Arch Capital Group (ACGL) AI Stock Analysis

• Market Cap: $34.26B
• Dividend Yield: N/A
• Average Volume (3M): 1.76M
• Price to Earnings (P/E): 8.1
• Beta (1Y): 0.42
• Revenue Growth: 26.24%
• EPS Growth: -3.87%
• Country: US
• Employees: 7,200
• Sector: Financial
• Sector Strength: 85
• Industry: Insurance - Diversified
• EPS (TTM): 11.19
• Shares Outstanding: 375,716,030
• 10 Day Avg. Volume: 1,373,503
• 30 Day Avg. Volume: 1,755,961
• PEG Ratio: 0.07
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.14
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 2.27
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $111.08
• Price Target Upside: 20.23% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 13

Arch Capital Group's robust financial performance and strategic management position it well for future growth, despite some operational challenges and competitive pressures. The stock appears undervalued, but technical analysis shows mixed signals. Positive corporate events further strengthen the outlook.

Positive Factors

Company Strategy

Arch is considered a best-in-class company admired by investors and peers, deserving a premium valuation due to consistently strong operating results.

Earnings Performance

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

Market Positioning

Arch stands to be one of the biggest beneficiaries of the P&C hard market due to its global distribution and underwriting expertise.

Negative Factors

Financial Estimates

The price target for Arch Capital has been lowered, reflecting adjustments in financial estimates.

Investment Income

Earnings per share estimates for 2025 and 2026 are reduced due to expected lower net investment income.

Revenue Performance

Total company gross written premiums of $4,756 million came in well below consensus of $5,046 million.

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 makes money primarily through its diverse portfolio of insurance and reinsurance products. The company collects premiums from policyholders in exchange for providing coverage against potential losses. In the insurance sector, revenue is generated through underwriting profits, where premiums collected exceed the claims paid out. In the reinsurance sector, Arch Capital earns money by providing risk management solutions to other insurers, receiving premiums in return for taking on some of their risk exposures. The mortgage insurance segment contributes to revenue by offering private mortgage insurance to lenders, protecting them against borrower defaults. Additionally, Arch Capital leverages its investment portfolio, earning income through interest, dividends, and capital gains from its investment operations. Key partnerships with brokers and agents across the globe also play a significant role in expanding their distribution network and enhancing revenue streams.

Arch Capital Group Financial Statement Overview

Summary

Arch Capital Group exhibits a strong financial position with impressive revenue and profit growth, effective cost management, and excellent leverage management. The absence of debt in recent years enhances financial stability. Despite some operational fluctuations, the company's overall financial health is robust, making it well-positioned to capitalize on future growth opportunities in the insurance industry.

Income Statement

Arch Capital Group has shown strong revenue growth over the years, with total revenue increasing from $6.78 billion in 2019 to $17.44 billion in 2024. The gross profit margin is high, consistently above 70%, indicating efficient cost management. The net profit margin has also been strong, with the latest figure at 24.73%. However, the EBIT margin has fluctuated, showing some operational challenges. Overall, the income statement reflects a robust growth trajectory and profitability.

Balance Sheet

The balance sheet of Arch Capital Group is quite strong. The company has zero total debt as of 2024, reflecting excellent leverage management. The equity ratio stands at 29.37%, indicating a solid equity base. Return on Equity (ROE) is also impressive at 20.71%, showcasing effective use of shareholder funds. The absence of debt reduces financial risk, and the growing stockholders' equity strengthens the company's financial stability.

Cash Flow

Arch Capital Group has demonstrated solid cash flow management with a significant increase in free cash flow from $2.01 billion in 2019 to $6.62 billion in 2024. The operating cash flow to net income ratio is 1.55, indicating strong cash generation relative to net income. However, the free cash flow growth rate has shown some volatility. Overall, the cash flow statement reflects healthy cash generation capabilities.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
17.44B	13.63B	9.60B	8.93B	8.29B
	Gross Profit
17.20B	12.24B	8.37B	7.84B	7.35B
	EBIT
200.00M	13.54B	1.69B	2.25B	1.47B
	EBITDA
200.00M	3.33B	1.61B	1.96B	1.77B
	Net Income Common Stockholders
4.31B	4.44B	1.48B	2.16B	1.41B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
979.00M	8.03B	21.87B	22.40B	21.55B
	Total Assets
70.91B	58.91B	47.99B	45.10B	43.28B
	Total Debt
2.73B	2.73B	2.73B	2.72B	3.02B
	Net Debt
1.75B	1.81B	1.87B	1.87B	2.11B
	Total Liabilities
50.09B	40.55B	35.07B	31.55B	29.29B
	Stockholders Equity
20.82B	18.35B	12.91B	13.55B	13.11B
Cash Flow		Free Cash Flow
6.62B	5.70B	3.76B	3.39B	2.85B
	Operating Cash Flow
6.67B	5.75B	3.82B	3.43B	2.89B
	Investing Cash Flow
-4.46B	-5.47B	-3.10B	-2.14B	-3.04B
	Financing Cash Flow
-1.93B	-69.00M	-706.00M	-1.23B	521.28M

Arch Capital Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 92.39
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ACGL, the sentiment is Negative. The current price of 92.39 is above the 20-day moving average (MA) of 91.46, above the 50-day MA of 91.92, and below the 200-day MA of 96.17, indicating a bearish trend. The MACD of -0.26 indicates Positive momentum. The RSI at 46.59 is Neutral, neither overbought nor oversold. The STOCH value of 53.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ACGL.

Arch Capital Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HIG	83 Outperform	$34.21B	12.00	18.49%	1.67%	7.55%	14.16%
ACGL	78 Outperform	$34.26B	8.15	22.02%	―	26.24%	-3.87%
ORI	75 Outperform	$9.31B	12.30	14.17%	2.91%	10.83%	20.74%
AIG	68 Neutral	$47.83B	16.18	7.10%	1.95%	-28.56%	1.14%
EQH	65 Neutral	$15.47B	13.34	61.74%	1.93%	16.81%	14.00%
Sector *	63 Neutral	$12.37B	9.56	7.95%	79.17%	12.62%	-5.26%
PFG	63 Neutral	$16.62B	15.83	9.70%	3.96%	-18.19%	―

Arch Capital Group Corporate Events

Arch Capital Group Appoints New Board Director

On February 4, 2025, Arch Capital Group Ltd. announced the appointment of Alexander Moczarski as a Class III director to its Board of Directors. Mr. Moczarski, with over 45 years of experience in the global insurance industry and previously serving as Chairman of Marsh McLennan Companies, International, brings significant leadership and industry knowledge to the Board. His appointment is expected to enhance Arch’s market leadership and long-term value creation for shareholders.