Arch Capital Group reported third-quarter net income of $1.03 billion, down from $1.34 billion a year earlier, as catastrophe losses rose and underwriting income fell across its insurance, reinsurance and mortgage businesses.

The Bermudian-based insurer and reinsurer earned $3.00 per diluted share in the three months to September 30, compared with $3.56 in the same period of 2025. Its annualised return on average common equity was 18.1 per cent, down from 23.8 per cent.

Overall underwriting income fell 19.4 per cent to $702 million from $871 million a year earlier. The combined ratio deteriorated to 82.5 per cent from 79.8 per cent. A ratio below 100 per cent indicates an underwriting profit.

Nicolas Papadopoulo, Arch’s chief executive officer, said the company had delivered a strong quarter, supported by underwriting performance across its three segments and its investment portfolio.

“We are operating in a transitioning market where conditions are increasingly uneven, but we are prepared and welcome the challenge,” he said. “The market will continue to evolve, but our core principles will not.”

Mr Papadopoulo added that Arch remained focused on producing superior risk-adjusted returns over the long term.

The company recorded $234 million in pre-tax catastrophe losses in its insurance and reinsurance segments, net of reinsurance recoveries and reinstatement premiums. Its insurance segment’s catastrophe losses included losses related to the Iran conflict.

Arch also benefited from $179 million of favourable development in prior-year loss reserves, net of related adjustments. This occurs when an insurer reassesses claims from earlier years and determines that they are expected to cost less than previously estimated.

Gross premiums written were broadly flat at $5.39 billion, while net premiums written declined 3 per cent to $3.85 billion.

In the insurance segment, gross premiums written rose 7.8 per cent to $2.77 billion. Net premiums written increased 2.7 per cent to $2.01 billion, or 5.8 per cent after adjusting for the non-renewal of certain programmes related to Arch’s acquisition of Allianz’s US MidCorp and entertainment insurance businesses.

Insurance underwriting income fell to $108 million from $129 million in the prior-year period, while the segment’s combined ratio rose to 94.4 per cent from 93.4 per cent.

Reinsurance gross premiums written fell 8 per cent to $2.31 billion, while net premiums written declined 9.3 per cent to $1.58 billion. Arch said the reduction in net premiums was due in part to non-renewals and reductions in the share of business it wrote.

Reinsurance underwriting income fell to $393 million from $482 million, and the combined ratio rose to 78.3 per cent from 76.1 per cent.

The mortgage segment generated underwriting income of $201 million, down from $260 million. Its combined ratio rose to 25.5 per cent from 13.5 per cent. Excluding favourable development on prior-year reserves, the loss ratio reflected a modestly higher level of delinquencies than a year earlier, Arch said.

Pre-tax net investment income increased to $451 million from $408 million, reflecting growth in average investable assets. Income from investments accounted for under the equity method rose to $224 million from $134 million.

Arch reported $99 million of net realised losses, compared with gains of $210 million a year earlier. The total return on investments was negative 0.42 per cent, which the company said primarily reflected the impact of rising interest rates on fixed-income securities.

Arch repurchased $1.4 billion of shares during the quarter. Book value per common share stood at $67.90 at September 30, down 0.2 per cent from June 30.

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