Arch Capital Group Ltd.

ACGL

$99.83

+1.65%

N/A+$1.62

Financial Services

Insurance - Diversified

NASDAQ

Active Trading

Arch Capital Group Ltd., together with its subsidiaries, provides insurance, reinsurance, and mortgage insurance products in the United States, Canada, Bermuda, the ...

Fundamental Analysis of ACGL

Key Strengths

Disciplined underwriting culture that consistently generates underwriting profits.

Diversified business segments (Insurance, Reinsurance, Mortgage) reducing earnings volatility.

Risk Factors

Exposure to catastrophic events (natural disasters) that can cause significant underwriting losses.

Cyclicality of the insurance/reinsurance industry with potential pricing pressure in soft markets.

Profitability

Net Margin24.44%

Operating Margin27.38%

Valuation

P/E Ratio7.70x

Current Ratio0.67

Efficiency

ROE19.52%

ROA5.51%

Fundamental Analysis of ACGL

Arch Capital Group Ltd. (ACGL) is a Bermuda-based global insurer and reinsurer operating through three segments: Insurance, Reinsurance, and Mortgage. The company has established a strong reputation for disciplined underwriting and innovative risk management, which has driven consistent book value growth and above-average returns over the long term. As of the latest TTM data, ACGL demonstrates robust profitability with a net profit margin of 24.4%, operating margin of 27.4%, and an impressive return on equity of 19.5%. The company maintains a solid balance sheet with a conservative debt-to-equity ratio of 17.8% and strong interest coverage of 33.7x, reflecting prudent financial management. Valuation metrics are attractive, with a price-to-earnings ratio of 7.6x and price-to-book of 1.41x, suggesting the market is pricing in significant value at current levels. ACGL generates substantial free cash flow, with a free cash flow yield of 21.0%, supporting sustainable dividend payments and potential buybacks. The company's growth trajectory is supported by premium rate increases, expansion in mortgage insurance, and a diversified global footprint. Recent S&P upgrades to 'AA-' for its re/insurance subsidiaries reflect strong earnings diversity and robust capitalization. While catastrophic losses remain an inherent industry risk, ACGL's disciplined approach and strong reserving practices have historically mitigated severe impacts. The macroeconomic environment, including inflation and interest rate fluctuations, could influence investment income and claims costs. Overall, ACGL presents a compelling investment opportunity for long-term investors seeking a well-managed, financially robust insurer with proven underwriting acumen.

Key Strengths of ACGL

Disciplined underwriting culture that consistently generates underwriting profits.
Diversified business segments (Insurance, Reinsurance, Mortgage) reducing earnings volatility.
Strong capital position with a conservative debt-to-equity ratio of 17.8%.
High return on equity (19.5%) and net margin (24.4%), indicating efficient capital use.
Substantial free cash flow generation, with a yield of 21.0%, supporting buybacks and dividends.
Recent credit rating upgrade to 'AA-' for subsidiaries, reflecting robust financial strength.
Experienced management team led by CEO Nicolas Papadopoulo with a long-term value focus.
Growth opportunities in mortgage insurance and international markets driving premium expansion.

Risk Factors of ACGL

Exposure to catastrophic events (natural disasters) that can cause significant underwriting losses.
Cyclicality of the insurance/reinsurance industry with potential pricing pressure in soft markets.
Interest rate and inflation risks affecting investment portfolio yields and claims inflation.
Regulatory changes across multiple jurisdictions (Bermuda, US, UK, Europe) could impact operations.
Dependence on broker distribution channels increases competitive pressure and fee structures.
Reserve uncertainty from prior-year claims developments may affect future earnings.
Integration risks from potential acquisitions or expansions into new lines of business.
Macroeconomic downturns could reduce demand for insurance and mortgage products.

Market Cap vs Revenue & Earnings

Earnings

n/a

Revenue

n/a

Market cap

$34.88B

7.7x

P/E Ratio

1.8x

P/S Ratio

Earnings & Revenue

Last Reportedn/a

Earnings per share (EPS)n/a

Gross Margin46.19%

Net Profit Margin24.44%

Debt/Equity Ratio0.18

Profitability Bridge (Current vs YoY)

How gross, operating and net margins shifted versus last year.

Revenue / Net Income / FCF History (USD B)

Growth Signals of ACGL

Metric	Current	Previous	YoYYear-over-Year change: current quarter versus the same quarter last year.	QoQQuarter-over-Quarter change: current quarter versus the immediately previous quarter.	Signal
Revenue	—	—	—	—	Flat
Diluted EPS	—	—	—	—	Flat
Free Cash Flow	—	—	—	—	Flat

Profitability of ACGL

Metric	Current	Previous	YoYYear-over-Year change: current quarter versus the same quarter last year.	QoQQuarter-over-Quarter change: current quarter versus the immediately previous quarter.	Signal
Net Margin	—	23.64%	—	—	Flat
Operating Margin	—	27.30%	—	—	Flat
ROE	—	—	—	—	Flat

Financial Health of ACGL

Metric	Current	Previous	YoYYear-over-Year change: current quarter versus the same quarter last year.	QoQQuarter-over-Quarter change: current quarter versus the immediately previous quarter.	Signal
Current Ratio	—	0.674	—	—	Flat
Quick Ratio	—	0.674	—	—	Flat
Debt / Equity	—	0.178	—	—	Flat

Valuation of ACGL

Metric	Current	Previous	YoYYear-over-Year change: current quarter versus the same quarter last year.	QoQQuarter-over-Quarter change: current quarter versus the immediately previous quarter.	Signal
P/E	—	7.96x	—	—	Flat
P/B	—	1.39x	—	—	Flat

Supply Chain of ACGL

RELATIONS

Upstream

Marsh (part of Marsh & McLennan Companies)NYSE:MRSH Aon plcNYSE:AON Willis Towers Watson plc (WTW)NASDAQ:WTW Munich Reinsurance CompanyOTCMKTS:MURGY Swiss Re AGOTCMKTS:SSREY Hannover Re SEOTCMKTS:HVRRYThird-Party Capital and ILS InvestorsNephila Capital (and other ILS fund managers)Guy Carpenter (Marsh subsidiary)NYSE:MRSHVarious Reinsurers (unlisted retrocession market)

Downstream

Fannie Mae (Federal National Mortgage Association)OTCMKTS:FNMA Freddie Mac (Federal Home Loan Mortgage Corporation)OTCMKTS:FMCCU.S. Mortgage Lenders and Financial InstitutionsPrimary Insurers (Cedents) - Property and CasualtyCorporate Policyholders - Specialty LinesUK Regional Insurance BrokersInternational Mortgage Insurance OperationsLloyd's of London Syndicates

Proxies

Everest Group Ltd.NYSE:EG AXIS Capital Holdings Ltd.NYSE:AXS RenaissanceRe Holdings Ltd.NYSE:RNR MGIC Investment CorporationNYSE:MTG Essent Group Ltd.NYSE:ESNT Argo Group International HoldingsNYSE:ARGO

About UsPrivacy PolicyTerms of ServiceDisclaimerStock DirectoryETFsIndices13F HoldingsAnalyst TargetsFree ToolsTechnology MapJoin our Slack

Plutux is not an investment adviser. Market data and AI-generated analysis are for information and education only, not investment advice. Disclaimer