Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion and analysis of our financial condition and results of operations. This should be read in conjunction with our consolidated financial statements included in Item 1 of this report and also our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2024 (“2024 Form 10-K”). In addition, readers should review “Risk Factors” set forth in Item 1A of Part I of our 2024 Form 10-K and “ITEM 1A—Risk Factors” of this Form 10-Q. All amounts are in millions, except per share amounts, unless otherwise noted.

Arch Capital Group Ltd. (“Arch Capital” and, together with its subsidiaries, “Arch”, “the Company”, “we”, “our” or “us”) is a publicly listed Bermuda exempted company with approximately $26.4 billion in capital at September 30, 2025 and, through operations in Bermuda, the United States, Europe, Canada and Australia, writes insurance, reinsurance and mortgage insurance on a worldwide basis.


		Page No.

Current Outlook		39
Financial Measures		40
Comment on Non-GAAP Financial Measures		41
Results of Operations		43
	Insurance Segment	43
	Reinsurance Segment	46
	Mortgage Segment	48
	Corporate	51
Critical Accounting Policies, Estimates and Recent Accounting Pronouncements		52
Financial Condition		53
Liquidity		58
Capital Resources		58
Catastrophic and Severe Economic Events		60
Market Sensitive Instruments and Risk Management		61


ARCH CAPITAL			38			2025 THIRD QUARTER FORM 10-Q

CURRENT OUTLOOK

As we near the end of 2025 and look ahead to 2026, our core objective to deliver long term value for our shareholders remains unchanged. We reported solid results for the 2025 third quarter, with an annualized net income return on average common equity and operating return on average common equity of 23.8% and 18.5%, respectively. See “Comment on Non-GAAP Financial Measures.” Meaningful contributions from all three segments along with solid investment returns pushed our year to date book value growth to 17.3%.

We continue to execute our cycle management strategy by actively allocating capital to the segments with the best risk-adjusted returns, while retaining the flexibility to invest in our platform when we find attractive opportunities. This approach, combined with a diversified global platform and strong distribution relationships, allows us to adapt dynamically to shifting market conditions. Our strong balance sheet and capital-generating capabilities, permit us to both invest in our business, and return capital to investors. During the 2025 third quarter, we repurchased $732 million of Arch shares in the quarter.

As competition in the overall property and casualty market is increasing, some sectors are seeing increased pressure while others continue to experience rate improvements. We continue to believe the property and casualty market presents meaningful opportunities, as we lean into the strength of our brand, including underwriting discipline, a longer term view of risk, and use risk-based pricing tools to generate profitable business.

Our insurance segment reported $129 million of underwriting income for the 2025 third quarter, with net premium written nearly $2 billion, which is an increase of 7.3% from the 2024 third quarter. Growth in net premiums written primarily resulted from the U.S MidCorp and Entertainment Insurance businesses acquired from Allianz on August 1, 2024 (“MCE Acquisition”). The acquired business provides a significant platform from which we intend to build further scale in the middle market sector. We saw selective growth in our North American other liability occurrence business of 17%, supported by middle market and double-digit rate increases in E&S casualty.

Net premiums written in our North American property and short-tail book increased 15%, where growth in middle market admitted property more than offset declines in E&S property. International premium volume remained stable, as the Lloyd’s and London market businesses are experiencing increased, but rational, competition. Our long-term investment in establishing a leadership position at Lloyd’s continues to yield strong results reflected in favorable signings and our ability to attract top-tier underwriting talent.

Our reinsurance segment contributed $482 million of underwriting income in the 2025 third quarter. Net premiums written were $1.7 billion, down roughly 11% when compared to 2024 third quarter, reflecting current pricing conditions in short-tail and property catastrophe lines and increased retentions by cedants. We are growing selectively and focusing on areas where margins are attractive. We continue to like our prospects in most lines of business and, with improving conditions in casualty lines, our agility and ability to create opportunities is an advantage for us in this market. Our diversified reinsurance platform, supported by strong partnerships with our brokers and ceding companies across multiple lines and geographies, further enhances our ability to navigate a competitive environment.

Our mortgage segment continued to deliver a steady level of earnings, generating $260 million of underwriting income in the 2025 third quarter. While new originations remained modest due to affordability challenges, underlying fundamentals remained strong and our U.S. market share was stable as industry pricing discipline held. The persistency of our in force U.S. primary mortgage insurance portfolio remained a healthy 82.3% and our delinquency rate remained low. We continue to expect the mortgage segment to serve as a steady diversifying contributor to our overall earnings and generate attractive underwriting income given the high credit quality and embedded equity of our in-force portfolio.


ARCH CAPITAL			39			2025 THIRD QUARTER FORM 10-Q

FINANCIAL MEASURES

Management uses the following three key financial indicators in evaluating our performance and measuring the overall growth in value generated for Arch Capital’s common shareholders:

Book Value per Share

Book value per share represents total common shareholders’ equity available to Arch divided by the number of common shares outstanding. Management uses growth in book value per share as a key measure of the value generated for our common shareholders each period and believes that book value per share is the key driver of Arch Capital’s share price over time. Book value per share is impacted by, among other factors, our underwriting results, investment returns and share repurchase activity, which has an accretive or dilutive impact on book value per share depending on the purchase price. Book value per share was $62.32 at September 30, 2025, compared to $59.17 at June 30, 2025, and $57.00 at September 30, 2024. The 5.3% increase in book value per share for the 2025 third quarter primarily reflected strong underwriting and investment returns.

Operating Return on Average Common Equity

Operating return on average common equity (“Operating ROAE”) represents annualized after-tax operating income available to Arch common shareholders divided by the average of beginning and ending common shareholders’ equity available to Arch during the period. After-tax operating income available to Arch common shareholders, a non-GAAP financial measure as defined in Regulation G, represents net income available to Arch common shareholders, excluding net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses, transaction costs and other and income taxes. Management uses Operating ROAE as a key measure of the return generated to common shareholders. See “Comment on Non-GAAP Financial Measures.”

Our annualized net income return on average common equity was 23.8% for the 2025 third quarter, compared to 19.0% for the 2024 third quarter, and 19.5% for the nine months ended September 30, 2025, compared to 22.9% for the 2024 period. Our Operating ROAE was 18.5% for the 2025 third quarter, compared to 14.8% for the 2024 third quarter and 16.2% for the nine months ended September 30, 2025, compared to 18.3% for the 2024 period. Returns for the 2025 periods reflected strong underwriting and investment returns.

