heard on OECD value you recent of guidance

additional apprised as We becomes will keep information you available.

in paid with December. remains strong recognition $X.X $XX our balance common common sheet that equity extremely the closing, after of of shareholders' was billion In dividend billion

preferred plus capital debt at remains low Our to ratio XX.X%.

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

Operator

[Operator Greenspan your Instructions]. And Elyse first at Wells will from be question Fargo.

Elyse Greenspan

the in XX% that's blend range of is on I underlying a of Arch is Arch My something about it running it ongoing close over first insurance right, point you mean the on of to kind of kind just bit that? where that, is I like about is the the basis, right XX%, from underlying to over some loss question in so in, point Allianz recognize that bit highlighted Francois, little calculated which way is coming right, right from think impact, insurance MidCorp deal the this under little X X an right, a and stand-alone somewhere then at ratio

François Morin

right. about that's Yes,

think I loss have about the around impact on quarter-to-quarter, assumption of pretty that. but of pre-MC has the some it's X call you which stable. -- the kind maybe ratio been down the MC been so about rate the introducing generally point, ratio is stable whatever MC is, from movements point up to There's it, run adds stable pretty speaking, X loss and and

Elyse Greenspan

on reinsurance, little pulled And midyear right? a back at is guys then 'XX. my You second bit question

bit. Did the just Now process the PMLs understand with thought little back PML flat you better I'm trying went a the at conditions it's X? but bringing up around back see incrementally right, X/X/'XX up, to January X/X/'XX. get

Nicolas Alain Papadopoulo

No.

I the business. happening that we like is think what's

attractive. lacking our I too, we quite business this some of so So based and think business. do X/X, I looking we're And opportunity competitive had think more other the are the at on people I think absent We positioning. to nature the to we think write returns

I think that, pleased were So think. we I by

Elyse Greenspan

your see renewal I the this follow-up the And cat guess, during and something the California PML where is to would go a How right, market guess might up the that I do see fires? you lead guys seasons 'XX, to that big year? it, you then is, expect is impact Do the impact to cat And X/X/'XX. in from California writings you fire pretty able to some being loss. of other

Nicolas Alain Papadopoulo

I mentioned think in go to pitch believe -- So in that we significant I XXs a will for including remarks, a of it reinsurer, loss ourselves, $XX is the as a I billion. I mean, maybe think And We and I significant my loss part market. luck, it $XX mean depending market. losses that the this will or reinsurance higher year your of -- the the think XXs the will I ratio with than start most that. or between

the think trying would writing to enthusiasm and it I the markets damper of be So many it -- should business. heroes

of on year will would have or effect think the for at an it I that rates the So the so. rest --

Operator

Next at be from Zaremski question will Mike BMO.

Michael Zaremski

the X%. back go just guess catastrophe to load question, I guidance, X% I'll first to

so historical Is right, -- mostly XQ of California X% correct? that includes, that to because but that than obvious, just X% higher probably losses. the it's the So

François Morin

a distributed. the bit, cat different kind a It because has zones. than a we bit increase cat load little It's more acquisition throughout realize of the the load. people the impact heavier impact. relative to it's didn't adds it. but the to think a also of But A load on adds our about year, really MC property book contribution when Because little PMLs in it it's meaningful basis,

Michael Zaremski

Switching casualty, the have Okay. one the room little in of I of just have Got good to would the for loss a I plugging trend. actually it. been the the guess umbrella of I elephants in higher, to have insurers, above going some cat load increases that slightly but overall -- was losses, okay, the back remained of the thought color. bit would just lots GL actually remarks, in kind environment the prepared said rate gears

more said your the book. at humble ones And seeing Day, you'd line out any now updated was on know of primary you a Any there? I reserves, your Investor the what GL what that's you one the you're GL honest that for commentary whether industry. in guys better in think are than with my marketplace. that probably I doing comments the to on insurance seeing of really be adding been amounts small you're nothing but what you've while But opinion. trend

