Arch reported Q1 2026 results
Arch Capital Group reported first quarter 2026 results that reflect a market turning point — strong earnings, but fewer places to deploy capital at attractive returns.
01. Insurance: flat growth, pruning unprofitable business
Insurance generated $66 million in underwriting income, with top-line growth essentially flat. The company is actively shedding underperforming program business tied to the MCE/Allianz portfolio, with about $250 million in net premiums written expected to roll off through 2026.
02. Reinsurance: rebound quarter, but shrinking premiums
Reinsurance led the group with $441 million in underwriting income, a sharp improvement from the prior year when California wildfire losses weighed results. Despite the earnings rebound, net premiums written declined 6%, reflecting a more selective approach as pricing weakens.
03. Mortgage: steady and profitable
Mortgage insurance delivered $221 million in underwriting income, supported by strong credit quality and consistent performance.
04. Market tone: from “all green” to selective underwriting
Management struck a cautious tone, particularly in property catastrophe. Pricing is falling as capital floods back into the market from both traditional reinsurers and alternative sources. Arch tracks profitability across 50 zones — once uniformly attractive, now mixed. While current returns remain in the high teens, the company is walking away from business that fails to meet that bar.
Casualty remains relatively more attractive but is also showing early signs of softening, with additional capacity coming from sidecars.
05. Iran conflict losses emerge
Arch disclosed losses tied to the Iran conflict through its political violence and terrorism lines in London, categorized as man-made catastrophe losses. Additional losses are expected in Q2. Management pegged industry-wide losses at around $3 billion against roughly $2 billion in premiums for those lines.
06. AI: one tangible win, otherwise early days
The company highlighted a completed 18-month migration of the Allianz middle market business, delivered ahead of schedule with support from AI-driven code generation and automated testing. Beyond that, AI adoption remains in early stages.
