Arch Capital (ACGL) Stock Forecast & Price Target

Arch Capital Group Ltd demonstrates a positive outlook, supported by the expectation of improved core loss ratios across underwriters in the Property & Casualty (P&C) insurance sector by 2025, despite a slowdown in rate increases. The company's projected earnings per share (EPS) for 2025, 2026, and 2027 have been raised to $8.05, $9.35, and $10.40, respectively, reflecting anticipated enhancements in the insurance segment's performance and lower expected share counts. Additionally, the continuing attractiveness of pricing in certain lines of business is expected to sustain profitability, even in the face of potential future rate decreases.

Arch Capital Group faces significant downside risks due to the potential acceleration of already high social inflation, which could render reserves inadequate to cover claims. Additionally, the company may be vulnerable to large catastrophe losses that could erode book value, further exacerbating its financial stability challenges. Furthermore, ongoing dynamics such as reinsurance pricing softness, declining profitability in the mortgage segment, and increased expenses related to the MidCorp integration could limit near-term growth and profitability prospects.