Arch Capital Group ( NASDAQ: ACGL ) Q4 earnings far exceeded Wall Street expectations as net premiums earned in its insurance and reinsurance segments offset the decline at its mortgage segment. In addition, rising interest rates bolstered its net investment income from both the prior and year-ago quarters.
Q4 operating EPS of $2.14, smashing the $1.34 consensus, surged from $0.28 in Q3 and from $1.27 in Q4 2021.
Q4 net premiums earned were $2.76B, up from $2.47B in Q3 and from $2.08B in Q4 2021.
Q4 underwriting income of $734.2M jumped 56% from the year-ago quarter.
Pretax net investment income of $181.1M, or $0.48 per share, increased from $128.6M, or $0.34 per share in Q3, and from $90.5M, or $0.23 per share in Q4 2021. Total return on investments improved to 2.60% in the December 2022 quarter, vs. -3.01% in the September quarter and +0.39% in the December 2021 quarter.
The growth in NII vs. the prior quarter and year-ago quarter reflects the effects of higher interest rates available in the market.
Pretax current accident year catastrophic losses for ACGL's insurance and reinsurance segments, net of reinsurance and reinstatement premiums, were $34.6M vs. $550.8M in the prior quarter and $72.3M in the year-ago quarter.
Combined ratio, excluding catastrophic activity and prior year development, increased to 82.0%, down from 82.2% in the prior quarter and up from 80.1% in Q4 2021.
Book value per share of $32.62 at Dec. 31, 2022, up from $29.69 at Sept. 30, 2022.
Conference call at 11:00 AM ET.
Earlier, Arch Capital ( ACGL ) Q4 non-GAAP EPS beats estimate, gross premiums written rise 30% Y/Y
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Arch Capital Group Q4 earnings soar on net premiums earned, higher interest rates