Total Return on Investments

Total return on investments, a non-GAAP financial measure as defined in Regulation G, includes investment income, equity in net income or loss of investments accounted for using the equity method, net realized gains or losses attributable to the investment portfolio and the change in unrealized gains or losses generated by Arch’s investment portfolio. Total return is calculated on a pre-tax basis and before investment expenses and reflects the effect of financial market conditions along with foreign currency fluctuations. In addition, total return incorporates the timing of investment returns during the periods. The following table summarizes our total return compared to the benchmark return against which we measured our portfolio during the periods. See “Comment on Non-GAAP Financial Measures.”


	Arch Portfolio		Benchmark Return
Pre-tax total return (before investment expenses):
2025 Third Quarter	1.80	%	1.81	%
2024 Third Quarter	3.97	%	4.24	%

Nine Months Ended September 30, 2025	7.07	%	7.27	%
Nine Months Ended September 30, 2024	6.20	%	6.40	%

Total return for the 2025 periods reflected the effects of lower bond yields, a weaker U.S. dollar and equity market returns. The portfolio slightly underperformed their benchmark returns, primarily due to the sale of certain alternative investments accounted for using the equity method. The allocation of our portfolio remained neutral relative to our targeted benchmark. We continue to maintain a relatively short duration on our fixed income portfolio of 3.24 years at September 30, 2025, compared to 3.31 years at December 31, 2024.

The benchmark return index is a customized combination of indices intended to approximate a target portfolio by asset mix and average credit quality with a fixed income component matching the approximate estimated duration and currency mix of our insurance and reinsurance liabilities. It is recalibrated annually. Although the estimated fixed income duration and average credit quality of this index will move as the duration and rating of its constituent securities


ARCH CAPITAL			40			2025 THIRD QUARTER FORM 10-Q

change, generally we do not adjust the composition of the benchmark return index during the year except to incorporate changes to the mix of liability currencies and durations noted above. The benchmark return index should not be interpreted as expressing a preference for or aversion to any particular sector or sector weight. At September 30, 2025, the fixed income portion of the benchmark had an average credit quality of “A1” by Moody’s and an estimated fixed income duration of 3.18 years.

The benchmark return index included weightings to the following indices:


	%
ICE BofA 1-10 Year U.S. Corporate Index	26.70
Yield on 3-5 Year U.S. Treasury Index plus 6%	17.00
ICE BofA 1-10 Year U.S. Treasury Index	15.00
ICE BofA 0-3 Month U.S. Treasury Index	3.00
JPM CLOIE Investment Grade	6.00
ICE BofA 1-5 Year U.K. Gilt Index	5.25
ICE BofA U.S. High Yield Constrained Index	5.00
ICE BofA U.S. ABS & CMBS Index	4.70
S&P 500 Total Return Index	4.50
ICE BofA 3-5 Year US Agency CMO Excluding IO & PO Index	3.50
ICE BofA German Government 1-5 Year Index	3.25
ICE BofA German Government 5-7 Year Index	0.60
ICE BofA 1-5 Year Canada Government Index	2.60
ICE BofA 15+ Year Canada Government Index	0.30
ICE BofA 1-5 Year Australia Government Index	1.90
ICE BofA 5-10 Year Australia Government Index	0.45
ICE BofA 1-5 Year Japan Government Index	0.25
Total	100.00	%

COMMENT ON NON-GAAP FINANCIAL MEASURES

Throughout this filing, we present our operations in the way we believe will be the most meaningful and useful to investors, analysts, rating agencies and others who use our financial information in evaluating the performance of our company. This presentation includes the use of after-tax operating income available to Arch common shareholders, which is defined as net income available to Arch common shareholders, excluding net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses, transaction costs and other, income taxes, and the use of annualized operating return on average common equity. The presentation of after-tax operating income available to Arch

common shareholders and annualized operating return on average common equity are non-GAAP financial measures as defined in Regulation G. The reconciliation of such measures to net income available to Arch common shareholders and annualized net income return on average common equity (the most directly comparable GAAP financial measures) in accordance with Regulation G is included under “Results of Operations” below.

We believe that net realized gains or losses, equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other in any particular period are not indicative of the performance of, or trends in, our business. Although net realized gains or losses, equity in net income or loss of investments accounted for using the equity method and net foreign exchange gains or losses are an integral part of our operations, the decision to realize these items, are independent of the insurance underwriting process and result, in large part, from general economic and financial market conditions. Furthermore, certain users of our financial information believe that, for many companies, the timing of the realization of investment gains or losses is largely opportunistic. In addition, changes in the allowance for credit losses and net impairment losses recognized in earnings on our investments represent other-than-temporary declines in expected recovery values on securities without actual realization. Furthermore, we exclude net realized gains or losses from the acquisition or disposition of subsidiaries, due to their non-recurring nature, such items are not indicative of the performance of, or trends in, our business performance.

The use of the equity method on certain of our investments funds that invest in fixed maturity securities is driven by the ownership structure of such funds (either limited partnerships or limited liability companies). In applying the equity method, these investments are initially recorded at cost and are subsequently adjusted based on our proportionate share of the net income or loss of the funds (which include changes in the market value of the underlying securities in the funds). This method of accounting is different from the way in which we account for our other investments; and, the timing of the recognition of equity in net income or loss of investments accounted for using the equity method may differ from gains or losses in the future upon sale or maturity of such investments.

Transaction costs and other include integration, advisory, financing, legal, severance, incentive compensation and all other transaction costs directly related to acquisitions. We believe that transaction costs and other, due to their nonrecurring nature, are not indicative of the performance of, or trends in, our business performance.


ARCH CAPITAL			41			2025 THIRD QUARTER FORM 10-Q

We believe that showing net income available to Arch common shareholders exclusive of the items referred to above reflects the underlying fundamentals of our business since we evaluate the performance of and manage our business to produce an underwriting profit. In addition to presenting the net income available to Arch common shareholders, we believe that this presentation enables investors and other users of our financial information to analyze our performance in a manner similar to how management analyzes performance. We also believe that this measure follows industry practice and, therefore, allows the users of financial information to compare our performance with our industry peer group. We believe that the equity analysts and certain rating agencies that follow us and the insurance industry as a whole generally exclude these items from their analyses for the same reasons.

