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What changed in Arch Capital Group's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Arch Capital Group's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+667 added−661 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-27)

Top changes in Arch Capital Group's 2025 10-K

667 paragraphs added · 661 removed · 550 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

259 edited+65 added−46 removed390 unchanged
Biggest changeIn addition, there are other Australian legislation and regulations applicable to the financial services sector in which our group operates, such as: • privacy legislation on the collection, use and storage of personal information and sensitive information of individuals and a mandatory data breach notification regime, which are overseen by the Office of the Australian Information Commissioner; • cyber security obligations imposed by APRA and ASIC as part of their respective licensing regimes for insurers, and also on larger insurers in Australia under Australian security of critical infrastructure legislation; • additional obligations under cyber security legislation passed in 2024 and expected to come into force in part from May 2025, which apply to various entities operating in Australia (subject to specific eligibility thresholds to be confirmed).
Biggest changeIn addition, there are other Australian legislation and regulations applicable to the financial services sector in which our group operates, such as: • privacy legislation on the collection, use and storage of personal information and sensitive information of individuals and a mandatory data breach notification regime, which are overseen by the Office of the Australian Information Commissioner under the Privacy Act 1988 (Cth) (with a new statutory cause of action for serious invasions of privacy effective as of June 10, 2025, and new obligations related to automated decision making to come into effect on December 10, 2026); • cyber security obligations imposed by APRA and ASIC as part of their respective licensing regimes for insurers (such as APRA Prudential Standard CPS 234 Information Security ), and also on larger insurers in Australia under Australian security of critical infrastructure legislation; • additional obligations under cyber security legislation passed in 2024, which came into force in part at the end of May 2025.
Arch Re U.S. is licensed or is an accredited or otherwise approved reinsurer in 50 states, the District of Columbia and Puerto Rico, the provinces of Ontario and Quebec in Canada with its principal U.S. offices in Morristown, New Jersey. Treaty and facultative operations in Canada are conducted through the Canadian branch of Arch Re U.S. (“Arch Re Canada”).
Arch Re U.S. is licensed or is an accredited or otherwise approved reinsurer in 50 states, the District of Columbia and Puerto Rico, and the provinces of Ontario and Quebec in Canada with its principal U.S. offices in Morristown, New Jersey. Treaty and facultative operations in Canada are conducted through the Canadian branch of Arch Re U.S. (“Arch Re Canada”).
For a discussion of our risk management policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Summary of Critical Accounting Estimates—Ceded Reinsurance” and “Risk Factors—Risks Relating to Our Industry, Business and Operations—The failure of any of the loss limitation methods we employ could have a material adverse effect on our financial condition or results of operations.” Claims Management.
For a discussion of our risk management policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Summary of Critical Accounting Estimates—Ceded Reinsurance” and “Risk Factors—Risks Relating to Our Industry, Business and Operations—The failure of any of the loss limitation methods we employ could have a material adverse effect on our financial condition or results of operations.” Claims Management.
Insurance ratings are also used by insurance and reinsurance intermediaries as an important means of assessing the financial strength and quality of insurers and reinsurers, and are often an important factor in the decision by an insured or intermediary of whether to place business with a particular insurance or reinsurance provider.
Insurance ratings are also used by insurance and reinsurance intermediaries as important means of assessing the financial strength and quality of insurers and reinsurers, and are often an important factor in the decision by an insured or intermediary of whether to place business with a particular insurance or reinsurance provider.
Such ratings may be revised or revoked at the discretion of such ratings agencies in response to a variety of factors, including capital adequacy, management, earnings, forms of capitalization and risk profile. A.M. Best Company (“A.M.
Such ratings may be revised or revoked at the discretion of such agencies in response to a variety of factors, including capital adequacy, management, earnings, forms of capitalization and risk profile. A.M. Best Company (“A.M.
Our main Bermuda insurance operating subsidiary, Arch Re Bermuda, is dual licensed as a Class 4 general business insurer and a Class C long-term insurer and is subject to the Insurance Act 1978 of Bermuda and related regulations, as amended (“Insurance Act”). AGRL, a Class 3A general insurer in Bermuda, is also subject to the Insurance Act.
Our main Bermuda insurance operating subsidiary, Arch Re Bermuda, is dual licensed as a Class 4 general business insurer and a Class C long-term insurer and is subject to the Insurance Act 1978 of Bermuda and related regulations, as amended (“Insurance Act”). AGRL, a Class 3A general business insurer in Bermuda, is also subject to the Insurance Act.
Although existing Treasury Regulations do not address the question, proposed Treasury Regulations issued in April 1991 create some ambiguity as to whether Section 1248 and the requirement to file Form 5471 would apply when the non-U.S. corporation has a foreign insurance subsidiary that is a CFC for RPII purposes and that would be taxed as an insurance company if it were a domestic corporation.
Although existing Treasury Regulations do not address the question, proposed Treasury Regulations issued in 1991 create some ambiguity as to whether Section 1248 and the requirement to file Form 5471 would apply when the non-U.S. corporation has a foreign insurance subsidiary that is a CFC for RPII purposes and that would be taxed as an insurance company if it were a domestic corporation.
(“Arch LMI”) was authorized by the Australian Prudential Regulation Authority (“APRA”) to write lenders’ mortgage insurance (“LMI”) on a direct basis in Australia. We expanded our presence in Australia in August 2021 by acquiring Westpac Lenders Mortgage Insurance Limited, another APRA approved writer of lenders mortgage insurance, which has since been renamed Arch Lenders Mortgage Indemnity Ltd. (“Arch Indemnity”).
(“Arch LMI”) was authorized by the Australian Prudential Regulation Authority (“APRA”) to write lenders’ mortgage insurance (“LMI”) on a direct basis in Australia. We expanded our presence in Australia in 2021 by acquiring Westpac Lenders Mortgage Insurance Limited, another APRA-approved writer of lenders mortgage insurance, which has since been renamed Arch Lenders Mortgage Indemnity Ltd. (“Arch Indemnity”).
See “Risk Factors—Risks Relating to Our Industry, Business and Operations—“We operate in a highly competitive environment, and we may not be able to compete successfully in our industry.” In our property casualty insurance and reinsurance businesses, we compete with insurers and reinsurers that provide specialty, property, and casualty lines of insurance, including, but not limited to Allianz, American Financial Group, Inc., American International Group, Inc., Aviva, AXA XL, AXIS Capital Holdings Limited, Berkshire Hathaway, Inc., Chubb Limited, CNA Financial Corp., Convex Group Limited, Everest Group Ltd., Fairfax Financial Holdings Limited, Hannover Rück SE, The Hartford Financial Services Group, Inc., Liberty Mutual Group, Lloyd’s, Markel Corporation, Munich Re Group, PartnerRe Ltd., RenaissanceRe Holdings Ltd., RLI Corp., SCOR, Sompo International, Swiss Reinsurance Company, Tokio Marine, The Travelers Companies, Inc., W.R.
See “Risk Factors—Risks Relating to Our Industry, Business and Operations—“We operate in a highly competitive environment, and we may not be able to compete successfully in our industry.” In our property casualty insurance and reinsurance businesses, we compete with insurers and reinsurers that provide specialty, property, and casualty lines of insurance, including, but not limited to Allianz, American Financial Group, Inc., American International Group, Inc., Aviva plc, AXA XL, AXIS Capital Holdings Limited, Berkshire Hathaway, Inc., Chubb Limited, CNA Financial Corp., Convex Group Limited, Everest Group Ltd., Fairfax Financial Holdings Limited, Hannover Rück SE, The Hartford Financial Services Group, Inc., Liberty Mutual Group, Lloyd’s, Markel Group Inc., Munich Re Group, PartnerRe Ltd., RenaissanceRe Holdings Ltd., RLI Corp., SCOR SE, Sompo International, Swiss Reinsurance Company Ltd., Tokio Marine Holdings Inc., The Travelers Companies, Inc., W.R.
Although, in doing so, they may be subject to the laws of such Member States with respect to the conduct of business in such Member State, company law registrations and other matters, they will remain subject to financial and operational supervision by the CBI only. Arch Insurance (EU) has branches in Italy, France, Spain and the U.K.
Although, in doing so, they may be subject to the laws of such Member States with respect to the conduct of business in such Member State, company law registrations and other matters, they will remain subject to financial and operational supervision by the CBI only. Arch Insurance (EU) has branches in Italy, France, Spain, the Netherlands and the U.K.
EIOPA has also indicated that, on a case by case basis, groups subject to this worldwide supervision may be exempted from any EEA sub-group supervision, where this results in more efficient supervision of the group and does not impair EEA supervisors in respect of their individual responsibilities. The IDD was published in February 2016.
EIOPA has also indicated that, on a case by case basis, groups subject to this worldwide supervision may be exempted from any EEA sub-group supervision, where this results in more efficient supervision of the group and does not impair EEA supervisors in respect of their individual responsibilities. The IDD was published in 2016.
Since February 2022, the EU has imposed significant sanctions on the Russian Federation in response to its invasion of Ukraine. These sanctions are similar to those imposed by the U.K. and U.S. Given the evolving situation, we are closely monitoring developments and the sanctions imposed, to ensure our European entities remain in compliance with any sanctions measures imposed. Inflation.
Since 2022, the EU has imposed significant sanctions on the Russian Federation in response to its invasion of Ukraine. These sanctions are similar to those imposed by the U.K. and U.S. Given the evolving situation, we are closely monitoring developments and the sanctions imposed, to ensure our European entities remain in compliance with any sanctions measures imposed. Inflation.
There are also financial services sector specific laws in Australia administered by APRA and ASIC which impact the development and deployment of AI in the sector in which our group operates, although such existing laws are technology-neutral. The Australian Government has been undertaking consultation on “Safe and Responsible AI” regulation in Australia since June 2023.
There are also financial services sector specific laws in Australia administered by APRA and ASIC which impact the development and deployment of AI in the sector in which our group operates, although such existing laws are technology-neutral. The Australian Government has been undertaking consultation on “Safe and Responsible AI” regulation in Australia since 2023.
The EU has adopted a range of measures to combat unprecedented levels of inflation, with EIOPA issuing a supervisory statement outlining its expectations of (re)insurers on inflation-related issues in December 2022. We are monitoring ongoing developments and considering the impact of EU and EIOPA guidance on inflation on its business. Third Country Governance Arrangements.
The EU has adopted a range of measures to combat unprecedented levels of inflation, with EIOPA issuing a supervisory statement outlining its expectations of (re)insurers on inflation-related issues in 2022. We are monitoring ongoing developments and considering the impact of EU and EIOPA guidance on inflation on its business. Third Country Governance Arrangements.
Following a report published by the European Affairs Committee in June 2022, which found that the TCA is limited in scope and silent as to EU equivalence in decisions over financial services, a Memorandum of Understanding (“MoU”) on regulatory cooperation between the U.K. and the EU was signed in June 2023.
Following a report published by the European Affairs Committee in 2022, which found that the TCA is limited in scope and silent as to EU equivalence in decisions over financial services, a Memorandum of Understanding (“MoU”) on regulatory cooperation between the U.K. and the EU was signed in 2023.
The GCC amendments to the Insurance Holding Company Models aim to streamline group-wide supervision by leveraging U.S. regulators’ existing risk and solvency measures and applying them on a group-wide basis. Arch’s U.S. lead state regulator, the Missouri Department of Commerce & Insurance (“MDCI”), adopted the GCC provisions of the Insurance Holding Company Models in 2021.
The GCC provisions of the Insurance Holding Company Models aim to streamline group-wide supervision by leveraging U.S. regulators’ existing risk and solvency measures and applying them on a group-wide basis. Arch’s U.S. lead state regulator, the Missouri Department of Commerce & Insurance (“MDCI”), adopted the GCC provisions of the Insurance Holding Company Models in 2021.
In March 2022, the U.S. government passed the Cyber Incident Reporting for Critical Infrastructure Act of 2022, which will require companies deemed to be part of U.S. critical infrastructure to report any substantial cybersecurity incidents or ransom payments to the federal government within 72 and 24 hours, respectively.
In 2022, the U.S. government passed the Cyber Incident Reporting for Critical Infrastructure Act of 2022, which will require companies deemed to be part of U.S. critical infrastructure to report any substantial cybersecurity incidents or ransom payments to the federal government within 72 and 24 hours, respectively.
Berkley Corp. and Zurich Insurance Group. In our mortgage business, we compete with insurers and reinsurers that provide mortgage insurance, including the U.S mortgage insurance subsidiaries of Essent Group Ltd., Enact Holdings Inc., MGIC Investment Corporation, NMI Holdings Inc. and Radian Group Inc. The private mortgage insurance industry is highly competitive.
Berkley Corp. and Zurich Insurance Group. In our mortgage business, we compete with insurers and reinsurers that provide mortgage insurance, including the U.S mortgage insurance subsidiaries of Essent Group Ltd., Enact Holdings Inc., MGIC Investment Corp., NMI Holdings Inc. and Radian Group Inc. The private mortgage insurance industry is highly competitive.
In September 2021, the European Commission published legislative proposals for amendments to the Solvency II Directive arising out of EIOPA's review of the Solvency II regime. The proposed amendments cover a number of areas including proportionality, quality of supervision, sustainability risks and group and cross-border supervision.
In 2021, the European Commission published legislative proposals for amendments to the Solvency II Directive arising out of EIOPA's review of the Solvency II regime. The proposed amendments cover a number of areas including proportionality, quality of supervision, sustainability risks and group and cross-border supervision.
As part of our Brexit plan, Arch Insurance (EU) received approval from the CBI to expand the nature of its business in 2019 and commenced writing expanded insurance lines in the EEA in 2020 with the Part VII Transfer completed at the end of December 2020.
As part of our Brexit plan, Arch Insurance (EU) received approval from the CBI to expand the nature of its business in 2019 and commenced writing expanded insurance lines in the EEA in 2020 with the Part VII Transfer completed at the end of 2020.
Arch Underwriters Europe was registered by the CBI as an insurance and reinsurance intermediary in July 2014. Arch Re Europe, Arch Insurance (EU) and Arch Underwriters Europe are subject to the supervision of the CBI and must comply with Irish insurance acts and regulations as well as with directions and guidance issued by the CBI.
Arch Underwriters Europe was registered by the CBI as an insurance and reinsurance intermediary in 2014. Arch Re Europe, Arch Insurance (EU) and Arch Underwriters Europe are subject to the supervision of the CBI and must comply with Irish insurance acts and regulations as well as with directions and guidance issued by the CBI.
We provide career growth opportunities through a combination of on-the-job training and experience, exposure to top-notch colleagues who coach and mentor, and education and training programs designed to accelerate learning and applying new skills and behaviors.
We provide career growth opportunities through a combination of on-the-job training and experience, exposure to top-notch colleagues who coach, provide feedback and mentor, and education and training programs designed to accelerate learning and applying new skills and behaviors.
In May 2004, Arch Insurance (U.K.) was granted the relevant permissions for the classes of insurance business which it underwrites in the U.K. AMAL currently manages our Lloyd’s Syndicates pursuant to its authorizations by the U.K. regulators and Lloyd’s.
In 2004, Arch Insurance (U.K.) was granted the relevant permissions for the classes of insurance business which it underwrites in the U.K. AMAL currently manages our Lloyd’s Syndicates pursuant to its authorizations by the U.K. regulators and Lloyd’s.
The U.S. first imposed sanctions on the Russian Federation following its annexation of Crimea in 2014. Since February 2022, the U.S. has since imposed several new sanctions on Russia in response to the Russian invasion of Ukraine and the ongoing hostilities.
The U.S. first imposed sanctions on the Russian Federation following its annexation of Crimea in 2014. Since 2022, the U.S. has since imposed several new sanctions on Russia in response to the Russian invasion of Ukraine and the ongoing hostilities.
In August 2014, Arch Underwriters Europe opened a branch office in Zurich (“Arch Underwriters Europe Swiss Branch”) to render reinsurance advisory services to certain group companies. Arch Underwriters Europe Swiss Branch is registered with the commercial register of the Canton of Zurich.
In 2014, Arch Underwriters Europe opened a branch office in Zurich (“Arch Underwriters Europe Swiss Branch”) to render reinsurance advisory services to certain group companies. Arch Underwriters Europe Swiss Branch is registered with the commercial register of the Canton of Zurich.
The SEC Cybersecurity Rules became effective in December 2023 and mandate that public companies report a cybersecurity incident on a Form 8-K within four days after they determine that the incident is material.
The SEC Cybersecurity Rules became effective in 2023 and mandate that public companies report a cybersecurity incident on a Form 8-K within four days after they determine that the incident is material.
In December 2022, we converted Arch LMI into a services company for our Australian LMI operations and the company relinquished its APRA authorization. See “Operations—Mortgage Operations” for further details on our mortgage operations.
In 2022, we converted Arch LMI into a services company for our Australian LMI operations and the company relinquished its APRA authorization. See “Operations—Mortgage Operations” for further details on our mortgage operations.
Under Pillar II, the OECD’s Inclusive Framework published the “Global Anti-Base Erosion,” or “GloBE” model rules in December 2021, which apply to certain in scope entities and provide for a coordinated system of taxation that imposes a “top-up” tax to ensure that any in scope entity pays a minimum rate of 15% tax on its net income in each country where it operates.
Under Pillar II, the OECD’s Inclusive Framework published the “Global Anti-Base Erosion,” or “GloBE” model rules in 2021, which apply to certain in scope entities and provide for a coordinated system of taxation that imposes a “top-up” tax to ensure that any in scope entity pays a minimum rate of 15% tax on its net taxable income in each country where it operates.
In December 2020, EIOPA provided an opinion to the European Commission in relation to the review of the Solvency II regime. This review was initiated by the European Commission to determine whether the Solvency II regime remains fit for purpose.
In 2020, EIOPA provided an opinion to the European Commission in relation to the review of the Solvency II regime. This review was initiated by the European Commission to determine whether the Solvency II regime remains fit for purpose.
The CIT Act does not impose any withholding tax, capital transfer tax, estate duty or inheritance tax,; and, so there will continue to be no such taxes payable by us or by our shareholders in respect of our shares following January 1, 2025. See Item 1A.“ Risk Factors — Risks Relating to Taxation ” for additional information.
The Bermuda CIT Act does not impose any withholding tax, capital transfer tax, estate duty or inheritance tax, so there will continue to be no such taxes payable by us or by our shareholders in respect of our shares following January 1, 2025. See Item 1A, “ Risk Factors — Risks Relating to Taxation ” for additional information.
The ES Act came into force on January 1, 2019, and provides that a registered entity other than an entity which is resident for tax purposes in certain jurisdictions outside Bermuda (“non-resident entity”) that carries on as a business any one or more of the “relevant activities” referred to in the ES Act must comply with economic substance requirements.
The ES Act came into force in 2019, and provides that a registered entity other than an entity which is resident for tax purposes in certain jurisdictions outside Bermuda (“non-resident entity”) that carries on as a business any one or more of the “relevant activities” referred to in the ES Act must comply with economic substance requirements.
Non-U.S. corporations not engaged in a trade or business in the U.S. are nonetheless subject to U.S. income tax on certain “fixed or determinable annual or periodic gains, profits and income” derived from sources within the U.S. as enumerated in Section 881(a) of the Code (such as dividends and certain interest on investments), subject to exemption under the Code or reduction by an applicable treaty.
Non-U.S. corporations not engaged in a trade or business in the U.S. are nonetheless subject to U.S. withholding tax on certain “fixed or determinable annual or periodic gains, profits and income” derived from sources within the U.S. as enumerated in Section 881(a) of the Code (such as dividends and certain interest on investments), subject to exemption under the Code or reduction by an applicable treaty.
