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Arch Capital Group Ltd. Reports 2013 Third Quarter Results

Arch Capital Group Ltd. (NASDAQ:ACGL) reports that net income available to common shareholders for the 2013 third quarter was $109.3 million, or $0.80 per share, compared to $184.2 million, or $1.33 per share, for the 2012 third quarter. The Company also reported after-tax operating income available to common shareholders of $149.2 million, or $1.10 per share, for the 2013 third quarter, compared to after-tax operating income available to common shareholders of $120.2 million, or $0.87 per share, for the 2012 third quarter. The Company's after-tax operating income available to common shareholders represented an annualized return on average common equity of 11.9% for the 2013 third quarter, compared to 9.9% for the 2012 third quarter, while the Company's net income available to common shareholders represented an annualized return on average common equity of 8.7% for the 2013 third quarter, compared to 15.2% for the 2012 third quarter. The Company's book value per common share was $38.34 at September 30, 2013, a 4.2% increase from $36.80 per share at June 30, 2013 and a 4.2% increase from $36.79 per share at September 30, 2012.

After-tax operating income or loss available to common shareholders, a non-GAAP measure, is defined as net income available to common shareholders, excluding net realized gains or losses, net impairment losses recognized in earnings, equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses and loss on repurchase of preferred shares, net of income taxes. See 'Comments on Regulation G' for a further discussion of after-tax operating income or loss available to common shareholders. All earnings per share amounts discussed in this release are on a diluted basis.

The following table summarizes the Company's underwriting results:

               

Three Months Ended

Nine Months Ended

September 30,

September 30,

(U.S. dollars in thousands) 2013   2012 2013   2012
 
Gross premiums written $ 1,036,987 $ 936,764 $ 3,241,424 $ 3,055,233
Net premiums written 839,135 755,249 2,602,446 2,439,093
Net premiums earned 795,000 748,691 2,306,586 2,155,659
Underwriting income 110,992 73,452 323,419 234,368
 
Combined ratio (1) 86.0 % 90.2 % 86.0 % 89.2 %
 
(1)   The combined ratio represents a measure of underwriting profitability, excluding investment income, and is the sum of the loss ratio and expense ratio. A combined ratio under 100% represents an underwriting profit and a combined ratio over 100% represents an underwriting loss.
 

For the 2013 third quarter, the combined ratio of the Company's insurance and reinsurance subsidiaries consisted of a loss ratio of 53.7% and an underwriting expense ratio of 32.3%, compared to a loss ratio of 59.3% and an underwriting expense ratio of 30.9% for the 2012 third quarter. For a discussion of underwriting activities and a review of the Company's results by operating segment, see “Segment Information” in the Supplemental Financial Information section of this release.

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