Arch Capital .(ACGL) - 2023 Q1 - Quarterly Report

Financial Performance - The company reported a net income of $1.1 billion for the first quarter of 2023, compared to$900 million for the same period in 2022, representing a year-over-year increase of approximately 22.2%[9]. - Total revenues for Q1 2023 reached $3,168 million, a 63.2$1,942 million in Q1 2022[15]. - Net income for Q1 2023 was $717 million, compared to$198 million in Q1 2022, representing a 262.1% increase[16]. - Basic net income per common share for Q1 2023 was $1.92, compared to$0.50 in Q1 2022, marking a 284% increase[15]. - Comprehensive income for Q1 2023 was $1,066 million, significantly higher than a loss of$387 million in Q1 2022[16]. - After-tax operating income available to Arch common shareholders was $654 million in Q1 2023, up from$422 million in Q1 2022[145]. - The annualized net income return on average common equity for Q1 2023 was 22.3%, significantly up from 6.0% in Q1 2022[137]. - The Operating ROAE for Q1 2023 was 20.7%, compared to 13.6% in Q1 2022, indicating improved performance[137]. Premiums and Underwriting - Gross premiums written for Q1 2023 totaled $4.78 billion, an increase from$3.80 billion in Q1 2022, representing a growth of 25.9%[35]. - Net premiums earned increased to $2,883 million in Q1 2023, up from$2,121 million in Q1 2022, reflecting a 36% growth[15]. - The insurance segment's net premiums written in Q1 2023 were $1,437 million, a 19.1$1,207 million in Q1 2022[153]. - The reinsurance segment's net premiums written in Q1 2023 were $1,726 million, a 51.5$1,139 million in Q1 2022[165]. - The mortgage segment's net premiums earned for Q1 2023 were $296 million, a 2.1$290 million in Q1 2022[181]. Expenses and Losses - Total expenses for Q1 2023 were $2,426 million, a 38.0$1,757 million in Q1 2022[15]. - Losses and loss adjustment expenses for Q1 2023 were $1,471 million, up from$1,001 million in Q1 2022, indicating a 47% increase[15]. - The total net incurred losses and loss adjustment expenses for Q1 2023 were $1,471 million, an increase from$1,001 million in Q1 2022[40]. - The company ceded $1,045 million in losses and LAE for the quarter, compared to$937 million in the same quarter of the previous year, reflecting an 11.5% increase[206]. Assets and Liabilities - Total assets increased to $51.1 billion as of March 31, 2023, compared to$48.0 billion at the end of 2022, reflecting a growth of approximately 4.6%[14]. - Total liabilities increased to $37.1 billion from$35.1 billion, which is an increase of about 5.7%[14]. - The company’s cash position decreased to $803 million from$855 million, a decline of approximately 6.1%[14]. - The net reserve for losses and loss adjustment expenses at the end of Q1 2023 was $14,411 million, up from$12,399 million at the end of Q1 2022[40]. Investment Performance - The company reported net investment income for Q1 2023 of $199 million, compared to$80 million in Q1 2022, showing a substantial increase of 148.8%[35]. - The total return on investments for Q1 2023 was 2.54%, compared to a negative return of (3.07)% in Q1 2022, driven by strong fixed income portfolio performance[139]. - The company recorded net realized gains of $17 million in the first quarter of 2023, a recovery from a loss of$292 million in the first quarter of 2022[73]. - The company reported investments in exchange-traded funds totaling $554 million as of March 31, 2023, slightly down from$570 million at the end of 2022[206]. Market Conditions and Risks - The company is monitoring changes in general economic conditions, including sovereign debt concerns, which could impact its financial condition and results of operations[7]. - The company’s investment performance is subject to legislative or regulatory developments that may adversely affect the fair value of investments[7]. - Inflation remains a focus for the company, which is proactively analyzing data to incorporate emerging trends into pricing and reserving strategies[133]. Shareholder Equity - Shareholders' equity available to Arch increased to $14.0 billion from$12.9 billion, reflecting a growth of approximately 8.4%[14]. - The company’s total shareholders' equity increased to $13,988 million in Q1 2023, compared to$12,920 million in Q1 2022[18]. - As of March 31, 2023, Arch Capital Group Ltd. reported a book value per share of $35.35, reflecting an 8.4$32.62 at December 31, 2022[133]. Segment Performance - The mortgage segment generated $243 million in underwriting income during the first quarter of 2023, with a delinquency rate of 1.65%, the lowest since March 31, 2020[133]. - The reinsurance segment's combined ratio improved to 84.3% in Q1 2023 from 86.6% in Q1 2022, indicating better underwriting performance[162]. - The insurance segment's current year loss ratio for Q1 2023 was 55.9%, down from 58.5% in Q1 2022, reflecting a 2.4-point improvement[158].