Certain of our in-scope Irish entities are required to comply with the obligations set out under DORA from January 17, 2025. In addition to the above, EIOPA continues to publish detailed guidelines, recommendations and expectations relating to cyber matters and how these should be managed and considered by the (re)insurance sector. Artificial Intelligence.
Certain of our in-scope Irish entities are required to comply with the obligations set out under DORA since January 17, 2025. In addition to the above, EIOPA continues to publish detailed guidelines, recommendations and expectations relating to cyber matters and how these should be managed and considered by the (re)insurance sector. Artificial Intelligence.
In addition to its APRA authorization, Arch Indemnity has been licensed by the Australian Securities and Investments Commission (“ASIC”) since March 2011 to engage in credit activities in Australia. Arch LMI has been licensed by ASIC since October 2023 as a Financial Services Licensee in Australia. Our group also conducts property and casualty insurance business in Australia through Lloyd’s.
In addition to its APRA authorization, Arch Indemnity has been licensed by the Australian Securities and Investments Commission (“ASIC”) since 2011 to engage in credit activities in Australia. Arch LMI has been licensed by ASIC since 2023 as a Financial Services Licensee in Australia. Our group also conducts property and casualty insurance business in Australia through Lloyd’s.
In August 2022, the CBI published a Consultation Paper setting out its proposed guidance on climate change risk for the (re)insurance sector.
In 2022, the CBI published a Consultation Paper setting out its proposed guidance on climate change risk for the (re)insurance sector.
In addition, the EU GDPR increases scrutiny of transfers of personal data to jurisdictions which the European Commission does not recognize as having “adequate” data protection laws. In particular, on July 16, 2020, the Court of Justice of the EU (Court of Justice) in Schrems II invalidated the European Union-United States (EU-U.S.) Privacy Shield on the grounds that the EU-U.S.
In addition, the EU GDPR increases scrutiny of transfers of personal data to jurisdictions which the European Commission does not recognize as having “adequate” data protection laws. In particular in 2020, the Court of Justice of the EU (Court of Justice) in Schrems II invalidated the European Union-United States (EU-U.S.) Privacy Shield on the grounds that the EU-U.S.
Entertainment Property and Casualty insurance business, representing an important part of our growth strategy in the U.S. See “Operations—Insurance Operations” for further details on our insurance operations. Our reinsurance underwriting platform initially consisted of Arch Reinsurance Ltd. in Bermuda (“Arch Re Bermuda”) and Arch Reinsurance Company (“Arch Re U.S.”), our U.S.-licensed reinsurer.
Entertainment business, representing an important part of our growth strategy in the U.S. See “Operations—Insurance Operations” for further details on our insurance operations. Our reinsurance underwriting platform initially consisted of Arch Reinsurance Ltd. in Bermuda (“Arch Re Bermuda”) and Arch Reinsurance Company (“Arch Re U.S.”), our U.S.-licensed reinsurer.
In September 2024, the Australian Government published a Voluntary AI Safety Standard which can be used on a voluntary basis by Australian businesses developing or implementing AI systems while the Australian Government continues to undertake consultation on proposed mandatory AI guardrails for high-risk applications that are to be defined following consultation.
In September 2024, the Australian Government published a Voluntary AI Safety Standard which can be used on a voluntary basis by Australian businesses developing or implementing AI systems while the Australian Government continues to undertake consultation on proposed mandatory AI guardrails for high-risk applications that were to be defined following consultation.
Our Australia mortgage operations will be reporting as a Group 2 company. Gibraltar General . The insurance industry is regulated by the Gibraltar Financial Services Commission (“GFSC”). We have two carriers, Alwyn Insurance Company Limited and Southern Rock Insurance Company Limited (“SRICL”), which are authorized and regulated by the GFSC.
Our Australia mortgage operations will be reporting as a Group 2 company. Gibraltar General . The insurance industry is regulated by the Gibraltar Financial Services Commission (“GFSC”). We have two carriers, Alwyn Insurance Company Limited (“Alwyn Insurance”) and Southern Rock Insurance Company Limited (“SRICL”), which are authorized and regulated by the GFSC.
In its opinion, EIOPA confirms that the overall Solvency II framework is working well from a prudential perspective, suggesting that there are no fundamental changes needed but that a number of amendments are required to ensure the regime continues as a well-functioning risk-based regime.
In its opinion, EIOPA confirmed that the overall Solvency II framework is working well from a prudential perspective, suggesting that there are no fundamental changes needed but that a number of amendments are required to ensure the regime continues as a well-functioning risk-based regime.
In December 2018, Bermuda enacted the Economic Substance Act 2018 (as amended) of Bermuda and its related regulations (together, the “ES Act”).
In 2018, Bermuda enacted the Economic Substance Act 2018 (as amended) of Bermuda and its related regulations (together, the “ES Act”).
Arch LMI, which was formerly authorized by APRA in January 2019 to conduct monoline lenders’ mortgage insurance business in Australia, relinquished its APRA authorization in December 2022 and has been converted to a services company for our Australian lenders mortgage insurance operations.
Arch LMI, which was formerly authorized by APRA in 2019 to conduct monoline lenders’ mortgage insurance business in Australia, relinquished its APRA authorization in 2022 and has been converted to a services company for our Australian lenders mortgage insurance operations.
We seek to identify business opportunities associated with environmentally friendly trends and incentivize responsible environmental behaviors. We have adopted a thermal coal policy in our global insurance operations and provide environmentally sustainable insurance solutions in certain product lines.
We seek to identify business opportunities associated with environmentally friendly trends and support responsible environmental behaviors. We have adopted a thermal coal policy in our global insurance operations and provide environmentally sustainable insurance solutions in certain product lines.
Recent 2025 Biden administration sanctions also target the Russian energy sector, including Russian and non-Russian companies, persons and vessels which are aiding Russia’s production of oil. These sanctions may have extra-territorial reach to our non-U.S. underwriting subsidiaries. The U.S.-Russia discussions regarding the war in Ukraine and the use of U.S. sanctions is an evolving topic which we continue to review.
Recent sanctions also target the Russian energy sector, including Russian and non-Russian companies, persons and vessels which are aiding Russia’s production of oil. These sanctions may have extra-territorial reach to our non-U.S. underwriting subsidiaries. The U.S.-Russia discussions regarding the war in Ukraine and the use of U.S. sanctions is an evolving topic which we continue to review.
GDPR has direct effect where an entity is established in the U.K. (as applicable) and has extra-territorial effect where an entity established outside of the U.K. processes personal data in relation to the offering of goods or services to individuals in the U.K. or the monitoring of their behavior. The U.K.
GDPR has direct effect where an entity is established in the U.K. and has extra-territorial effect where an entity established outside of the U.K. processes personal data in relation to the offering of goods or services to individuals in the U.K. or the monitoring of their behavior. The U.K.
The U.K. branches of Arch Re Europe and Arch Insurance (EU) are subject to U.K. corporation tax on the profits (both income profits and chargeable gains) attributable to each branch. The rate of U.K. corporation tax for the 2024 financial year is 25%.
The U.K. branches of Arch Re Europe and Arch Insurance (EU) are subject to U.K. corporation tax on the profits (both income profits and chargeable gains) attributable to each branch. The rate of U.K. corporation tax for the 2025 financial year is 25%.
GDPR however does explicitly require that controllers notify personal data breaches under certain circumstances. Artificial Intelligence. The U.K. has adopted a (primarily) “soft law” approach to AI regulation meaning it has not adopted formal legislation to regulate AI but has adopted soft law guidelines in the form of a White Paper published on March 29, 2023.
GDPR however does explicitly require that controllers notify personal data breaches under certain circumstances. Artificial Intelligence. The U.K. has adopted a (primarily) “soft law” approach to AI regulation meaning it has not adopted formal legislation to regulate AI but has adopted soft law guidelines in the form of a White Paper published in 2023.
Shareholder would be subject to current U.S. federal income taxation (at ordinary income tax rates) to the extent of all or a portion of the undistributed earnings and profits of Arch Capital and our subsidiaries attributable to “subpart F income” (including certain insurance premium income and investment income) or global intangible low-taxed income and may be taxable at ordinary income tax rates on any gain recognized on a sale or other disposition (including by way of repurchase or liquidation) of our common shares or preferred shares to the extent of the current and accumulated earnings and profits attributable to such common shares or preferred shares.
Shareholder on any day during a taxable year of the CFC) would be subject to current U.S. federal income taxation (at ordinary income tax rates) to the extent of all or a portion of the undistributed earnings and profits of Arch Capital and our subsidiaries attributable to “subpart F income” (including certain insurance premium income and investment income) or global intangible low-taxed income and may be taxable at ordinary income tax rates on any gain recognized on a sale or other disposition (including by way of repurchase or liquidation) of our common shares or preferred shares to the extent of the current and accumulated earnings and profits attributable to such common shares or preferred shares.
Arch Insurance (EU), based in Dublin, Ireland, received authorization from the Central Bank of Ireland (“CBI”) to expand its authorized classes of business as part of our plan to address the U.K.’s departure from the EU (“Brexit”).
Arch Insurance (EU), headquartered in Dublin, Ireland, received authorization from the Central Bank of Ireland (“CBI”) to expand its authorized classes of business as part of our plan to address the U.K.’s departure from the EU (“Brexit”).
Collectively, the U.K. insurance operations are referred to as “Arch U.K.” Arch U.K. conducts its operations from London and other locations in the U.K. On May 1, 2024, we completed the sale of Castel Underwriting Agencies Limited, a managing general agency in the U.K. that we acquired as part of the Barbican acquisition. ARCH CAPITAL 5 2024 FORM 10-K Strategy.
Collectively, the U.K. insurance operations are referred to as “Arch U.K.” Arch U.K. conducts its operations from London and other locations in the U.K. In May 2024, we completed the sale of Castel Underwriting Agencies Limited, a managing general agency in the U.K. that we acquired as part of the Barbican acquisition. ARCH CAPITAL 5 2025 FORM 10-K Strategy.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) created the FIO, which is not a federal regulator or supervisor of insurance, but monitors the insurance industry for systemic risk, consults with the states regarding insurance matters, develops federal policy on aspects of international insurance matters, is authorized to assist the U.S.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) created the Federal Insurance Office (“FIO”), which is not a federal regulator or supervisor of insurance, but monitors the insurance industry for systemic risk, consults with the states regarding insurance matters, develops federal policy on aspects of international insurance matters, is authorized to assist the U.S.
A U.S. holder that is an individual, estate or a trust that does not fall into a special class of trusts that is exempt from such tax, will be subject to a 3.8% tax on the lesser of (1) the U.S. holder’s “net investment income” for the relevant taxable year and (2) the excess of the U.S. holder’s modified adjusted gross income for the taxable year over a certain threshold (which in the case of individual will be between $125,000 and $250,000, depending on the individual’s circumstances).
A U.S. holder that is an individual, estate or a trust that does not fall into a special class of trusts that is exempt from such tax, will be subject to a 3.8% tax on the lesser of (1) the U.S. holder’s “net investment income” for the relevant taxable year and (2) the excess of the U.S. holder’s modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals will be between $125,000 and $250,000, depending on the individual’s filing status).
The European Data Protection Board issued additional guidance regarding international transfers which may require us to implement additional safeguards to further enhance the security of data transferred out of the EEA. The European Commission published new versions of the EU SCCs in June 2021, which place onerous obligations on the parties. On October 7, 2022, the U.S.
The European Data Protection Board issued additional guidance regarding international transfers which may require us to implement additional safeguards to further enhance the security of data transferred out of the EEA. The European Commission published new versions of the EU SCCs in 2021, which place onerous obligations on the parties. In 2022, the U.S.
Our investments are subject to market-wide risks and fluctuations, as well as to risks inherent in particular securities. While maintaining our emphasis on preservation of capital and liquidity, we expect our portfolio to grow and, in the future, may expand into areas that are not part of our current investment strategy.
Our investments are subject to market-wide risks and fluctuations, as well as to risks inherent in particular securities. While maintaining our emphasis on preservation of capital and liquidity, some investments are not readily tradable. We expect our portfolio to grow and, in the future, may expand into areas that are not part of our current investment strategy.
It is expected that the cyber risk policy will be approved by the Arch Re Bermuda board of directors at least annually. The BMA will assess Arch Re Bermuda’s compliance with the Cyber Risk Management Code of Conduct in a proportionate manner relative to the nature, scale and complexity of its business.
The cyber risk policy is to be approved by the Arch Re Bermuda board of directors at least annually. The BMA will assess Arch Re Bermuda’s compliance with the Cyber Risk Management Code of Conduct in a proportionate manner relative to the nature, scale and complexity of its business.
An ORSA report is produced at least annually, and the results of each assessment are reported to the Board. The Board actively participates in the ORSA process by steering how the assessment is performed and challenging its results. This assessment is also taken into account when formulating strategic decisions.
An ORSA report and associated recovery plan are produced at least annually, and the results of each assessment are reported to the Board. The Board actively participates in the ORSA process by steering how the assessment is performed and challenging its results. This assessment is also taken into account when formulating strategic decisions.
Generally, mortgage insurance policies exclude direct physical losses resulting from physical damages, such as damage caused by extreme weather events, though we do have some exposure to physical damage in certain GSE credit risk transfer (“CRT”) and European structured financial transactions.
Generally, mortgage insurance policies exclude direct physical losses resulting from physical damages, such as damage caused by extreme weather events, though we do have some exposure to physical damage in certain GSE credit risk transfer (“CRT”) and European SRT transactions.
We believe that we were not a PFIC for any taxable year ended on or before December 31, 2023, and we currently are not expecting to become a PFIC for any subsequent taxable year.
We believe that we were not a PFIC for any taxable year ended on or before December 31, 2025, and we currently are not expecting to become a PFIC for any subsequent taxable year.
In addition, 2019 amendments to the NAIC Model Law and Regulation eliminate reinsurance collateral requirements for reinsurers that (1) have their head office or are domiciled in EU Member States, the U.K., NAIC accredited U.S. jurisdictions and other jurisdictions deemed “reciprocal jurisdictions” by the NAIC (although individual states may approve or reject the designation of such other jurisdictions as a “reciprocal jurisdiction”), and (2) have been approved as a “reciprocal jurisdiction reinsurer.” The NAIC list of approved reciprocal jurisdictions includes Bermuda, Japan and Switzerland.
The NAIC Model Law and Regulation also eliminate reinsurance collateral requirements for reinsurers that (1) have their head office or are domiciled in EU Member States, the U.K., NAIC accredited U.S. jurisdictions and other jurisdictions deemed “reciprocal jurisdictions” by the NAIC (although individual states may approve or reject the designation of such other jurisdictions as a “reciprocal jurisdiction”), and (2) have been approved as a “reciprocal jurisdiction reinsurer.” The NAIC list of approved reciprocal jurisdictions includes Bermuda, Japan and Switzerland.
Such ratings from third party internationally recognized statistical rating organizations or agencies are instrumental in establishing the financial security of companies in our industry. We believe that the primary users of such ratings include commercial and investment banks, policyholders, brokers, ceding companies and investors.
Such ratings from third party internationally recognized statistical rating organizations or agencies are instrumental in establishing the financial security of companies in our industry. The primary users of such ratings include commercial and investment banks, policyholders, brokers, ceding companies and investors.
Some states’ laws also require or give regulators the discretion to take action in the aftermath of certain events, such as natural catastrophes, including the ability to impose moratoria on policy cancellations or nonrenewals, and to impose “grace periods” on premium payments.
Some states’ laws also require or give regulators the discretion to take action in the aftermath of certain events, such as natural catastrophes, including the ability to impose moratoria on policy cancellations or non-renewals, and to impose “grace periods” on premium payments.
The PRA has stated that these reforms to Solvency II and restatement of rules provide a new regulatory framework for maintaining the safety and soundness of insurance firms and protecting their policyholders, and that the PRA will continue to evolve its prudential regulatory framework for the insurance sector in 2025 and beyond.
The PRA has stated that these reforms to Solvency II and restatement of rules provide a new regulatory framework for maintaining the safety and soundness of insurance firms and protecting their policyholders, and that the PRA will continue to evolve its prudential regulatory framework for the insurance sector.
The U.K. government has published its own form of the EU Standard Contractual Clauses (“SCCs”), known as the International Data Transfer Agreement and an International Data Transfer Addendum to the new EU SCCs. Further, on September 21, 2023, the U.K. Government established a U.K.-U.S. data bridge or adequacy decision, through the U.K. extension to the EU-U.S. Data Privacy Framework (“DPF”).
The U.K. government has published its own form of the EU Standard Contractual Clauses (“SCCs”), known as the International Data Transfer Agreement and an International Data Transfer Addendum to the new EU SCCs. Further, in 2023, the U.K. Government established a U.K.-U.S. data bridge or adequacy decision, through the U.K. extension to the EU-U.S. Data Privacy Framework (“DPF”).
Absent any future agreement between the U.K. and the EU on the provision of financial services into the U.K., the post-Brexit status and rules applicable to U.K. branches of EEA financial institutions will be primarily driven by U.K. law and regulation.
Absent any future agreement between the U.K. and the EU on the provision of financial services into the U.K., the post-Brexit status and rules applicable to U.K. branches of EEA financial institutions are primarily driven by U.K. law and regulation.
The EU Artificial Intelligence Act (the “EU AI Act”) came into effect on August 1, 2024. As of February 2, 2025, companies are required to cease the use of AI systems which pose an unacceptable risk.
The EU Artificial Intelligence Act (the “EU AI Act”) came into effect in August 2024. As of February 2, 2025, companies are required to cease the use of AI systems which pose an unacceptable risk.
For a discussion of our risk management policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Summary of Critical Accounting Estimates—Ceded Reinsurance” and “Risk Factors—Risks Relating to Our Industry, Business and Operations—The failure of any of the loss limitation methods we employ could have a material adverse effect on our financial condition or results of operations.” ARCH CAPITAL 11 2024 FORM 10-K Our mortgage group has ceded a portion of its premium through quota share and aggregate excess of loss reinsurance agreements which provide reinsurance coverage for delinquencies on portfolios of in-force policies issued between certain periods.
For a discussion of our risk management policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Summary of Critical Accounting Estimates—Ceded Reinsurance” and “Risk Factors—Risks Relating to Our Industry, Business and Operations—The failure of any of the loss limitation methods we employ could have a material adverse effect on our financial condition or results of operations.” Our mortgage group has ceded a portion of its premium through quota share and aggregate excess of loss reinsurance agreements which provide reinsurance coverage for delinquencies on portfolios of in-force policies issued between certain periods.
In our non-U.S. mortgage insurance businesses, we compete with insurance subsidiaries of Helia Group Ltd. and QBE Insurance Group, Ltd. in Australia as well as the Australian Government’s Home Guarantee Scheme that provides coverage to participating lenders for first time homebuyers and other eligible borrowers; in Europe, our competitors on structured capital relief transactions include approximately 10-15 highly rated multi-line (re)insurers in addition to over 30 funded credit investors.
In our non-U.S. mortgage insurance businesses, we compete with insurance subsidiaries of Helia Group Limited and QBE Insurance Group Limited in Australia as well as the Australian Government’s Home Guarantee Scheme that provides coverage to participating lenders for first time homebuyers and other eligible borrowers; in Europe, our competitors on SRT transactions include approximately 10-15 highly rated multi-line (re)insurers in addition to over 30 funded credit investors.
ARCH CAPITAL 4 2024 FORM 10-K OPERATIONS We classify our businesses into three underwriting segments – insurance, reinsurance and mortgage.
