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what it is
Arch Capital sells insurance and reinsurance, then also writes mortgages for lenders.
how it gets paid
Last year Arch Capital made $19.9B in revenue. Reinsurance was the main engine at $8.7B, or 44% of sales.
why it's growing
Revenue grew 14.3% last year. Net premiums earned rose about 3% vs. prior year.
what just happened
Arch posted $2.98 of core operating EPS versus $2.26 a year earlier.
At a glance
A balance sheet — strong enough to weather a downturn
55/100 earnings predictability — expect surprises
~8.5× trailing GAAP P/E · $2.98 Q4’25 core operating EPS
18.3% return on capital — nothing to write home about
xvary composite: 79/100 — average
What they do
Arch Capital sells insurance and reinsurance, then also writes mortgages for lenders.
You own a business with 18.3% return on capital (profit from each dollar invested), so each dollar is working harder than it looks. Reinsurance, insurance, and mortgage together produced $19.9B of annual revenue, so one bad line does not own the whole company.
How they make money
$19.9B
annual revenue · their business grew +14.3% last year
Reinsurance
$8.7B
+12.0%
Insurance
$7.4B
+4.0%
Mortgage
$3.0B
+22.0%
Investment income
$0.6B
+8.0%
Other
$0.2B
0.0%
The products that matter
insurance for insurers
Reinsurance
$8.7B · ~44% of NPE mix
Largest net premiums earned line in the FY mix table on this page (~$8.7B of ~$19.9B). Cat years and renewal discipline show up here first.
largest segment
primary insurance underwriting
Insurance
$7.4B · ~37% of NPE mix
Second line in the same net-premium breakdown—MCE and international mix matter; read management’s segment commentary in the quarterly release.
~37% of NPE
mortgage credit protection
Mortgage
$3.0B · ~15% of NPE mix
Smaller in earned premium dollars than the two P&C underwriting segments on this snapshot, but it is the third leg of Arch’s underwriting platform.
third engine
Key numbers
$19.9B
annual revenue
That is the whole top line. It tells you Arch is big enough to take a bad year without falling apart.
~8.5×
trailing GAAP P/E
~$98 ÷ ~$11.60 FY2025 diluted EPS (year-end summary). Operating metrics will differ—do not mix lenses in one sentence.
$10.60
fy2027 eps
Profit per share rises from $9.84 in 2025 to $10.60 in 2027. That is slow, but it is still up.
$116
18-month target
That sits $17.62 above the $98.38 price. You are looking at 18% upside, not a moon mission.
Financial health
A
strength
- balance sheet grade A — very strong financial position
- risk rank 2 — safer than 80% of stocks
- price stability 85 / 100
- long-term debt $2.7B (7% of capital)
- return on equity 12% — $0.12 profit for every $1 investors have put in
A — among the top-rated companies for balance sheet quality.
Total return vs. market
You invested $10,000 in ACGL 3 years ago → it's now worth $14,720.
The index would have given you $13,880.
source: institutional data · total return
What just happened
beat estimates
Arch posted $2.98 of core operating EPS versus $2.26 a year earlier.
Net premiums earned rose about 3% vs. prior year. The quarter was mixed, but the earnings line did the heavy lifting.
$4.26B
Q4 net premiums earned
$2.98
core operating EPS
2.7%
NPE growth YoY
core eps
The number that mattered was $2.98 in core operating EPS, because it beat the $2.26 comparison quarter.
-
arch capital group reported mixed 2025 fourth-quarter financial results.
-
on the positive side, core operating earnings of $2.98 per share compared very favorably to the $2.26 posted in the like prior-year period, as catastrophe losses were considerably lower due to a milder atlantic hurricane season.
-
this alone accounted for about $0.50 per share of earnings improvement.
-
also, our top-line measure, net premiums earned, was up about 3% vs. prior year.the recent figure benefited from low- to mid-single-digit growth in net premiums written (npw) over the prior five quarters, as there is a lag effect between recognizing earned revenue on written premiums.
-
for the insurance segment, npw fell 4% vs. prior year.
source: Arch Q4/FY 2025 release, Feb 9, 2026
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What could go wrong
the #1 risk is catastrophe losses outrunning Arch's underwriting margin.
med
catastrophe losses spike back up
Arch gets paid to absorb rare but expensive events. A bad storm season, wildfire year, or cluster of large losses can erase the benefit of disciplined pricing fast.
Q4 benefited from lower catastrophe losses and management said that tailwind accounted for about $0.50 per share of improvement. The reverse math works too.
med
premium growth stays soft
Net premiums earned grew 3%, and the insurance segment's net premiums written fell 4%. If that persists, the stock starts to look like a beneficiary of a favorable loss period rather than a compounding underwriter.
When EPS rises 32% and earned premiums rise 3%, you should ask which number is more durable. That answer drives the multiple.
med
investment income cools off
Insurers invest the float — premiums collected before claims are paid. Higher portfolio income helped results. If yields flatten or lower rates work through the book, that support fades.
This is not the main risk. It matters more when underwriting growth is only modest.
A low multiple only rerates higher if Arch proves today's earnings are not just a calm-weather number. If catastrophe losses normalize up and premium growth stays around 3%, cheap can stay cheap.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
next report: may 11
Q1 2026 earnings are due May 11. The key question is not only whether EPS clears the $2.40 estimate. Watch whether premium growth moves up from 3% and whether the insurance segment stabilizes after that 4% decline in net premiums written.
underwriting
the 3% premium-growth problem
If net premiums earned keep growing at roughly 3% while EPS keeps posting much bigger gains, you are looking at earnings quality risk. The operating story needs top-line support, not just lighter losses.
risk
catastrophe season math
Management said lower catastrophe losses added about $0.50 per share to the improvement. If the next bad season gives that back, the market will test whether 10.0x earnings was cheap or fair.
kill criteria
what would weaken the rerating case
If premium growth stays near 3%, insurance net premiums written keep falling from that 4% decline, and catastrophe losses stop being favorable, the stock loses the argument for a higher multiple. Then you own a good insurer priced like one.
Analyst rankings
earnings predictability
55 / 100
middle of the road. in human-speak, this is not the kind of business that prints the same quarter four times a year.
price stability
85 / 100
the stock itself is calmer than the earnings stream. You are buying underwriting volatility packaged inside a relatively stable share price.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 406 buyers vs. 401 sellers in 3q2025. total institutional holdings: 0.3B shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$82
$150
$98
current price
$116
target midpoint · +18% from current · 3-5yr high: $170 (+75% · 15% ann'l return)
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