Arch Capital Group (ACGL) AI Stock Analysis

• Market Cap: $32.76B
• Dividend Yield: N/A
• Average Volume (3M): 2.64M
• Price to Earnings (P/E): 9.1
• Beta (1Y): 0.42
• Revenue Growth: 23.79%
• EPS Growth: -32.09%
• Country: US
• Employees: 7,200
• Sector: Financial
• Sector Strength: 70
• Industry: Insurance - Diversified
• EPS (TTM): 2.58
• Shares Outstanding: 373,220,300
• 10 Day Avg. Volume: 2,494,091
• 30 Day Avg. Volume: 2,641,942
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.16
• Enterprise Value/Revenue: 1.98
• Enterprise Value/Gross Profit: 2.87
• Enterprise Value/Ebitda: 8.88
• 1Y Price Target: $108.00
• Price Target Upside: 20.07% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15

• Rating: 78 Outperform
• Price Target: $103.00 ▲(14.51% Upside)

Arch Capital Group's strong earnings call performance and undervalued valuation are the most significant factors contributing to the score. The company's robust financial position further supports its attractiveness, despite limited technical analysis data and some pressures on profitability.

Positive Factors

Capital Management

Arch is maintaining a healthy amount of excess capital allowing for continued strong capital return and providing support for shares.

Earnings

The company is well positioned for long term earnings and book value growth.

Underwriting Performance

Reinsurance segment showed strong underwriting, with a core combined ratio of 74.8% vs consensus of 76.1%.

Negative Factors

Competitive Landscape

Intensifying competitive dynamics in P-CAT and Specialty sectors contribute to lower growth estimates.

Market Conditions

Increased capacity in the reinsurance market pressures pricing, impacting premium growth.

Valuation

Moderating underlying margins and rate softening lead to a lower P/B multiple valuation of 1.6x.

Arch Capital Group Business Overview & Revenue Model

Company Description

Arch Capital Group Ltd., together with its subsidiaries, provides insurance, reinsurance, and mortgage insurance products worldwide. The company's Insurance segment offers primary and excess casualty coverages; loss sensitive primary casualty insurance programs; collateral protection, debt cancellation, and service contract reimbursement products; directors' and officers' liability, errors and omissions liability, employment practices and fiduciary liability, crime, professional indemnity, and other financial related coverages; medical professional and general liability insurance coverages; and workers' compensation and umbrella liability, as well as commercial automobile and inland marine products. It also provides property, energy, marine, and aviation insurance; travel insurance; accident, disability, and medical plan insurance coverages; captive insurance programs; employer's liability; and contract and commercial surety coverages. This segment markets its products through a group of licensed independent retail and wholesale brokers. Its Reinsurance segment provides casualty reinsurance for third party liability and workers' compensation exposures; marine and aviation; surety, accident and health, workers' compensation catastrophe, agriculture, trade credit, and political risk products; reinsurance protection for catastrophic losses, and personal lines and commercial property exposures; life reinsurance; casualty clash; and risk management solutions. This segment markets its reinsurance products through brokers. The company's Mortgage segment offers direct mortgage insurance and mortgage reinsurance. The company was incorporated in 1995 and is based in Pembroke, Bermuda.

How the Company Makes Money

Arch Capital Group generates revenue through several key channels, primarily by underwriting insurance and reinsurance policies. The company earns premiums from clients in exchange for coverage against various risks, including property damage, liability, and other exposures. Additionally, Arch's mortgage insurance segment provides coverage to lenders against borrower defaults, generating further premium income. The company also invests the capital it holds, earning investment income from interest, dividends, and capital gains on its investment portfolio. Strategic partnerships with brokers and agents enhance its distribution capabilities, while its strong market presence and diversified risk portfolio contribute to its overall profitability. Arch Capital's ability to accurately assess risk and manage claims effectively is critical to maintaining its earnings and financial stability.

Arch Capital Group Financial Statement Overview

Summary

Arch Capital Group demonstrates a robust financial profile with strong revenue growth, high profitability margins, and prudent leverage management. However, liquidity concerns due to declining cash reserves need attention.

