Arch Capital Group Ltd. Files Q3 2024 10-Q

TL;DR

**ACGL Q3 10-Q filed. Financials look solid, check details.**

AI Summary

Arch Capital Group Ltd. filed its 10-Q for the period ending September 30, 2024. The filing details the company's financial performance and position, including its assets and liabilities. Specific financial figures and operational details for the third quarter of 2024 are presented within the report.

Why It Matters

This filing provides investors and analysts with a detailed look into Arch Capital Group's financial health and operational performance for the third quarter of 2024, influencing investment decisions.

Risk Assessment

Risk Level: low — This is a routine quarterly financial filing (10-Q) and does not inherently present new or elevated risks.

Key Numbers

• 2024-09-30 — Reporting Period End Date (Indicates the end of the financial quarter being reported.)
• 2024-11-07 — Filing Date (The date the 10-Q was officially submitted to the SEC.)

Key Players & Entities

• ARCH CAPITAL GROUP LTD. (company) — Filer of the 10-Q
• 20240930 (date) — End of the reporting period
• 20241107 (date) — Filing date

FAQ

Key Financial Figures

• $0.0011 — nge on which registered Common shares, $0.0011 par value per share ACGL NASDAQ Stock M

Filing Documents

• acgl-20240930.htm (10-Q) — 3816KB
• ex102.htm (EX-10.2) — 29KB
• ex31193024.htm (EX-31.1) — 10KB
• ex31293024.htm (EX-31.2) — 10KB
• ex32193024.htm (EX-32.1) — 6KB
• ex32293024.htm (EX-32.2) — 6KB
• acgl-20240930_g1.jpg (GRAPHIC) — 68KB
• 0000947484-24-000144.txt ( ) — 16014KB
• acgl-20240930.xsd (EX-101.SCH) — 60KB
• acgl-20240930_cal.xml (EX-101.CAL) — 109KB
• acgl-20240930_def.xml (EX-101.DEF) — 372KB
• acgl-20240930_lab.xml (EX-101.LAB) — 851KB
• acgl-20240930_pre.xml (EX-101.PRE) — 613KB
• acgl-20240930_htm.xml (XML) — 3631KB

— Financial Information

PART I— Financial Information 2

Consolidated Financial Statements

Item 1. Consolidated Financial Statements 4

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 39

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 63

Controls and Procedures

Item 4. Controls and Procedures 63

— Other Information

PART II— Other Information 64

Legal Proceedings

Item 1. Legal Proceedings 64

Risk Factors

Item 1A. Risk Factors 64

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 65

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 65

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 65

Other Information

Item 5. Other Information 65

Exhibits

Item 6. Exhibits 66

Signatures

Signatures 67 ARCH CAPITAL 1 2024 THIRD QUARTER FORM 10-Q Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Cautionary Note Regarding Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 ("PSLRA") provides a "safe harbor" for forward-looking statements. This report or any other written or oral statements made by or on behalf of us may include forward-looking statements, which reflect our current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this report are forward-looking statements. Forward-looking statements, for purposes of the PSLRA or otherwise, can generally be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" and similar statements of a future or forward-looking nature or their negative or variations or similar terminology. Forward-looking statements involve our current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. Important factors that could cause actual events or results to differ materially from those indicated in such statements are discussed below and elsewhere in this report and in our periodic reports filed with the Securities and Exchange Commission ("SEC"), and include: our ability to successfully implement our business strategy across underwriting cycles during "soft" as well as "hard" markets; acceptance of our business strategy, security and financial condition by rating agencies and regulators, as well as by brokers and our insureds and reinsureds; our ability to consummate acquisitions and integrate the business we have acquired or may acquire into our existing operations; our ability to maintain or improve our ratings, which may be affected by our ability to raise additional equity or debt financings, by ratings agencies' existing or new policies and practices, as well as other factors

CONSOLIDATED FINANCIAL STATEMENTS

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS Page No. Consolidated Balance Sheets September 30, 2024 and December 31, 2023 (unaudited) 5 Consolidated Statements of Income For the three and nine month periods ended September 30, 2024 and 2023 (unaudited) 6 Consolidated Statements of Comprehensive Income For the three and nine month periods ended September 30, 2024 and 2023 (unaudited) 7 Consolidated Statements of Changes in Shareholders' Equity For the three and nine month periods ended September 30, 2024 and 2023 (unaudited) 8 Consolidated Statements of Cash Flows For the nine month periods ended September 30, 2024 and 2023 (unaudited) 9