Our segment information includes the presentation of consolidated underwriting income or loss. Such measures represent the pre-tax profitability of our underwriting operations and include net premiums earned plus other underwriting income, less losses and loss adjustment expenses, acquisition expenses and other operating expenses. Other operating expenses include those operating expenses that are incremental and/or directly attributable to our individual underwriting operations. Underwriting income or loss does not incorporate certain income and expense items which are included in corporate. While these measures are presented in note 5, “Segment Information,” to our consolidated financial statements, they are considered non-GAAP financial measures when presented elsewhere on a consolidated basis. The reconciliations of underwriting income or loss to income before income taxes (the most directly comparable GAAP financial measure) on a consolidated basis, in accordance with Regulation G, is shown in note 5, “Segment Information” to our consolidated financial statements.

We measure segment performance for our three underwriting segments based on underwriting income or loss. We do not manage our assets by underwriting segment, with the exception of goodwill and intangible assets, and, accordingly, investment income, income from operating affiliates and other non-underwriting related items are not allocated to each underwriting segment.

Our presentation of segment information includes the use of a current year loss ratio which excludes favorable or adverse development in prior year loss reserves. This ratio is a non-GAAP financial measure as defined in Regulation G. The reconciliation of such measure to the loss ratio (the most directly comparable GAAP financial measure) in accordance with Regulation G is shown on the individual segment pages. Management utilizes the current year loss ratio in its analysis of the underwriting performance of each of our underwriting segments. Effective in the 2025 first quarter, the ‘Other operating expense ratio’ includes ‘Other underwriting income.’

Total return on investments includes investment income, equity in net income or loss of investments accounted for using the equity method, net realized gains or losses (excluding changes in the allowance for credit losses on non-investment related financial assets) and the change in unrealized gains or losses generated by Arch’s investment portfolio. Total return is calculated on a pre-tax basis and before investment expenses, and reflects the effect of financial market conditions along with foreign currency fluctuations. In addition, total return incorporates the timing of investment returns during the periods. There is no directly comparable GAAP financial measure for total return. Management uses total return on investments as a key measure of the return generated to Arch common shareholders on the capital held in the business, and compares the return generated by our investment portfolio against benchmark returns which we measured our portfolio against during the periods.


ARCH CAPITAL			42			2025 THIRD QUARTER FORM 10-Q

RESULTS OF OPERATIONS

The following table summarizes our consolidated financial data, including a reconciliation of net income or loss available to Arch common shareholders to after-tax operating income or loss available to Arch common shareholders. See “Comment on Non-GAAP Financial Measures.”


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Net income available to Arch common shareholders	$	1,340	$	978	$	3,131	$	3,347
Net realized (gains) losses (1)	(210)		(169)		(442)		(358)

Equity in net (income) loss of investments accounted for using the equity method	(134)		(171)		(349)		(437)
Net foreign exchange (gains) losses	7		63		122		31
Transaction costs and other	21		30		49		55

Income tax expense (benefit) (2)	18		31		97		38
After-tax operating income available to Arch common shareholders	$	1,042	$	762	$	2,608	$	2,676

Beginning common shareholders’ equity	$	22,211	$	19,835	$	19,990	$	17,523
Ending common shareholders’ equity	22,889		21,444		22,889		21,444
Average common shareholders’ equity	$	22,550	$	20,640	$	21,440	$	19,484

Annualized net income return on average common equity %	23.8		19.0		19.5		22.9
Annualized operating return on average common equity %	18.5		14.8		16.2		18.3

(1) Net realized gains or losses include realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries.

(2) Income tax expense on net realized gains or losses, equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other reflects the relative mix reported by jurisdiction and the varying tax rates in each jurisdiction.

Segment Information

We classify our businesses into three underwriting segments: insurance, reinsurance and mortgage. Our insurance, reinsurance and mortgage segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to our chief operating decision makers. The Chief Executive Officer and the Chief Financial Officer and Treasurer are the Company’s chief operating decision makers. They do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis. Management measures segment performance for our three underwriting segments based on underwriting income or loss. We do not manage our assets by underwriting segment, with the exception of goodwill and intangible assets, and accordingly, investment income is not allocated to each underwriting segment.

We determined our reportable segments using the management approach described in accounting guidance regarding disclosures about segments of an enterprise and related information. The accounting policies of the segments are the same as those used for the preparation of our consolidated financial statements. Intersegment business is allocated to the segment accountable for the underwriting results.

Insurance Segment

The Company’s insurance segment primarily consists of commercial insurance lines of business, with a focus on specialty insurance products. These products are mainly offered in North America, Bermuda, the United Kingdom, continental Europe and Australia. Products offered in North America include: commercial automobile; commercial multi-peril; other liability-claims made, which includes financial and professional lines; other liability-occurrence, which includes admitted and excess and surplus casualty lines; property and short-tail specialty; workers compensation; and other. Products offered across the Company’s International units include: property and short-tail specialty; and casualty and other.


ARCH CAPITAL			43			2025 THIRD QUARTER FORM 10-Q

The following tables set forth our insurance segment’s underwriting results:


	Three Months Ended September 30,
	2025			2024			% Change
Gross premiums written	$	2,567		$	2,341		9.7
Premiums ceded	(614)			(521)
Net premiums written	1,953			1,820			7.3
Change in unearned premiums	16			(55)
Net premiums earned	1,969			1,765			11.6
Other underwriting income (1)	9			—
Losses and loss adjustment expenses	(1,162)			(1,087)
Acquisition expenses	(386)			(308)
Other operating expenses	(301)			(250)
Underwriting income (loss)	$	129		$	120		7.5

Underwriting Ratios							% Point Change
Loss ratio	59.0		%	61.6		%	(2.6)
Acquisition expense ratio	19.6		%	17.4		%	2.2
Other operating expense ratio (2)	14.8		%	14.1		%	0.7
Combined ratio	93.4		%	93.1		%	0.3

(1) ‘Other underwriting income’ includes revenue earned from underwriting-related activities covered under existing service contracts.

