ARCH CAPITAL GROUP LTD. (ACGL)

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AI: Undervalued

Price checkAt $98.71, the shares look undervalued if recent earnings remain mostly durable.

At the August 14 close, $98.71 equals 7.7 times trailing diluted earnings of about $12.77 a share, calculated by updating 2025 earnings with first-half 2026 results. It is also 1.45 times June book value of $68.04, meaning net assets attributable to each common share. Even using second-quarter operating earnings of $2.56 as a steadier base gives roughly 9.6 times earnings if repeated for four quarters. The verdict assumes earnings normalize near $10, not collapse toward 2022’s $3.80.

Big pictureStrong recent profits and cash generation come with meaningful swings across insurance cycles.

Revenue rose 14.3% to $19.93 billion in 2025, while net income held near $4.4 billion. Operating cash was $6.17 billion, down 7.5%, and capital spending was only $44 million; however, insurer cash flows partly reflect when premiums arrive and claims are paid, so they are not ordinary free cash flow. First-half 2026 net income increased 16% to $2.10 billion, while operating cash slipped 2.8% to $2.51 billion. Earnings ranged from $1.48 billion in 2022 to $4.44 billion in 2023, confirming cyclicality.

Business strengthGrowing capital and forceful buybacks are increasing the value represented by each share.

Equity was $24.03 billion in June 2026, up 15% from December 2024, against $61.15 billion of liabilities that largely include future claim obligations. Cash was $1.11 billion. Arch spent $1.89 billion on repurchases in 2025 and another $1.95 billion in first-half 2026; diluted shares fell 8.2% year over year to 348.8 million in the second quarter. Stock compensation was only $97 million in first-half 2026, so buybacks more than offset dilution. The new $2 billion debt issue modestly reduces this cushion.

What could change the storyCheaper insurance pricing or heavier disasters could quickly erase today’s apparent discount.

Second-quarter premiums earned fell 8.1%, underwriting profit fell 19.7%, and the combined ratio rose to 83.5% from 81.2%; that ratio is claims and operating costs divided by premiums, so lower is better. Catastrophe losses were $201 million, partly offset by a $165 million favorable revision to older claim estimates. The bull case is sustained ratios in the low-to-mid 80s plus repurchases below sensible value. The bear case is weaker pricing and disasters pushing the ratio toward the 90s, making $10-per-share normalized earnings unrealistic.

$98.71 price considered

AI: News

Second-quarter resultsProfit remained strong, but shrinking premiums and slightly weaker underwriting tempered the result.

On July 28, Arch reported second-quarter net income of $1.05 billion, or $3.00 a share, versus $1.23 billion and $3.23 a year earlier. Operating earnings were nearly steady per share at $2.56 because repurchases reduced the share count, although premiums earned fell 8.1% and underwriting profit fell 19.7%. The stock closed 1.8% lower on July 29 and 5.0% below its pre-release close after two sessions; this timing shows association, not proven causation.

Large buyback expansionArch authorized substantially more repurchases and quickly used capital to reduce its share count.

On April 19, Arch increased its repurchase authorization by $3 billion, leaving about $3.1 billion available on April 20. The company subsequently bought $1.2 billion of shares during the second quarter and $1.95 billion during the first half. Buying shares below a reasonable estimate of business value raises each remaining owner’s claim on future earnings and equity. The benefit weakens if catastrophe losses require capital or management pays too much.

Debt refinancingArch extended debt maturities, but the new borrowing carries higher interest costs.

On June 2, Arch priced $600 million of 5.25% notes due in 2036 and $1.4 billion of 5.95% notes due in 2056. Proceeds were designated partly for retiring $500 million of 4.011% notes and purchasing about $418 million of older notes, with the remainder available for general purposes. This lengthened funding but increased gross borrowing and contributed to second-quarter interest expense rising to $44 million from $38 million. No isolated market reaction can be established reliably.

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Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015	2014	2013	2012	2011	2010	2009	2008
Revenue	$19.93B	$17.44B	$13.63B	$9.61B	$9.25B	$8.51B	$6.93B	$5.45B	$5.63B	$4.46B	$3.94B	$3.99B	$3.53B	$3.48B	$3.06B	$3.24B	$3.50B	$2.97B
Net income	$4.40B	$4.31B	$4.44B	$1.48B	$2.16B	$1.41B	$1.64B	$758.0M	$619.3M	$692.7M	$537.7M	$834.4M	$709.7M	$593.4M	$436.2M	$842.7M	$876.9M	$291.0M
Basic EPSper diluted share	$11.83	$11.47	$11.94	$3.90	$5.35	$3.38	$3.97	$1.76	$1.40	$1.83	$4.24	$6.21	$5.24	$4.15	$3.10	$5.43	$4.76	$4.27
Diluted EPSper diluted share	$11.60	$11.19	$11.62	$3.80	$5.23	$3.32	$3.87	$1.73	$1.36	$1.78	$4.09	$6.02	$5.07	$4.03	$2.97	$5.18	$4.58	$4.09

Review source filings at SEC.gov ↗

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys2$516.0K disclosed value

Sells (SEC code S)19$44.96M disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Jun 3, 2026Form 4	Posner Brian SDirector	SellDepositary Shares, Series F	3.0K	$19.66	$59.0K	0
May 11, 2026Form 4	Posner Brian SDirector	SellDepositary Shares, Series G	2.0K	$17.14	$34.3K	0
Apr 30, 2026Form 4	Houston Daniel JosephDirector	BuyCommon Shares, $.0011 par value per share	5.3K	$94.09	$498.7K	9.9K
Mar 11, 2026Form 4	Posner Brian SDirector	SellDepositary Shares, Series G	3.0K	$17.12	$51.4K	2.0K
Mar 10, 2026Form 4	Gansberg DavidPresident, Arch Capital Group	SellCommon Shares, $.0011 par value per share	5.9K	$96.37	$569.3K	336.6K

Review ownership filings at SEC.gov ↗

ARCH CAPITAL GROUP LTD. (ACGL)

Financial charts

Financial statements

Insider buys & sells