François Morin

Yes.

insurance reserve position reserve our One, We're we think I'll I answer the with and to in very reinsurance. didn't position, parts. comfortable X on reserves. the add both in

expected versus very that supporting or that prior year-end view analysis reserves are actual for analysis years all our Our accident are adequate.

second So keeping are 'XX no 'XX, we concern there. But as we of look trends. half rate changes up loss at and seeing yes, with into

So we're in not places. -- and even some exceeding

comfortable we're there. environment with the So

recognize we of lot But that there. also uncertainty there's a

the make think reflection in So or here, initial our to loss loss we how choosing signals or specific bit we but a that are very current for the our picks, around I It's of function want initial risk areas we some not prudent, cautious, that picks. on environment adverse data increased we're are prudent. the we development being I reason, -- And much a perceive rate it's the us a not to years. be telling it old targeted it's missed mark more clear very and of

Michael Zaremski

due Got it. the of that change just Is that DTA any Okay. little rate to that some whether or Bermuda. flux? could from would be said established, a guidance tweaks for quick in in there to way handicap a lastly, bit? the something just Or things you flux, the guidance. have real I materially kind peers that's was if And DTA was could Is think tax DTA it

François Morin

this follow, amount. It's the recent be that's -- obviously, we latest realize OECD mean change only then that's The up being, thing, is at guidance able off us the of may allows quick the of pretty I up end the suggests to instruct that's mean about guidance. law, which or perspective, it's we law, in I what is taxes. have following. Bermuda carry us what the the that guidance. to DTA. some say, that maybe 'XX may only talking or still again, XX% in of happen write XX% changed, point or from which right guidance we really 'XX Bermuda and realizing kind time to that's case, things I'd important But amount, when your not might start this we the of and an But Yes. to that if worst rest do law has we're at late we not 'XX. now, That --

Operator

will question from Next be at Bhullar Jimmy JPMorgan.

Jamminder Bhullar

So of a those? And the back? different releases, few go on business? that years driving much X reserve versus can on years for had a details the is expectations last MI in just And margins what's through I maybe overall topic. from X On to you question just that your a how

François Morin

the reserve Yes. all right, that quarters there's out to say at has amount segments, in few reported -- the not -- the I been from time, I we U.S. in delinquencies it talking both people want 'XX, same of come story last conditions a reserves that and mean at on from and our that releases that's we've to a the little the and have the up we 'XX from -- been had that I in level mean, severity bit time, about curing been initial on based Again, turns set thought. MI. we meaningful were X where the of

picks on of to in loss what that CRT normal, little proven a little say we that of business reserves other same, out we where today. the methodology, need of say, excess go be it's I'd in through a but I'd I'd the process kind at kind So say, different we pieces, the reserving with business a of has the just initial for bit our a bit that have that's and slightly USMI,

So some there. there's releases been

And long short place, segments performing mortgage or X to are it book, the the the bit there's finally, X books in the international well. story pieces of that our where of really is of methodologies a same all little really, but or different all maybe

writing the margins. returns how We about think and in are like we We any the margins So deterioration healthy. we we're think the business the see don't today.

very So about it. very, excited we're

Jamminder Bhullar

the reason decline on bit then this assuming buybacks of none just buybacks, price. did stock I'm And of little was in the a part quarter versus share before you the

stays the be around So stock well. that assuming reasonable as throughout you'd 'XX assume active here, to

François Morin

with we at particular remains I time regularly. mean whether of it's But of we strong may every on -- in I all in business. capital kind For sure. to not look our position deploy even late this wildfires. capital that's will I but time, time California time. level think excess the mean volatility a yes, opportunity part we from sit can mean, something that we little the I fourth the -- of see again, quarter. in the mean, the there's situation, we don't

we So can think if we don't -- grow. still we

We are bullish XXXX. about

are deploy point, buybacks great that is we share that. generate, or good. maybe But And the way price we conditions think do are the to return at really we a not. still all we'll can capital market have we that right, And The it. if

Nicolas Alain Papadopoulo

Yes.

look play want attractively deploy at is I in that order think we business. the where can capital to the of we

there while, most see would we capital So may excess we return way, time the and after assess not that I capital, position the think. capital at that's periodically, all to And our deploy do to to all shareholders. we I we a the our that time, say, that yes, think the I be effective consider when if the opportunities

Operator

at from question Next be will Carmichael Wes Autonomous.

