Arch Capital Group Ltd.

Waterloo House, Ground Floor

100 Pitts Bay Road

Pembroke HM 08 Bermuda

Financial Supplement

June 30, 2023

The following financial supplement is provided to assist in your understanding of Arch Capital Group Ltd. ("Arch") and its subsidiaries (collectively, the "Company").

This report is for informational purposes only. It should be read in conjunction with documents filed by Arch with the U.S. Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and the Quarterly Reports on Form 10-Q. Please refer to the Company's website at www.archgroup.comfor further information describing Arch.

Arch Capital Group Ltd.

Investor Relations

François Morin: (441) 278-9250

Donald Watson: (914) 872-3616; dwatson@archgroup.com

Arch Capital Group Ltd. and Subsidiaries

Table of Contents

  1. Financial Highlights
  1. Consolidated Financial Statements
    1. Consolidated Statements of Income
    2. Consolidated Balance Sheets
    3. Consolidated Statements of Changes in Shareholders' Equity
    4. Consolidated Statements of Cash Flows
  1. Segment Information
    1. Overview
    2. Consolidated Results
    3. Insurance Segment Results
    4. Reinsurance Segment Results
    5. Mortgage Segment Results
    6. Segment Consolidated Results
    7. Selected Information on Losses and Loss Adjustment Expenses

IV.

Investment Information

a.

Investable Asset Summary and Investment Portfolio Metrics

b.

Composition of Net Investment Income, Yield and Total Return

c.

Composition of Fixed Maturities

d.

Credit Quality Distribution and Maturity Profile

e.

Analysis of Corporate Exposures

f.

Structured Securities

Page

3

4

5

6

7

8

9

13

15

17

22

23

24

25

26

27

28

29

  1. Other a.
    b.
    c.
    d.

Comments on Regulation G

Operating Income Reconciliation and Annualized Operating Return on Average Common Equity Operating Income and Effective Tax Rate Calculations

Capital Structure and Share Repurchase Activity

30

31

32

33

1

Arch Capital Group Ltd. and Subsidiaries

Basis of Presentation

Basis of Presentation

All financial information contained herein is unaudited, however, certain information relating to the consolidated balance sheet at December 31, 2022 is derived from or agrees to audited financial information. Unless otherwise noted, all amounts are in millions, except for per share amounts and ratio information. Amounts presented have been rounded for presentation purposes and may not reconcile due to rounding differences.

Cautionary Note Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. This release or any other written or oral statements made by or on behalf of Arch and its subsidiaries may include forward-looking statements, which reflect the Company's current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements.

Forward-looking statements can generally be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or their negative or variations or similar terminology. Forward-looking statements involve the Company's current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: adverse general economic and market conditions; increased competition; pricing and policy term trends; fluctuations in the actions of rating agencies and the Company's ability to maintain and improve the Company's ratings; investment performance; the loss and addition of key personnel; the adequacy of the Company's loss reserves, severity and/or frequency of losses, greater than expected loss ratios and adverse development on claim and/or claim expense liabilities; greater frequency or severity of unpredictable natural and man-made catastrophic events; including pandemics such as COVID-19; the impact of acts of terrorism and acts of war; changes in regulations and/or tax laws in the United States or elsewhere; the Company's ability to successfully integrate, establish and maintain operating procedures as well as integrate the businesses we have acquired or may acquire into the existing operations; changes in accounting principles or policies; material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements; availability and cost to the Company of reinsurance to manage gross and net exposures; the failure of others to meet their obligations to the Company; a disruption caused by cyber-attacks or other technology breaches or failures on the Company or the Company's business partners and service providers, which could negatively impact the Company's business and/or expose the Company to litigation; and other factors identified in the Company's filings with the U.S. Securities and Exchange Commission.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein or elsewhere. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on the Company's behalf are expressly qualified in their entirety by these cautionary statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

2

Arch Capital Group Ltd. and Subsidiaries

Financial Highlights

The following table presents financial highlights:

(U.S. Dollars and shares in millions, except per share data)

Three Months Ended

Six Months Ended

June 30,

June 30,

2023

2022

Change

2023

2022

Change

Underwriting results:

Gross premiums written

$

4,845

$

3,870

25.2 %

$

9,625

$

7,671

25.5 %

Net premiums written

3,428

2,685

27.7 %

6,852

5,319

28.8 %

Net premiums earned

2,965

2,326

27.5 %

5,848

4,447

31.5 %

Underwriting income (loss) (1)

606

536

13.1 %

1,176

994

18.3 %

Loss ratio

50.3 %

47.4 %

2.9

50.6 %

47.3 %

3.3

Acquisition expense ratio

18.9 %

17.8 %

1.1

18.7 %

17.8 %

0.9

Other operating expense ratio

10.6 %

11.9 %

(1.3)

10.8 %

12.8 %

(2.0)

