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Segment Information | 3 Months Ended
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Mar. 31, 2022
Segment Reporting [Abstract] |
Segment Information | The Company classifies its businesses into three underwriting segments — insurance, reinsurance and mortgage — and two other operating segments — corporate and ‘other.’ The Company determined its reportable segments using the management approach described in accounting guidance regarding disclosures about segments of an enterprise and related information. The accounting policies of the segments are the same as those used for the preparation of the Company’s consolidated financial statements. Intersegment business is allocated to the segment accountable for the underwriting results. The Company’s insurance, reinsurance and mortgage segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to the Company’s chief operating decision makers, the Chief Executive Officer of Arch Capital, the Chief Financial Officer and Treasurer of Arch Capital and the President and Chief Underwriting Officer of Arch Capital. The chief operating decision makers do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis. Management measures segment performance for its three underwriting segments based on underwriting income or loss. The Company does not manage its assets by underwriting segment, with the exception of goodwill and intangible assets, and, accordingly, investment income is not allocated to each underwriting segment. The insurance segment consists of the Company’s insurance underwriting units which offer specialty product lines on a worldwide basis. Product lines include: construction and national accounts; excess and surplus casualty; lenders products; professional lines; programs; property, energy, marine and aviation; travel, accident and health; and other (consisting of alternative markets, excess workers' compensation and surety business). The reinsurance segment consists of the Company’s reinsurance underwriting units which offer specialty product lines on a worldwide basis. Product lines include: casualty; marine and aviation; other specialty; property catastrophe; property excluding property catastrophe (losses on a single risk, both excess of loss and pro rata); and other (consisting of life reinsurance, casualty clash and other). The mortgage segment includes the Company’s U.S. primary mortgage insurance business, investment and services related to U.S. credit-risk transfer (“CRT”) which are predominately with government sponsored enterprises (“GSE’s”) and international mortgage insurance and reinsurance operations. Arch Mortgage Insurance Company and United Guaranty Residential Insurance Company (combined “Arch MI U.S.”) are approved as eligible mortgage insurers by Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”), each a GSE. Arch MI U.S. also includes Arch Mortgage Guaranty Company, which is not a GSE-approved entity. The corporate segment results include net investment income, net realized gains or losses (which includes changes in the allowance for credit losses on financial assets and net impairment losses recognized in earnings), equity in net income or loss of investments accounted for using the equity method, other income (loss), corporate expenses, transaction costs and other, amortization of intangible assets, interest expense, net foreign exchange gains or losses, income taxes, income or loss from operating affiliates and items related to the Company’s non-cumulative preferred shares. Such amounts exclude the results of the ‘other’ segment. Through June 30, 2021, the ‘other’ segment included the results of Somers. In July 2021, the Company announced the completion of the previously disclosed acquisition of Somers by Greysbridge. Based on the governing documents of Greysbridge, the Company has concluded that, while it retains significant influence over Somers, Somers no longer constitutes a variable interest entity. Accordingly, effective July 1, 2021, Arch no longer consolidates the results of Somers in its consolidated financial statements. S ee note 11. The following tables summarize the Company’s underwriting income or loss by segment, together with a reconciliation of underwriting income or loss to net income available to Arch common shareholders:
| Three Months Ended
| March 31, 2022
| Insurance |  | Reinsurance |  | Mortgage |  | Sub-Total |  | Other |  | Total
Gross premiums written (1) | $ | 1,719,605 |  |  | $ | 1,718,942 |  |  | $ | 364,839 |  |  | $ | 3,800,775 |  |  | $ | — |  |  | $ | 3,800,775 |
Premiums ceded | (512,709) |  |  | (579,818) |  |  | (76,719) |  |  | (1,166,635) |  |  | — |  |  | (1,166,635) |
Net premiums written | 1,206,896 |  |  | 1,139,124 |  |  | 288,120 |  |  | 2,634,140 |  |  | — |  |  | 2,634,140 |
Change in unearned premiums | (180,200) |  |  | (334,724) |  |  | 1,417 |  |  | (513,507) |  |  | — |  |  | (513,507) |
Net premiums earned | 1,026,696 |  |  | 804,400 |  |  | 289,537 |  |  | 2,120,633 |  |  | — |  |  | 2,120,633 |
Other underwriting income (loss) | — |  |  | 836 |  |  | 5,061 |  |  | 5,897 |  |  | — |  |  | 5,897 |
Losses and loss adjustment expenses | (600,739) |  |  | (454,700) |  |  | 54,604 |  |  | (1,000,835) |  |  | — |  |  | (1,000,835) |
Acquisition expenses | (195,650) |  |  | (171,996) |  |  | (10,513) |  |  | (378,159) |  |  | — |  |  | (378,159) |
Other operating expenses | (166,825) |  |  | (69,776) |  |  | (53,342) |  |  | (289,943) |  |  | — |  |  | (289,943) |
Underwriting income (loss) | $ | 63,482 |  |  | $ | 108,764 |  |  | $ | 285,347 |  |  | 457,593 |  |  | — |  |  | 457,593 |
Net investment income |  |  |  |  |  |  | 80,436 |  |  | — |  |  | 80,436 |
Net realized gains (losses) |  |  |  |  |  |  | (292,414) |  |  | — |  |  | (292,414) |
Equity in net income (loss) of investment funds accounted for using the equity method |  |  |  |  |  |  | 36,305 |  |  | — |  |  | 36,305 |
Other income (loss) |  |  |  |  |  |  | (9,025) |  |  | — |  |  | (9,025) |
Corporate expenses (2) |  |  |  |  |  |  | (31,935) |  |  | — |  |  | (31,935) |
Transaction costs and other (2) |  |  |  |  |  |  | (397) |  |  | — |  |  | (397) |
Amortization of intangible assets |  |  |  |  |  |  | (27,167) |  |  | — |  |  | (27,167) |
Interest expense |  |  |  |  |  |  | (32,708) |  |  | — |  |  | (32,708) |
Net foreign exchange gains (losses) |  |  |  |  |  |  | 3,845 |  |  | — |  |  | 3,845 |
Income (loss) before income taxes and income (loss) from operating affiliates |  |  |  |  |  |  | 184,533 |  |  | — |  |  | 184,533 |
Income tax (expense) benefit |  |  |  |  |  |  | (11,619) |  |  | — |  |  | (11,619) |
Income (loss) from operating affiliates |  |  |  |  |  |  | 24,518 |  |  | — |  |  | 24,518 |
Net income (loss) |  |  |  |  |  |  | 197,432 |  |  | — |  |  | 197,432 |
Amounts attributable to redeemable noncontrolling interests |  |  |  |  |  |  | (1,632) |  |  | — |  |  | (1,632) |
Net income (loss) available to Arch |  |  |  |  |  |  | 195,800 |  |  | — |  |  | 195,800 |
Preferred dividends |  |  |  |  |  |  | (10,184) |  |  | — |  |  | (10,184) |
Net income (loss) available to Arch common shareholders |  |  |  |  |  |  | $ | 185,616 |  |  | $ | — |  |  | $ | 185,616 |
Underwriting Ratios |  |  |  |  |  |  |  |  |  |  |
Loss ratio | 58.5 | % |  | 56.5 | % |  | (18.9) | % |  | 47.2 | % |  | — | % |  | 47.2 | %
Acquisition expense ratio | 19.1 | % |  | 21.4 | % |  | 3.6 | % |  | 17.8 | % |  | — | % |  | 17.8 | %
Other operating expense ratio | 16.2 | % |  | 8.7 | % |  | 18.4 | % |  | 13.7 | % |  | — | % |  | 13.7 | %
Combined ratio | 93.8 | % |  | 86.6 | % |  | 3.1 | % |  | 78.7 | % |  | — | % |  | 78.7 | %
Goodwill and intangible assets | $ | 249,423 |  |  | $ | 183,675 |  |  | $ | 493,329 |  |  | $ | 926,427 |  |  | $ | — |  |  | $ | 926,427 |