ARCH CAPITAL 4 2025 FORM 10-K OPERATIONS We classify our businesses into three underwriting segments: insurance, reinsurance and mortgage.
A controller is defined for these purposes as a person who holds (either alone or in concert with others) 10% or more of the shares or voting power in the relevant company or its parent undertaking. ARCH CAPITAL 26 2024 FORM 10-K Restrictions on Payment of Dividends .
A controller is defined for these purposes as a person who holds (either alone or in concert with others) 10% or more of the shares or voting power in the relevant company or its parent undertaking. ARCH CAPITAL 27 2025 FORM 10-K Restrictions on Payment of Dividends .
As part of the underwriting process, our reinsurance group typically assesses a variety of factors, including: • adequacy of underlying rates for a specific class of business and territory; • the reputation of the proposed cedent and the likelihood of establishing a long-term relationship with the cedent, the geographic area in which the cedent does business, together with its catastrophe exposures, and our aggregate exposures in that area; • historical loss data for the cedent and, where available, for the industry as a whole in the relevant regions, in ARCH CAPITAL 8 2024 FORM 10-K order to compare the cedent’s historical loss experience to industry averages; • projections of future loss frequency and severity; and • the perceived financial strength of the cedent.
As part of the underwriting process, our reinsurance group typically assesses a variety of factors, including: • adequacy of underlying rates for a specific class of business and territory; • the reputation of the proposed cedent and the likelihood of establishing a long-term relationship with the cedent, the geographic area in which the cedent does business, together with its catastrophe exposures, and our aggregate exposures in that area; • historical loss data for the cedent and, where available, for the industry as a whole in the relevant regions, in order to compare the cedent’s historical loss experience to industry averages; • projections of future loss frequency and severity; and • the perceived financial strength of the cedent.
Those entities acting within the Lloyd’s market are required to comply with the requirements of the FSMA and provisions of the PRA’s or ARCH CAPITAL 25 2024 FORM 10-K FCA's rules, although the PRA has delegated certain of its powers, including some of those relating to prudential requirements, to Lloyd’s.
Those entities acting within the Lloyd’s market are required to comply with the requirements of the FSMA and provisions of the PRA’s or ARCH CAPITAL 26 2025 FORM 10-K FCA's rules, although the PRA has delegated certain of its powers, including some of those relating to prudential requirements, to Lloyd’s.
Under the Bermuda Companies Act of 1981, as amended (the “Companies Act”), Arch Re Bermuda and AGRL may each ARCH CAPITAL 17 2024 FORM 10-K declare or pay a dividend out of distributable reserves only if the company has reasonable grounds for believing that it is, or would after the payment be, able to pay its liabilities as they become due and if the realizable value of its assets would thereby not be less than its liabilities.
Under the Bermuda Companies Act of 1981, as amended (the “Companies Act”), Arch Re Bermuda and AGRL may each declare or pay a dividend out of distributable reserves only if the company has reasonable grounds for believing that it is, or would after the payment be, able to pay its liabilities as they become due and if the realizable value of its assets would thereby not be less than its liabilities.
From January 1, 2021, under the provisions of the TCA our Irish regulated entities lost their passporting rights into the U.K. Sustainability Considerations. Sustainability matters have been on the CBI's agenda for a number of years. In November 2021, the CBI issued its expectations in respect of climate and broader sustainability issues for all regulated firms in Ireland (including (re)insurers).
Since 2021, under the provisions of the TCA our Irish regulated entities lost their passporting rights into the U.K. Sustainability Considerations. Sustainability matters have been on the CBI's agenda for a number of years. In 2021, the CBI issued its expectations in respect of climate and broader sustainability issues for all regulated firms in Ireland (including (re)insurers).
As part of those efforts, on January 17, 2022, the U.K. passed mandatory climate related financial disclosure requirements under the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022. The regulations apply to large companies (including some of our U.K. entities) for financial years starting on or after April 6, 2022.
As part of those efforts, in 2022, the U.K. passed mandatory climate related financial disclosure requirements under the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022. The regulations apply to large companies (including some of our U.K. entities) for financial years starting on or after April 2022.
In Australia, Arch Indemnity provides lenders’ mortgage insurance on a flow basis to cover new originations and offers coverage through structured transactions to cover one or more portfolios of previously originated residential loans. • Reinsurance . Arch Re Bermuda provides quota share and excess of loss reinsurance covering U.S. and international mortgages.
In Australia, Arch Indemnity provides lenders’ mortgage insurance on a flow basis to cover new originations and offers coverage through structured transactions to cover one or more portfolios of previously originated residential loans. • Reinsurance . Arch Re Bermuda provides quota share and excess of loss reinsurance covering U.S. and international mortgages. • Other credit risk-sharing products .
EEA Member States were required to transpose the IDD by October 1, 2018. The IDD replaces the existing Insurance Mediation Directive. The IDD applies to all distributors of insurance and reinsurance products (including insurers and reinsurers selling directly to customers) and strengthens the regulatory regime applicable to distribution activities through increased transparency, information and conduct requirements.
EEA Member States were required to transpose the IDD by 2018. The IDD replaced the Insurance Mediation Directive. The IDD applies to all distributors of insurance and reinsurance products (including insurers and reinsurers selling directly to customers) and strengthens the regulatory regime applicable to distribution activities through increased transparency, information and conduct requirements.
The other reforms forming part of what will eventually be known as “Solvency U.K.” became effective on December 31, 2024, on the implementation of the PRA’s Policy Statement PS15/24 (Review of Solvency II: Restatement of assimilated law).
The other reforms forming part of what is known as “Solvency U.K.” became effective on December 31, 2024, on the implementation of the PRA’s Policy Statement PS15/24 (Review of Solvency II: Restatement of assimilated law).
With the acquisition of Arch Indemnity in Australia in 2021, and continued growth insuring and reinsuring European banks, we believe diversifying revenues on a global basis is a key operating principle . Our mortgage group focuses on the following areas: • Direct mortgage insurance in the United States .
With the acquisition of Arch Indemnity in Australia in 2021, and continued growth insuring and reinsuring European banks, we believe diversifying revenues on a global basis is a key operating principle. ARCH CAPITAL 10 2025 FORM 10-K Our mortgage group focuses on the following areas: • Direct mortgage insurance in the United States .
It outlines our approach to risk identification and assessment and provides an overview of our risk appetite and tolerance for each of the following major risks: underwriting (insurance) risk including pricing, reserving and catastrophe; investment risk including market and liquidity risks; group risk including strategic, governance, rating agency and capital market risk; credit risk; and operational risk including ARCH CAPITAL 15 2024 FORM 10-K regulatory, cyber security, investor relations (reputational risk) and outsourcing risks.
It outlines our approach to risk identification and assessment and provides an overview of our risk appetite and tolerance for each of the following major risks: underwriting (insurance) risk including pricing, reserving and catastrophe; investment risk including market and liquidity risks; group risk including strategic, governance, rating agency and capital market risk; credit risk; and operational risk including regulatory, cyber security, investor relations (reputational risk) and outsourcing risks.
Our three Irish operating subsidiaries are Arch Re Europe, Arch Insurance (EU) and Arch Underwriters Europe Limited (“Arch Underwriters Europe”). Arch Re Europe was licensed and authorized by the CBI as a non-life reinsurer in October 2008 and as a life reinsurer in November 2009.
Our three Irish operating subsidiaries are Arch Re Europe, Arch Insurance (EU) and Arch Underwriters Europe Limited (“Arch Underwriters Europe”). Arch Re Europe was licensed and authorized by the CBI as a non-life reinsurer in 2008 and as a life reinsurer in 2009. Arch Insurance (EU) was licensed and authorized by the CBI as a non-life insurer in 2011.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeChanges to existing regulation and supervisory standards, or failure to comply with applicable requirements, could adversely affect our business and results of operations. • We are subject to ongoing legal and policy actions around climate change which may result in additional requirements that could prompt us to shift our risk selection and business strategy in ways which may adversely impact our results of operations. • The imposition of sanctions by the U.S., U.K. and EU on Russia and Russia-related businesses has impacted certain sectors in which we write business. • Our customers and policyholders may also be impacted by regulatory, technological, market or other risks relating to climate change in ways which we cannot predict with certainty and adversely impact our results of operations. • We are subject to changes in governmental, investor and societal responses to climate change and sustainability-related issues, which may result in scrutiny of our business, litigation or adverse impacts to our share price and our results of operations. • We could face unanticipated losses from increased geopolitical tensions, hostilities, war, terrorism, cyber attacks and general political instability, and these or other unanticipated losses could have a material adverse effect on our financial condition and results of operations. • Underwriting risks and reserving for losses are based on probabilities and related modeling, which are subject to inherent uncertainties. • The failure of any of the loss limitation methods we employ could have a material adverse effect on our financial condition or results of operations. • The availability of reinsurance, retrocessional coverage and capital market transactions to limit our exposure to risks may be limited, and counterparty credit and other risks associated with our reinsurance arrangements may result in losses which could adversely affect our financial condition and results of operations. • We could be materially adversely affected to the extent that important third parties with whom we do business do not adequately or appropriately manage their risks, commit fraud or otherwise breach obligations owed to us. • Emerging claim and coverage issues may adversely affect our business. • Acquisitions, the addition of new lines of insurance or reinsurance business, expansion into new geographic regions and/or entering into joint ventures or partnerships expose us to risks. • Our information technology systems and our pace of adoption of new technologies, such as generative AI, may not be adequate to meet the demands of our customers or impact negatively our ability to compete with our peers. • Technology failures caused by intentional and unintentional human and non-human actions may cause material disruption in the availability of the information technology systems we use in our business. • We could be materially impacted by a cyber attack, data breach, ransomware, phishing, social engineering or other cybersecurity incident resulting in loss of business data, personal data and other confidential or secret information, a disruption in our business operations, regulatory or other legal action, and fines. • Changes in criteria used by rating agencies which may result in a downgrade in our ratings, our inability to obtain a rating or a change in capital allocation or requirements for our operating insurance and reinsurance subsidiaries may adversely affect our relationships with clients and brokers and negatively impact sales of our products. • Our ability to execute our business strategy successfully, continue to grow and innovate and offer our employees a dynamic and supportive workplace depends on the recruitment, retention and promotion of talented, agile, and resilient employees at all levels of our organization. • Our success will depend on our ability to maintain and enhance effective operating procedures and internal controls and our ERM program. • We are exposed to credit risk in certain of our business operations. • Our business is subject to laws and regulations relating to economic trade sanctions and foreign bribery laws, the violation of which could adversely affect our operations.
Biggest changeChanges to existing regulation and supervisory standards, or failure to comply with applicable requirements, could adversely affect our business and results of operations. • We are subject to ongoing legal and policy actions around climate change which may result in additional requirements that could prompt us to shift our risk selection and business strategy in ways which may adversely impact our results of operations. • Sanctions imposed by the U.S., U.K. and EU on Russia and Russia-related businesses have impacted certain sectors in which we write business. • Certain U.S. policies and actions have created geopolitical risks which are not possible to manage or predict, some of which may result in uncertainty in the global markets. • Our customers and policyholders may also be impacted by regulatory, technological, market or other risks relating to climate change in ways which we cannot predict with certainty and adversely impact our results of operations. • We are subject to changes in governmental, investor and societal responses to climate change and sustainability-related issues, which may result in scrutiny of our business, litigation or adverse impacts to our share price and our results of operations. • We could face unanticipated losses from increased geopolitical tensions, hostilities, war, terrorism, cyber attacks and general political instability, and these or other unanticipated losses could have a material adverse effect on our financial condition and results of operations. • Underwriting risks and reserving for losses are based on probabilities and related modeling, which are subject to inherent uncertainties. • The failure of any of the loss limitation methods we employ could have a material adverse effect on our financial condition or results of operations. • The availability of reinsurance, retrocessional coverage and capital market transactions to limit our exposure to risks may be limited, and counterparty credit and other risks associated with our reinsurance arrangements may result in losses which could adversely affect our financial condition and results of operations. • We could be materially adversely affected to the extent that important third parties with whom we do business do not adequately or appropriately manage their risks, commit fraud or otherwise breach obligations owed to us. • Emerging claim and coverage issues may adversely affect our business. • Acquisitions, the addition of new lines of insurance or reinsurance business, expansion into new geographic regions and/or entering into joint ventures or partnerships expose us to risks.
For our U.S. insurance business, in addition to utilizing reinsurance, we have developed a proprietary risk model that simulates the maximum probable loss resulting from a severe economic event impacting the housing market. We also seek to limit our loss exposure by geographic diversification, including by pricing adjustments in our U.S. mortgage insurance business.
For our U.S. mortgage insurance business, in addition to utilizing reinsurance, we have developed a proprietary risk model that simulates the maximum probable loss resulting from a severe economic event impacting the housing market. We also seek to limit our loss exposure by geographic diversification, including by pricing adjustments in our U.S. mortgage insurance business.
Some of the reinsurance agreements assumed by our reinsurance operations include provisions that a ratings downgrade or other specified triggering event with respect to our reinsurance operations, such as a reduction in surplus by specified amounts during specified periods, provide our ceding company clients certain rights, including, the right to terminate the subject reinsurance agreement and/or to require us to post additional collateral.
Some of our assumed reinsurance agreements include provisions that a ratings downgrade or other specified triggering event with respect to our reinsurance operations, such as a reduction in surplus by specified amounts during specified periods, provide our ceding company clients certain rights, including, the right to terminate the subject reinsurance agreement and/or to require us to post additional collateral.
Also, the continued adoption of these standards may increase the complexity and costs associated with tax compliance and adversely affect our financial position and results of operations. In May 2019, the OECD published a “Programme of Work,” divided into two pillars, which is designed to address the tax challenges created by an increasing digitalized economy.
Also, the continued adoption of these standards may increase the complexity and costs associated with tax compliance and adversely affect our financial position and results of operations. In 2019, the OECD published a “Programme of Work,” divided into two pillars, which is designed to address the tax challenges created by an increasing digitalized economy.
It is expected that the Bermuda CIT generally will prevent or mitigate the risk of other adopting countries from collecting “top-up” taxes from Bermuda companies to reach the 15% minimum rate, although the continued evolution of the implementation of Pillar II may in some cases mean that the Bermuda CIT does not avoid a “top-up” tax in all scenarios.
It is expected that the Bermuda CIT Act generally will prevent or mitigate the risk of other adopting countries from collecting “top-up” taxes from Bermuda companies to reach the 15% minimum rate, although the continued evolution of the implementation of Pillar II may in some cases mean that the Bermuda CIT Act does not avoid a “top-up” tax in all scenarios.
The PMIERs apply to AMIC and UGRIC, which are eligible mortgage insurers. The PMIERs impose limitations on the type of risk insured, the forms and insurance policies issued, standards for the geographic and customer diversification of risk, acceptable underwriting practices, quality assurance, loss mitigation, claims handling, standards for certain reinsurance cessions and financial requirements, among other things.
The PMIERs apply to AMIC and UGRIC, which are eligible mortgage insurers. The PMIERs impose limitations on the type of risk insured, the forms and insurance policies issued, standards for geographic and customer diversification of risk, acceptable underwriting practices, quality assurance, loss mitigation, claims handling, reinsurance cessions and financial requirements, among other things.
It is possible that rating agencies may modify their evaluation criteria, heighten the level of scrutiny they apply when analyzing companies in our industry, adjust upward the capital and other requirements employed in their models and/or discontinue credit and debt instruments or other structures deployed for maintenance of certain rating levels.
It is possible that rating agencies may modify their evaluation criteria, heighten the level of scrutiny they apply when analyzing companies in our industry, adjust upward the capital and other requirements employed in their models and/or discontinue recognition of credit and debt instruments or other structures deployed for maintenance of certain rating levels.
New sanctions regimes may be initiated, or existing sanctions expanded or lifted, at any time, which can immediately impact our business activities. Since the Russian invasion of Ukraine in February 2022, there have been several sanctions packages imposed by the U.S., U.K. and EU which impact our business.
New sanctions regimes may be initiated, or existing sanctions expanded or lifted, at any time, which can immediately impact our business activities. Since the Russian invasion of Ukraine in 2022, there have been several sanctions packages imposed by the U.S., U.K. and EU which impact our business.
Elevated levels of inflation could drive higher U.S. and global interest rates, negatively impacting asset prices, particularly in fixed income and financial flexibility of operating businesses. In addition, a lack of pricing transparency, decreased market liquidity, the strengthening or weakening of foreign currencies against the U.S.
Elevated levels of inflation could drive higher U.S. and global interest rates, negatively impacting asset prices, particularly in fixed income and undermine financial flexibility of operating businesses. In addition, a lack of pricing transparency, decreased market liquidity, the strengthening or weakening of foreign currencies against the U.S.
Future changes to the ERCF, or the guarantee fees charged to acquire loans, could adversely impact credit for credit risk transfer, the capital relief afforded mortgage insurance or the volume of loans purchased by the Enterprises and the demand for mortgage insurance.
Future changes to the ERCF, or the guarantee fees charged to acquire loans, could adversely impact credit for credit risk transfer, the capital relief afforded private mortgage insurance or the volume of loans purchased by the Enterprises and the demand for mortgage insurance.
In January 2020, the OECD released a statement excluding most financial services activities, including insurance activities, from the scope of the profit reallocation mechanism in Pillar I (referred to under Pillar I as “Amount A”).
In 2020, the OECD released a statement excluding most financial services activities, including insurance activities, from the scope of the profit reallocation mechanism in Pillar I (referred to under Pillar I as “Amount A”).
The adoption of the tax laws described above (in particular, the adoption of an “under-taxed profit rule” by certain countries in which we and our affiliates do business and the expected implementation of a corporate income tax regime in Bermuda) are expected to result in an increase to our effective tax rate and aggregate tax liability, which may adversely affect our financial position and results of operations, and is expected to increase the complexity and cost of our worldwide tax compliance.
The adoption of the tax laws described above (in particular, the adoption of an “under-taxed profit rule” by certain countries in which we and our affiliates do business and the enactment of a corporate income tax regime in Bermuda) are expected to result in an increase to our effective tax rate and aggregate tax liability, which may adversely affect our financial position and results of operations, and is expected to increase the complexity and cost of our worldwide tax compliance.
The financial requirements require a mortgage insurer’s available assets to meet or exceed “minimum required assets” as of each quarter end. In August 2024, the GSEs updated PMIERs to incorporate new deductions to the definition of available assets for investment risk. This update will become effective March 31, 2025, but the impact will be phased in through September 30, 2026.
The financial requirements require a mortgage insurer’s available assets to meet or exceed “minimum required assets” as of each quarter end. In August 2024, the GSEs updated PMIERs to incorporate new deductions to the definition of available assets for investment risk. This update became effective March 31, 2025, but the impact will be phased in through September 30, 2026.
Accordingly, while we believe our reinsurance programs, together with the coverage provided under the Terrorism Risk Insurance Act of 2002, as amended (“TRIP”) are sufficient to reasonably limit our net losses relating to potential future terrorist attacks, we can offer no assurance that our available capital will be adequate to cover losses when they materialize.
Accordingly, while we believe our reinsurance programs, together with the coverage provided under the Terrorism Risk Insurance Act of 2002, as amended (“TRIA”) are sufficient to reasonably limit our net losses relating to potential future terrorist attacks, we can offer no assurance that our available capital will be adequate to cover losses when they materialize.
Risk Relating to Our Company and Our Shares Some of the provisions of our bye-laws and our shareholders agreement may have the effect of hindering, delaying or preventing third party takeovers or changes in management initiated by shareholders. These provisions may also prevent our shareholders from receiving premium prices for their shares in an unsolicited takeover.