(2) The ‘Other operating expense ratio’ for the 2025 period includes ‘Other underwriting income.’ See ‘Comments on Non-GAAP Financial Measures’ for further details.


	Nine Months Ended September 30,
	2025			2024			% Change
Gross premiums written	$	7,893		$	6,569		20.2
Premiums ceded	(1,971)			(1,649)
Net premiums written	5,922			4,920			20.4
Change in unearned premiums	(124)			(226)
Net premiums earned	5,798			4,694			23.5
Other underwriting income (1)	25			—
Losses and loss adjustment expenses	(3,568)			(2,789)
Acquisition expenses	(1,116)			(872)
Other operating expenses	(883)			(718)
Underwriting income (loss)	$	256		$	315		(18.7)

Underwriting Ratios							% Point Change
Loss ratio	61.5		%	59.4		%	2.1
Acquisition expense ratio	19.3		%	18.6		%	0.7
Other operating expense ratio (2)	14.8		%	15.3		%	(0.5)
Combined ratio	95.6		%	93.3		%	2.3

(1) ‘Other underwriting income’ includes revenue earned from underwriting-related activities covered under existing service contracts.

(2) The ‘Other operating expense ratio’ for the 2025 period includes ‘Other underwriting income.’ See ‘Comments on Non-GAAP Financial Measures’ for further details.

Premiums Written.

The following tables set forth our insurance segment’s net premiums written by major line of business:


	Three Months Ended September 30,
	2025			2024
	Amount		%	Amount		%
North America
Property and short-tail specialty	$	339	17.4	$	296	16.3
Other liability - occurrence	297		15.2	253		13.9
Other liability - claims made	209		10.7	228		12.5
Commercial multi-peril	194		9.9	163		9.0
Workers compensation	151		7.7	147		8.1
Commercial automobile	150		7.7	134		7.4
Other	86		4.4	81		4.5
Total North America	1,426		73.0	1,302		71.5

International
Property and short-tail specialty	$	287	14.7	$	287	15.8
Casualty and other	240		12.3	231		12.7
Total International	527		27.0	518		28.5
Total	$	1,953	100.0	$	1,820	100.0

2025 Third Quarter versus 2024 Period. Gross premiums written by the insurance segment in the 2025 third quarter were 9.7% higher than in the 2024 third quarter, while net premiums written were 7.3% higher than in the 2024 third quarter. Growth in net premiums written primarily reflected business related to the MCE Acquisition.


	Nine Months Ended September 30,
	2025			2024
	Amount		%	Amount		%
North America
Property and short-tail specialty	$	1,056	17.8	$	856	17.4
Other liability - occurrence	993		16.8	660		13.4
Other liability - claims made	564		9.5	643		13.1
Commercial multi-peril	597		10.1	266		5.4
Workers compensation	434		7.3	402		8.2
Commercial automobile	476		8.0	369		7.5
Other	251		4.2	225		4.6
Total North America	4,371		73.8	3,421		69.5

International
Property and short-tail specialty	$	860	14.5	$	830	16.9
Casualty and other	691		11.7	669		13.6
Total International	1,551		26.2	1,499		30.5
Total	$	5,922	100.0	$	4,920	100.0

Nine Months Ended September 30, 2025 versus 2024 period. Gross premiums written by the insurance segment for the nine months ended September 30, 2025 were 20.2% higher than in the 2024 period, while net premiums written were 20.4% higher than in the 2024 period. Growth in net premiums written primarily reflected business related to the MCE Acquisition.


ARCH CAPITAL			44			2025 THIRD QUARTER FORM 10-Q

Net Premiums Earned.

The following tables set forth our insurance segment’s net premiums earned by major line of business:


	Three Months Ended September 30,
	2025			2024
	Amount		%	Amount		%
North America
Property and short-tail specialty	$	339	17.2	$	306	17.3
Other liability - occurrence	329		16.7	265		15.0
Other liability - claims made	205		10.4	213		12.1
Commercial multi-peril	195		9.9	146		8.3
Workers compensation	160		8.1	135		7.6
Commercial automobile	143		7.3	122		6.9
Other	70		3.6	79		4.5
Total North America	1,441		73.2	1,266		71.7

International
Property and short-tail specialty	$	296	15.0	$	283	16.0
Casualty and other	232		11.8	216		12.2
Total International	528		26.8	499		28.3
Total	$	1,969	100.0	$	1,765	100.0


	Nine Months Ended September 30,
	2025			2024
	Amount		%	Amount		%
North America
Property and short-tail specialty	$	1,035	17.9	833		17.7
Other liability - occurrence	996		17.2	615		13.1
Other liability - claims made	583		10.1	633		13.5
Commercial multi-peril	599		10.3	246		5.2
Workers compensation	438		7.6	394		8.4
Commercial automobile	435		7.5	329		7.0
Other	213		3.7	235		5.0
Total North America	4,299		74.1	3,285		70.0

International
Property and short-tail specialty	$	821	14.2	779		16.6
Casualty and other	678		11.7	630		13.4
Total International	1,499		25.9	1,409		30.0
Total	$	5,798	100.0	$	4,694	100.0

Net premiums written are primarily earned on a pro rata basis over the terms of the policies for all products, usually 12 months. Net premiums earned reflect changes in net premiums written over the previous five quarters. Net premiums earned for the 2025 third quarter were 11.6% higher than in the 2024 third quarter, while net premiums earned for the nine months ended September 30, 2025 were 23.5% higher than in the 2024 period.

Other Underwriting Income.

Other underwriting income, which includes revenue earned from underwriting-related activities covered under existing service contracts, was $9 million for the 2025 third quarter, compared to nil for the 2024 third quarter, and $25 million for the nine months ended September 30, 2025, compared to nil for the 2024 period.

Losses and Loss Adjustment Expenses.

The table below shows the components of the insurance segment’s loss ratio:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Current year	59.7	%	62.5	%	62.2	%	60.0	%
Prior period reserve development	(0.7)	%	(0.9)	%	(0.7)	%	(0.6)	%
Loss ratio	59.0	%	61.6	%	61.5	%	59.4	%

Current Year Loss Ratio.