Wesley Carmichael

what give lines would of the us quarter, any prepared release? color of A you think on mentioned in that little question remarks, strengthening, had more in And you most particularly helpful. unfavorable Can drove but reinsurance. development you color in tail if a maybe bit I just on be short any

François Morin

than is cat. vast property cat vast, The property Yes. majority and other on

short tail. short what -- So flat we consider be line on to casualty. We that's were

segment. reinsurance across the So

really items, on development and all lines, no down the moves a small up So and they're bulk property. of small of but couple other it. that's It's casualty marine,

meaning events reserved bit is for -- of prior large are I'd we kind Some a developing had that say, cats, that favorably.

of Some of that we be proven losses out we hold has miscellaneous excess for it the is in what kind just of needed. attritional IBNR to

of kind how business. we it So those lines that's quarter through recognize this of

Wesley Carmichael

maybe pressure Got little that's competitive margins that it. lines you of more in be just prepared talk And eroded think where broader a business. comment, mentioned Can a some but in remarks, where certain you pronounced? about might I bit

Nicolas Alain Papadopoulo

Yes.

I come So going question was to this I up. think thinking is

X to last and I I where So would have say is, I really is reached X most you the line seems X double we've yourself, I account-by-account, would level areas. that the tempering, say, decrease think think That still but mainly it's overall in seen years digits. public significant to visible ask in the profitable. D&O, it a be

second the supply cyber wanting we've and we area think. And the be seen where to that decreases double-digit public both side, of also on capacity area I are in to seem that D&O don't cyber is the and reduce, watching the excess

Operator

questions, Did further any you Carmichael? have Mr.

Wesley Carmichael

guess X MI with I up tick-up. on I'll the Yes. just delinquency and but more, follow

little you But could bit saw I by a think be you last cat had with can of unpack that in exposed and areas, there. just you the sizable what storms obviously you hoping couple year. a mentioned impacted tick-up

François Morin

part it's much Yes. very the process. of I mean natural

people -- fully the you'd delinquency rate They events. these mortgage these fourth directly point. were expect, what the it's X by best happen and half increase And in quarter. I payments. at in to once expected turn estimate they area, mean that's attributable some our the would As delinquent cat consecutive this we of About missed affected affected is that's

driven of types these is by events The extremely delinquencies cure historical high. natural on rate

financial typically, at delinquency process high or show over for works. we the cured up ultimately But a rate that's resolved minimal. will So we the why be time. currently, and the think in They But those. impact level to that's those how reserve get

on the type California different add add. exposures. I I'll just And of wildfires, just quickly mean slightly I'll quickly,

that too at not in early to all minimal, be given or of all But wildfires. exist the certainly to mean we at would again, not We mortgages know. types impacted I to areas, -- very significantly in the due expect these -- early, expect California very

Operator

at Next Motemaden question be Evercore. will from David

David Motemaden

rate question, it that the as XXXX. saw at well reinsurance like I had little And sounds talk fourth have I'm just line the adequacy, critical and reinsurance casualty sounded a within wondering surprising the know a guys I I casualty more others adequacy a the if I a but line. there. see on specifically could continued in you to as growth that's X//X/'XX. bit broad solid just It lean rate the guess little in like there. been about quarter you

you wonder little that. could a elaborate I So bit on if

Nicolas Alain Papadopoulo

Yes.

