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Segment Information
 12 Months Ended
Dec. 31, 2023
Segment Reporting [Abstract]  
Segment Information
The Company classifies its businesses into three underwriting segments – insurance, reinsurance and mortgage – and two 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, 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: primary and excess casualty coverages for middle market and large construction accounts, a comprehensive range of products for middle market accounts in specialty industries and casualty solutions for large national accounts, including loss sensitive primary insurance programs (large deductible, self-insured retention and retrospectively rated programs).
•    Excess and surplus casualty: primary and excess casualty insurance coverages written primarily on a non-admitted basis.
•    Professional lines: directors’ and officers’ liability, errors and omissions liability, employment practices liability, fiduciary liability, crime, professional indemnity and other financial related coverages for corporate, private equity, venture capital, real estate investment trust, limited partnership, financial institution and not-for-profit clients of all sizes, cyber insurance, and medical professional and general liability insurance coverages for the healthcare industry. The business is predominately written on a claims-made basis.
•    Programs: primarily targeting program managers with unique expertise and niche products offering some combination of general liability, commercial automobile, property, inland marine, umbrella and workers’ compensation.
•    Property, energy, marine and aviation: primary and excess general property insurance coverages, including catastrophe-exposed property coverage, for commercial clients. Coverages for marine include hull, cargo, war, specie and liability. Aviation, stand-alone terrorism and political risks are also offered. Coverage may be provided for operational and construction risk.
•    Travel, accident and health: specialty travel and accident and related insurance products for individual, group travelers, travel agents and suppliers, as well as accident and health, which provides accident, disability and medical plan insurance coverages for employer groups, medical plan members, students and other participant groups.
•    Warranty and lenders solutions: collateral protection, debt cancellation and service contract reimbursement products to banks, credit unions, automotive dealerships and original equipment manufacturers and other specialty programs that pertain to automotive lending and leasing.
•    Other: includes alternative market risks (including captive insurance programs), excess workers’ compensation and employer’s liability insurance coverages for qualified self-insured groups, associations and trusts, and contract, commercial and transactional surety coverages.
The reinsurance segment consists of the Company’s reinsurance underwriting units which offer specialty product lines on a worldwide basis. Reinsurance agreements are typically offered on a proportional and/or excess of loss basis and provide coverage to ceding company clients for specific underlying written policies. Product lines include:
•Casualty: provides coverage on third party liability exposures including, among others, executive assurance, professional liability, excess and umbrella liability, excess motor and healthcare business, and workers’ compensation. Business is assumed primarily on a treaty basis, with some facultative coverages also offered.
•Marine and aviation: provides coverage for energy, hull, cargo, specie, liability and transit, and aviation business, including airline and general aviation risks. Business written may also include space business, which includes coverages for satellite assembly, launch and operation for commercial space programs.
•Other specialty: provides coverage for proportional motor reinsurance, whole account multi-line treaties, cyber, trade credit and surety, accident and health, workers’ compensation catastrophe, agriculture and political risk, among others.
•Property catastrophe: provides protection for most types of catastrophic losses, including hurricane, earthquake, flood, tornado, hail and fire, and for other perils on a case-by-case basis. Excess of loss coverages are triggered when aggregate losses and loss adjustment expense from a single occurrence or aggregation of losses from a covered peril exceed the retention specified in the contract.
•Property excluding property catastrophe: provides coverage for personal lines and/or commercial property exposures and principally covers buildings, structures, equipment and contents. The primary perils in this business include fire, explosion, collapse, riot, vandalism, wind, tornado, flood and earthquake. Business is assumed on either a treaty basis or facultative basis.
•Other: primarily includes life reinsurance business.
The mortgage segment includes the Company’s underwriting units which offer mortgage insurance and reinsurance products on a worldwide basis. Underwriting units include:
•U.S. primary mortgage insurance: offers private mortgage insurance through Arch Mortgage Insurance Company and United Guaranty Residential Insurance Company (combined “Arch MI U.S.”), both approved eligible mortgage insurers by Fannie Mae and Freddie Mac. Arch MI U.S. also includes AMG, which is not a government sponsored enterprise (“GSE”) approved entity.
•U.S. credit risk transfer (“CRT”) and other: underwrites CRT transactions, which are predominantly with GSEs, and other U.S. reinsurance transactions.
•International mortgage insurance/reinsurance: underwrites mortgage insurance and reinsurance outside of the U.S.
The corporate segment results include net investment income, 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 and losses on derivative instruments and changes in the allowance for credit losses on financial assets), equity in net income or loss of investment funds 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 items, income or loss from operating affiliates and items related to the Company’s non cumulative preferred shares.
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. See note 12, “Variable Interest Entity and Noncontrolling Interests.”