2025 Third Quarter versus 2024 Period. The insurance segment’s current year loss ratio in the 2025 third quarter was 2.8 points lower than in the 2024 third quarter. The 2025 third quarter loss ratio reflected 2.2 points of current year catastrophic activity, compared to 4.9 points of current year catastrophic activity in the 2024 third quarter.

Nine Months Ended September 30, 2025 versus 2024 Period. The insurance segment’s current year loss ratio for the nine months ended September 30, 2025 was 2.2 points higher than in the 2024 period and reflected 4.8 points of current year catastrophic activity, primarily related to the California wildfires, compared to 3.0 points in the 2024 period. The current year loss ratio for the 2025 period also reflected the impact of the MCE Acquisition and changes in mix of business.

Prior Period Reserve Development.

The insurance segment’s net favorable development was $14 million, or 0.7 points, for the 2025 third quarter, compared to $16 million, or 0.9 points, for the 2024 third quarter, and $39 million, or 0.7 points, for the nine months ended September 30, 2025, compared to $31 million, or 0.6 points, for the 2024 period. See note 6, “Reserve for Losses and Loss Adjustment Expenses,” to our consolidated financial statements for information about the insurance segment’s prior year reserve development.


ARCH CAPITAL			45			2025 THIRD QUARTER FORM 10-Q

Underwriting Expenses.

2025 Third Quarter versus 2024 Period. The insurance segment’s underwriting expense ratio was 34.4% in the 2025 third quarter, compared to 31.5% in the 2024 third quarter. In the 2024 third quarter, the impact of the MCE Acquisition lowered the underwriting expense ratio by approximately 250 basis points, primarily due to the effects of the fair value estimation of the assets acquired at closing, including the non-recognition of deferred acquisition costs. The 2025 third quarter underwriting expense ratio also included 0.6 points related to net favorable development of prior year loss reserves, compared to 0.2 points in the 2024 third quarter.

Nine Months Ended September 30, 2025 versus 2024 period. The insurance segment’s underwriting expense ratio was 34.1% for the nine months ended September 30, 2025, compared to 33.9% for the 2024 period.

Reinsurance Segment

The Company’s reinsurance segment offers reinsurance products on a worldwide basis. Lines of business include: casualty; marine and aviation; specialty; property catastrophe; property excluding property catastrophe; and other.

The following tables set forth our reinsurance segment’s underwriting results:


	Three Months Ended September 30,
	2025			2024			% Change
Gross premiums written	$	2,515		$	2,763		(9.0)
Premiums ceded	(778)			(818)
Net premiums written	1,737			1,945			(10.7)
Change in unearned premiums	278			(53)
Net premiums earned	2,015			1,892			6.5
Other underwriting income (1)	38			2
Losses and loss adjustment expenses	(1,040)			(1,317)
Acquisition expenses	(398)			(374)
Other operating expenses	(133)			(54)
Underwriting income	$	482		$	149		223.5

Underwriting Ratios							% Point Change
Loss ratio	51.6		%	69.6		%	(18.0)
Acquisition expense ratio	19.8		%	19.8		%	—
Other operating expense ratio (2)	4.7		%	2.9		%	1.8
Combined ratio	76.1		%	92.3		%	(16.2)

(1) ‘Other underwriting income’ includes revenue earned from underwriting-related activities covered under existing service contracts.

(2) The ‘Other operating expense ratio’ for the 2025 period includes ‘Other underwriting income.’ See ‘Comments on Non-GAAP Financial Measures’ for further details.


	Nine Months Ended September 30,
	2025			2024			% Change
Gross premiums written	$	9,205		$	9,171		0.4
Premiums ceded	(3,093)			(3,013)
Net premiums written	6,112			6,158			(0.7)
Change in unearned premiums	18			(820)
Net premiums earned	6,130			5,338			14.8
Other underwriting income (1)	123			5
Losses and loss adjustment expenses	(3,524)			(3,206)
Acquisition expenses	(1,251)			(1,050)
Other operating expenses	(378)			(193)
Underwriting income (loss)	$	1,100		$	894		23.0

Underwriting Ratios							% Point Change
Loss ratio	57.5		%	60.1		%	(2.6)
Acquisition expense ratio	20.4		%	19.7		%	0.7
Other operating expense ratio (2)	4.2		%	3.6		%	0.6
Combined ratio	82.1		%	83.4		%	(1.3)

(1) ‘Other underwriting income’ includes revenue earned from underwriting-related activities covered under existing service contracts.

(2) The ‘Other operating expense ratio’ for the 2025 period includes ‘Other underwriting income.’ See ‘Comments on Non-GAAP Financial Measures’ for further details.

Premiums Written.

The following tables set forth our reinsurance segment’s net premiums written by major line of business:


	Three Months Ended September 30,
	2025			2024
	Amount		%	Amount		%
Specialty	$	633	36.4	$	769	39.5
Property excluding property catastrophe	557		32.1	671		34.5
Casualty	399		23.0	339		17.4
Property catastrophe	64		3.7	52		2.7
Marine and aviation	60		3.5	69		3.5
Other	24		1.4	45		2.3
Total	$	1,737	100.0	$	1,945	100.0

2025 Third Quarter versus 2024 Period. Gross premiums written by the reinsurance segment in the 2025 third quarter were 9.0% lower than in the 2024 third quarter, while net premiums written were 10.7% lower than in the 2024 third quarter. The lower level of net premiums written this quarter was primarily due to the impact of two transactions in the 2024 third quarter in the specialty line of business and the lower level of reinstatement premiums in the 2025 third quarter.


ARCH CAPITAL			46			2025 THIRD QUARTER FORM 10-Q


	Nine Months Ended September 30,
	2025			2024
	Amount		%	Amount		%
Specialty	$	1,956	32.0	$	2,148	34.9
Property excluding property catastrophe	1,568		25.7	1,823		29.6
Casualty	1,206		19.7	943		15.3
Property catastrophe	1,025		16.8	874		14.2
Marine and aviation	249		4.1	257		4.2
Other	108		1.8	113		1.8
Total	$	6,112	100.0	$	6,158	100.0

Nine Months Ended September 30, 2025 versus 2024 period. Gross premiums written by the reinsurance segment for the nine months ended September 30, 2025 were 0.4% higher than in the 2024 period, while net premiums written were 0.7% lower than in the 2024 period.

Net Premiums Earned.

