Wildfires burn a hole in Arch Capital profit
Arch Capital Group Ltd has continued a trend for reinsurers who have had their profits hit by losses from the California wildfires in January.
Net income for the first quarter fell by nearly 50 per cent to $564 million (2024 Q1: $1.1 billion), representing an 11.1 per cent annualised net income return on average common equity.
After-tax operating income available to Arch common shareholders of $587 million, or $1.54 per share, represented an 11.5 per cent annualised operating return on average common equity, compared with $933 million, or $2.45 per share, for the 2024 first quarter.
Arch reported a pre-tax catastrophe loss of $547 million, mainly due, the company reported, to the wildfires. The loss was net of reinsurance and reinstatement premiums.
Gross premiums written were almost $6.5 billion, nearly nine per cent higher than for the same period in 2024.
Net premiums earned were 21.7 per cent higher at $2.028 billion.
The combined ratio jumped from 77.4 per cent the year before to 91.8 per cent in this reporting period.
The group's net investment income rose 15.6 per cent ($51 million higher) to $378 million from the comparative period.
Nicolas Papadopoulo, the Arch chief executive, said: “We delivered solid results this quarter despite the losses arising from the California wildfires, resulting in an annualised operating return on equity of 11.5 per cent.
“Although the market has generally become more competitive, we remain optimistic about our prospects to deliver long-term shareholder value. For a company with a strong underwriting culture like Arch, this is a market where we can stand out.”
• For more on Arch Capital Q1 2025 earnings, see Related Media
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