Risks Relating to Our Company and Our Shares Some of the provisions of our bye-laws and our shareholders agreement may have the effect of hindering, delaying or preventing third party takeovers or changes in management initiated by shareholders. These provisions may also prevent our shareholders from receiving premium prices for their shares in an unsolicited takeover.
The program trigger for calendar year 2024 and any program year thereafter through 2027 is $200 million. If an act (or acts) of terrorism result in covered losses exceeding the $100 billion annual limit, insurers with losses exceeding their deductibles will not be responsible for additional losses.
The program trigger for calendar year 2025 and any program year thereafter through 2027 is $200 million. If an act (or acts) of terrorism result in covered losses exceeding the $100 billion annual limit, insurers with losses exceeding their deductibles will not be responsible for additional losses.
The effects of inflation, trade and tariff disputes and global recessionary and other economic conditions impact the insurance and reinsurance industry in ways which may negatively impact our business, financial condition and results of operations. While general economic inflation has eased in recent quarters, higher inflationary conditions may continue to remain in place.
The effects of inflation, trade and tariff disputes and other economic conditions impact the insurance and reinsurance industry in ways which may negatively impact our business, financial condition and results of operations. While general economic inflation has eased in recent quarters, higher inflationary conditions may continue to remain in place.
We have substantial exposure to unexpected, large losses resulting from man-made catastrophic events, such as acts of war, regional hostilities, acts of terrorism, political instability, social unrest and pandemics similar to the COVID-19 pandemic. These risks are inherently unpredictable.
We have substantial exposure to unexpected, large losses resulting from man-made catastrophic events, such as acts of war, regional hostilities, acts of terrorism, political instability, social unrest, cyber attacks and pandemics similar to the COVID-19 pandemic. These risks are inherently unpredictable.
Any estimates and assumptions made as part of the reserving process could prove to be inaccurate due to several factors, including the fact that for certain lines of business relatively limited historical information has been reported to us through December 31, 2024.
Any estimates and assumptions made as part of the reserving process could prove to be inaccurate due to several factors, including the fact that for certain lines of business relatively limited historical information has been reported to us through December 31, 2025.
Our eligible mortgage insurers each satisfied the PMIERs’ financial requirements as of December 31, 2024. While we intend to continue to comply with these requirements, there can be no assurance that the GSEs will not change the PMIERs or that AMIC or UGRIC will continue as eligible mortgage insurers.
Our eligible mortgage insurers each satisfied the PMIERs’ financial requirements as of December 31, 2025. While we intend to continue to comply with these requirements, there can be no assurance that the GSEs will not change the PMIERs or that AMIC or UGRIC will continue as eligible mortgage insurers.
While our business has not been directly impacted by the proposed Trump administration tariffs on imported goods, there may be a ripple effect on how these impact certain industries where we provide insurance or reinsurance.
While our business has not been directly impacted by the existing and proposed Trump administration tariffs on imported goods, there may be a ripple effect on how these impact certain industries where we provide insurance or reinsurance.
Economic conditions, including but not limited to recessionary conditions, inflation, declining home prices or the impact of climate change could also have a material impact on our ability to manage our risk aggregations through reinsurance or capital markets transactions.
Economic conditions, including but not limited to unemployment, inflation, declining home prices or the impact of climate change could also have a material impact on our ability to manage our risk aggregations through reinsurance or capital markets transactions.
ARCH CAPITAL 44 2024 FORM 10-K Risks Relating to Financial Markets and Investment s • Adverse developments in the financial markets could have a material adverse effect on our results of operations, financial position and our businesses, and may also limit our access to capital; our policyholders, reinsurers and retrocessionaires may also be affected by such developments, which could adversely affect their ability to meet their obligations to us. • Disruption to the financial markets and weak economic conditions resulting from situations such as supply/demand imbalances, inflation and political unrest may adversely and materially impact our investments, financial condition and results of operation. • Foreign currency exchange rate fluctuation may adversely affect our financial results. • The determination of the amount of current expected credit losses (“CECL”) allowances taken on our investments is highly subjective and could materially impact our results of operations or financial position. • Our reinsurance subsidiaries may be required to provide collateral to ceding companies, by applicable regulators, their contracts or other commercial considerations.
Risks Relating to Financial Markets and Investment s • Adverse developments in the financial markets could have a material adverse effect on our results of operations, financial position and our businesses, and may also limit our access to capital; our policyholders, reinsurers and retrocessionaires may also be affected by such developments, which could adversely affect their ability to meet their obligations to us. • Disruption to the financial markets and weak economic conditions resulting from situations such as supply/demand imbalances, inflation and political unrest may adversely and materially impact our investments, financial condition and results of operation. • Foreign currency exchange rate fluctuation may adversely affect our financial results. • The determination of the amount of current expected credit losses (“CECL”) allowances taken on our investments is highly subjective and could materially impact our results of operations or financial position. • Our reinsurance subsidiaries may be required to provide collateral to ceding companies, by applicable regulators, their contracts or other commercial considerations.
Continued increases in the supply of insurance and reinsurance may have consequences for us, including fewer contracts written, lower premium rates, increased expenses for customer acquisition and retention, and less favorable policy terms and conditions.
Continued increases in the supply of insurance and reinsurance may have consequences for us, including fewer contracts written, lower New Insurance Written (“NIW”), lower premium rates, increased expenses for customer acquisition and retention, and less favorable policy terms and conditions.
If any GSE reform is adopted, whether through legislation or administrative action, it could impact the current role of private mortgage insurance as credit enhancement, including its reduction or elimination. Passage and timing of any comprehensive GSE reform or incremental change (legislative or administrative) is uncertain, making the actual impact on the mortgage insurance industry difficult to predict.
If any GSE reform, including privatization, is pursued, whether through legislation or administrative action, it could impact the current role of private mortgage insurance as credit enhancement, including its reduction or elimination. Passage and timing of any comprehensive GSE reform or incremental change (legislative or administrative) is uncertain, making the actual impact on the mortgage insurance industry difficult to predict.
Risk Relating to Our Company • Some of the provisions of our bye-laws and our shareholders agreement may have the effect of hindering, delaying or preventing third party takeovers or changes in management initiated by shareholders.
Risks Relating to Our Company • Some of the provisions of our bye-laws and our shareholders agreement may have the effect of hindering, delaying or preventing third party takeovers or changes in management initiated by shareholders.
Furthermore, the FHFA and/or the GSEs could chose to reduce the amount of CRT protection purchased on their loan portfolios, which could reduce the CRT investment opportunities available for reinsurers. Future legislative, administrative or changes to business practices related to the use or requirement for credit enhancement could have a material adverse impact on the Company.
Furthermore, the FHFA and/or the GSEs could choose to reduce the amount of CRT protection purchased on their loan portfolios, which could reduce the CRT investment opportunities available for reinsurers. Future legislative or administrative action or changes to business practices related to the use or requirement for credit enhancement could have a material adverse impact on the Company.
Changes were made to the ERCF in 2022 to incentive CRT transactions, and in 2023 to address capital requirements for derivatives; market risk; multifamily loans; and exposures of an Enterprise to the other Enterprise.
Changes were made to the ERCF in 2022 to incentivize CRT transactions, and in 2023 to address capital requirements for derivatives; market risk; multifamily loans; and exposures of an Enterprise to the other Enterprise.
In November 2015, “final reports” were approved for adoption by the G20 finance ministers.
In 2015, “final reports” were approved for adoption by the G20 finance ministers.
ARCH CAPITAL 51 2024 FORM 10-K While we conduct underwriting, financial, claims and information technology due diligence reviews and apply rigorous standards in the selection of these counterparties, there is no assurance they have provided us accurate or complete information to assess their risk or that they can manage effectively their own risks.
ARCH CAPITAL 53 2025 FORM 10-K While we conduct underwriting, financial, claims and information technology due diligence reviews and apply rigorous standards in the selection of these counterparties, there is no assurance they have provided us accurate or complete information to assess their risk or that they can manage effectively their own risks.
Disputes relating to coverage and choice of legal forum may also arise. Underwriting is inherently a matter of ARCH CAPITAL 50 2024 FORM 10-K judgment, involving important assumptions about matters that are inherently unpredictable and beyond our control, and for which historical experience and probability analysis may not provide sufficient guidance.
Disputes relating to coverage and choice of legal ARCH CAPITAL 52 2025 FORM 10-K forum may also arise. Underwriting is inherently a matter of judgment, involving important assumptions about matters that are inherently unpredictable and beyond our control, and for which historical experience and probability analysis may not provide sufficient guidance.
The bye-laws also contain a provision limiting the rights of any U.S. person (as defined in section 7701(a)(30) of the Internal Revenue Code of 1986, as amended (the “Code”)) that owns shares of Arch Capital, directly, indirectly or constructively (within the meaning of section 958 of the Code), representing more than 9.9% of the voting power of all shares entitled to vote generally at an election of directors.
ARCH CAPITAL 61 2025 FORM 10-K The bye-laws also contain a provision limiting the rights of any U.S. person (as defined in section 7701(a)(30) of the Internal Revenue Code of 1986, as amended (the “Code”)) that owns shares of Arch Capital, directly, indirectly or constructively (within the meaning of section 958 of the Code), representing more than 9.9% of the voting power of all shares entitled to vote generally at an election of directors.
Risks Relating to Taxation We expect to become subject to increased taxation in Bermuda as a result of the recently adopted Bermuda CIT Act, and may become subject to increased taxation in other countries as a result of th e implementation of the OECD's plan on “Base Erosion and Profit Shifting.” The OECD, with the support of the G20, initiated the “Base Erosion and Profit Shifting” (“BEPS”) project in 2013 in response to concerns that changes are needed to international tax laws to address situations where multinationals may pay little or no tax in certain jurisdictions by shifting profits away from jurisdictions where the activities creating those profits may take place.
Risks Relating to Taxation We are subject to increased taxation in Bermuda as a result of the Bermuda CIT Act, effective January 1, 2025 and may become subject to increased taxation in other countries as a result of th e implementation of the OECD's plan on “Base Erosion and Profit Shifting.” The OECD, with the support of the G20, initiated the “Base Erosion and Profit Shifting” (“BEPS”) project in 2013 in response to concerns that changes are needed to international tax laws to address situations where multinationals may pay little or no tax in certain jurisdictions by shifting profits away from jurisdictions where the activities creating those profits may take place.
Our information technology systems and our pace of adoption of new technologies, such as generative AI, may not be adequate to meet the demands of our customers or impact negatively our ability to compete with our peers. We are dependent on our information technology systems to conduct our business and drive strategic decisions based on data analytics.
Our information technology systems and our pace of adoption of new technologies, including AI, may not be adequate to meet the demands of our customers or impact negatively our ability to compete with our peers. We are dependent on our information technology systems to conduct our business and drive strategic decisions based on data analytics.
As of December 31, 2024, our consolidated reserves for unpaid losses and loss adjustment expenses, net of unpaid losses and loss adjustment expenses recoverable, were approximately $21.5 billion. Such reserves were established in accordance with applicable insurance laws and GAAP. Loss reserves are inherently subject to uncertainty.
As of December 31, 2025, our consolidated reserves for unpaid losses and loss adjustment expenses, net of unpaid losses and loss adjustment expenses recoverable, were approximately $24.5 billion. Such reserves were established in accordance with applicable insurance laws and GAAP. Loss reserves are inherently subject to uncertainty.
Risks Relating to Our Mortgage Operations • The ultimate performance of our mortgage insurance portfolios remains uncertain. • If the volume of low down payment mortgage originations declines, or if other government housing policies, practices or regulations change, the amount of mortgage insurance we write in the U.S. or Australia could decline, which would reduce our mortgage insurance revenues. • Changes to the role of the GSEs in the U.S. housing market or to GSE eligibility requirements for mortgage insurers or to the GSEs’ use of CRT could negatively impact our results of operations and financial condition or reduce our operating flexibility. • The implementation of the Basel III Capital Accord and Federal Housing Finance Agency (“FHFA”)’s Enterprise Regulator Capital Framework may adversely affect the use of mortgage insurance and CRT opportunities.
Risks Relating to Our Mortgage Operations • The ultimate performance of our mortgage insurance portfolios remains uncertain. • If the volume of low down payment mortgage originations declines, or if other government housing policies, practices or regulations change, the amount of mortgage insurance we write in the U.S. or Australia could decline, which would reduce our mortgage insurance revenues. • Changes to the role of the GSEs in the U.S. housing market or to GSE eligibility requirements for mortgage insurers or to the GSEs’ use of CRT could negatively impact our results of operations and financial condition or reduce our operating flexibility. • The implementation of the Basel III Capital Accord and FHFA’s Enterprise Regulatory Capital Framework may adversely affect the use of mortgage insurance and SRT and CRT opportunities.
In December 2017, the Basel Committee published final revisions to the Basel Capital Accord which is informally denominated in the U.S. as “Basel III Endgame.” The Basel Committee expects the new rules to be fully implemented by January 2027.
In 2017, the Basel Committee on Banking Supervision published final revisions to the Basel Capital Accord which is informally denominated in the U.S., as “Basel III Endgame.” The Basel Committee expects the new rules to be fully implemented by January 2027.
Department of Treasury (the “Treasury Department”) and FHFA announced an agreement to amend the preferred stock purchase agreements between ARCH CAPITAL 57 2024 FORM 10-K the Treasury Department and the GSEs, originally entered into in September 2008, in order to, among other things, codify the requirement that Treasury consent before the conservatorships can be terminated, memorialize that ending the conservatorship should be based on consideration of the financial condition of the GSEs and the potential impact on the housing market, and outline an agreed upon process for eventual public input.
Department of Treasury (the “Treasury Department”) and FHFA announced an agreement to amend the preferred stock purchase agreements between the Treasury Department and the GSEs, originally entered into in 2008, in order to, among other things, codify the requirement that Treasury consent before the conservatorships can be terminated, memorialize that ending the conservatorship should be based on consideration of the financial condition of the GSEs and the potential impact on the housing market, and outline an agreed upon process for eventual public input.
State credit for reinsurance rules also generally provide that reinsurers such as Arch Re Bermuda must provide statutory collateral in the event their certified or reciprocal status is “terminated” or 100% collateral upon the entry of an order of rehabilitation, liquidation or conservation against a ceding insurer.
State credit for reinsurance rules also generally provide that reinsurers such as Arch Re Bermuda must provide statutory collateral in the event their certified or reciprocal status is ARCH CAPITAL 58 2025 FORM 10-K “terminated” or 100% collateral upon the entry of an order of rehabilitation, liquidation or conservation against a ceding insurer.
Our preferred shares are equity interests and do not constitute indebtedness. As such, these preferred shares will rank junior to all of our indebtedness and other non-equity claims with respect to assets available to satisfy our claims, including in our liquidation. Our existing and future indebtedness may restrict payments of dividends on our preferred shares.
As such, these preferred shares will rank junior to all of our indebtedness and other non-equity claims with respect to assets available to satisfy our claims, including in our liquidation. Our existing and future indebtedness may restrict payments of dividends on our preferred shares.
We compete on an international and regional basis with major U.S. and non-U.S. insurers and reinsurers, many of which have greater financial, marketing and management resources than we do. See “Competition” in Item 1 for details on our competitors in each of the major segments we operate in.
The insurance and reinsurance industry is highly competitive. We compete on an international and regional basis with major U.S. and non-U.S. insurers and reinsurers, many of which have greater financial, marketing and management resources than we do. See “Competition” in Item 1 for details on our competitors in each of the major segments we operate in.
ARCH CAPITAL 53 2024 FORM 10-K Changes in criteria used by rating agencies which may result in a downgrade in our ratings, our inability to obtain a rating or a change in capital application or requirements for our operating insurance and reinsurance subsidiaries may adversely affect our relationships with clients and brokers and negatively impact sales of our products.
Changes in criteria used by rating agencies which may result in a downgrade in our ratings, our inability to obtain a rating or a change in capital application or requirements for our operating insurance and reinsurance subsidiaries may adversely affect our relationships with clients and brokers and negatively impact sales of our products.
On December 17, 2020, the FHFA published a new Enterprise Regulatory Capital Framework (“ERCF”) Enterprise Capital Rule for Fannie Mae and Freddie Mac that significantly increases minimum capital requirements for these GSEs. The new rule requires each GSE to maintain both higher minimum capital ratios and capital “buffers” to avoid restrictions on capital distributions and discretionary bonus payments.
In 2020, the FHFA published a new Enterprise Regulatory Capital Framework (“ERCF”) for Fannie Mae and Freddie Mac that significantly increased minimum capital requirements for the GSEs. The rule requires each GSE to maintain both higher minimum capital ratios and capital “buffers” to avoid restrictions on capital distributions and discretionary bonus payments.
A significant portion of cash and invested assets held by Arch consists of fixed maturities ( 67.4% as of December 31, 2024). Although our current investment guidelines and approach emphasize preservation of capital, market liquidity and diversification of risk, our investments are subject to market-wide risks and valuation fluctuations.
A significant portion of cash and invested assets held by Arch consists of fixed maturities ( 70.8% as of December 31, 2025). Although our current investment guidelines and approach emphasize preservation of capital, market liquidity and diversification of risk, our investments are subject to market-wide risks and valuation fluctuations.
We could be materially impacted by a cyber attack, data breach, ransomware, phishing, social engineering or other cybersecurity incident resulting in loss of business data, personal data and other confidential or secret information, a disruption in our business operations, regulatory or other legal action, and fines.
See Item 1C, “ Cybersecurity ” for additional information. We could be materially impacted by a cyber attack, data breach, ransomware, phishing, social engineering or other cybersecurity incident resulting in loss of business data, personal data and other confidential or secret information, a disruption in our business operations, regulatory or other legal action, and fines .
These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake or ARCH CAPITAL 54 2024 FORM 10-K circumvention of controls. There can be no assurance that our control system will succeed in achieving its stated goals under all potential future conditions.
These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake or circumvention of controls. There can be no assurance that our control system will succeed in achieving its stated goals under all potential future conditions.
Future pricing changes, which may include increasing LLPAs and guarantee fees, limiting the purchase of certain categories of loans, or restricting loan limits could cause a decline in the volume of low-down payment home mortgage purchases by the GSEs, could decrease demand for mortgage insurance, and could decrease our U.S. new insurance written and reduce mortgage insurance revenues.
Future pricing changes, which may include increasing LLPAs and guarantee fees, limiting the purchase of certain categories of loans, or restricting loan limits could cause a decline in the volume of low down payment home mortgage purchases by the GSEs and could negatively impact U.S. new insurance written and mortgage insurance revenues.
In addition, these provisions could also result in the entrenchment of incumbent management. ARCH CAPITAL 59 2024 FORM 10-K There are regulatory limitations on the ownership and transfer of our common shares. The jurisdictions where we operate have laws and regulations that require regulatory approval of a change in control of an insurer or an insurer's holding company.
In addition, these provisions could also result in the entrenchment of incumbent management. There are regulatory limitations on the ownership and transfer of our common shares. The jurisdictions where we operate have laws and regulations that require regulatory approval of a change in control of an insurer or an insurer's holding company.
In October 2021, 136 jurisdictions agreed on a two-pillar solution to address the tax challenges arising from the digitalization of the economy. In December 2021, the OECD released Model Rules for implementation of Pillar II followed by the release of detailed commentary in March 2022, with the latest update to the commentary in December 2023.