specialty -- on of casualty, over program would the I think side into with is -- that from say, insurance treaty that and way, it's more think I underweight And think, were already, flavor. started a as view, on the more, true, an that position the the reinsurance. by think casualty are the we've our it we I we to tried I E&S get years our

similar growing side. the writing to would be or insurance what So on we

we that advantage opportunity. reinsurance the been the some been think casualty, less onto So we've think right been -- our value to are the companies to of some I take on but of side, cloud I maybe I appetite backing it's the of the able programs from reinsurance think reinsurance people for think programs weathering we've brand that the finally a the the forecasting -- additional on I or or based while, ceding or get and think

has and underwriting returns that that It's to we able not deliver really us. behind for the not we're the growth. the be attractive selective the underwriters think engine So to We're have been underwriting just know-how the market. expertise

David Motemaden

Great. Yes, underweight understood. are there. Definitely, you guys

So makes sense. that

noted. that sound maybe on the wanted was you just And on year any segment. little year how so to lines bit wanted But was. like prior it And but to pick switching Insurance didn't a just current the reserve color get on It sounded detail more happened? a gears had little what understand prior bit loss impact. minor more impact it any just year increases to accident just like that wanted get to And reserve it the -- that

François Morin

reacting mean, X/X -- MidCorp is I it roughly, if Entertainment increase segment. would due D&O, and lines I'd or just it, the that it. both to example the again, seen and the you professional lines, to the of say be of We've break to environment. addition Yes. where An it's of business it. are rate cyber X/X down, guys call -- There's we where like we inclusion seen another have

You've last heard the and pretty down a over couple mean years rates coming I been significantly, have it. part of that's book. our big of

naturally, I ago, booking are and a year we than think this just we ratio expect a So us, year and a you'd the that's did loss higher function of rate environment.

So that's an example.

different the auto realities ratio what with cover, there. our economic cars warranty to little product insure loss and we inched different GAAP Another due of a the some bit our market where we of used conditions, example value is and product, up what

reflecting are kind minor and little examples surprising bit of mix was of to -- those that's the and but that data that adjustments increase. nothing contributed there's a end, to I'd some kind say to we're So or again, us. the obviously, the always But at small of overall reacting

David Motemaden

Got it.

Okay. Yes.

So that in related umbrella It sound lines? GL pick more or other it like was was increases. any doesn't

Nicolas Alain Papadopoulo

Correct.

Operator

Andrew Kligerman be TD will from at Next Securities. question

Andrew Kligerman

in insurance maybe you you'd give in you in areas areas growing a then reinsurance, the question, First lines, And both grow with E&S the of us casualty where changes respectively. that, are could or reinsurance rate down both you of like into and insurance, those the could respectively. to casualty, where and more little sense drill a

Nicolas Alain Papadopoulo

Yes.

for say, I business. of the are, those book would part, So large similar

larger would of to it's the call liability, high E&S more in and So propensity market to few where years. reacting what the access it's layers, losses really last we've seen the I E&S, middle

happening on what's that used people the have in first, market to So side, is retail limits. big

with once maybe market by anymore limits players. offer if able that those you admitted had definition, going they're X million to be the not program -- a So decides to X or $XXX

reduce Now admitted decide going you're to their million, XX to. to need the $XX limit to that people players

And is market but a the repriced of and business on going now conditions. terms is way getting the so been for side, -- the also the pricing into on that while. works A market, that on only and not E&S lot has the

able that on admitted you to will side. the able get not get exclusion retail to are be You

business. a XX the to writing that actually So that we we been line but over business it that writing in experience have like go going the specific business with years, years that been experience. and call, underweight business. business, and for I'm we We've of not We've in have it. over for have over been we We've

We where know the know auto to know, We those that's the in -- risks. exposure it. we claims of we know commercial severity embedded we have write venues of type to the

of and And they a -- market, XXs, getting subset -- in late. have back of and in for we're I double while. we're the were the were to the were the think increases, the rate been I good double single been companies then in the able digits rate double They went so they then it to on very has back going digit. increases still a selectively that distant digit, digit, do selectively And pick think

