Arch Capital Group reported second-quarter net income of just over $1 billion, down 14.6 per cent year over year.

The Bermudian-based insurer and reinsurer said net income available to common shareholders was $1.047 billion, or $3 per diluted share, compared with $1.227 billion, or $3.23 per share, in the same period a year earlier.

After-tax operating income came in at $893 million, or $2.56 per share, down from $979 million, or $2.58 per share, a year ago.

The company said it achieved a $17 million reduction in quarterly operating expenses — to $12 million from $29 million in the second quarter of 2025 — that “primarily reflected the benefit of Bermuda qualified refundable tax credits”.

Arch’s annualised return on average common equity was 18 per cent, while its operating return on average common equity was 15.3 per cent. Book value per common share increased 2.8 per cent during the quarter to $68.04. The company also repurchased $1.2 billion of its own shares.

Nicolas Papadopoulo, Arch’s chief executive officer, described the results as another strong performance driven by the company's diversified operations.

“We delivered a strong quarter, driven by solid underwriting performance across our three segments, reflecting the continued strength of our diversified platform and disciplined execution across the enterprise,” he said.

“Our leadership positions in specialty insurance, including our mortgage and reinsurance operations, provide us with a meaningful competitive advantage. Clients not only come to us for capacity, but also for our underwriting expertise, claims capabilities, creative solutions and valuable perspectives that help them better manage risk.”

Gross premiums written edged down 1.1 per cent to $6.13 billion, while net premiums written fell 6.9 per cent to $4.05 billion. Underwriting income declined 19.7 per cent to $657 million as the company's combined ratio — the proportion of premium income outlaid on claims and expenses — deteriorated to 83.5 per cent from 81.2 per cent a year earlier.

During the quarter, Arch absorbed $201 million of pre-tax current accident-year catastrophe losses across its insurance and reinsurance businesses, while favourable prior-year reserve development contributed $165 million.

Performance varied across the group's three underwriting divisions.

The insurance segment saw underwriting income fall sharply to $27 million from $129 million a year earlier as catastrophe losses increased and expenses rose following the integration of businesses acquired from Allianz in 2024. The segment's combined ratio worsened to 98.5 per cent from 93.4 per cent.

The reinsurance division remained the group's largest contributor, producing underwriting income of $410 million despite lower net premiums written, reflecting non-renewals, reduced participations on selected business and increased retrocession purchases. Its combined ratio improved to 77.5 per cent from 78.5 per cent, benefiting from lower catastrophe losses and stronger favourable reserve development.

Arch's mortgage insurance business generated underwriting income of $220 million, down from $238 million a year earlier. Gross premiums written were broadly unchanged, although net premiums written rose 7.5 per cent following the termination of certain quota share arrangements. The division continued to post a strong combined ratio of 22.8 per cent.

Pre-tax net investment income increased to $417 million from $405 million in the prior-year quarter.

During the quarter, Arch completed a $2 billion senior notes offering, using part of the proceeds to refinance existing debt and repurchase outstanding notes. The transactions generated a pre-tax realised gain of $16 million.

• This story was generated by machine and edited by The Royal Gazette newsroom