Combined ratio

79.8 %

77.1 %

2.7

80.1 %

77.9 %

2.2

Net investment income

$

242

$

106

128.3 %

$

441

$

186

137.1 %

Per diluted share

$

0.64

$

0.28

128.6 %

$

1.17

$

0.49

138.8 %

Net income available to Arch common shareholders

$

661

$

394

67.8 %

$

1,366

$

580

135.5 %

Per diluted share

$

1.75

$

1.04

68.3 %

$

3.62

$

1.52

138.2 %

After-tax operating income available to Arch common shareholders (1)

$

726

$

506

43.5 %

$

1,380

$

928

48.7 %

Per diluted share

$

1.92

$

1.34

43.3 %

$

3.65

$

2.44

49.6 %

Comprehensive income (loss) available to Arch

$

649

$

(204)

n/m

$

1,713

$

(593)

n/m

Net cash provided by operating activities

$

1,151

$

902

27.6 %

$

2,114

$

1,454

45.4 %

Weighted average common shares and common share equivalents outstanding - diluted

378.4

377.9

0.1 %

377.8

380.8

(0.8)%

Financial measures:

Change in book value per common share during period

4.8 %

(2.5)%

7.3

13.5 %

(6.5)%

20.0

Annualized net income return on average common equity

19.6 %

13.3 %

6.3

21.1 %

9.5 %

11.6

Annualized operating return on average common equity (1)

21.5 %

17.1 %

4.4

21.3 %

15.3 %

6.0

Total return on investments (2)

0.56 %

(3.02)%

358 bps

3.10 %

(6.00)%

909 bps

  1. See 'Comments on Regulation G' for a further discussion of consolidated underwriting income or loss, after-tax operating income or loss available to Arch common shareholders and annualized operating return on average common equity.
  2. Total return on investments includes investment income, equity in net income (loss) of investment funds accounted for using the equity method, net realized gains and losses and the change in unrealized gains and losses and is calculated on a pre-tax basis and before investment expenses. See 'Comments on Regulation G' for a further discussion of the presentation of total return on investments.

3

Arch Capital Group Ltd. and Subsidiaries

Consolidated Statements of Income

(U.S. Dollars and shares in millions, except per share data)

Three Months Ended

Six Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

June 30,

2023

2023

2022

2022

2022

2023

2022

Revenues

Net premiums earned

$

2,965

$

2,883

$

2,761

$

2,471

$

2,326

$

5,848

$

4,447

Net investment income

242

199

181

129

106

441

186

Net realized gains (losses)

(123)

17

80

(184)

(267)

(106)

(559)

Other underwriting income

6

10

1

3

3

16

9

Equity in net income (loss) of investment funds accounted for using the equity method

69

48

40

(19)

58

117

94

Other income (loss)

3

11

8

(14)

(12)

14

(21)

Total revenues

3,162

3,168

3,071

2,386

2,214

6,330

4,156

Expenses

Losses and loss adjustment expenses

(1,491)

(1,471)

(1,241)

(1,683)

(1,103)

(2,962)

(2,104)

Acquisition expenses

(561)

(533)

(501)

(448)

(413)

(1,094)

(791)

Other operating expenses

(313)

(319)

(286)

(275)

(277)

(632)

(567)

Corporate expenses

(21)

(30)

(17)

(18)

(28)

(51)

(60)

Amortization of intangible assets

(24)

(23)

(26)

(26)

(27)

(47)

(54)

Interest expense

(33)

(32)

(32)

(33)

(33)

(65)

(66)

Net foreign exchange gains (losses)

(5)

(18)

(81)

91

88

(23)

92

Total expenses

(2,448)

(2,426)

(2,184)

(2,392)

(1,793)

(4,874)

(3,550)

Income (loss) before income taxes and income (loss) from operating affiliates

714

742

887

(6)

421

1,456

606

Income tax (expense) benefit

(67)

(64)

(61)

15

(22)

(131)

(34)

Income (loss) from operating affiliates

22

39

36

9

5

61

30

Net income (loss)

669

717

862

18

404

1,386

602

Net (income) loss attributable to noncontrolling interests

2

(2)

(3)

(1)

-

-

(2)

Net income (loss) attributable to Arch

671

715

859

17

404

1,386

600

Preferred dividends

(10)

(10)

(10)

(10)

(10)

(20)

(20)

Net income (loss) available to Arch common shareholders

$

661

$

705

$

849

$

7

$

394

$

1,366

$

580

Comprehensive income (loss) available to Arch

$

649

$

1,064

$

1,105

$

(617)

$

(204)

$

1,713

$

(593)

Net income (loss) per common share and common share equivalent

Basic

$

1.79

$

1.92

$

2.32

$

0.02

$

1.07

$

3.71

$

1.56

Diluted

$

1.75

$

1.87

$

2.26

$

0.02

$

1.04

$

3.62

$

1.52

Weighted average common shares and common share equivalents outstanding

Basic

368.7

367.3

365.9

365.2

369.2

368.0

371.7

Diluted

378.4

377.6

375.9

373.8

377.9

377.8

380.8

4

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Disclaimer

Arch Capital Group Ltd. published this content on 26 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 July 2023 21:45:04 UTC.