And think getting trend. the so we're of rates we

underwritten be not, make. across we business could the to board you the and pick think the attractive. think, bet limits, we think have again, with choose. right It's I properly that But I very

Andrew Kligerman

I helpful on just of competitors answers. scared as given running excess of high are very it, casualty the think a And guess that's environment. layer the inflationary about your loss I very, lot

color a just could experience maybe gave Arch the little -- So get could of up day it these fear hand, in and one color on maybe that and terms why of you layers? with market. wake high some your But just a see of lot things little of you get and of kind don't just in out kind into that, we hit a the of jumping

Nicolas Alain Papadopoulo

property of it's limit. not is have of lot cut to whether losses, -- what market So it's markets the this do. this When the severity is reaction a you is or liability, whether

$XXX $XX portfolio, million say, let's loss loss of limit, X I you if XXX%. So think and is writing short million if your ratio think have you it, you're a, a

X what people cutting to we've limit think is their XX. dramatically seen and I

get the $X million. your portfolio or million the now to tower losses, So when contribution we $XX full is

diversification, think what definition, this it I said because market for a stable. million it So it a lot to happens costs a like $XXX you a earlier, makes now more beauty loss the before X -- more. because your of XX, it by makes do And lot need when the X, I ratio you need program, tower

the so is adequacy better. lot And price a

what So we're seeing. that's

Operator

Bank. be Next Cave question at from will Montazeri Deutsche

Cave Montazeri

development primary the higher good seeing helping the have We're business see incremental the casualty X/X Another at question continue know adverse specific at My reinsurance that's was primary to is, you on side, increases but rate carriers on expected. on is more opportunities. growth than and didn't on also casualty is the to share of supply would both, despite some you line, write side? detail rather which what the you're new writing good much it change you why side reinsurance And that attractive I have than Preceding on currently quota the casualty question and X/X commissions reinsurance. face.

Nicolas Alain Papadopoulo

I suppose I'll Yes. the answer question. first

I that I reinsurance, think don't casualty they the call supply on people of think of the attractive. saying bubbles we're it's hearing treaty think

willing withdraw. of think So -- hopefully, it's But the right now, write I there's they plenty to business. people

a go the write to on and ceding going are mean I lot say, supplies it's ceding of the not down will -- and there's think demand. X%. X% commission putting their down is I ground it listen, people unless the where foot the day commission So or I'm

even seen we placed that the we on ourselves seen that that. So we haven't that haven't business

for you increase get So sure, justifying math helped It they the they the a reinsurer, lower get so I rate commission. the for that why would business. think think those I -- write

say one the by So think -- those We we our say the we I And I me. support we one. side are competitors that but hire underwriter mean, reinsurance think I think people sense today the of there. Being makes because think would -- we -- that able business us, I I we the expertise we I there's I -- underwrite through I to that have to primary bullish side true more to list, it -- being E&S -- put the have goes I on from. or able #X. ours on for I would team, yes, on admire think on think, good we before a

think think but think, little I I a be may the I yes, outperform be high, may that can So you ratio, commission pick right. people if you the on loss still

Cave Montazeri

us time. expectations side evolving second still going? deal? the an this And the can of Good. update the growth your on you that's if integration to give question, is how MidCorp the how days, versus on Early And prospects, prior on but primary my growth

Nicolas Alain Papadopoulo

Yes.

to I pretty much think on we plan, are honest. be

we think on are much so -- the I a far comfortable big But I is it's things think pretty are plan. lift. pretty that integration

terms -- In it's expected. is the or itself, business I it's much to don't early worse. pretty think I think what better the business it's tell, of we but don't

we pretty it's think I had planned for. what much

aspect on think also that And I the the is property the rate the side. on liability And some increases news us double-digit good MidCorp seeing for side. on we're

So that I driven have really the the only periods side, in that mid-market but for on think on it's for that us, not secondary problem the been have past. side the by others a property

but And -- also around some So and rate the the getting increase. seeing a increase underwriting of we're we're total are the -- it, people GL. on same liability the same rate

