Arch Capital Group reported net income of $1 billion for the second quarter of 2026, as higher catastrophe losses weighed on earnings despite continued underwriting profitability and growth in investment income.

The Bermuda-based insurer and reinsurer recorded after-tax operating income of $893 million, down from $979 million in the second quarter of 2025, while pre-tax current accident year catastrophe losses rose to $201 million, compared with $154 million a year earlier.

Higher catastrophe losses were partly offset by $165 million of favourable prior-year reserve development, up from $139 million in the prior-year quarter.

Gross premiums written (GPW) declined 1.1% year over year to $6.1 billion, while net premiums written (NPW) fell 6.9% to $4.1 billion. Net premiums earned (NPE) decreased 8% to $4 billion.

Group underwriting income fell nearly 20% to $657 million, with the combined ratio deteriorating by 2.3 percentage points to 83.5%, reflecting a 55.1% loss ratio and 28.4% expense ratio.

Reinsurance remains a bright spot

Arch’s reinsurance business continued to deliver strong underwriting performance despite lower premium volumes.

Gross premiums written increased slightly to $3.2 billion, although net premiums written declined 10.4% to $1.8 billion, reflecting non-renewals, reduced participations and increased retrocession purchases.

Underwriting income for the segment fell 9.1% to $410 million, but the combined ratio improved to 77.5% from 78.5%a year earlier.

Insurance margins come under pressure

The insurance segment generated $2.6 billion in gross premiums written, down 2.9% from the prior year.

Net premiums written declined 5.1% to $1.9 billion, while underwriting income dropped nearly 80% to $27 million as the combined ratio deteriorated to 98.5%.

Mortgage business remains profitable

Arch’s mortgage insurance segment continued to produce strong results, with gross premiums written increasing slightly to $324 million and net premiums written rising 7.5% to $272 million.

Although underwriting income declined 7.6% to $220 million, the business maintained a low combined ratio of 22.8%.

Meanwhile, pre-tax net investment income increased to $417 million, compared with $405 million in the second quarter of 2025.

Chief Executive Officer Nicolas Papadopoulo said the group’s diversified business model continued to deliver resilient performance despite elevated catastrophe activity.

“We delivered a strong quarter, driven by solid underwriting performance across our three segments, reflecting the continued strength of our diversified platform and disciplined execution across the enterprise.”

He added that Arch’s leadership across specialty insurance, mortgage insurance and reinsurance continued to differentiate the business.

“Clients not only come to us for capacity, but also for our underwriting expertise, claims capabilities, creative solutions and valuable perspectives that help them better manage risk.”

Despite increased catastrophe losses and softer premium volumes, Arch maintained strong profitability in the second quarter, supported by disciplined underwriting, favourable reserve development and higher investment income as market conditions continue to normalize across insurance and reinsurance.