Arch Capital Group Ltd., the Bermuda-based insurer and reinsurer, has reported a 62% year-on-year rise in underwriting income to $871 million for the third quarter of 2025, driven by a significantly stronger underwriting performance in its reinsurance business.
Pre-tax current accident year catastrophic losses for the firm’s insurance and reinsurance segments, net of reinsurance and reinstatement premiums, totalled $72 million in the quarter.
Additionally, favorable development in prior year loss reserves, net of related adjustments, amounted to $103 million.
The company’s Q3’25 combined ratio excluding catastrophic activity and prior year development stands at 80.5%, slightly higher than the prior year’s 78.3%.
Across the business, gross premiums written (GPW) were relatively flat at $5.4 billion, as net premiums written (NPW) fell 2.1% to $3.96 billion, and net premiums earned increased 7.9% to $4.3 billion.
Group-wide, net income available to Arch common shareholders totalled $1.34 billion in Q3’25, up significantly on the prior year’s 978 million.
Within Arch’s reinsurance segment, underwriting income increased by 223.5% year-on-year to $482 million from $149 million, as the combined ratio strengthened by 16.2 percentage points to 76.1%, with an 18 percentage point improvement in the loss ratio to 51.6%, and a slightly higher expense ratio of 24.5%.
Arch explains that the 2025 third quarter loss ratio reflected 1.3 points of current year catastrophic activity, compared to 21.3 points of current year catastrophic activity in the prior year quarter.
Estimated net favorable development of prior year loss reserves, before related adjustments, reduced the loss ratio by 2.6 points in Q3’25, compared to 2.2 points in Q3’24. The balance of the change in the loss ratio resulted, in part, from changes in mix of business, notes the re/insurer.
GPW in the reinsurance arm fell 9% year-on-year to $2.5 billion, while NPW declined 11% to $1.7 billion, and net earned premiums increased by 7% to $2 billion in Q3’25.
The lower level of net premiums written year-on-year was primarily due to the impact of two transactions in the 2024 third quarter in the specialty line of business and the lower level of reinstatement premiums in the 2025 third quarter, explains the company.
In the insurance segment, underwriting income rose 7.5% year-on-year to $129 million, with a relatively unchanged combined ratio of 93.4% for Q3’25. The loss ratio came down by 2.6 percentage points to 59%, and the expense ratio increased by 2.9 percentage points to 34.4%.
The insurance arm generated GPW of $2.6 billion in Q3’25, an increase of 10% year-on-year, as NPW rose 7% to $2 billion, and net premiums earned increased 12% to $2 billion.
Arch notes that the growth in NPW in the quarter primarily reflected business related to the MCE Acquisition in August 2024.
Turning to Arch’s mortgage business, underwriting income fell by 3.3 percentage points to $260 million in Q3’25, although the combined ratio strengthened by 1.3 percentage points to 13.5% on a lower expense ratio of 14%.
GPW in the mortgage business were $330 million in Q3’25, down 3% year-on-year, while NPW also fell 3% to $274 million, and net earned premiums fell by 4% to $301 million.
The reduction in net premiums written in the third quarter of 2025 primarily reflected lower US monthly and single premium volume, states the firm.
On the asset side of the balance sheet, Arch has reported pre-tax net investment income of $408 million, which primarily reflected growth in average invested assets, due in part to strong operating cash flows.
Arch CEO, Nicolas Papadopoulo, said: “We are extremely pleased with our financial performance this quarter, which resulted in us delivering record-level results of operating income. While we benefitted from a relatively quiet quarter for natural catastrophes, we remain upbeat about our ability to perform well in the current market, which should lead to strong financial results on behalf of our shareholders.”
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