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, summary information regarding net premiums written and earned by major line of business and net premiums written by location:
Year Ended December 31, 2023
InsuranceReinsuranceMortgageSub-TotalOtherTotal
Gross premiums written (1)$7,911 $9,113 $1,387 $18,403 $— $18,403 
Premiums ceded (1)(2,049)(2,559)(335)(4,935)— (4,935)
Net premiums written5,862 6,554 1,052 13,468 — 13,468 
Change in unearned premiums(416)(718)106 (1,028)— (1,028)
Net premiums earned5,446 5,836 1,158 12,440 — 12,440 
Other underwriting income— 17 14 31 — 31 
Losses and loss adjustment expenses(3,122)(3,227)103 (6,246)— (6,246)
Acquisition expenses(1,055)(1,240)(17)(2,312)— (2,312)
Other operating expenses(819)(288)(194)(1,301)— (1,301)
Underwriting income$450 $1,098 $1,064 2,612 — 2,612 
Net investment income1,023 — 1,023 
Net realized gains (losses)(165)— (165)
Equity in net income (loss) of investments accounted for using the equity method278 — 278 
Other income (loss)27 — 27 
Corporate expenses (96)— (96)
Transaction costs and other(6)— (6)
Amortization of intangible assets(95)— (95)
Interest expense(133)— (133)
Net foreign exchange gains (losses)(60)— (60)
Income (loss) before income taxes and income (loss) from operating affiliates3,385 — 3,385 
Income tax (expense) benefit873 — 873 
Income (loss) from operating affiliates184 — 184 
Net income (loss)4,442 — 4,442 
Amounts attributable to redeemable noncontrolling interests1 — 1 
Net income (loss) available to Arch4,443 — 4,443 
Preferred dividends(40)— (40)
Net income (loss) available to Arch common shareholders$4,403 $— $4,403 
Underwriting Ratios
Loss ratio57.3 %55.3 %-8.9 %50.2 %— %50.2 %
Acquisition expense ratio19.4 %21.2 %1.4 %18.6 %— %18.6 %
Other operating expense ratio15.0 %4.9 %16.8 %10.5 %— %10.5 %
Combined ratio91.7 %81.4 %9.3 %79.3 %— %79.3 %
Goodwill and intangible assets$224 $130 $377 $731 $— $731 
Total investable assets$34,589 $— $34,589 
Total assets58,906 — 58,906 
Total liabilities40,551 — 40,551 
(1)    Certain assumed and ceded amounts related to intersegment transactions are included in individual segment results. Accordingly, the sum of such transactions for each segment does not agree to the total due to eliminations.
Year Ended December 31, 2022
InsuranceReinsuranceMortgageSub-TotalOtherTotal
Gross premiums written (1)$6,931 $6,948 $1,455 $15,327 $— $15,327 
Premiums ceded (1)(1,910)(2,024)(322)(4,249)— (4,249)
Net premiums written5,021 4,924 1,133 11,078 — 11,078 
Change in unearned premiums(461)(965)27 (1,399)— (1,399)
Net premiums earned4,560 3,959 1,160 9,679 — 9,679 
Other underwriting income— 5 8 13 — 13 
Losses and loss adjustment expenses(2,784)(2,568)324 (5,028)— (5,028)
Acquisition expenses, net(887)(813)(40)(1,740)— (1,740)
Other operating expenses(665)(268)(195)(1,128)— (1,128)
Underwriting income (loss)$224 $315 $1,257 1,796 — 1,796 
Net investment income496 — 496 
Net realized gains (losses)(663)— (663)
Equity in net income (loss) of investments accounted for using the equity method115 — 115 
Other income (loss)(27)— (27)
Corporate expenses(95)— (95)
Transaction costs and other— — — 
Amortization of intangible assets(106)— (106)
Interest expense(131)— (131)
Net foreign exchange gains (losses)102 — 102 
Income (loss) before income taxes and income (loss) from operating affiliates1,487 — 1,487 
Income tax (expense) benefit(80)— (80)
Income (loss) from operating affiliates75 — 75 
Net income (loss)1,482 — 1,482 
Amounts attributable to redeemable noncontrolling interests(6)— (6)
Net income (loss) available to Arch1,476 — 1,476 
Preferred dividends(40)— (40)
Net income (loss) available to Arch common shareholders$1,436 $— $1,436 
Underwriting Ratios
Loss ratio61.0 %64.9 %-28.0 %51.9 %— %51.9 %
Acquisition expense ratio19.4 %20.5 %3.5 %18.0 %— %18.0 %
Other operating expense ratio14.6 %6.8 %16.8 %11.7 %— %11.7 %
Combined ratio95.0 %92.2 %-7.7 %81.6 %— %81.6 %
Goodwill and intangible assets$229 $145 $430 $804 $— $804 
Total investable assets$28,065 $— $28,065 
Total assets47,990 — 47,990 
Total liabilities35,069 — 35,069 
(1)    Certain assumed and ceded amounts related to intersegment transactions are included in individual segment results. Accordingly, the sum of such transactions for each segment does not agree to the total due to eliminations.