In 2021, 136 jurisdictions agreed on a two-pillar solution to address the tax challenges arising from the digitalization of the economy. In 2021, the OECD released Model Rules for implementation of Pillar II followed by the release of detailed commentary in 2022, with the latest update to the commentary in May 2025.
With new technologies emerging at a rapid pace, there is no assurance that we will be able to evaluate and integrate new ARCH CAPITAL 52 2024 FORM 10-K technologies or update our existing systems to keep pace with our competitors and customer needs.
ARCH CAPITAL 54 2025 FORM 10-K With new technologies and AI tools emerging at a rapid pace, there is no assurance that we will be able to evaluate and integrate new technologies or update our existing systems to keep pace with our competitors and customer needs.
To the extent that an act of terrorism is certified by the Secretary of the Treasury and aggregate industry insured losses resulting from the act of terrorism exceeds the prescribed program trigger, our U.S. insurance operations may be covered under TRIP for up to ARCH CAPITAL 49 2024 FORM 10-K 80% subject to (i) a mandatory deductible of 20% of our prior year’s direct earned premium for covered property and liability coverages, and (ii) an industry aggregate retention of $37.5 billion.
To the extent that an act of terrorism is certified by the Secretary of the Treasury and aggregate industry insured losses resulting from the act of terrorism exceeds the prescribed program trigger, our U.S. insurance operations may be covered under TRIA for up to 80% subject to (i) a mandatory deductible of 20% of our prior year’s direct earned premium for covered property and liability ARCH CAPITAL 51 2025 FORM 10-K coverages, and (ii) an industry aggregate retention of $53.4 billion.
A cybersecurity incident could result in a violation of these and other applicable laws, resulting in damage to our reputation, loss of customers, decline in our stock price, litigation, remediation costs, increased insurance premiums, employee dissatisfaction and/or monetary fines, penalties or litigation, any of which could adversely affect our business.
A cybersecurity incident could result in a violation of these and other applicable laws, resulting in damage to our reputation, loss of customers, decline in our stock price, litigation, ARCH CAPITAL 55 2025 FORM 10-K remediation costs, increased insurance premiums, employee dissatisfaction and/or monetary fines, penalties or litigation, any of which could adversely affect our business.
Disruption to the financial markets and weak economic conditions resulting from situations such as supply/demand imbalances, inflation and political unrest may adversely and materially impact our investments, financial condition and results of operation.
ARCH CAPITAL 57 2025 FORM 10-K Disruption to the financial markets and weak economic conditions resulting from situations such as supply/demand imbalances, inflation and political unrest may adversely and materially impact our investments, financial condition and results of operation.
Dividends on our preferred shares are non-cumulative. Dividends on our preferred shares are non-cumulative and payable only out of lawfully available funds of Arch Capital under Bermuda law.
ARCH CAPITAL 62 2025 FORM 10-K Dividends on our preferred shares are non-cumulative. Dividends on our preferred shares are non-cumulative and payable only out of lawfully available funds of Arch Capital under Bermuda law.
Pillar I addresses the broader challenge of a digitalized economy and focuses on the allocation of group profits among taxing jurisdictions based on a market-based concept rather than historical “permanent establishment” concepts.
Pillar I addresses the broader challenge of a digitalized ARCH CAPITAL 63 2025 FORM 10-K economy and focuses on the allocation of group profits among taxing jurisdictions based on a market-based concept rather than historical “permanent establishment” concepts.
ARCH CAPITAL 58 2024 FORM 10-K The ERCF includes higher risk-capital charges for residential mortgages and continues to take into account the benefits of mortgage insurance, provided the mortgage insurer is compliant with the PMIERs.
The ERCF includes higher risk-capital charges for residential mortgages and continues to take into account the benefits of private mortgage insurance, provided the mortgage insurer is compliant with the PMIERs.
Factors affecting the volume of low down payment mortgage originations include, among others: restrictions on mortgage credit due to stringent underwriting standards and liquidity issues affecting lenders; changes in mortgage interest rates and home prices, and other economic conditions in the U.S., Australian and regional economies; population trends, including the rate of household formation; and U.S. government housing policy, and Australian government housing policy.
Other factors affecting the volume of low down payment mortgage originations include, among others: restrictions on mortgage credit due to stringent underwriting standards and liquidity issues affecting lenders; changes in affordability due to increased mortgage interest rates and home prices, and other economic conditions in the U.S., Australian and regional economies; population trends, including the rate of household formation and immigration; supply constraints and increased building costs; and U.S. and Australian government housing policy, including policies encouraging loans to first time home buyers.
We paid a special cash dividend on our common shares during fiscal year 2024, but there is no assurance that any dividend will be declared and paid in the future. ARCH CAPITAL 60 2024 FORM 10-K Our preferred shares are equity and are subordinate to our existing and future indebtedness.
We paid a special cash dividend on our common shares during fiscal year 2024, but there is no assurance that any dividend will be declared and paid in the future. Our preferred shares are equity and are subordinate to our existing and future indebtedness. Our preferred shares are equity interests and do not constitute indebtedness.
In some cases, a downgrade in ratings of certain of our operating subsidiaries may constitute an event of default under our credit facilities. We can offer no assurances that our ratings will remain at their current levels or that any of our ratings which are under review or watch by ratings agencies will remain unchanged.
In some cases, a downgrade in ratings of certain of our operating subsidiaries may constitute an event of default under our credit facilities. We can offer no assurances that our ratings will remain at their current levels.
The higher risk-capital charges for residential mortgages could be incorporated into the PMIERs standards, thereby requiring mortgage insurers to hold higher capital levels in order to be recognized as approved counterparties for the GSEs. This could have a negative impact on our return on equity.
The higher risk-capital charges for residential mortgages under the ERCF could be incorporated into future PMIERs amendments, thereby requiring mortgage insurers to hold higher capital levels in order to be recognized as an eligible insurer for the GSEs. This could have a negative impact on our return on equity.
Certain lines of business we write have been impacted by the sanctions, such as the marine and energy lines of business, although the extent of the impact will depend on the outcome of the war in Ukraine and the nature of future sanctions packages or potential rescindment of some or all of the Russia sanctions currently in place.
Additionally, certain lines of business we write have been impacted by sanctions, such as the marine and energy lines of business, although the extent of the impact will depend on the outcome of the war in Ukraine and the nature of future sanctions packages.
This practice exposes us to increased risks if those third-party systems are not maintained and monitored in accordance with contractual terms or due to human error. There is no assurance that we will not be materially adversely affected by such incidents impacting our critical and important functions. See Item 1C, “ Cybersecurity ” for additional information.
This practice exposes us to increased risks if those third party systems, including AI technologies that may be in use, are not maintained and monitored in accordance with contractual terms, regulations or due to human error. There is no assurance that we will not be materially adversely affected by such incidents impacting our critical and important functions.
The FHFA as conservator of the GSEs continues to evaluate loan level price adjustments (“LLPAs”) and guarantees fees assessed by the GSEs when purchasing loans.
ARCH CAPITAL 59 2025 FORM 10-K The FHFA as conservator of the GSEs continues to evaluate loan level price adjustments (“LLPAs”) and guarantees fees assessed by the GSEs when purchasing loans.
In addition to the nature of the property business, we believe that economic and geographic trends affecting insured property, including inflation, property value appreciation and geographic concentration tend to generally increase the size of losses from catastrophic events over time.
Catastrophes can cause losses in non-property business such as workers’ compensation or general liability. In addition to the nature of the property business, we believe that economic and geographic trends affecting insured property, including inflation, property value appreciation and geographic concentration tend to generally increase the size of losses from catastrophic events over time.
With the change in the Presidential administration, and based on feedback received in response to the proposed rule, the Federal Banking agencies have indicated an intent to repropose the Basel III Rules, though the timing, requirements, and implementation of the reproposed rule remain uncertain.
With the change in the Presidential administration in 2025, and based on feedback received in response to the proposed rule, the Federal banking agencies have indicated an intent to repropose the Basel III Rules.
Operational risk and losses can result from, among other things, fraud, errors, failure to document transactions properly or to obtain proper internal authorization, failure to comply with regulatory requirements, information technology or information security failures and failure to train employees appropriately or adequately.
Additionally, operational risk and losses can result from, among other things, fraud, errors, failure to document transactions properly or to obtain proper internal authorization, failure to comply with regulatory requirements across all jurisdictions where Arch conducts ARCH CAPITAL 56 2025 FORM 10-K business, information technology or information security failures and failure to train employees appropriately or adequately.
It is too early to determine the long-term effect, if any, of the Trump administration tariff policy, but sustained escalation of tariffs and trade disputes may result in a global economic slowdown which impacts our clients. In addition, it is anticipated that the Trump administration will promulgate a number of executive orders or propose legislation that could impact our industry.
It is too early to determine the long-term effect, if any, of the Trump administration tariff policy, but sustained escalation of tariffs and trade disputes may result in a global economic slowdown which impacts us and our clients.
We are subject to changes in governmental, investor and societal responses to climate change and sustainability-related issues, which may result in scrutiny of our business, litigation or adverse impacts to our share price and our results of operations.
We are subject to changes in governmental, investor and societal responses to climate change and sustainability-related issues, which may result in scrutiny of our business, litigation or adverse impacts to our share price and our results of operations. Shareholders, investors and regulators have historically focused on climate and sustainability matters, leading to evolving and sometimes conflicting expectations and standards.
However, profits from “unregulated elements of the financial services sector” remain in scope but only where revenue exceeds €20 billion. The revenue ARCH CAPITAL 61 2024 FORM 10-K threshold is expected to be reduced to €10 billion following future review of the operation of Amount A.
However, profits from “unregulated elements of the financial services sector” remain in scope but only where revenue exceeds €20 billion. The revenue threshold is expected to be reduced to €10 billion following future review of the operation of Amount A. The review of when to reduce the revenue threshold begins beginning seven years after the effective date of Amount A.
This change, and any future changes to the FHA program may, negatively impact the amount of mortgage insurance we write in the U.S.
This change, and any future changes to the FHA program may, cause a decline in the volume of low down payment home mortgages purchased by the GSEs and negatively impact the amount of mortgage insurance we write in the U.S.
ARCH CAPITAL 43 2024 FORM 10-K • The effects of inflation, trade and tariff disputes and global recessionary and other economic conditions impact the insurance and reinsurance industry in ways which may negatively impact our business, financial condition and results of operations. • Claims for natural and man-made catastrophic events could cause large losses and substantial volatility in our results of operations and could have a material adverse effect on our financial position and results of operations. • The impact of climate change will affect our loss limitation methods, such as the purchase of third party reinsurance and catastrophe risk modeling and risk selection in ways which may adversely impact our business, financial condition and results of operations. • Our insurance and reinsurance subsidiaries are subject to supervision and regulation.
Risks Relating to Our Industry, Business and Operations • We operate in a highly competitive environment, and we may not be able to compete successfully in our industry. • The insurance and reinsurance industry is highly cyclical, and we may at times experience periods characterized by excess underwriting capacity and unfavorable premium rates. • The effects of inflation, trade and tariff disputes and other economic conditions impact the insurance and reinsurance industry in ways which may negatively impact our business, financial condition and results of operations. • Claims for natural catastrophic events could cause large losses and substantial volatility in our results of operations and could have a material adverse effect on our financial position and results of operations. • The impact of climate change will affect our loss limitation methods, such as the purchase of third party reinsurance and catastrophe risk modeling and risk selection in ways which may adversely impact our business, financial condition and results of operations. • Our insurance, reinsurance and mortgage subsidiaries are subject to supervision and regulation.
Our business, financial condition and operating results may be adversely affected if we do not adequately maintain our information technology systems, both internal and third-party, and continuously test and upgrade them.
We must continually invest significant resources in maintaining, monitoring and enhancing our information technology systems’ capabilities to meet customer needs and business strategy. Our business, financial condition and operating results may be adversely affected if we do not adequately maintain our information technology systems, both internal and third party, and continuously test and upgrade them.
We cannot predict with certainty the impact of these actions on our business and results of operations. ARCH CAPITAL 46 2024 FORM 10-K Claims for natural and man-made catastrophic events could cause large losses and substantial volatility in our results of operations and could have a material adverse effect on our financial position and results of operations.
ARCH CAPITAL 48 2025 FORM 10-K Claims for natural catastrophic events could cause large losses and substantial volatility in our results of operations and could have a material adverse effect on our financial position and results of operations. We have large aggregate exposures to natural catastrophic events.
Pillar II addresses the remaining BEPS risk of profit shifting to certain in-scope entities in low tax jurisdictions by introducing a global minimum tax (15%), which would operate through the imposition of residence-based and source-based taxation (including potentially through the denial of certain deductions).
Pillar II addresses the remaining BEPS risk of profit shifting to certain in-scope entities in low tax jurisdictions by introducing a global minimum tax (15%).
The purpose of insurance laws and regulations generally is to protect policyholders and ceding insurance companies, not our shareholders. See “Regulation” in Item 1.
In August 2024, we were added to the list of IAIGs, subjecting our global operations to additional regulation and scrutiny. The purpose of insurance laws and regulations generally is to protect policyholders and ceding insurance companies, not our shareholders. See “Regulation” in Item 1.
The mix of higher-risk loans, including affordable housing loans which often have higher-risk characteristics, could increase losses and harm our financial performance. The geographic mix of our insured loan portfolio could also increase losses and harm our financial performance. Mortgage insurance premiums are set at the time coverage is procured, based in part on the expected duration of the coverage.
The geographic mix of our insured loan portfolio could also increase losses and harm our financial performance. Mortgage insurance premiums are set at the time coverage is procured, based in part on the expected duration of the coverage. We cannot cancel mortgage insurance coverage or adjust renewal premiums during the life of the policy.
Our insurance and reinsurance subsidiaries are subject to supervision and regulation. Changes to existing regulation and supervisory standards, or failure to comply with applicable requirements, could adversely affect our business and results of operation.
Changes to existing regulation and supervisory standards, or failure to comply with applicable requirements, could adversely affect our business and results of operation. Our insurance and reinsurance subsidiaries conduct business globally and are subject to varying degrees of regulation in the various jurisdictions in which they conduct business, including by state, federal and national insurance regulators.
The implementation of the Basel III Capital Accord and FHFA’s Enterprise Regulator Capital Framework may adversely affect the use of mortgage insurance and CRT opportunities. With certain exceptions, the Basel III Rules became effective on January 1, 2014.
The implementation of the Basel III Capital Accord and FHFA’s Enterprise Regulatory Capital Framework may adversely affect the use of mortgage insurance and SRT and CRT opportunities.
As a result, such actions could have a material effect on our results of operations and financial condition. We are subject to ongoing legal and policy actions around climate change which may result in additional requirements which could prompt us to shift our risk selection and business strategy in ways which may adversely impact our results of operations.
We are subject to ongoing legal and policy actions around climate change which may result in additional requirements which could prompt us to shift our risk selection and business strategy in ways which may adversely impact our results of operations. Governments, regulators, legislators and influential non-governmental organizations (“NGOs”) continue to develop laws, regulations and other requirements related to climate change.
Further, in the U.S., to the extent that the insured cancels coverage as a result of prior home price appreciation, the duration of coverage will be shorter, and we will receive less premium.
Thus, higher than anticipated claims generally cannot be offset by premium increases on policies in force or mitigated by our non-renewal or cancellation of insurance coverage. Further, in the U.S., to the extent that the insured cancels coverage as a result of prior home price appreciation, the duration of coverage will be shorter, and we will receive less premium.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe P&S Committee, ORC, CIMT and IT Committee are comprised of executives with reporting lines to the CIO and/or the COO. We also have an enterprise Artificial Intelligence Governance and Oversight Committee focusing on the use and management of AI in our operations.
Biggest changeNew AI use cases presented to the AIGOC for approval include a review of cybersecurity controls, among other considerations such as regulatory and business factors. The P&S Committee, ORC, CIMT, AIGOC and IT Committee are comprised of executives with reporting lines to the CIO and/or the COO.
These policies and standards are regularly reviewed and updated at least annually based on the risk and regulatory environment in which we operate. We monitor closely privacy and cybersecurity, AI and operational resilience laws, regulations and guidance applicable to us. See Item 1, “ Business—Regulation—Cybersecurity and Privacy ” for additional details.
These policies and standards are regularly reviewed and updated at least annually based on the risk and regulatory environment in which we operate. We closely monitor privacy and cybersecurity, AI and operational resilience laws, regulations and guidance applicable to us. See Item 1, “ Business—Regulation—Cybersecurity and Privacy ” for additional details.
See Item 1A, “ Risk Factors—Risk Relating to Our Industry, Business & Operations —Technology failures and cyber attacks, including, but not limited to, ransomware, exploitation in software or code with malicious intent, state-sponsored cyber attacks, as well as vulnerabilities relating to new technologies, such as generative AI, may impact us or our business partners and service providers, causing a disruption in service and operations which could materially and negatively impact our business and/or expose us to litigation.” ARCH CAPITAL 63 2024 FORM 10-K Governance As part of our overall risk management approach, we recognize the importance of identifying and managing cybersecurity risk at several levels, including Board oversight, executive commitment and employee training.
See Item 1A, “ Risk Factors—Risk Relating to Our Industry, Business & Operations —Technology failures and cyber attacks, including, but not limited to, ransomware, exploitation in software or code with malicious intent, state-sponsored cyber attacks, as well as vulnerabilities relating to new technologies, such as generative AI, may impact us or our business partners and service providers, causing a disruption in service and operations which could materially and negatively impact our business and/or expose us to litigation.” ARCH CAPITAL 65 2025 FORM 10-K Governance As part of our overall risk management approach, we recognize the importance of identifying and managing cybersecurity risk at several levels, including Board oversight, executive commitment and employee training.
Our privacy and information security policies and standards cover topics such as information sharing, privacy, data handling and data management as well as more detailed information technology (“IT”) processes encompassing incident response, access control, disaster recovery and testing, among other areas.
Our privacy and information security policies and standards cover topics such as information sharing, privacy, data handling and data management as well as more detailed information technology (“IT”) processes encompassing incident response, access control, artificial intelligence, disaster recovery and testing, among other areas.
His responsibilities as the CIO include all areas of Information Technology and information security oversight. Our CISO, has 19 years of experience in information security. The CISO holds certifications from leading security associations. The information security personnel reporting to the CISO hold various leading security certifications.
His responsibilities as the CIO include all areas of Information Technology and information security oversight. Our CISO, has 20 years of experience in information security. The CISO holds certifications from leading security associations. The information security personnel reporting to the CISO hold various leading security certifications.
Our Audit Committee is informed of such risks through quarterly reports from our Chief Information Officer (“CIO”) and Chief Operations Officer (“COO”), with input from our Chief Information Security Officer (“CISO”). Our cybersecurity and IT executives include our CIO, who has 34 years of experience in Information Technology, including 21 years in the financial services space.
Our Audit Committee is informed of such risks through quarterly reports from our Chief Information Officer (“CIO”) and Chief Operations Officer (“COO”), with input from our Chief Information Security Officer (“CISO”). Our cybersecurity and IT executives include our CIO, who has 35 years of experience in Information Technology, including 22 years in the financial services space.
We also hold employee training on privacy and cybersecurity, records and information management, conduct regular phishing tests and generally seek to promote awareness of cybersecurity risk through communication and education of our employee population.
We also hold employee training on privacy and cybersecurity, records and information management, conduct regular phishing tests and generally seek to promote awareness of cybersecurity risk through communication and education to all our employees. ARCH CAPITAL 66 2025 FORM 10-K
Each quarter, the CIMT exercises its communication plan to confirm that its members can be alerted quickly in the event of an actual crisis and meet as a team to discuss the event and response options. • The IT Steering Committee (“IT Committee”, which includes our CIO, CISO, COO and members of executive leadership, oversees IT initiatives while considering cybersecurity risk mitigation with respect to these initiatives.