Operator

be Next at Barclays. Alex from question will Scott

Taylor Scott

upward as season? and to PML a forma PML. what to you understand the about I First pressure losses, degree just some on the would we heading into wind of that one to of note cause had treaties aggregate we any wildfire pro to when just the think reinsurance about wanted exposure are think I for of is

Nicolas Alain Papadopoulo

to have we treaties. but some, very do we limited So exposure aggregate

frequency general it's enough price -- the The hard severity. philosophy it's as is I think hard to a underwriting really, price. to really

when good from on could think -- the that it, have the sense. of frequency an that -- the a grab really may exposure line we I cover good we aggregate or of the maybe So because providing business we feel we -- have we a the away frequency make do and but get enough

So have aggregate very covers. limited we to exposure

forgot? of just repeat PML, terms the I the you second question? In can

Taylor Scott

thinking along morning potentially I trying it you treaties to aggregate this I cause had it announced through then to aggregate lines. exposure baseline to number the budget, just was think look increase if just primary it extent would you for wildfire what when them a was that yes. example, potentially the cat Well, same pierce to would your understand, PMLs, their at

Nicolas Alain Papadopoulo

My us. guess for is immaterial

Taylor Scott

it. Got

there. on to just I just follow-up then And as MidCorp. wanted a Okay. probe separate

it you premiums the talk sounds to remediation on there's you plan. heavier that the book, remediation in going that think of going things Now going portion just what still gotten like the are have But and trajectory considering should we about work the about how that those you've like could of in through background? premiums are some

Nicolas Alain Papadopoulo

of think I like again, of of I book $XXX ourselves think it's a $XXX this say, we mainly million I we there something book I million MidCorp, a book And program would MidCorp. bought is business. the programs, have think business. When why around, I and significant, think we was not bought

business have get to underwriting information their I think type that risk appetite we and of require the back-office teams with, quickly. integration defined a for that that's type to teams, the where the manager with of trying we very we do integrate we're very our

sure are of their qualified book one So we going I and which think to which business through make one doesn't.

So...

François Morin

period show the on impact notice, programs. mean bottom the of the actions taken the a think But to of of those half I more ratios it top kind certainly, as And that. answer in well. line have the already least. loss I at of mean, will XXXX, we on second action line, to we Yes, follow will given to number the start

Operator

at Andrew be will from Jefferies. Andersen question Next

Andrew Andersen

thought area environment rate that's more You competition perhaps just come where level. but Can mentioned you in still talk maybe deploying decelerating bit a capital has an growth maybe into the perhaps at about London is specialty an and markets. I would have adequate there?

Nicolas Alain Papadopoulo

think and in I I'm No, bullish personally we -- think market. I the London we are

more yes, the thing -- think I there is that competition.

is a write today in of -- I certain in substandard the that's of think or a But the that grown think the more London to market in we've business -- that rates thing help close from subscale premium. business us flattened billion to our London market, $X.X I have the probably being business.

So consolidating one of we the are market -- a of number carriers. around is and fewer the

So one -- of of the we are beneficiary that are consolidation. we

lines has makes in one, and done business, that I not team we're job the think of huge but We're leading only an difference. beneficiary amazing the built and of building number a we've capabilities a

get in pick we which our So first, is to business advantage. a I huge think

Andrew Andersen

like still just of sounds And reinsurance, prop on then cat. maybe positive within it kind

I quarter. maybe the there's number the touch just it declined businesses decrease line, realize on Can drivers a of The different in but specialty the other probably year-over-year? you here, of in

Nicolas Alain Papadopoulo

Yes.

