Arch Capital (ACGL) Stock Forecast & Price Target

Arch Capital Group Ltd has demonstrated robust growth within its Insurance segment, with net written premiums (NWP) increasing by 34.9% year-over-year to $1,954 million, significantly outperforming RBC's estimate of 28.6%, primarily fueled by strong contributions from various key lines and the Allianz unit acquisition. The overall premium growth remains strong, as reflected by the total net written premiums rising by 17.1% to $3,819 million, bolstered by a substantial increase in new insurance written (NIW) of 26.3% year-over-year to $11.8 billion, supported by increased refinancing activity. Despite a slight uptick in the delinquency ratio to 2.09%, the company maintains a favorable outlook based on consistent book value growth since 2001 and improved accident year margins, suggesting continued operational resilience and profitability potential.

The financial data indicates a concerning trend for Arch Capital Group, highlighted by a 1.9% sequential decline in insurance in force and a drop in persistency to 82.1%. Additionally, the earnings outlook reflects a reduction in estimated EPS for 2025 and 2026, influenced by anticipated higher catastrophe losses, increased expense ratios, and lower net investment income, despite some offsetting factors from premium growth. Furthermore, a decline in the PMIERs sufficient ratio from 205% in Q3 to 186% signals potential challenges in maintaining regulatory capital requirements, further supporting a negative outlook for the company's stock performance.