The following tables set forth our reinsurance segment’s net premiums earned by major line of business:


	Three Months Ended September 30,
	2025			2024
	Amount		%	Amount		%
Specialty	$	719	35.7	$	688	36.4
Property excluding property catastrophe	581		28.8	540		28.5
Casualty	360		17.9	282		14.9
Property catastrophe	253		12.6	256		13.5
Marine and aviation	77		3.8	80		4.2
Other	25		1.2	46		2.4
Total	$	2,015	100.0	$	1,892	100.0


	Nine Months Ended September 30,
	2025			2024
	Amount		%	Amount		%
Specialty	$	2,206	36.0	$	1,934	36.2
Property excluding property catastrophe	1,716		28.0	1,546		29.0
Casualty	1,040		17.0	798		14.9
Property catastrophe	819		13.4	736		13.8
Marine and aviation	239		3.9	214		4.0
Other	110		1.8	110		2.1
Total	$	6,130	100.0	$	5,338	100.0

Net premiums written, irrespective of the class of business, are generally earned on a pro rata basis over the terms of the underlying policies or reinsurance contracts. Net premiums earned reflect changes in net premiums written over the previous five quarters. Net premiums earned for the 2025 third quarter were 6.5% higher than in the 2024 third quarter, while net premiums earned for the nine months ended September 30, 2025 were 14.8% higher than in the 2024 period.

Other Underwriting Income.

Other underwriting income, which includes revenue earned from underwriting-related activities covered under existing service contracts, was $38 million for the 2025 third quarter, compared to $2 million for the 2024 third quarter, and $123 million for the nine months ended September 30, 2025, compared to $5 million for the 2024 period.

Losses and Loss Adjustment Expenses.

The table below shows the components of the reinsurance segment’s loss ratio:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Current year	54.2	%	71.8	%	61.6	%	62.3	%
Prior period reserve development	(2.6)	%	(2.2)	%	(4.1)	%	(2.2)	%
Loss ratio	51.6	%	69.6	%	57.5	%	60.1	%

Current Year Loss Ratio.

2025 Third Quarter versus 2024 Period. The reinsurance segment’s current year loss ratio in the 2025 third quarter was 17.6 points lower than in the 2024 third quarter. The 2025 third quarter loss ratio reflected 1.3 points of current year catastrophic activity, compared to 21.3 points of current year catastrophic activity in the 2024 third quarter. The balance of the change in the loss ratio resulted, in part, from changes in mix of business.

Nine Months Ended September 30, 2025 versus 2024 Period. The reinsurance segment’s current year loss ratio for the nine months ended September 30, 2025 was 0.7 points lower than in the 2024 period and reflected 9.5 points of current year catastrophic activity primarily related to the California wildfires, compared to 11.5 points in the 2024 period. The current year loss ratio for the 2025 period also reflected changes in mix of business.

Prior Period Reserve Development.

The reinsurance segment’s net favorable development was $53 million, or 2.6 points, for the 2025 third quarter, compared to $41 million, or 2.2 points, for the 2024 third quarter, and $253 million, or 4.1 points, for the nine months ended September 30, 2025, compared to $115 million, or 2.2 points, for the 2024 period. See note 6, “Reserve for Losses and Loss Adjustment Expenses,” to our consolidated financial statements for information about the reinsurance segment’s prior year reserve development.


ARCH CAPITAL			47			2025 THIRD QUARTER FORM 10-Q

Underwriting Expenses.

2025 Third Quarter versus 2024 Period. The underwriting expense ratio for the reinsurance segment was 24.5% in the 2025 third quarter, compared to 22.7% in the 2024 third quarter, with the increase primarily reflecting a higher level of incentive compensation expenses in the 2025 third quarter.

Nine Months Ended September 30, 2025 versus 2024 period. The underwriting expense ratio for the reinsurance segment was 24.6% for the nine months ended September 30, 2025, compared to 23.3% for the 2024 period. The increase in the 2025 period primarily reflected lower profit and sliding scale commissions on ceded business, along with a higher level of incentive compensation expenses in the 2025 third quarter.

Mortgage Segment

The Company’s mortgage segment consists of U.S. primary mortgage insurance business written predominantly on loans sold to the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), each a government sponsored entity (“GSE”) and also through non GSE approved entities (combined “Arch MI U.S.”); reinsurance and underwriting services related to U.S. credit-risk transfer (“CRT”) business which are predominately with the GSEs and other U.S. mortgage reinsurance transactions; and international mortgage insurance and reinsurance business covering loans primarily in Australia and Europe.

The following tables set forth our mortgage segment’s underwriting results:


	Three Months Ended September 30,
	2025			2024			% Change
Gross premiums written	$	330		$	339		(2.7)
Premiums ceded	(56)			(57)
Net premiums written	274			282			(2.8)
Change in unearned premiums	27			31
Net premiums earned	301			313			(3.8)
Other underwriting income (1)	3			3
Losses and loss adjustment expenses	2			1
Acquisition expenses	(2)			1
Other operating expenses	(44)			(49)
Underwriting income	$	260		$	269		(3.3)

Underwriting Ratios							% Point Change
Loss ratio	(0.5)		%	(0.4)		%	(0.1)
Acquisition expense ratio	0.7		%	(0.4)		%	1.1
Other operating expense ratio (2)	13.3		%	15.6		%	(2.3)
Combined ratio	13.5		%	14.8		%	(1.3)

(1) ‘Other underwriting income’ includes revenue earned from underwriting-related activities covered under existing service contracts.

(2) The ‘Other operating expense ratio’ for the 2025 period includes ‘Other underwriting income.’ See ‘Comments on Non-GAAP Financial Measures’ for further details.


	Nine Months Ended September 30,
	2025			2024			% Change
Gross premiums written	$	979		$	1,020		(4.0)
Premiums ceded	(186)			(185)
Net premiums written	793			835			(5.0)
Change in unearned premiums	89			90
Net premiums earned	882			925			(4.6)
Other underwriting income (1)	17			15
Losses and loss adjustment expenses	2			37
Acquisition expenses	(7)			1
Other operating expenses	(144)			(151)
Underwriting income	$	750		$	827		(9.3)

Underwriting Ratios							% Point Change
Loss ratio	(0.2)		%	(4.0)		%	3.8
Acquisition expense ratio	0.8		%	(0.1)		%	0.9
Other operating expense ratio (2)	14.3		%	16.3		%	(2.0)
Combined ratio	14.9		%	12.2		%	2.7

(1) ‘Other underwriting income’ includes revenue earned from underwriting-related activities covered under existing service contracts.