is So I X of the the fourth really think the first smaller a quarters. quarter is

to to trying proportional not for for if premiums. dynamic. instance, the X profitable I looking So don't it's -- to premium. and company a -- never excess in ceding well or change want ceding replace as are to decide to We're concepts. from we Those actually thing understand different doesn't on if -- something company in true is fit extremely reinsurance, people target. a decides happen premium a We're that itself We is we the the insurance are

what starting fourth quarter, in happened a bias I have cyber, be we're to think the on I honest. to So think we negative is

in of I think we share were provider the side. cyber a quota big

couple I -- a that it. or may one is retain the our terms another explains have conditions. of most based back contracts, on So of the more, which on either cut and ceding we company new think And

Operator

Next question will KBW. be at from Meyer Shields

Meyer Shields

don't a reinsurance question reinsurance MidCorp purchase has changed? whether about or purchase on reinsurance that's Insurance the or is know talk how one question I market guess can question segment, for you I -- outward both. your XXXX

Nicolas Alain Papadopoulo

the Allianz of maybe to it some buying if I being lot this, how have I reinsurance outlook? property, we think of casualty. was change? change is had we A to being portfolio. understand think MidCorp I cover it do So one the What's did it the to

$XXX $XXX on think we limits, I the to side, X/X, had at think I So and I or large limits bought million think million. -- property they up we to

we an so I framework. to and that mean, thing was one bought, onto to So Arch that we we transfer had reinsurance manage -- I think had

So outside of ceded and so department, the Allianz within Arch the -- ceded department.

X/X. at happened that So

team offer MidCorp you job, that need like I capacity the -- kept billion able of capacity, in we large is up which market, X compete think the did be the the on or and to $X account huge allocation. a to part the a to great middle up value the proposition is to any

think that we by So secured a of I think the or bought. lot able we value lot we of I to do the that, -- a brand being

So I think that satisfactory was very outcome a us. for

Meyer Shields

Once risk done, Francois, mentioned there's obviously, portfolio. now, exposure? that property side Right Okay. should is legacy cat lot that Arch the therefore that loss you MC than a of underlying loss elevated. of lower of because the is MC ratio a all the then Great. things within cat and And have attritional of ratio

Nicolas Alain Papadopoulo

-- that and cat the so primary exposure us because secondary we think more period is that had. very a business it of -- attractive the I something I period the to around MidCorp hurricane and we the around So it is the than footprint complementary for of was think was

catalyst the really of going underwrite MidCorp -- -- they attritional attritional the coming That's so don't part the I tornadoes, we ratio change expect loss from flood, the underwrite to the really -- forward, -- forward. I ultimately, I remain. think think secondary going we ratio, we but underwrite those the the mean the don't I I So -- perils,

François Morin

it, I expect cat pre business. significant fully and ex call to mean a MC I think post change ratio. I not after the that. Exactly we integrated the loss would

Operator

will Meredith Brian of from Next UBS. question be

Brian Meredith

about on Nicolas, how curious, impact Francois, the you thinking tariffs your business? I'm are potential just of

François Morin

point. at for this us significant Nothing

carriers you As jurisdictions we the between in which in are the operate. locally each transacted mean, local know, businesses of I

issue mean view, I our a answer, on tell trade slow would potential -- our it an there I of but I impact. world down Coface we're too obviously, an how in some you -- for investment, point think or trade example. Does early can broader that's sense impact there's could concern. see that's think watching. that's I don't that something, from to so the be have and see might in think reductions any And I maybe? that But

Brian Meredith

now way. that second you GL, then I assuming you've kind and And are Great. what answered call respect it, loss this question, in trend? to your But of right with pricing think reserving around

François Morin

-- like business, mean but XX% double E&S I low X%. it's it on primary is it's the excess It's XX% of by casualty varies digits. for certainly, kind limit self, to around the probably

Nicolas Alain Papadopoulo

X% or X%.