Each quarter, the CIMT exercises its communication plan to confirm that its members can be alerted quickly in the event of an actual crisis and meet as a team to discuss the event and response options. • The IT Steering Committee (“IT Committee”, which includes our CIO, CISO, COO and members of executive leadership, oversees IT initiatives while considering cybersecurity risk mitigation with respect to these initiatives. • The Artificial Intelligence Governance and Oversight Committee (“AIGOC”), which includes senior executives from IT, legal, compliance, risk and analytics, focuses on the governance of AI through the Company Artificial Intelligence Policy, annual training and vetting new AI technologies.
The Company also requires these vendors to adhere to privacy and cybersecurity measures and has a third-party service provider monitoring program in place that reviews changes to the security posture of certain higher risk third-party service providers. Our operations rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks.
The Company also requires these third party service providers to adhere to privacy and cybersecurity measures and has a third party service provider monitoring program in place that reviews changes to the security posture of certain higher risk third party service providers.
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Our operations rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur mortgage group leases space for offices in the U.S., Bermuda, Hong Kong and Australia. We believe that the above described office space is adequate for our needs. However, as we continue to develop our business, we may open additional office locations in 2025 . ARCH CAPITAL 64 2024 FORM 10-K
Biggest changeWe believe that the above described office space is adequate for our needs. However, as we continue to develop our business, we may open additional office locations in 2026 .
ITEM 2. PROPERTIES We lease office space in Bermuda where our principal offices are located. Our insurance group leases space for offices in the U.S., Canada, Bermuda, U.K., Europe and Australia. Our reinsurance group leases space for offices in the U.S., Bermuda, U.K., Europe, Canada and Dubai.
ITEM 2. PROPERTIES We lease office space in Bermuda where our principal offices are located. Our insurance group leases space for offices in the U.S., Canada, Bermuda, U.K., Europe and Australia. Our reinsurance group leases space for offices in the U.S., Bermuda, U.K., Europe, Canada and Dubai. Our mortgage group leases space for offices in the U.S., Bermuda and Australia.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAs of December 31, 2024, we were not a party to any litigation or arbitration which is expected by management to have a material adverse effect on our results of operations and financial condition and liquidity. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
Biggest changeAs of December 31, 2025, we were not a party to any litigation or arbitration which is expected by management to have a material adverse effect on our results of operations and financial condition and liquidity.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(2) This column represents the remaining approximate dollar amount available at the end of each applicable period under Arch Capital’s $1.0 billion share repurchase authorization, authorized by the Board of Directors of ACGL on December 20, 2024, and having no expiration date. Repurchases may be effected from time to time in open market or privately negotiated transactions.
Biggest change(2) This column represents the remaining approximate dollar amount available at the end of each applicable period under Arch Capital’s repurchase authorization. On September 4, 2025, the Company increased its authorization for its existing $1.0 billion share repurchase program by $2.0 billion, and having no expiration date.
We repurchased these shares from employees in order to facilitate the payment of withholding taxes on restricted shares granted and the exercise of stock appreciation rights, in each case at their fair value as determined by reference to the closing price of our common shares on the day the restricted shares vested or the stock appreciation rights were exercised.
We repurchased these shares from employees in order to facilitate the payment of withholding taxes on restricted and performance shares granted and the exercise of stock appreciation rights, in each case at their fair value as determined by reference to the closing price of our common shares on the day the restricted and performance shares vested or the stock appreciation rights were exercised.
ARCH CAPITAL 65 2024 FORM 10-K PERFORMANCE GRAPH The following graph compares the cumulative total shareholder return on our common shares for each of the last five years through December 31, 2024 to the cumulative total return, assuming reinvestment of dividends, of (1) S&P 500 Composite Stock Index (“S&P 500 Index”) and (2) the S&P 500 Property & Casualty Insurance Index.
ARCH CAPITAL 68 2025 FORM 10-K PERFORMANCE GRAPH The following graph compares the cumulative total shareholder return on our common shares for each of the last five years through December 31, 2025 to the cumulative total return, assuming reinvestment of dividends, of (1) S&P 500 Composite Stock Index (“S&P 500 Index”) and (2) the S&P 500 Property & Casualty Insurance Index.
(2) The above graph assumes that the value of the investment was $100 on December 31, 2019.
(2) The above graph assumes that the value of the investment was $100 on December 31, 2020.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES HOLDERS As of February 21, 2025, and based on information provided to us by our transfer agent and proxy solicitor, there were 1,210 holders of record of our common shares (Nasdaq: ACGL) and approximately 485,646 beneficial holders of our common shares.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES HOLDERS As of February 6, 2026, and based on information provided to us by our transfer agent and proxy solicitor, there were 976 holders of record of our common shares (Nasdaq: ACGL) and approximately 646,333 beneficial holders of our common shares.
ISSUER PURCHASES OF EQUITY SECURITIES The following table summarizes our purchases of common shares for the 2024 fourth quarter: Issuer Purchases of Common Shares Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan or Programs ($000’s) (2) 10/1/2024-10/31/2024 517 $ 113.51 — $ 1,000,000 11/1/2024-11/30/2024 80 $ 101.85 — $ 1,000,000 12/1/2024-12/31/2024 262,857 $ 89.66 261,981 $ 996,796 Total 263,454 $ 89.71 261,981 $ 996,796 (1) This column represents (in whole shares) open market share repurchases, including an aggregate of 517 shares, 80 shares and 876 shares repurchased by Arch Capital during October, November and December, respectively, other than through publicly announced plans or programs.
ISSUER PURCHASES OF EQUITY SECURITIES The following table summarizes our purchases of common shares for the 2025 fourth quarter: Issuer Purchases of Common Shares Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan or Programs ($000’s) (2) 10/1/2025-10/31/2025 3,532,228 $ 89.07 3,532,228 $ 1,590,313 11/1/2025-11/30/2025 3,479,250 $ 89.13 3,469,676 $ 1,281,163 12/1/2025-12/31/2025 1,858,791 $ 93.71 1,858,788 $ 1,107,004 Total 8,870,269 $ 90.07 8,860,692 (1) This column represents (in whole shares) open market share repurchases, including an aggregate of nil shares, 9,574 shares and 3 shares repurchased by Arch Capital during October, November and December, respectively, other than through publicly announced plans or programs.
CUMULATIVE TOTAL SHAREHOLDER RETURN (1)(2)(3) Base Period Company Name/Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 l Arch Capital Group Ltd. $100.00 $84.10 $103.64 $146.37 $173.16 $226.44 n S&P 500 Index $100.00 $118.40 $152.39 $124.79 $157.59 $197.02 p S&P 500 Property & Casualty Insurance Index $100.00 $106.96 $127.58 $151.65 $168.05 $227.67 (1) Stock price appreciation plus dividends.
CUMULATIVE TOTAL SHAREHOLDER RETURN (1)(2)(3) Base Period Company Name/Index 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 l Arch Capital Group Ltd. $100.00 $123.23 $174.05 $205.91 $269.25 $279.66 n S&P 500 Index $100.00 $128.71 $105.40 $133.10 $166.40 $196.16 p S&P 500 Property & Casualty Insurance Index $100.00 $119.28 $141.79 $157.12 $212.86 $234.32 (1) Stock price appreciation plus dividends.
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Repurchases may be effected from time to time in open market or privately negotiated transactions.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAt December 31, 2024 and 2023, our Loss Reserves, net of unpaid losses and loss adjustment expenses recoverable, by type and by operating segment were as follows: December 31, 2024 2023 Insurance segment: Case reserves $ 3,730 $ 2,730 IBNR reserves 8,238 5,626 Total net reserves 11,968 8,356 Reinsurance segment: Case reserves 2,721 2,447 Additional case reserves 806 484 IBNR reserves 5,580 4,260 Total net reserves 9,107 7,191 Mortgage segment: Case reserves 331 323 IBNR reserves 142 192 Total net reserves 473 515 Total: Case reserves 6,782 5,500 Additional case reserves 806 484 IBNR reserves 13,960 10,078 Total net reserves $ 21,548 $ 16,062 At December 31, 2024 and 2023, the insurance segment’s Loss Reserves by major line of business, net of unpaid losses and loss adjustment expenses recoverable, were as follows: December 31, 2024 2023 Multi-line and other specialty $ 4,105 $ 1,350 Third party occurrence business 4,104 3,719 Third party claims-made business 2,630 2,451 Property, energy, marine and aviation 1,129 836 Total net reserves $ 11,968 $ 8,356 At December 31, 2024 and 2023, the reinsurance segment’s Loss Reserves by major line of business, net of unpaid losses and loss adjustment expenses recoverable, were as follows: December 31, 2024 2023 Casualty $ 3,089 $ 2,725 Other specialty 2,791 2,125 Property excluding property catastrophe 1,778 1,243 Property catastrophe 845 585 Marine and aviation 461 359 Other 143 154 Total net reserves $ 9,107 $ 7,191 ARCH CAPITAL 78 2024 FORM 10-K At December 31, 2024 and 2023, the mortgage segment’s Loss Reserves by major line of business, net of unpaid losses and loss adjustment expenses recoverable, were as follows: December 31, 2024 2023 U.S. primary mortgage insurance (1) $ 333 $ 324 U.S. credit risk transfer (CRT) and other 85 100 International mortgage insurance/reinsurance 55 91 Total net reserves $ 473 $ 515 (1) At December 31, 2024, 35.0% of total net reserves represent policy years 2014 and prior and the remainder from later policy years.
Biggest changeARCH CAPITAL 81 2025 FORM 10-K At December 31, 2025 and 2024, our Loss Reserves, net of unpaid losses and loss adjustment expenses recoverable, by type and by operating segment were as follows: December 31, 2025 2024 Insurance segment: Case reserves $ 3,489 $ 3,730 IBNR reserves 9,251 8,238 Total net reserves 12,740 11,968 Reinsurance segment: Case reserves 2,929 2,721 Additional case reserves 1,034 806 IBNR reserves 7,349 5,580 Total net reserves 11,312 9,107 Mortgage segment: Case reserves 324 331 IBNR reserves 117 142 Total net reserves 441 473 Total: Case reserves 6,742 6,782 Additional case reserves 1,034 806 IBNR reserves 16,717 13,960 Total net reserves $ 24,493 $ 21,548 At December 31, 2025 and 2024, the insurance segment’s Loss Reserves by major line of business, net of unpaid losses and loss adjustment expenses recoverable, were as follows: December 31, 2025 2024 Third party occurrence business $ 4,610 $ 4,104 Multi-line and other specialty 4,345 4,105 Third party claims-made business 2,861 2,630 Property, energy, marine and aviation 924 1,129 Total net reserves $ 12,740 $ 11,968 At December 31, 2025 and 2024, the reinsurance segment’s Loss Reserves by major line of business, net of unpaid losses and loss adjustment expenses recoverable, were as follows: December 31, 2025 2024 Casualty $ 3,823 $ 3,089 Specialty 3,658 2,791 Property excluding property catastrophe 2,107 1,778 Property catastrophe 953 845 Marine and aviation 582 461 Other 189 143 Total net reserves $ 11,312 $ 9,107 At December 31, 2025 and 2024, the mortgage segment’s Loss Reserves by major line of business, net of unpaid losses and loss adjustment expenses recoverable, were as follows: December 31, 2025 2024 U.S. primary mortgage insurance $ 321 $ 333 U.S. credit risk transfer (CRT) and other 64 85 International mortgage insurance/reinsurance 56 55 Total net reserves $ 441 $ 473 Potential Variability in Loss Reserves The following tables summarize the effect of reasonably likely scenarios on the key actuarial assumptions used to estimate our Loss Reserves, net of unpaid losses and loss adjustment expenses recoverable, at December 31, 2025 by underwriting segment and reserving lines.
The use of the equity method on certain of our investments in certain funds that invest in fixed maturity securities is driven by the ownership structure of such funds (either limited partnerships or limited liability companies).
The use of the equity method on certain of our investments funds that invest in fixed maturity securities is driven by the ownership structure of such funds (either limited partnerships or limited liability companies).
The resulting future performance of our in-force portfolio is then estimated under the economic stress scenario, reflecting loan and borrower information. Currently, we seek to limit our modeled RDS loss from a severe economic event to approximately 25% of total tangible shareholders’ equity available to Arch. We reserve the right to change this threshold at any time.
The resulting future performance of our in-force portfolio is then estimated under the economic stress scenario, reflecting loan and borrower information. Currently, we seek to limit our modeled RDS loss from a severe economic event to approximately 25% of tangible shareholders’ equity available to Arch. We reserve the right to change this threshold at any time.
Furthermore, certain users of our financial information believe that, for many companies, the timing of the realization of investment gains or losses is largely opportunistic. In addition, changes in the allowance for credit losses and net impairment losses recognized in earnings on the Company’s investments represent other-than-temporary declines in expected recovery values on securities without actual realization.
Furthermore, certain users of our financial information believe that, for many companies, the timing of the realization of investment gains or losses is largely opportunistic. In addition, changes in the allowance for credit losses and net impairment losses recognized in earnings on our investments represent other-than-temporary declines in expected recovery values on securities without actual realization.
This method of accounting is different from the way we account for our other investments and the timing of the recognition of equity in net income or loss of investments accounted for using the equity method may differ from gains or losses in the future upon sale or maturity of such investments.
This method of accounting is different from the way in which we account for our other investments; and the timing of the recognition of equity in net income or loss of investments accounted for using the equity method may differ from gains or losses in the future upon sale or maturity of such investments.
The Group Credit Facility contains certain restrictive and maintenance covenants customary for facilities of this type, including restrictions on indebtedness, minimum consolidated tangible net worth, maximum leverage levels and minimum financial strength ratings. Arch Capital and its subsidiaries which are party to the agreement were in compliance with all covenants contained therein at December 31, 2024.
The Group Credit Facility contains certain restrictive and maintenance covenants customary for facilities of this type, including restrictions on indebtedness, minimum consolidated tangible net worth, maximum leverage levels and minimum financial strength ratings. Arch Capital and its subsidiaries which are party to the agreement were in compliance with all covenants contained therein at December 31, 2025.
In addition, the potential variability shown in the tables above are reasonably likely scenarios of changes in our key assumptions at December 31, 2024 and are not meant to be a “best case” or “worst case” series of outcomes and therefore, it is possible that future variations may be more or less than the amounts set forth above.
In addition, the potential variability shown in the tables above are reasonably likely scenarios of changes in our key assumptions at December 31, 2025 and are not meant to be a “best case” or “worst case” series of outcomes and therefore, it is possible that future variations may be more or less than the amounts set forth above.
Fair Value Measurements We review our securities measured at fair value and discuss the proper classification of such investments with investment advisors and others. See note 10, “Fair Value,” to our consolidated financial statements in Item 8 for a summary of our financial assets and liabilities measured at fair value at December 31, 2024 by valuation hierarchy.
Fair Value Measurements We review our securities measured at fair value and discuss the proper classification of such investments with investment advisors and others. See note 10, “Fair Value,” to our consolidated financial statements in Item 8 for a summary of our financial assets and liabilities measured at fair value at December 31, 2025 by valuation hierarchy.
We also have significant exposure to losses due to mortgage defaults resulting from severe economic events in the future. For our U.S. mortgage insurance business, we have developed a proprietary risk model (“Realistic Disaster Scenario” or “RDS”) that simulates the maximum loss resulting from a severe economic downturn impacting the housing market.
We also have significant exposure to losses due to mortgage defaults resulting from severe economic events in the future. For our U.S. and Australian mortgage insurance business, we have developed a proprietary risk model (“Realistic Disaster Scenario” or “RDS”) that simulates the maximum loss resulting from a severe economic downturn impacting the housing market.
Comparisons between 2023 and 2022 have been omitted from this Form 10-K, but may be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K year ended December 31, 2023 filed with the SEC.
Comparisons between 2024 and 2023 have been omitted from this Form 10-K, but may be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K year ended December 31, 2024 filed with the SEC.
The benchmark return index should not be interpreted as expressing a preference for or aversion to any particular sector or sector weight. At December 31, 2024, the fixed income portion of the benchmark had an average credit quality of “A1” by Moody’s and an estimated fixed income duration of 3.18 years.
The benchmark return index should not be interpreted as expressing a preference for or aversion to any particular sector or sector weight. At December 31, 2025, the fixed income portion of the benchmark had an average credit quality of “A1” by Moody’s and an estimated fixed income duration of 3.18 years.
The scenarios shown in the tables summarize the effect of (i) changes to the expected loss ratio selections used at December 31, 2024, which represent loss ratio point increases or decreases to the expected loss ratios used, and (ii) changes to the loss development patterns used in our reserving process at December 31, 2024, which represent claims reporting that is either slower or faster than the reporting patterns used.
The scenarios shown in the tables summarize the effect of (i) changes to the expected loss ratio selections used at December 31, 2025, which represent loss ratio point increases or decreases to the expected loss ratios used, and (ii) changes to the loss development patterns used in our reserving process at December 31, 2025, which represent claims reporting that is either slower or faster than the reporting patterns used.
For example, assuming all other factors remain constant, for every one percentage point change in primary claim severity (which we estimate to be approximately 30% of the unpaid principal balance at December 31, 2024), we estimated that our loss reserves would change by approximately $15 million at December 31, 2024.
For example, assuming all other factors remain constant, for every one percentage point change in primary claim severity (which we estimate to be approximately 30% of the unpaid principal balance at December 31, 2025), we estimated that our loss reserves would change by approximately $15 million at December 31, 2025.
The models, assumptions and estimates we use to evaluate the need for a PDR may prove to be inaccurate, especially during an extended economic downturn or a period of extreme market volatility and uncertainty. No premium deficiency charges were recorded by us during 2024 or 2023.
The models, assumptions and estimates we use to evaluate the need for a PDR may prove to be inaccurate, especially during an extended economic downturn or a period of extreme market volatility and uncertainty. No premium deficiency charges were recorded by us during 2025 or 2024.
ARCH CAPITAL 93 2024 FORM 10-K If we are not able to obtain adequate capital, our business, results of operations and financial condition could be adversely affected, which could include, among other things, the following possible outcomes: (1) potential downgrades in the financial strength ratings assigned by ratings agencies to our operating subsidiaries, which could place those operating subsidiaries at a competitive disadvantage compared to higher-rated competitors; (2) reductions in the amount of business that our operating subsidiaries are able to write in order to meet capital adequacy-based tests enforced by statutory agencies; and (3) any resultant ratings downgrades could, among other things, affect our ability to write business and increase the cost of bank credit and letters of credit.
If we are not able to obtain adequate capital, our business, results of operations and financial condition could be adversely affected, which could include, among other things, the following possible outcomes: (1) potential downgrades in the financial strength ratings assigned by ratings agencies ARCH CAPITAL 97 2025 FORM 10-K to our operating subsidiaries, which could place those operating subsidiaries at a competitive disadvantage compared to higher-rated competitors; (2) reductions in the amount of business that our operating subsidiaries are able to write in order to meet capital adequacy-based tests enforced by statutory agencies; and (3) any resultant ratings downgrades could, among other things, affect our ability to write business and increase the cost of bank credit and letters of credit.
In accordance with the SEC’s Financial Reporting Release No. 48, we performed a sensitivity analysis to determine the effects that market risk exposures could have on the future earnings, fair values or cash flows of our financial instruments as of December 31, 2024.