(1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’
| Three Months Ended
| March 31, 2021
| Insurance |  | Reinsurance |  | Mortgage |  | Sub-Total |  | Other |  | Total
Gross premiums written (1) | $ | 1,415,886 |  |  | $ | 1,471,060 |  |  | $ | 391,246 |  |  | $ | 3,277,293 |  |  | $ | 216,523 |  |  | $ | 3,397,206 |
Premiums ceded | (421,047) |  |  | (471,948) |  |  | (56,051) |  |  | (948,147) |  |  | (37,212) |  |  | (888,749) |
Net premiums written | 994,839 |  |  | 999,112 |  |  | 335,195 |  |  | 2,329,146 |  |  | 179,311 |  |  | 2,508,457 |
Change in unearned premiums | (175,365) |  |  | (354,212) |  |  | 1,122 |  |  | (528,455) |  |  | (31,580) |  |  | (560,035) |
Net premiums earned | 819,474 |  |  | 644,900 |  |  | 336,317 |  |  | 1,800,691 |  |  | 147,731 |  |  | 1,948,422 |
Other underwriting income (loss) | — |  |  | (1,198) |  |  | 6,897 |  |  | 5,699 |  |  | 411 |  |  | 6,110 |
Losses and loss adjustment expenses | (535,747) |  |  | (484,870) |  |  | (63,689) |  |  | (1,084,306) |  |  | (118,794) |  |  | (1,203,100) |
Acquisition expenses | (128,222) |  |  | (118,025) |  |  | (30,082) |  |  | (276,329) |  |  | (28,152) |  |  | (304,481) |
Other operating expenses | (137,113) |  |  | (60,514) |  |  | (49,131) |  |  | (246,758) |  |  | (14,275) |  |  | (261,033) |
Underwriting income (loss) | $ | 18,392 |  |  | $ | (19,707) |  |  | $ | 200,312 |  |  | 198,997 |  |  | (13,079) |  |  | 185,918 |
Net investment income |  |  |  |  |  |  | 78,729 |  |  | 20,127 |  |  | 98,856 |
Net realized gains (losses) |  |  |  |  |  |  | 101,336 |  |  | 41,125 |  |  | 142,461 |
Equity in net income (loss) of investment funds accounted for using the equity method |  |  |  |  |  |  | 71,686 |  |  | — |  |  | 71,686 |
Other income (loss) |  |  |  |  |  |  | (1,741) |  |  | — |  |  | (1,741) |
Corporate expenses (2) |  |  |  |  |  |  | (23,468) |  |  | — |  |  | (23,468) |
Transaction costs and other (2) |  |  |  |  |  |  | (1,201) |  |  | (715) |  |  | (1,916) |
Amortization of intangible assets |  |  |  |  |  |  | (14,402) |  |  | — |  |  | (14,402) |
Interest expense |  |  |  |  |  |  | (34,197) |  |  | (4,149) |  |  | (38,346) |
Net foreign exchange gains (losses) |  |  |  |  |  |  | 21,505 |  |  | (1,442) |  |  | 20,063 |
Income (loss) before income taxes and income (loss) from operating affiliates |  |  |  |  |  |  | 397,244 |  |  | 41,867 |  |  | 439,111 |
Income tax (expense) benefit |  |  |  |  |  |  | (38,852) |  |  | (8) |  |  | (38,860) |
Income (loss) from operating affiliates |  |  |  |  |  |  | 75,457 |  |  | — |  |  | 75,457 |
Net income (loss) |  |  |  |  |  |  | 433,849 |  |  | 41,859 |  |  | 475,708 |
Amounts attributable to redeemable noncontrolling interests |  |  |  |  |  |  | 117 |  |  | (972) |  |  | (855) |
Amounts attributable to nonredeemable noncontrolling interests |  |  |  |  |  |  | — |  |  | (36,697) |  |  | (36,697) |
Net income (loss) available to Arch |  |  |  |  |  |  | 433,966 |  |  | 4,190 |  |  | 438,156 |
Preferred dividends |  |  |  |  |  |  | (10,403) |  |  | — |  |  | (10,403) |
Net income (loss) available to Arch common shareholders |  |  |  |  |  |  | $ | 423,563 |  |  | $ | 4,190 |  |  | $ | 427,753 |
Underwriting Ratios |  |  |  |  |  |  |  |  |  |  |
Loss ratio | 65.4 | % |  | 75.2 | % |  | 18.9 | % |  | 60.2 | % |  | 80.4 | % |  | 61.7 | %
Acquisition expense ratio | 15.6 | % |  | 18.3 | % |  | 8.9 | % |  | 15.3 | % |  | 19.1 | % |  | 15.6 | %
Other operating expense ratio | 16.7 | % |  | 9.4 | % |  | 14.6 | % |  | 13.7 | % |  | 9.7 | % |  | 13.4 | %
Combined ratio | 97.7 | % |  | 102.9 | % |  | 42.4 | % |  | 89.2 | % |  | 109.2 | % |  | 90.7 | %
Goodwill and intangible assets | $ | 276,211 |  |  | $ | 17,807 |  |  | $ | 377,841 |  |  | $ | 671,859 |  |  | $ | 7,650 |  |  | $ | 679,509 |
(1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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