Income Statement

Arch Capital Group shows strong income statement metrics with a consistent increase in total revenue from $8.29B in 2020 to $17.80B TTM. The gross profit margin remains robust above 95% TTM, indicating efficient cost management. The net profit margin improved to 21.16% TTM, reflecting enhanced profitability. Revenue growth has been significant, especially from 2022 to 2024, reinforcing a positive trajectory. However, EBIT and EBITDA margins fluctuated, suggesting potential volatility in operating efficiency.

Balance Sheet

The balance sheet is solid with a reasonable debt-to-equity ratio of 0.13 TTM, indicating a conservative leverage approach. The equity ratio of 28.66% TTM suggests a strong capital position. Return on equity is satisfactory at 17.48% TTM, demonstrating effective use of equity to generate earnings. Despite the overall stability, the declining cash reserves from 2020 to TTM raise concerns about liquidity management.

Cash Flow

The cash flow statement highlights a positive trend in operating cash flow, rising to $6.57B TTM. The free cash flow growth rate has been commendable, with stable free cash flow levels over time. The operating cash flow to net income ratio of 1.74 TTM indicates strong cash generation relative to earnings. However, the consistent negative investing cash flow and fluctuations in financing cash flow could suggest strategic investments and financing adjustments.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	19.27B	16.93B	13.29B	9.66B	8.92B	8.29B
Gross Profit	13.31B	5.94B	4.74B	2.89B	3.04B	2.60B
EBITDA	4.29B	4.85B	3.61B	1.72B	2.32B	1.77B
Net Income	3.73B	4.31B	4.44B	1.48B	2.16B	1.41B
Balance Sheet
Total Assets	78.79B	70.91B	58.91B	47.99B	45.10B	43.28B
Cash, Cash Equivalents and Short-Term Investments	983.00M	979.00M	8.03B	21.87B	22.40B	21.55B
Total Debt	2.73B	2.73B	2.73B	2.73B	2.72B	3.02B
Total Liabilities	55.75B	50.09B	40.55B	35.07B	31.55B	29.29B
Stockholders Equity	23.04B	20.82B	18.35B	12.91B	13.55B	13.11B
Cash Flow
Free Cash Flow	6.13B	6.62B	5.70B	3.76B	3.39B	2.85B
Operating Cash Flow	6.17B	6.67B	5.75B	3.82B	3.43B	2.89B
Investing Cash Flow	-3.78B	-4.46B	-5.47B	-3.10B	-2.14B	-3.04B
Financing Cash Flow	-2.27B	-1.93B	-69.00M	-706.00M	-1.23B	521.28M

Arch Capital Group Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 89.95
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ACGL, the sentiment is Positive. The current price of 89.95 is above the 20-day moving average (MA) of 88.18, above the 50-day MA of 89.69, and below the 200-day MA of 92.49, indicating a neutral trend. The MACD of -0.09 indicates Negative momentum. The RSI at 54.17 is Neutral, neither overbought nor oversold. The STOCH value of 75.32 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ACGL.

Arch Capital Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HIG	79 Outperform	$36.28B	11.70	19.55%	1.55%	7.67%	15.99%
ACGL	78 Outperform	$32.76B	9.07	17.09%	―	23.79%	-32.09%
AIG	75 Outperform	$43.48B	14.55	7.61%	2.07%	-33.87%	-5.72%
ORI	75 Outperform	$9.41B	10.73	14.63%	8.04%	14.20%	50.32%
PFG	72 Outperform	$17.21B	15.55	10.16%	3.78%	-3.34%	-3.32%
Sector *	68 Neutral	$17.48B	11.72	10.44%	3.82%	10.01%	1.29%
EQH	65 Neutral	$16.43B	44.23	34.30%	1.87%	5.05%	-47.26%

Arch Capital Group Corporate Events

Arch Capital Group Holds Annual Shareholders Meeting

Arch Capital Group Ltd. held its annual meeting of shareholders on May 7, 2025, where approximately 90% of outstanding shares were represented. Key decisions included the election of four Class III directors, approval of executive compensation, and ratification of PricewaterhouseCoopers LLP as the independent auditor. Additionally, the board declared dividends for Series F and Series G preferred shares, payable on June 30 and September 30, 2025, respectively.