(2) The ‘Other operating expense ratio’ for the 2025 period includes ‘Other underwriting income.’ See ‘Comments on Non-GAAP Financial Measures’ for further details.

Premiums Written.

The following tables set forth our mortgage segment’s net premiums written by major line of business:


	Three Months Ended September 30,
	2025			2024
	Amount		%	Amount		%
U.S. primary mortgage insurance	$	197	71.9	$	209	74.1
U.S. credit risk transfer (CRT) and other	55		20.1	54		19.1
International mortgage insurance/ reinsurance	22		8.0	19		6.7
Total	$	274	100.0	$	282	100.0

2025 Third Quarter versus 2024 Period. Gross premiums written by the mortgage segment in the 2025 third quarter were 2.7% lower than in the 2024 third quarter, while net premiums written were 2.8% lower than in the 2024 third quarter. The reduction in net premiums written in the 2025 third quarter primarily reflected lower U.S. monthly and single premium volume.


ARCH CAPITAL			48			2025 THIRD QUARTER FORM 10-Q


	Nine Months Ended September 30,
	2025			2024
	Amount		%	Amount		%
U.S. primary mortgage insurance	$	584	73.6	$	612	73.3
U.S. credit risk transfer (CRT) and other	156		19.7	161		19.3
International mortgage insurance/ reinsurance	53		6.7	62		7.4
Total	$	793	100.0	$	835	100.0

Nine Months Ended September 30, 2025 versus 2024 Period. Gross premiums written by the mortgage segment for the nine months ended September 30, 2025 were 4.0% lower than in the 2024 period, while net premiums written for the nine months ended September 30, 2025 were 5.0% lower than in the 2024 period. The reduction in net premiums written in the 2025 period primarily reflected a one-time expense related to the tender offer of certain Bellemeade Re mortgage insurance linked notes, along with a lower U.S. monthly and single premium volume.

The persistency rate was 82.3% for the Arch MI U.S. portfolio of primary mortgage insurance policies at September 30, 2025, compared to 82.9% at September 30, 2024. The persistency rate represents the percentage of mortgage insurance in force at the beginning of a 12 month period that remains in force at the end of such period.

The following tables provide details on the new insurance written (“NIW”) generated by Arch MI U.S. NIW represents the original principal balance of all loans that received coverage during the period.


	Three Months Ended September 30,
2025				2024
	Amount		%		Amount		%
Total new insurance written (NIW)	$	12,965			$	13,526

Credit quality:
>=740	$	9,850	76.0		$	9,438	69.8
680-739	2,753		21.2		3,584		26.5
620-679	359		2.8		502		3.7
<620	3		0.0		2		0.0
Total	$	12,965	100.0		$	13,526	100.0

Loan-to-value (LTV):
95.01% and above	$	1,038	8.0		$	1,089	8.1
90.01% to 95.00%	5,668		43.7		6,620		48.9
85.01% to 90.00%	4,323		33.3		4,293		31.7
85.00% and below	1,936		14.9		1,524		11.3
Total	$	12,965	100.0		$	13,526	100.0

Monthly vs. single:
Monthly	$	12,267	94.6		$	12,581	93.0
Single	698		5.4		945		7.0
Total	$	12,965	100.0		$	13,526	100.0

Purchase vs. refinance:
Purchase	$	12,319	95.0		$	13,177	97.4
Refinance	646		5.0		349		2.6
Total	$	12,965	100.0		$	13,526	100.0


	Nine Months Ended September 30,
2025				2024
	Amount		%		Amount		%
Total new insurance written (NIW)	$	34,409			$	36,661

Credit quality:
>=740	$	26,096	75.8		$	25,528	69.6
680-739	7,383		21.5		9,885		27.0
620-679	921		2.7		1,243		3.4
<620	9		0.0		5		0.0
Total	$	34,409	100.0		$	36,661	100.0

Loan-to-value (LTV):
95.01% and above	$	2,608	7.6		$	2,645	7.2
90.01% to 95.00%	15,674		45.6		19,094		52.1
85.01% to 90.00%	11,188		32.5		10,964		29.9
85.01% and below	4,939		14.4		3,958		10.8
Total	$	34,409	100.0		$	36,661	100.0

Monthly vs. single:
Monthly	$	32,543	94.6		$	34,261	93.5
Single	1,866		5.4		2,400		6.5
Total	$	34,409	100.0		$	36,661	100.0

Purchase vs. refinance:
Purchase	$	32,747	95.2		$	35,932	98.0
Refinance	1,662		4.8		729		2.0
Total	$	34,409	100.0		$	36,661	100.0


ARCH CAPITAL			49			2025 THIRD QUARTER FORM 10-Q

Net Premiums Earned.

The following tables set forth our mortgage segment’s net premiums earned by major line of business:


	Three Months Ended September 30,
	2025			2024
	Amount		%	Amount		%
U.S. primary mortgage insurance	$	204	67.8	$	215	68.7
U.S. credit risk transfer (CRT) and other	55		18.3	55		17.6
International mortgage insurance/ reinsurance	42		14.0	43		13.7
Total	$	301	100.0	$	313	100.0

2025 Third Quarter versus 2024 Period. Net premiums earned for the 2025 third quarter were 3.8% lower than in the 2024 third quarter, reflecting changes in net premiums written over the previous five quarters. The decrease in net premiums earned in the 2025 period primarily reflected a lower level of U.S. monthly premium volume.


	Nine Months Ended September 30,
	2025			2024
	Amount		%	Amount		%
U.S. primary mortgage insurance	$	601	68.1	$	630	68.1
U.S. credit risk transfer (CRT) and other	156		17.7	162		17.5
International mortgage insurance/ reinsurance	125		14.2	133		14.4
Total	$	882	100.0	$	925	100.0

Nine Months Ended September 30, 2025 versus 2024 Period. For the nine months ended September 30, 2025, net premiums earned were 4.6% lower than in the 2024 period. The decrease in net premiums earned in the 2025 period primarily reflected a one-time expense related to the tender offer of certain Bellemeade Re mortgage insurance linked notes and a lower level of U.S. monthly premium volume.

