Arch Capital (ACGL) Stock Forecast & Price Target

Arch Capital Group Ltd has demonstrated robust growth in its Insurance segment, with net written premiums (NWP) increasing by 34.9% year-over-year to $1,954 million, surpassing estimates and reflecting strong contributions from the acquisition of Allianz. The company also reported a significant overall NWP increase of 17.1% year-over-year to $3,819 million, indicating solid performance across most key lines and continued premium growth. Additionally, new insurance written surged by 26.3% year-over-year to $11.8 billion, buoyed by an uptick in refinancing activities, underscoring the company's positive momentum in the insurance and mortgage sectors.

Arch Capital Group Ltd experienced a 1.9% sequential decline in insurance in force, alongside a drop in persistency by 80 basis points to 82.1%, indicating potential challenges in client retention. The company's 2025 and 2026 earnings per share (EPS) estimates have been revised downward due to anticipated higher catastrophe losses, increased expense ratios, and a lower net investment income (NII), leading to expectations of margin pressure from weaker core underwriting performance. Additionally, the decline in the PMIERs sufficient ratio from 205% to 186% suggests increased risk in its mortgage insurance segment, further complicating the financial outlook.