World Insurance Report

Arch Capital Group Ltd

The fact that Arch Capital, unlike many of its peer group, managed to emerge from 2008 with not only a positive net result (albeit greatly diminished compared with the previous year) but also with a positive underwriting result, is largely down to the way in which the group has diversified its business over the last five years in terms of the extent of its involvement in the primary insurance and reinsurance markets of the US and Europe. However, its increased loss experience in 2008 has prompted group to reconfigure its US exposures, on both the primary insurance and reinsurance sides, and to increase its involvement, particularly on the reinsurance side, in Europe and other regions such as the Middle East

The Bermuda based Arch Capital Group which wrote a gross premium income of $3.7bn in 2008 saw its net income significantly reduced from a profit of $857.94mn in 2007 to a profit of only $291.0mn in 2008. Although it was clearly a challenging year for the group in terms of increased natural catastrophe losses, with claims incurred costs increasing by 12.4% to $1.9bn in 2008 (mainly as a result of havoc wreaked by Hurricanes Gustav and Ike) the pressure on Arch Capital’s pre-tax and bottom line results was not, as it might have been the case in financially less volatile times, from the expenses side of the group’s income statement, but rather from the revenue side.

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