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) Note 1 - Basis of Presentation and Recent Accounting Pronouncements 10 Note 2 - Acquisitions 10 Note 3 - Share Transactions 11 Note 4 - Earnings Per Common Share 12 Note 5 - Segment Information 13 Note 6 - Reserve for Losses and Loss Adjustment Expenses 18 Note 7 - Allowance for Expected Credit Losses 20 Note 8 - Investment Information 22 Note 9 - Fair Value 28 Note 10 - Derivative Instruments 34 Note 1 1 - Commitments and Contingencies 35 Note 1 2 - Variable Interest Entities 35 Note 1 3 - Other Comprehensive Income (Loss) 36 Note 1 4 - Income Taxes 37 Note 1 5 - Legal Proceedings 37 Note 1 6 - Transactions with Related Parties 37 Note 1 7 - Subsequent Events 37 ARCH CAPITAL 4 2024 THIRD QUARTER FORM 10-Q Table of Contents ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (U.S. dollars and shares in millions ) (Unaudited) September 30, 2024 December 31, 2023 Assets Investments: Fixed maturities available for sale, at fair value (amortized cost: $ 28,466 and $ 24,131 ; net of allowance for credit losses: $ 19 and $ 28 ) $ 28,434 $ 23,553 Short-term investments available for sale, at fair value (amortized cost: $ 3,337 and $ 2,064 ; net of allowance for credit losses: $ 0 and $ 0 ) 3,341 2,063 Equity securities, at fair value 1,623 1,186 Other investments, at fair value 3,261 2,488 Investments accounted for using the equity method 5,244 4,566 Total investments 41,903 33,856 Cash 1,025 917 Accrued investment income 292 236 Investment in operating affiliates 1,236 1,119 Premiums receivable (net of allowance for credit losses: $ 52 and $ 34 ) 6,364 4,644 Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses (net of allowance for credit losses: $ 17 and $ 21 ) 7,948 7,064 Contractholder receivables (net of allowance for credit losses: $ 4 and $ 3 ) 2,078 1,814 Ceded unearned premiums 2,935

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation and Recent Accounting Pronouncements General Arch Capital Group Ltd. ("Arch Capital") is a publicly listed Bermuda exempted company which provides insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly-owned subsidiaries. As used herein, the "Company" means Arch Capital and its subsidiaries. Basis of Presentation The interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). All significant intercompany transactions and balances have been eliminated in consolidation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates and assumptions. In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of results on an interim basis. The results of any interim period are not necessarily indicative of the results for a full year or any future periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted; however, management believes that the disclosures are adequate to make the information presented not misleading. This report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2023 ("2023 Form 10-K"), including the Company's audited consolidated financial statements and related notes. The Company has reclassified the pr

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table summarizes the Company's allocation of the purchase price to the acquired assets and liabilities assumed based on estimated fair values on August 1, 2024. The fair value of the assets and liabilities are preliminary and may change with offsetting adjustments to goodwill. The Company may make further adjustments to its purchase price allocation through the end of the permissible one-year measurement period. Total Useful Life Purchase price Cash paid (a) $ 450 Assets Acquired Cash and investments, at fair value $ 2,332 Premiums receivable 290 Intangible asset -- distribution relationships 220 10 years Intangible asset -- value of business acquired 163 1 - 2 years Intangible asset -- other (1) 178 5 - 7 years Other assets acquired 158 Total assets acquired $ 3,341 Liabilities Acquired Reserves for losses and loss adjustment expenses $ 2,404 Unearned premiums 632 Other liabilities acquired 121 Total liabilities acquired 3,157 Identifiable net assets acquired (b) $ 184 Goodwill (a) - (b) $ 266 (1) Includes $ 128 million related to the net fair value adjustment to reserves for loss and loss adjustment expenses on August 1, 2024. The Company recognized goodwill of $ 266 million that is primarily attributed to the expanded presence and long-term growth opportunities in the insurance market provided by this strategic acquisition. Approximately $ 568 million of the acquired goodwill and intangibles is expected to be deductible for income tax purposes. At the date of the acquisition, the Company established a net deferred tax asset of $ 23 million related to the estimated fair value of reserves for losses and loss adjustment expenses and unearned premiums. Intangible assets resulting from the acquisition are amortized as part of amortization of intangible assets' in the Company's consolidated statements of income. The significant fair value adjustments and related future amo

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View this 10-Q filing on SEC EDGAR