In accordance with the SEC’s Financial Reporting Release No. 48, we performed a sensitivity analysis to determine the effects that market risk exposures could have on the future earnings, fair values or cash flows of our financial instruments as of December 31, 2025.
For additional information on our preferred shares, see note 21, “Shareholders’ Equity,” to our consolidated financial statements in Item 8. The following tables present condensed financial information for Arch Capital (parent guarantor) and Arch-U.S. (subsidiary issuer): December 31, 2024 December 31, 2023 Arch Capital Arch-U.S. Arch Capital Arch-U.S.
For additional information on our preferred shares, see note 21, “Shareholders’ Equity,” to our consolidated financial statements in Item 8. The following tables present condensed financial information for Arch Capital (parent guarantor) and Arch-U.S. (subsidiary issuer): December 31, December 31, 2025 December 31, 2024 Arch Capital Arch- U.S. Arch Capital Arch- U.S.
The sensitivity analysis performed as of December 31, 2024 presents hypothetical losses in cash flows, earnings and fair values of market sensitive instruments which were held by us on December 31, 2024 and are sensitive to changes in interest rates and equity security prices.
The sensitivity analysis performed as of December 31, 2025 presents hypothetical losses in cash flows, earnings and fair values of market sensitive instruments which were held by us on December 31, 2025 and are sensitive to changes in interest rates and equity security prices.
After-tax operating income available to Arch common shareholders, a “non-GAAP measure” as defined in the SEC rules, represents net income available to Arch common shareholders, excluding net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses, transaction costs and other, loss on redemption of preferred shares and income taxes.
After-tax operating income available to Arch common shareholders, a “non-GAAP measure” as defined in the SEC rules, represents net income available to Arch common shareholders, excluding net realized gains or losses (which includes, but is not limited to, realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses, transaction costs and other, loss on redemption of preferred shares and income taxes.
For our mortgage segment, we considered the sensitivity of loss reserve estimates at December 31, 2024 by assessing the potential changes resulting from a parallel shift in severity and default to claim rate.
For our mortgage segment, we considered the sensitivity of loss reserve estimates at December 31, 2025 by assessing the potential changes resulting from a parallel shift in severity and default to claim rate.
It is not possible to completely eliminate our exposure to unforecasted or unpredictable events and, to the extent that losses from such risks occur, our financial condition and results of operations could be materially adversely affected.
It is not possible to completely eliminate our exposure to unpredictable events and, to the extent that losses from such risks occur, our financial condition and results of operations could be materially adversely affected.
For every one percentage point change in our primary net default to claim rate (which we estimate to be approximately 22% at December 31, 2024), we estimated a $20 million change in our loss reserves at December 31, 2024.
For every one percentage point change in our primary net default to claim rate (which we estimate to be approximately 22% at December 31, 2025), we estimated a $20 million change in our loss reserves at December 31, 2025.
The accounting policies of the segments are the same as those used for the preparation of our consolidated financial statements. Intersegment business is allocated to the segment accountable for the underwriting results.
The accounting policies of the segments are the same as those used for the preparation of our consolidated financial statements. Inter-segment business is allocated to the segment accountable for the underwriting results.
CATASTROPHIC EVENTS AND SEVERE ECONOMIC EVENTS We have large aggregate exposures to natural and man-made catastrophic events, pandemic events like COVID-19 and severe economic events. Natural catastrophes can be caused by various events, including hurricanes, floods, windstorms, earthquakes, hailstorms, tornadoes, explosions, severe winter weather, fires, droughts and other natural disasters.
CATASTROPHIC AND SEVERE ECONOMIC EVENTS We have large aggregate exposures to natural and man-made catastrophic events, pandemic events and severe economic events. Natural catastrophes can be caused by various events, including hurricanes, floods, windstorms, earthquakes, hailstorms, tornadoes, explosions, severe winter weather, fires, droughts and other natural disasters.
Together, our eligible mortgage insurers satisfied the PMIERs’ financial requirements as of December 31, 2024 with a PMIER sufficiency ratio of 186%, compared to 213% at December 31, 2023. On August 21, 2024, Fannie Mae and Freddie Mac (collectively the GSEs) each updated their PMIERs to incorporate new deductions to available assets for investment risk.
Together, our eligible mortgage insurers satisfied the PMIERs’ financial requirements as of December 31, 2025 with a PMIER sufficiency ratio of 179%, compared to 186% at December 31, 2024. On August 21, 2024, Fannie Mae and Freddie Mac (collectively the GSEs) each updated their PMIERs to incorporate new deductions to available assets for investment risk.
Amounts in both periods primarily reflect changes in the cash surrender value of our investment in corporate-owned life insurance. Corporate Expenses. Corporate expenses were $119 million for 2024, compared to $96 million for 2023. Such amounts primarily represent certain holding company costs necessary to support our worldwide operations and costs associated with operating as a publicly traded company.
Amounts in both periods primarily reflect changes in the cash surrender value of our investment in corporate-owned life insurance. Corporate Expenses. Corporate expenses were $57 million for 2025, compared to $119 million for 2024. Such expenses primarily represent certain holding company costs necessary to support our worldwide operations and costs associated with operating as a publicly traded company.
The insurance in force and risk in force for our U.S. primary mortgage insurance business by policy year were as follows at December 31, 2024: IIF RIF Delinquency Amount % Amount % Rate (1) Policy year: 2014 and prior $ 14,998 5.2 $ 3,817 5.0 6.49 % 2015 3,331 1.1 853 1.1 2.19 % 2016 5,240 1.8 1,371 1.8 3.23 % 2017 5,554 1.9 1,489 2.0 3.52 % 2018 7,081 2.4 1,843 2.4 4.31 % 2019 12,919 4.4 3,386 4.5 2.85 % 2020 39,426 13.6 10,718 14.1 1.52 % 2021 62,382 21.5 16,620 21.9 1.52 % 2022 57,175 19.7 15,113 19.9 1.51 % 2023 36,827 12.7 9,479 12.5 1.12 % 2024 45,502 15.7 11,345 14.9 0.30 % Total $ 290,435 100.0 $ 76,034 100.0 2.09 % (1) Represents the ending percentage of loans in default.
The insurance in force and risk in force for our U.S. primary mortgage insurance business by policy year were as follows at December 31, 2024: IIF RIF Delinquency Amount % Amount % Rate (1) Policy year: 2015 and prior $ 18,329 6.3 $ 4,670 6.1 5.85 % 2016 5,240 1.8 1,371 1.8 3.23 % 2017 5,554 1.9 1,489 2.0 3.52 % 2018 7,081 2.4 1,843 2.4 4.31 % 2019 12,919 4.4 3,386 4.5 2.85 % 2020 39,426 13.6 10,718 14.1 1.52 % 2021 62,382 21.5 16,620 21.9 1.52 % 2022 57,175 19.7 15,113 19.9 1.51 % 2023 36,827 12.7 9,479 12.5 1.12 % 2024 45,502 15.7 11,345 14.9 0.30 % Total $ 290,435 100.0 $ 76,034 100.0 2.09 % (1) Represents the ending percentage of loans in default.
GUARANTOR INFORMATION The below table provides a description of our senior notes payable at December 31, 2024: Interest Principal Carrying Issuer/Due (Fixed) Amount Amount Arch Capital: May 1, 2034 7.350 % $ 300 $ 298 June 30, 2050 3.635 % 1,000 989 Arch-U.S.: Nov. 1, 2043 (1) 5.144 % 500 496 Arch Finance: Dec. 15, 2026 (1) 4.011 % 500 499 Dec. 15, 2046 (1) 5.031 % 450 446 Total $ 2,750 $ 2,728 ( 1) Fully and unconditionally guaranteed by Arch Capital.
GUARANTOR INFORMATION The below table provides a description of our senior notes payable at December 31, 2025: Interest Principal Carrying Issuer/Due (Fixed) Amount Amount Arch Capital: May 1, 2034 7.350 % $ 300 $ 298 June 30, 2050 3.635 % 1,000 990 Arch-U.S.: Nov. 1, 2043 (1) 5.144 % 500 496 Arch Finance: Dec. 15, 2026 (1) 4.011 % 500 499 Dec. 15, 2046 (1) 5.031 % 450 446 Total $ 2,750 $ 2,729 ( 1) Fully and unconditionally guaranteed by Arch Capital.
At December 31, 2024 and 2023, such amounts approximated $13.0 billion and $9.9 billion, respectively. Our investments in certain securities, including certain fixed income and structured securities, investments in funds accounted for using the equity method, other alternative investments and investments in operating affiliates may be illiquid due to contractual provisions or investment market conditions.
At December 31, 2025 and 2024, such amounts approximated $15.0 billion and $13.0 billion, respectively. Our investments in certain securities, including certain fixed income and structured securities, investments in funds accounted for using the equity method, other alternative investments and investments in operating affiliates may be illiquid due to contractual provisions or investment market conditions.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is a discussion and analysis of the financial condition and results of operations for the year ended December 31, 2024 and 2023.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is a discussion and analysis of the financial condition and results of operations for the year ended December 31, 2025 and 2024.
ARCH CAPITAL 70 2024 FORM 10-K We believe that net realized gains or losses, equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other in any particular period are not indicative of the performance of, or trends in, our business.
ARCH CAPITAL 73 2025 FORM 10-K We believe that net realized gains or losses, equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other in any particular period are not indicative of the performance of, or trends in, our business.
We recorded $200 million of net income from our operating affiliates in 2024, compared to $184 million in 2023. Amounts in both periods primarily reflected amounts related to our investments in Somers Group Holdings Ltd. and Coface SA. See note 9, “Investment Information—Investments in Operating Affiliates,” to our consolidated financial statements for additional information.
We recorded $180 million of net income from our operating affiliates in 2025, compared to $200 million in 2024. Amounts in both periods primarily reflected amounts related to our investments in Somers Group Holdings Ltd. and Coface SA. See note 9, “Investment Information—Investments in Operating Affiliates,” to our consolidated financial statements for additional information.
At December 31, 2024 and 2023, the fair value of our investments in equity securities and certain investments accounted for using the equity method with underlying equity strategies totaled $1.5 billion and $1.0 billion, respectively. These investments are exposed to price risk, which is the potential loss arising from decreases in fair value.
At December 31, 2025 and 2024, the fair value of our investments in equity securities and certain investments accounted for using the equity method with underlying equity strategies totaled $1.8 billion and $1.5 billion, respectively. These investments are exposed to price risk, which is the potential loss arising from decreases in fair value.
If we require significant amounts of cash on short notice in excess of anticipated cash requirements, then we may have difficulty selling these investments in a timely manner or may be forced to sell or terminate them at unfavorable values. Our unfunded investment commitments totaled approximately $4.4 billion at December 31, 2024 and are callable by our investment managers.
If we require significant amounts of cash on short notice in excess of anticipated cash requirements, then we may have difficulty selling these investments in a timely manner or may be forced to sell or terminate them at unfavorable values. Our unfunded investment commitments totaled approximately $3.7 billion at December 31, 2025 and are callable by our investment managers.
As of December 31, 2024, our portfolio’s 95th percentile VaR was estimated to be 5.6%, compared to an estimated 7.8% at December 31, 2023. In periods where the volatility of the risk factors mapped to our portfolio’s exposures is higher due to market conditions, the resulting VaR is higher than in other periods. Equity Securities.
As of December 31, 2025, our portfolio’s 95th percentile VaR was estimated to be 6.5%, compared to an estimated 5.6% at December 31, 2024. In periods where the volatility of the risk factors mapped to our portfolio’s exposures is higher due to market conditions, the resulting VaR is higher than in other periods. Equity Securities.
The table below shows the components of the mortgage segment’s loss ratio: Year Ended December 31, 2024 2023 Current year 18.6 % 20.8 % Prior period reserve development (23.0) % (29.7) % Loss ratio (4.4) % (8.9) % Unlike property and casualty business for which we estimate ultimate losses on premiums earned, losses on U.S. primary mortgage insurance business are only recorded at the time a borrower is delinquent on their mortgage, in accordance with primary mortgage insurance industry practice.
The table below shows the components of the mortgage segment’s loss ratio: Year Ended December 31, 2025 2024 Current year 19.8 % 18.6 % Prior period reserve development (20.2) % (23.0) % Loss ratio (0.4) % (4.4) % Unlike property and casualty business for which we estimate ultimate losses on premiums earned, losses on U.S. primary mortgage insurance business are only recorded at the time a borrower is delinquent on their mortgage, in accordance with primary mortgage insurance industry practice.
Dollar against foreign currencies: Shareholders’ equity $ (76) $ (110) Book value per share $ (0.20) $ (0.30) Pre-tax impact of a hypothetical 10% decline of the U.S. Dollar against foreign currencies: Shareholders’ equity $ 76 $ 110 Book value per share $ 0.20 $ 0.30 (1) Represents capital contributions held in the foreign currencies of our operating units.
Dollar against foreign currencies: Shareholders’ equity $ (120) $ (76) Book value per share $ (0.33) $ (0.20) Pre-tax impact of a hypothetical 10% decline of the U.S. Dollar against foreign currencies: Shareholders’ equity $ 120 $ 76 Book value per share $ 0.33 $ 0.20 (1) Represents capital contributions held in the foreign currencies of our operating units.
See Item 1A, “Risk Factors—Risks Relating to Our Industry, Business and Operations—We are exposed to credit risk in certain of our business operations” and “Financial Condition, Liquidity and Capital Resources” for further details. We have entered into various aggregate excess of loss reinsurance agreements with various special purpose reinsurance companies domiciled in Bermuda.
See Item 1A, “Risk Factors—Risks Relating to Our Industry, Business and Operations—We are exposed to credit risk in certain of our business operations” and “Financial Condition, Liquidity and Capital Resources” for further details. ARCH CAPITAL 86 2025 FORM 10-K We have entered into various aggregate excess of loss reinsurance agreements with various special purpose reinsurance companies domiciled in Bermuda.
If the underlying exposure of each investment-related derivative held at December 31, 2024 depreciated by 100 basis points, it would have resulted in a reduction in net income of approximately $50 million, and a decrease in book value per share of $0.13, compared to $42 million and $0.11, respectively, on investment-related derivatives held at December 31, 2023.
If the underlying exposure of each investment-related derivative held at December 31, 2025 depreciated by 100 basis points, it would have resulted in a reduction in net income of approximately $80 million, and a decrease in book value per share of $0.22, compared to $50 million and $0.13, respectively, on investment-related derivatives held at December 31, 2024.
Based on in-force exposure estimated as of January 1, 2025, our modeled peak zone catastrophe exposure is a windstorm affecting the Florida Tri-County, with a net probable maximum pre-tax loss of $1.8 billion, followed by windstorms affecting the Northeast U.S., and the Gulf of Mexico with net probable maximum pre-tax losses of $1.7 billion and $1.5 billion, respectively.
Based on in-force exposure estimated as of January 1, 2026, our modeled peak zone catastrophe exposure was a windstorm affecting the Florida Tri-County, with a net probable maximum pre-tax loss of $1.9 billion, followed by windstorms affecting the Northeast U.S., and the Gulf of Mexico with net probable maximum pre-tax losses of $1.7 billion and $1.5 billion, respectively.
If the underlying exposure of each investment-related derivative held at December 31, 2024 appreciated by 100 basis points, it would have resulted in an increase in net income of approximately $50 million, and an increase in book value per share of $0.13, compared to $42 million and $0.11, respectively, on investment-related derivatives held at December 31, 2023.
If the underlying exposure of each investment-related derivative held at December 31, 2025 appreciated by 100 basis points, it would have resulted in an increase in net income of approximately $80 million, and an increase in book value per share of $0.22, compared to $50 million and $0.13, respectively, on investment-related derivatives held at December 31, 2024.
We assess the need for a premium deficiency reserve on a quarterly basis and perform a full analysis annually. No such reserve was established during 2024 or 2023. Current Year Loss Ratio . The mortgage segment’s current year loss ratio was 2.2 points lower in 2024 compared to 2023.
We assess the need for a premium deficiency reserve on a quarterly basis and perform a full analysis annually. No such reserve was established during 2025 or 2024. Current Year Loss Ratio . The mortgage segment’s current year loss ratio was 1.2 points higher in 2025 compared to 2024.
Significant Accounting Pronouncements For all other significant accounting policies see note 3, “Significant Accounting Policies” and note 3(t), “Recent Accounting Pronouncements” to our consolidated financial statements in Item 8 for disclosures concerning our companies significant accounting policies and recent accounting pronouncements. FINANCIAL CONDITION Investable Assets At December 31, 2024, total investable assets held by Arch were $41.4 billion.
Significant Accounting Pronouncements For all other significant accounting policies see note 3, “Significant Accounting Policies” and note 3(u), “Recent Accounting Pronouncements” to our consolidated financial statements in Item 8 for disclosures concerning our companies significant accounting policies and recent accounting pronouncements. FINANCIAL CONDITION Investable Assets At December 31, 2025, total investable assets held by Arch were $47.4 billion.
On a consolidated basis, ceded premiums written represented 26.9% of gross premiums written for 2024, compared to 26.8% for 2023. We monitor the financial condition of our reinsurers and attempt to place coverages only with substantial, financially sound carriers.
On a consolidated basis, ceded premiums written represented 28.0% of gross premiums written for 2025, compared to 26.9% for 2024. We monitor the financial condition of our reinsurers and attempt to place coverages only with substantial, financially sound carriers.
As of January 1, 2025, our modeled peak zone earthquake exposure (San Francisco area earthquake) represented approximately 57% of our peak zone catastrophe exposure, and our modeled peak zone international exposure (German windstorm) was substantially less than both our peak zone windstorm and earthquake exposures.
As of January 1, 2026, our modeled peak zone earthquake exposure (San Francisco area earthquake) represented approximately 51% of our peak zone catastrophe exposure, and our modeled peak zone international exposure (German windstorm) was substantially less than both our peak zone windstorm and earthquake exposures.
Based on in-force exposure estimated as of January 1, 2025, our modeled RDS loss was 4.8% of tangible shareholders’ equity available to Arch. Net probable maximum loss estimates are net of expected reinsurance recoveries, before income tax and before excess reinsurance reinstatement premiums. RDS loss estimates are net of expected reinsurance recoveries and before income tax.
Based on in-force exposure estimated as of January 1, 2026, our modeled RDS loss was $931 million, or 4.1% of tangible shareholders’ equity available to Arch. Net probable maximum loss estimates are net of expected reinsurance recoveries, before income tax and before excess reinsurance reinstatement premiums. RDS loss estimates are net of expected reinsurance recoveries and before income tax.
In the event of natural disasters, cure rates are influenced by the adequacy of homeowners and flood insurance carried on a related property, and a borrower's access to aid from government entities and private organizations, in addition to other factors which generally impact cure rates in unaffected areas. Prior Period Reserve Development .
In the event of natural disasters, cure rates are influenced by the adequacy of homeowners and flood insurance carried on a related property, and a borrower's access to aid from government entities and private organizations, in addition to other factors which generally impact cure rates in unaffected areas. ARCH CAPITAL 79 2025 FORM 10-K Prior Period Reserve Development .
At December 31, 2024, the notional value of all derivative instruments (excluding foreign currency forward contracts which are included in the foreign currency exchange risk analysis below) was $5.0 billion, compared to $4.2 billion at December 31, 2023.
At December 31, 2025, the notional value of all derivative instruments (excluding foreign currency forward contracts which are included in the foreign currency exchange risk analysis below) was $8.0 billion, compared to $5.0 billion at December 31, 2024.
