ACGL changes
Pick any two versions below to diff them.
- Price
- $109.17
- Discount category
- Close to intrinsic value
- Intrinsic value source
- AI estimate
- Next earnings
- Feb 8, 2027
- Next earnings is estimate
- Yes
- Company name
- added: Arch Capital Group
- Sector
- added: Property and casualty insurance and reinsurance
- About
- added: Arch Capital Group Ltd. is a Bermuda company with three businesses: specialty insurance, reinsurance and mortgage insurance. In Q3 2026, gross premiums written were $5,391 million: $2,766 million in insurance, $2,313 million in reinsurance and $316 million in mortgage. Net premiums earned were $4,014 million and the combined ratio was 82.5%. In 2024, the insurance segment bought the US MidCorp and Entertainment insurance businesses from Allianz. Arch had investments of $48.3 billion, common shareholders' equity of $22,162 million and book value per common share of $67.90 at September 30, 2026. Nicolas Papadopoulo is Chief Executive Officer. The pick is the common share on NASDAQ (ACGL), in US dollars.
- Thesis
- added: The market prices Arch close to the AI estimate, as a specialty insurer near the top of its price cycle that must keep its profit as prices soften. Arch says that conditions are becoming uneven. Net premiums earned fell 6.3% to $4,014 million in Q3 2026 and operating income per diluted share fell to $2.67 from $2.77, while the combined ratio excluding catastrophes and prior-year changes was 81.2%. The reinsurance segment shrank: its net premiums written were 9.3% lower. Arch keeps cutting its share count. It bought $1.4 billion of shares in Q3 2026 and $3.4 billion in nine months, and its diluted share count fell to 341.4 million from 376.1 million. For the price to stay close to the AI estimate, Arch must keep an operating return on equity near 15% as prices fall, keep catastrophe and reserve results steady and keep buying back shares. The January 2027 renewals and the Q4 2026 report in February 2027 are the next tests. If returns hold, the price can stay close to the AI estimate.
- Valuation
- added: The intrinsic value for Arch Capital Group is an AI estimate from November 12, 2026. It is not an analyst's value. An AI research agent calculated it from Arch's filings with the SEC. The method is a multiple of after-tax operating income per diluted share for 2027, which is Arch's own measure. It leaves out realized gains and losses, equity in the net income of investments accounted for using the equity method, foreign exchange and some other items, and it is after preferred dividends. For an insurer, the estimate makes no debt adjustment. The Q3 2026 release (8-K, October 27, 2026) gives after-tax operating income of $910 million, or $2.67 per diluted share, an annualized operating return on average common equity of 16.0%, a combined ratio of 82.5%, catastrophe losses of $234 million, favorable development of prior year reserves of $179 million, share repurchases of $1.4 billion and book value per common share of $67.90. The Form 10-Q for the quarter ended September 30, 2026 gives after-tax operating income of $2,704 million for nine months, diluted shares of 349.7 million for nine months and 341.4 million for Q3, which makes $7.73 per share for nine months, 325,525,336 common shares at October 29, 2026, common shareholders' equity of $22,162 million, preferred shares of $830 million and senior notes of $4,286 million. The 8-K of February 9, 2026 gives $2.98 per share for Q4 2025. The 2027 figures and the multiples are assumptions. The estimate takes 325 million diluted shares for 2027, below the Q3 count of 341.4 million, because buybacks continue. The low case assumes more catastrophe losses and softer prices, with operating income of $2,500 million, about 11% of average common equity, which gives $7.69 per share, at 8.5 times. It gives $65.37 per share. The base case assumes that earned premium falls a little as prices soften and that underwriting and investment income stay steady, with $3,150 million, about 14% of equity, which gives $9.69 per share, at 11.0 times. It gives $106.59 per share. The base case equals about 1.57 times book value per share at September 30, 2026. The high case assumes that profit stays near the Q3 pace, with $3,650 million, which gives $11.23 per share, at 12.5 times. It gives $140.38 per share. The estimate assumes weights of 25%, 50% and 25%. The weighted intrinsic value is $104.73 per share. As of Nov 12, 2026.
- Risks
- added: Catastrophe losses can be large. Current-year catastrophe losses in the insurance and reinsurance segments were $234 million in Q3 2026, including losses from the Iran conflict. A year with major storms or earthquakes would cut profit and book value. Prices are softening. Arch says the market is in transition. Net premiums written in reinsurance fell 9.3% in Q3 2026, and lower prices with the same costs would cut margins. Reserves may prove too low. Favorable development of prior-year reserves was $179 million in Q3 2026. If past claims cost more than reserved, Arch would add reserves and book charges. Mortgage insurance depends on the US housing market. Underwriting income in the mortgage segment fell to $201 million in Q3 2026 from $260 million, and falling house prices or rising unemployment would raise claims. Investment results can swing. Net investment income was $451 million in Q3 2026, and net realized losses were $99 million, so interest rates and markets move book value.
- Balance sheet
- added: At September 30, 2026, Arch had total investments of $48,258 million and senior notes of $4,286 million, against $2,729 million at December 31, 2025. Total liabilities were $61,084 million. Common shareholders' equity was $22,162 million, against $23,376 million at December 31, 2025, and preferred shares were $830 million. Debt to total capital was 15.7% and debt and preferred shares to total capital was 18.8%. Book value per common share was $67.90, against $65.11. There were 325,525,336 common shares at October 29, 2026. Arch bought 14.8 million shares in Q3 2026, and about $725 million remained under its repurchase authorization at September 30, 2026. All amounts are in US dollars. As of Sep 30, 2026.
- Checkpoints
- added: Feb 8, 2027 (estimate): Q4 2026 results: return on equity. Pending. Watch: An annualized operating return on average common equity of 15% or more for Q4 2026 passes; a lower return fails. Apr 2027 (estimate): Q1 2027 results: reinsurance premiums after the January renewals. Pending. Watch: A fall in reinsurance net premiums written of less than 10% in Q1 2027 passes; a larger fall fails.
- Recent events
- added: Oct 27, 2026: Arch reported Q3 2026 results. Net income to common shareholders was $1.0 billion ($3.00 per diluted share) and after-tax operating income was $910 million ($2.67), an annualized return of 16.0% on average common equity. The combined ratio was 82.5%, catastrophe losses were $234 million, favorable development of prior-year reserves was $179 million and share repurchases were $1.4 billion. Book value per common share was $67.90. Jun 9, 2026: Arch sold $2.0 billion of senior notes: $600 million of 5.250% notes due 2036 and $1.4 billion of 5.950% notes due 2056. It used part of the money for cash tender offers, completed on June 16, 2026, and to retire its 4.011% notes due 2026. Apr 19, 2026: Arch's board raised its share repurchase authorization by $3.0 billion. Arch bought 35.5 million shares for about $3.4 billion in the first nine months of 2026. Feb 9, 2026: Arch reported Q4 2025 results. After-tax operating income was $1.1 billion ($2.98 per diluted share), an annualized return of 18.9% on average common equity, and book value per common share was $65.11.