Arch Capital Group reports drop in net income for Q2 2015

Arch Capital Group Ltd. has reported a net income of US$110.3 million for the second quarter of 2015 (ending June 30), compared to US$202.5 million for Q2 2014 and a combined underwriting ratio of 87.9%, compared to 86.2% for the same quarter in 2014.

The company also reported on Wednesday an after-tax operating income of US$146 million for Q2 2015, compared to US$160.7 million for Q2 2014, representing an annualized return on average common equity of 9.9% for Q2 2015, compared to 11.2% for Q2 2014. The underwriting loss ratio was 52.8% for Q2 2015, compared to 53.4% for the same time last year, the company added in a statement. [click image below to enlarge]

Net premiums written for the quarter were US$823,392, compared to US$920,126 for Q2 2014 and underwriting income was US$108,343, compared to US$125,133. For the first half of 2015, net premiums written were US$1.76 million, compared with US$1.95 million for 1H 2014, while underwriting decreased from US$258,711 in 1H 2014 to US$223,046 in 1H 2015.

Net investment income for Q2 2015 was US$67.2 million, compared to US$72.5 million for the 2014 second quarter. “The lower level of net investment income per share compared to the 2015 first quarter was primarily related to a lower level of income on certain fund investments,” the statement said.

Gross premiums written by the insurance segment in the 2015 second quarter were 12.6% lower than in the 2014 second quarter, while net premiums written were 12.1% lower than in the 2014 second quarter. “Changes in foreign currency rates resulted in a decrease in net premiums written in the 2015 second quarter of approximately $8 million, or 1.4%, compared to the 2014 second quarter,” the statement said.

For the reinsurance sector, gross premiums written by the reinsurance segment in the 2015 second quarter were 2.2% lower than in the 2014 second quarter, while net premiums written were 13.1% lower than in the 2014 second quarter.

Gross premiums written by the mortgage segment in the 2015 second quarter were 23.6% higher than in the 2014 second quarter, while net premiums written were 22.4% higher than in the 2014 second quarter.

Arch Capital Group Ltd., a Bermuda-based company with approximately $7.03 billion in capital at June 30, provides insurance and reinsurance on a worldwide basis through its wholly owned subsidiaries. It began operations in Canada in 2005 as a commercial property insurer based in Toronto and has a branch office in Vancouver.