The significant assumptions ARCH CAPITAL 85 2024 FORM 10-K utilized in the DCF models included the future revenue and profits expected to be generated by the identifiable intangible assets and the discount rates. See note 15, “Income Taxes” to our consolidated financial statements in Item 8 for disclosures concerning our Company’s deferred income tax asset.
The significant assumptions utilized in the DCF models included the future revenue and profits expected to be generated by the identifiable intangible assets and the discount rates. See note 15, “Income Taxes” to our consolidated financial statements in Item 8 for disclosures concerning our Company’s deferred income tax asset.
Contracts which are written on a “risks attaching” basis cover claims which attach to the underlying insurance policies written during the terms of such contracts. Premiums earned on such contracts usually extend beyond the original term of the reinsurance contract, typically resulting in recognition of premiums earned over a 24-month period.
Contracts which are written on a “risks attaching” basis cover claims which attach to the underlying insurance policies written during the terms of such contracts. Premiums earned on such contracts usually extend beyond the original term of the reinsurance contract, typically resulting in recognition of premiums earned in proportion to the period of risk coverage.
An immediate hypothetical 10% increase in the value of each position would increase the fair value of such investments by approximately $149 million and $101 million at December 31, 2024 and 2023, respectively, and would have increased book value per share by approximately $0.40 and $0.27, respectively. Investment-Related Derivatives.
An immediate hypothetical 10% increase in the value of each position would increase the fair value of such investments by approximately $178 million and $149 million at December 31, 2025 and 2024, respectively, and would have increased book value per share by approximately $0.50 and $0.40, respectively. Investment-Related Derivatives.
Total return is calculated on a pre-tax basis and before investment expenses, and reflects the effect of financial market conditions along with foreign currency fluctuations. In addition, total return incorporates the timing of investment returns during the periods. There is no directly comparable GAAP financial measure for total return.
Total return is calculated on a pre-tax basis and ARCH CAPITAL 74 2025 FORM 10-K before investment expenses, and reflects the effect of financial market conditions along with foreign currency fluctuations. In addition, total return incorporates the timing of investment returns during the periods. There is no directly comparable GAAP financial measure for total return.
Our Chief Investment Officer administers the investment portfolio, oversees our investment managers and formulates investment strategy in conjunction with the FIR Committee. At December 31, 2024, approximately $25.6 billion, or 62%, of total investable assets held by Arch were internally managed, compared to $21.9 billion, or 63%, at December 31, 2023.
Our Chief Investment Officer administers the investment portfolio, oversees our investment managers and formulates investment strategy in conjunction with the FIR Committee. At December 31, 2025, approximately $29.5 billion, or 62%, of total investable assets held by Arch were internally managed, compared to $25.6 billion, or 62%, at December 31, 2024.
At December 31, 2024, $996.8 million of share repurchases were available under the program. Repurchases under the program may be effected from time to time in open market. The timing and amount of the repurchase transactions under this program will depend on a variety of factors, including market conditions, the development of the economy, corporate and regulatory considerations.
At December 31, 2025, $1.1 billion of share repurchases were available under the program. Repurchases under the program may be effected from time to time in open market. The timing and amount of the repurchase transactions under this program will depend on a variety of factors, including market conditions, the development of the economy, corporate and regulatory considerations.
ARCH CAPITAL 94 2024 FORM 10-K Our models employ both proprietary and vendor-based systems and include cross-line correlations for property, marine, offshore energy, aviation, workers compensation and personal accident. We seek to limit the probable maximum pre-tax loss to a specific level for severe catastrophic events.
Our models employ both proprietary and vendor-based systems and include cross-line correlations for property, marine, offshore energy, aviation, workers compensation and personal accident. We seek to limit the probable maximum pre-tax loss to a specific level for severe catastrophic events.
This risk management ARCH CAPITAL 95 2024 FORM 10-K discussion and the estimated amounts generated from the following sensitivity analysis represent forward-looking statements of market risk assuming certain adverse market conditions occur. Actual results in the future may differ materially from these projected results due to actual developments in the global financial markets.
This risk management discussion and the estimated amounts generated from the following sensitivity analysis represent forward-looking statements of market risk assuming certain adverse market conditions occur. Actual results in the future may differ materially from these projected results due to actual developments in the global financial markets.
The benchmark return index included weightings to the following indices: % ICE BofA 1-10 Year U.S. Corporate Index 27.70 Yield on 3-5 Year U.S. Treasury Index plus 6% 17.00 ICE BofA 1-10 Year U.S. Treasury Index 15.00 JPM CLOIE Investment Grade 6.00 ICE BofA U.S. High Yield Constrained Index 6.00 ICE BofA 1-5 Year U.K.
The benchmark return index included weightings to the following indices: % ICE BofA 1-10 Year U.S. Corporate Index 26.70 Yield on 3-5 Year U.S. Treasury Index plus 6% 17.00 ICE BofA 1-10 Year U.S. Treasury Index 15.00 ICE BofA 0-3 Month U.S. Treasury Index 3.00 JPM CLOIE Investment Grade 6.00 ICE BofA 1-5 Year U.K.
In 2024, Arch Capital received dividends of $2.5 billion from Arch Reinsurance Ltd. (“Arch Re Bermuda”), our Bermuda-based reinsurer and insurer. Arch Re Bermuda can pay approximately $5.5 billion to Arch Capital in 2025 without providing an affidavit to the Bermuda Monetary Authority (“BMA”).
In 2025, Arch Capital received dividends of $2.0 billion from Arch Reinsurance Ltd. (“Arch Re Bermuda”), our Bermuda-based reinsurer and insurer. Arch Re Bermuda can pay approximately $6.4 billion to Arch Capital in 2026 without providing an affidavit to the Bermuda Monetary Authority (“BMA”).
The following table provides a summary of our net foreign currency exchange exposures, as well as foreign currency derivatives in place to manage these exposures: (U.S. dollars in millions, except per share data) December 31, 2024 December 31, 2023 Net assets (liabilities), denominated in foreign currencies, excluding shareholders’ equity and derivatives $ (815) $ (300) Shareholders’ equity denominated in foreign currencies (1) 1,120 1,158 Net foreign currency forward contracts outstanding (2) 453 246 Net exposures denominated in foreign currencies $ 758 $ 1,104 Pre-tax impact of a hypothetical 10% appreciation of the U.S.
The following table provides a summary of our net foreign currency exchange exposures, as well as foreign currency derivatives in place to manage these exposures: (U.S. dollars in millions, except per share data) December 31, 2025 December 31, 2024 Net assets (liabilities), denominated in foreign currencies, excluding shareholders’ equity and derivatives $ (498) $ (815) Shareholders’ equity denominated in foreign currencies (1) 1,220 1,120 Net foreign currency forward contracts outstanding (2) 478 453 Net exposures denominated in foreign currencies $ 1,200 $ 758 Pre-tax impact of a hypothetical 10% appreciation of the U.S.
Although the Company generally attempts to match the currency of its projected liabilities with investments in the same currencies, from time to time the Company may elect to over or underweight one or more currencies, which could increase the Company’s exposure to foreign currency fluctuations and increase the volatility of the Company’s shareholders’ equity.
ARCH CAPITAL 101 2025 FORM 10-K Although the Company generally attempts to match the currency of its projected liabilities with investments in the same currencies, from time to time the Company may elect to over or underweight one or more currencies, which could increase the Company’s exposure to foreign currency fluctuations and increase the volatility of the Company’s shareholders’ equity.
(“Arch Capital” and, together with its subsidiaries, “we” or “us”) is a publicly listed Bermuda exempted company with approximately $23.5 billion in capital at December 31, 2024 and is part of the S&P 500 index.
(“Arch Capital” and, together with its subsidiaries, “we” or “us”) is a publicly listed Bermuda exempted company with approximately $26.9 billion in capital at December 31, 2025 and is part of the S&P 500 index.
Estimating reinsurance recoverables can be more subjective than estimating the underlying reserves for losses and loss adjustment expenses as discussed above in “—Loss Reserves.” In particular, reinsurance recoverables may be ARCH CAPITAL 82 2024 FORM 10-K affected by deemed inuring reinsurance, industry losses reported by various statistical reporting services, and other factors.
Estimating reinsurance recoverables can be more subjective than estimating the underlying reserves for losses and loss adjustment expenses as discussed above in “—Loss Reserves.” In particular, reinsurance recoverables may be affected by deemed inuring reinsurance, industry losses reported by various statistical reporting services, and other factors.
MARKET SENSITIVE INSTRUMENTS AND RISK MANAGEMENT Our investment results are subject to a variety of risks, including risks related to changes in the business, financial condition or results of operations of the entities in which we invest, as well as changes in general economic conditions and overall market conditions.
ARCH CAPITAL 99 2025 FORM 10-K MARKET SENSITIVE INSTRUMENTS AND RISK MANAGEMENT Our investment results are subject to a variety of risks, including risks related to changes in the business, financial condition or results of operations of the entities in which we invest, as well as changes in general economic conditions and overall market conditions.
The mortgage segment’s net favorable development was $282 million, or 23.0 points, for 2024, compared to $344 million, or 29.7 points, for 2023. See note 5, “Reserve for Losses and Loss Adjustment Expenses,” to our consolidated financial statements in Item 8 for information about the mortgage segment’s prior year reserve development. Underwriting Expenses .
The mortgage segment’s net favorable development was $235 million, or 20.2 points, for 2025, compared to $282 million, or 23.0 points, for 2024. See note 5, “Reserve for Losses and Loss Adjustment Expenses,” to our consolidated financial statements in Item 8 for information about the mortgage segment’s prior year reserve development. Underwriting Expenses .
A significant portion of amounts included as premiums receivable, which represent estimated premiums written, net of commissions, are not currently due based on the terms of the underlying contracts. Based on currently available information, we report premiums receivable net of an allowance for expected credit loss.
A significant portion of amounts included as premiums receivable, which represent estimated premiums written, net of commissions, are not currently due based on the terms of the underlying contracts. Based on currently ARCH CAPITAL 87 2025 FORM 10-K available information, we report premiums receivable net of an allowance for expected credit loss.
The following table summarizes the effect that an immediate, parallel shift in the interest rate yield curve would have had on our investment portfolio at December 31, 2024 and 2023: (U.S. dollars in billions) Interest Rate Shift in Basis Points -100 -50 - +50 +100 Dec. 31, 2024 Total fair value $ 40.0 $ 39.5 $ 38.9 $ 38.4 $ 37.9 Change from base 2.8 % 1.4 % (1.4) % (2.7) % Change in unrealized value $ 1.09 $ 0.54 $ (0.54) $ (1.05) Dec. 31, 2023 Total fair value $ 33.6 $ 33.1 $ 32.7 $ 32.2 $ 31.7 Change from base 3.0 % 1.5 % (1.4) % (2.8) % Change in unrealized value $ 0.98 $ 0.49 $ (0.46) $ (0.91) In addition, we consider the effect of credit spread movements on the market value of our Fixed Income Securities and the corresponding change in unrealized value.
The following table summarizes the effect that an immediate, parallel shift in the interest rate yield curve would have had on our investment portfolio at December 31, 2025 and 2024: (U.S. dollars in billions) Interest Rate Shift in Basis Points -100 -50 - +50 +100 Dec. 31, 2025 Total fair value $ 45.8 $ 45.2 $ 44.6 $ 44.0 $ 43.3 Change from base 2.8 % 1.4 % (1.4) % (2.8) % Change in unrealized value $ 1.2 $ 0.6 $ (0.6) $ (1.2) Dec. 31, 2024 Total fair value $ 40.0 $ 39.5 $ 38.9 $ 38.4 $ 37.9 Change from base 2.8 % 1.4 % (1.4) % (2.7) % Change in unrealized value $ 1.1 $ 0.5 $ (0.5) $ (1.1) In addition, we consider the effect of credit spread movements on the market value of our Fixed Income Securities and the corresponding change in unrealized value.
During 2024 and 2023, we made interest payments of $127 million and $127 million, respectively, primarily related to our senior notes and other financing arrangements. See note 19, “Debt and Financing Arrangements,” to our consolidated financial statements in Item 8 for additional disclosures concerning our senior notes and revolving credit agreement borrowings.
ARCH CAPITAL 95 2025 FORM 10-K During 2025 and 2024, we made interest payments of $127 million and $127 million, respectively, primarily related to our senior notes and other financing arrangements. See note 19, “Debt and Financing Arrangements,” to our consolidated financial statements in Item 8 for additional disclosures concerning our senior notes and revolving credit agreement borrowings.
The persistency rate represents the percentage of mortgage insurance in force at the beginning of a 12-month period that remains in force at the end of such period. The following tables provide details on the new insurance written (“NIW”) generated by U.S. primary mortgage insurance operations.
The persistency rate represents the percentage of mortgage insurance in force at the beginning of a 12 month period that remains in force at the end of such period. ARCH CAPITAL 78 2025 FORM 10-K The following tables provide details on the new insurance written (“NIW”) generated by U.S. primary mortgage insurance operations.
Our U.S. insurance and reinsurance subsidiaries are subject to insurance laws and regulations in the jurisdictions in which they operate. The ability of our regulated insurance subsidiaries to pay dividends or make distributions is dependent on their ability to meet applicable regulatory standards.
Our U.S. insurance and reinsurance subsidiaries are subject to insurance laws and regulations in the jurisdictions in which they operate. The ability of our regulated insurance subsidiaries to pay dividends or make distributions is dependent on their ability to meet applicable regulatory ARCH CAPITAL 92 2025 FORM 10-K standards.
Our senior notes were issued by Arch Capital, Arch Capital Group (U.S.) Inc. (“Arch-U.S.”) and Arch Capital Finance ARCH CAPITAL 91 2024 FORM 10-K LLC (“Arch Finance”). Arch-U.S. is a wholly-owned subsidiary of Arch Capital and Arch Finance is a wholly-owned finance subsidiary of Arch-U.S.
Our senior notes were issued by Arch Capital, Arch Capital Group (U.S.) Inc. (“Arch-U.S.”) and Arch Capital Finance LLC (“Arch Finance”). Arch-U.S. is a wholly-owned subsidiary of Arch Capital and Arch Finance is a wholly-owned finance subsidiary of Arch-U.S.
Simulation Results In order to illustrate the potential volatility in our Loss Reserves, we used a Monte Carlo simulation approach to simulate a range of results based on various probabilities. Both the probabilities and related modeling are subject to inherent uncertainties.
ARCH CAPITAL 83 2025 FORM 10-K Simulation Results In order to illustrate the potential volatility in our Loss Reserves, we used a Monte Carlo simulation approach to simulate a range of results based on various probabilities. Both the probabilities and related modeling are subject to inherent uncertainties.
For informational purposes, based on the total simulation results, a change in our Loss Reserves to the amount indicated at the 90th percentile would result in a decrease in income before income taxes of approximately $3.7 billion, or $9.71 per diluted share, while a change in our Loss Reserves to the amount indicated at the 10th percentile would result in an increase in income before income taxes of approximately $3.4 billion, or $8.99 per diluted share.
For informational purposes, based on the total simulation results, a change in our Loss Reserves to the amount indicated at the 90th percentile would result in a decrease in income before income taxes of approximately $4.5 billion, or $11.98 per diluted share, while a change in our Loss Reserves to the amount indicated at the 10th percentile would result in an increase in income before income taxes of approximately $4.3 billion, or $11.32 per diluted share.
We recorded $580 million of equity in net income related to investments accounted for using the equity method for 2024, compared to $278 million for 2023. Investments accounted for using the equity method totaled $6.0 billion at December 31, 2024, compared to $4.6 billion at December 31, 2023.
We recorded $504 million of equity in net income related to investments accounted for using the equity method for 2025, compared to $580 million for 2024. Investments accounted for using the equity method totaled $6.5 billion at December 31, 2025, compared to $6.0 billion at December 31, 2024.
For our natural catastrophe exposed business, we seek to limit the amount of exposure we will assume from any one insured or reinsured and the amount of the exposure to catastrophe losses from a single event in any geographic zone.
ARCH CAPITAL 98 2025 FORM 10-K For our natural catastrophe exposed business, we seek to limit the amount of exposure we will assume from any one insured or reinsured and the amount of the exposure to catastrophe losses from a single event in any geographic zone.
Management uses Operating ROAE as a key measure of the return generated to Arch common shareholders. See “Comment on Non-GAAP Financial Measures.” Our annualized net income return on average common equity was 22.8% for 2024, compared to 29.7% for 2023. Our Operating ROAE was 18.9% for 2024, compared to 21.6% for 2023.
Management uses Operating ROAE as a key measure of the return generated to Arch common shareholders. See “Comment on Non-GAAP Financial Measures.” Our annualized net income return on average common equity was 20.1% for 2025, compared to 22.8% for 2024. Our Operating ROAE was 17.1% for 2025, compared to 18.9% for 2024.
ARCH CAPITAL 90 2024 FORM 10-K In addition, Arch Mortgage Insurance Company and United Guaranty Residential Insurance Company (together, “eligible mortgage insurer”) are required to maintain compliance with the GSE requirements, known as PMIERs.
In addition, Arch Mortgage Insurance Company and United Guaranty Residential Insurance Company (together, “eligible mortgage insurer”) are required to maintain compliance with the GSE requirements, known as PMIERs.
Share Repurchase Program Our Board has authorized the investment in Arch Capital’s common shares through a share repurchase program. Since the inception of the share repurchase program through December 31, 2024, Arch Capital has repurchased approximately 433.8 million common shares for an aggregate purchase price of $5.9 billion.
Share Repurchase Program Our Board has authorized the investment in Arch Capital’s common shares through a share repurchase program. Since the inception of the share repurchase program through December 31, 2025, Arch Capital has repurchased approximately 455.0 million common shares for an aggregate purchase price of $7.8 billion.
Any such determination will be at the discretion of the Board and will be dependent upon our profits, financial requirements and other factors, including legal restrictions, rating agency requirements and such other factors as our Board deems relevant.
Any such determination will be at the discretion of the Board and will be dependent upon our profits, financial requirements and other factors, including legal restrictions, rating agency requirements, prevailing market conditions and such other factors as our Board deems relevant. The amounts involved may be material.
This presentation includes the use of after-tax operating income available to Arch common shareholders, which is defined as net income available to Arch common shareholders, excluding net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses, transaction costs and other, net of income taxes (which for the 2023 fourth quarter includes a one-time deferred income tax benefit related to the enactment of Bermuda’s new corporate income tax), and the use of annualized operating return on average common equity.
This presentation includes the use of after-tax operating income available to Arch common shareholders, which is defined as net income available to Arch common shareholders, excluding net realized gains or losses (which includes, but is not limited to, realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses, transaction costs and other, net of income taxes, and the use of annualized operating return on average common equity.
The 2024 loss ratio included 11.8 points for current year catastrophic event activity related to Hurricanes Milton and Helene, and a series of other global events, compared to 6.8 points in 2023. The current year loss ratio for 2024 also reflected the impact of rate increases and changes in mix of business. Prior Period Reserve Development .
The 2025 loss ratio included 8.5 points for current year catastrophic event activity, primarily related to the California wildfires, compared to 11.8 points in 2024, primarily related to Hurricanes Milton, Helene and a series of other global events. The current year loss ratio for 2025 also reflected changes in mix of business. Prior Period Reserve Development .

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Reference is made to the information appearing above under the subheading “Market Sensitive Instruments and Risk Management” under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” which information is hereby incorporated by reference. ARCH CAPITAL 98 2024 FORM 10-K
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Reference is made to the information appearing above under the subheading “Market Sensitive Instruments and Risk Management” under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” which information is hereby incorporated by reference. ARCH CAPITAL 102 2025 FORM 10-K

Other ACGL 10-K year-over-year comparisons