Brian Meredith

And then X one other slip one, in in or quickly casualty. then X here.

that You kind reasonable of you're opportunity and in 'XX fleet, good at transactions on that? all have here seeing typically done a 'XX reinsurance of Are your amount that structured in surplus stuff. much you

Nicolas Alain Papadopoulo

we -- think We so. don't don't

need pulling I it And traditional think -- we I We some business. been us were that in there because successful to were are the has of that for seems few. to a write sense players Again, it. margin it's the for while, make back. really think a we

couple in coming a got terms transactions. our couple may of capacities like a opportunities participate some to we there back. be at It of looks So

to it's So tell. hard

just not it's it. are fits, think in we and do we we business I doesn't, target, something And if something -- don't. we that we when it So

François Morin

the typical drive not demand more Arch we're We little that bit business. don't it. of but type on for Yes, a reactive thing, a

results a other that knows. capital Sometimes -- have cats be kind could or of have may in be other who of you company the may some or any or development, issues some because reserve

there for products, the whether demand -- the we're for to but these where that's predict So it's hard will business. open be

Nicolas Alain Papadopoulo

there cedents. support again our offer to we of of some think the we benefit I

we today, especially in we the think U.S., I reinsurer. are multiline we a -- -- have

do do do the cat. we risk, quota the the the don't We we we So cat, share. do just

opportunity the of as the of company got So the has we partners. ceding is us X one they of a when think that problem

Arch? were so this? -- the together. they all then of So listen, it you like, at doing us some they're of doing -- looked us Could this they came because to problem help more like is how we those that's them, And opportunities we have we things for

bit But more So be our right puts the I do to has tailwind be the has to that a price. again, think in it this. to probably ability right structure, it

Operator

Fargo. question be Greenspan from Wells Next will at Elyse

Elyse Greenspan

follow-ups. of couple a Just

I fire. one, to that X-point include The first does correctly. just Francois, to want the the load. cat on X understand was That

large also seen would are 'XX? the -- you of for take the might would then of year? that that another be loss the So cat that kind have load in Or fires this assuming you place that,

François Morin

-- This we in the the going Yes, not thought year. is is for cat in cat the was include X. that load January in the losses on our sense way, that is fires or what this does it this a direct

would higher hurricanes chance been, wildfires, specifically the of than end Now -- yes, so far by for the lower. the if being that total may out end we token, cat up for being turns then up our -- wildfires could total end which that what load up year there's have the same that exceed it but load, a

So of that's truly without additional knowledge start kind a any reflected year in of number. the that

Elyse Greenspan

it question, MidCorp, combined you my XXs post-integration, it's running when from Okay. were you and on like And in plan. low a guys It second then would right, saying announced ratio. said everything the run with transaction, you at track right, sounds

still the be would that So target.

low like you when when XXs As guys be that what would considered post-integration? might we see year number like said

Nicolas Alain Papadopoulo

say -- going to didn't take time. We some when it's

always take longer. think things those I

goal, we I today, the we from I -- think very that think what I think still get know comfortable we I'm there.

on the finish still integration we're operating systems. people, to have business for the we Again, Allianz

of to limit can insight. we there's can what a you in see that So terms do

happen preparing And Arch the that lift next we're for sometime so year. over should

take time. bit to So I think of a it's going

Elyse Greenspan

one question, loss meaning maybe saying the you run at at the as same And Arch, point then would what Was just Francois, one MidCorp loss integrated. a you is someone ratio were that ratio I asked same that and think there? implied follow-up, the once legacy

François Morin

mean be a Yes. accident the once would different. metric include MC that bit ratio again, loss the I year meaning my and that I be of cat of the little or acquired, don't MC -- some expectation I after the integration on recently, but same math completed, business the Arch that would pre haven't remediation you ex done think legacy is we

line. would So be those much in pretty I think

Operator

further to turn to Papadopoulo, for the remarks. Mr. any like would showing closing not I conference I'm questions. Nicolas over

Nicolas Alain Papadopoulo

we'll time you And quarter. today. you yes, for your you. Thank see Thank next

Operator

Thank please this attending. your you you, call sir. again, you And we for Ladies and do Once lines. indeed disconnect today. conclude at gentlemen, thank does time, ask that this for your conference

Arch Capital (ACGL) 11 Feb 252024 Q4 Earnings call transcript