27 October 2016 Insurance

Mortgage business drives Q3 growth at Arch Capital

Profits soared at Arch Capital Group in the third quarter and the company also enjoyed healthy growth, driven by a big increase in the amount of mortgage business it is underwriting.

The re/insurer made a net profit of $247.4 million in the third quarter compared with $74.5 million in the third quarter of 2015. The group's combined ratio for the third quarter was 88 percent, down 2.7 percentage points.

Its overall gross written premiums in the period increased to $1.3 billion for the three-month period ending September 30, an increase of 7.5 percent from $1.2 billion for the same period in 2015.

This growth was driven by the mortgage segment in which gross written premiums were 76.4 percent higher than in the 2015 third quarter, reflecting growth in Australian mortgage reinsurance and in US primary business and from GSE credit risk-sharing transactions receiving insurance accounting treatment.

It also saw some small growth in the insurance business where gross premiums written were 0.9 percent higher than in the 2015 third quarter while net premiums written were 0.3 percent lower than in the 2015 third quarter. The decrease in net premiums written reflected reductions in programmes and property lines, partially offset by growth in travel and in ‘other’ lines including alternative markets and high excess comp business.

It also said the reduction in programme business primarily reflected the continued impact of the non-renewal of a large programme in the latter part of 2015 while the lower level in property lines reflected continued weak market conditions.

Its reinsurance business shrank, however, with gross premiums written 1.5 percent lower than in the 2015 third quarter, while net premiums written were 1 percent lower than in the 2015 third quarter. The decrease in net premiums written reflected reductions in casualty and marine and aviation lines, due in part to reductions in premium estimates reflecting current market conditions.

Such amounts were partially offset by growth in other specialty business, reflecting additional agriculture business and strong renewals on pro rata UK motor business.

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