Year Ended December 31, 2021
InsuranceReinsuranceMortgageSub-TotalOtherTotal
Gross premiums written (1)$5,868 $5,094 $1,508 $12,463 $458 $12,752 
Premiums ceded (1)(1,719)(1,840)(247)(3,799)(105)(3,735)
Net premiums written4,149 3,254 1,261 8,664 353 9,017 
Change in unearned premiums(524)(413)22 (915)(20)(935)
Net premiums earned3,625 2,841 1,283 7,749 333 8,082 
Other underwriting income— 3 18 21 — 21 
Losses and loss adjustment expenses(2,345)(1,925)(57)(4,327)(258)(4,585)
Acquisition expenses, net(606)(537)(97)(1,240)(63)(1,303)
Other operating expenses(559)(214)(193)(966)(33)(999)
Underwriting income (loss)$115 $168 $954 1,237 (21)1,216 
Net investment income347 42 389 
Net realized gains (losses)299 81 380 
Equity in net income (loss) of investments accounted for using the equity method366 — 366 
Other income (loss)10 — 10 
Corporate expenses(76)— (76)
Transaction costs and other(1)(1)(2)
Amortization of intangible assets(81)(1)(82)
Interest expense(131)(8)(139)
Net foreign exchange gains (losses)42 (1)41 
Income (loss) before income taxes and income (loss) from operating affiliates2,012 91 2,103 
Income tax (expense) benefit(128)— (128)
Income (loss) from operating affiliates264 — 264 
Net income2,148 91 2,239 
Amounts attributable to redeemable noncontrolling interests(2)(2)(4)
Amounts attributable to nonredeemable noncontrolling interests— (78)(78)
Net income (loss) available to Arch2,148 9 2,157 
Preferred dividends(48)— (48)
Loss on redemption of preferred shares(15)— (15)
Net income (loss) available to Arch common shareholders$2,085 $9 $2,094 
Underwriting Ratios
Loss ratio64.6 %67.8 %4.4 %55.8 %78.0 %56.7 %
Acquisition expense ratio16.7 %18.9 %7.6 %16.0 %18.9 %16.1 %
Other operating expense ratio15.4 %7.5 %15.1 %12.5 %9.9 %12.4 %
Combined ratio96.7 %94.2 %27.1 %84.3 %106.8 %85.2 %
Goodwill and intangible assets$256 $184 $505 $945 $— $945 
Total investable assets$27,442 $— $27,442 
Total assets45,101 — 45,101 
Total liabilities31,546 — 31,546 
(1)    Certain assumed and ceded amounts related to intersegment transactions are included in individual segment results. Accordingly, the sum of such transactions for each segment does not agree to the total due to eliminations.
The following tables provide summary information regarding net premiums earned by major line of business and net premiums written by underwriting location:
INSURANCE SEGMENTYear Ended December 31,
202320222021
Net premiums earned (1)
Professional lines$1,419 $1,314 $943 
Property, energy, marine and aviation1,064772668
Programs658590507
Construction and national accounts561432417
Travel, accident and health557492256
Excess and surplus casualty486393318
Warranty and lenders solutions185128153
Other 516439363
Total$5,446 $4,560 $3,625 
Net premiums written by underwriting location (1)
United States$3,780 $3,342 $2,812 
Europe1,7741,4051,126
Other308 274 211 
Total$5,862 $5,021 $4,149 
REINSURANCE SEGMENTYear Ended December 31,
202320222021
Net premiums earned (1)
Other specialty$2,097 $1,378 $819 
Property excluding property catastrophe1,6451,090838
Casualty1,005855667
Property catastrophe742367280
Marine and aviation229159153
Other11811084
Total$5,836 $3,959 $2,841 
Net premiums written by underwriting location (1)
United States$1,756 $1,247 $829 
Bermuda3,2882,5611,555 
Europe and other1,5101,116870 
Total$6,554 $4,924 $3,254 
MORTGAGE SEGMENTYear Ended December 31,
202320222021
Net premiums earned
U.S. primary mortgage insurance$759 $804 $953 
U.S. credit risk transfer (CRT) and other220196181
International mortgage insurance/reinsurance179160149
Total$1,158 $1,160 $1,283 
Net premiums written by underwriting location
United States$743 $781 $913 
Other309 352 348 
Total$1,052 $1,133 $1,261 

(1)    Segment results include intersegment transactions.
OTHER SEGMENTYear Ended December 31,
202320222021
Net premiums earned (1)
Casualty $— $— $138 
Other specialty— — 118 
Property catastrophe— — 15 
Property excluding property catastrophe— — 7 
Marine and aviation— — — 
Other — — 55 
Total$— $— $333 
Net premiums written by underwriting location (1)
United States$— $— $63 
Europe— — 91 
Bermuda— — 199 
Total$— $— $353