Other Underwriting Income.

Other underwriting income, which is primarily related to GSE credit risk-sharing transactions, was $3 million for the 2025 third quarter, consistent with $3 million for the 2024 third quarter, and $17 million for the nine months ended September 30, 2025, compared to $15 million for the 2024 period.

Losses and Loss Adjustment Expenses.

The table below shows the components of the mortgage segment’s loss ratio:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Current year	17.6	%	20.1	%	20.2	%	19.9	%
Prior period reserve development	(18.1)	%	(20.5)	%	(20.4)	%	(23.9)	%
Loss ratio	(0.5)	%	(0.4)	%	(0.2)	%	(4.0)	%

Current Year Loss Ratio.

2025 Third Quarter versus 2024 Period. The mortgage segment’s current year loss ratio was 2.5 points lower in the 2025 third quarter than in the 2024 third quarter. The lower current year loss ratio for the 2025 third quarter reflected a decline in new notices of default.

Nine Months Ended September 30, 2025 versus 2024 Period. The mortgage segment’s current year loss ratio was 0.3 points higher for the nine months ended September 30, 2025 than for the 2024 period. The higher current year loss ratio for the 2025 period reflected slightly higher new delinquencies and the impact of the Bellemeade Re tender offers noted above.

Prior Period Reserve Development.

The mortgage segment’s net favorable development was $54 million, or 18.1 points, for the 2025 third quarter, compared to $64 million, or 20.5 points, for the 2024 third quarter, and $179 million, or 20.4 points, for the nine months ended September 30, 2025, compared to $220 million, or 23.9 points, for the 2024 period. See note 6, “Reserve for Losses and Loss Adjustment Expenses,” to our consolidated financial statements for information about the mortgage segment’s prior year reserve development.

Underwriting Expenses.

2025 Third Quarter versus 2024 Period. The underwriting expense ratio for the mortgage segment was 14.0% in the 2025 third quarter, compared to 15.2% in the 2024 third quarter.

Nine Months Ended September 30, 2025 versus 2024 period. The underwriting expense ratio for the mortgage segment was 15.1% for the nine months ended September 30, 2025, compared to 16.2% for the 2024 period.


ARCH CAPITAL			50			2025 THIRD QUARTER FORM 10-Q

Corporate

The Company’s corporate results include net investment income, net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investments accounted for using the equity method, other income or loss, corporate expenses, transaction costs and other, amortization of intangible assets, interest expense, net foreign exchange gains or losses, income taxes, income from operating affiliates and items related to our non-cumulative preferred shares.

Net Investment Income.

The components of net investment income were derived from the following sources:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Fixed maturities	$	379	$	340	$	1,081	$	926

Short-term investments	25		38		75		102
Equity securities (dividends)	10		9		31		27

Other (1)	19		35		82		103
Gross investment income	433		422		1,269		1,158
Investment expenses (2)	(25)		(23)		(78)		(68)
Net investment income	$	408	$	399	$	1,191	1,090

(1) Amounts include dividends and other distributions on investment funds, term loan investments, funds held balances, cash balances and other items.

(2) Investment expenses were approximately 0.25% of average invested assets for the 2025 third quarter, compared to 0.29% for the 2024 third quarter, and 0.27% for the nine months ended September 30, 2025, consistent with 0.27% for the 2024 period.

The higher level of net investment income for the 2025 periods primarily reflected growth in average invested assets, due in part to strong operating cash flows. Net cash flow from operating activities contributed $4.8 billion for the nine months ended September 30, 2025. The pre-tax investment income yield, calculated based on amortized cost and on an annualized basis, was 4.07% for the 2025 third quarter, compared to 4.40% for the 2024 third quarter, and 4.16% for the nine months ended September 30, 2025, compared to 4.29% for the 2024 period.

Corporate Expenses.

Corporate expenses were $28 million for the 2025 third quarter, compared to $19 million for the 2024 third quarter, and $107 million for the nine months ended September 30, 2025, compared to $88 million for the 2024 period. Such amounts primarily represent certain holding company costs necessary to support our worldwide operations and costs associated with operating as a publicly traded company. The increase in corporate expenses was primarily due to higher incentive compensation costs.

Transaction Costs and Other.

Transaction costs and other for the 2025 third quarter was $21 million, compared to $30 million for the 2024 third quarter, and $49 million for the nine months ended September 30, 2025, compared to $55 million for the 2024 period. Amounts in both periods primarily includes direct costs related to the MCE Acquisition.

Other Income or Losses.

Other income for the 2025 third quarter was $22 million, compared to $8 million for the 2024 third quarter, and $38 million for the nine months ended September 30, 2025, compared to $30 million for the 2024 period. Amounts in both periods primarily reflect changes in the cash surrender value of our investment in corporate-owned life insurance.

Amortization of Intangible Assets.

Amortization of intangible assets for the 2025 third quarter was $49 million, compared to $88 million for the 2024 third quarter, and $146 million for the nine months ended September 30, 2025, compared to $136 million for the 2024 period. Amounts in both periods primarily related to the MCE Acquisition.

Interest Expense.

Interest expense was $37 million for the 2025 third quarter, compared to $35 million for the 2024 third quarter, and $110 million for the nine months ended September 30, 2025, compared to $104 million for the 2024 period. Interest expense primarily reflects amounts related to our outstanding senior notes.


ARCH CAPITAL			51			2025 THIRD QUARTER FORM 10-Q

Net Realized Gains or Losses.

Net realized gains for the 2025 third quarter were $210 million, compared to net realized gains of $169 million for the 2024 third quarter. Net realized gains were $442 million for the nine months ended September 30, 2025, compared to net realized gains of $358 million for the 2024 period. Amounts in both periods reflected sales of investments as well as the impact of financial market movements on the Company’s equity securities and investments accounted for under the fair value option method. Amounts in the 2025 periods also include losses related to the sale of certain alternative investments accounted for under the equity method. Currently, our portfolio is actively managed to maximize total return within certain guidelines. The effect of financial market movements on the investment portfolio will directly impact net realized gains or losses as the portfolio is adjusted and rebalanced. Net realized gains or losses from the sale of fixed maturities primarily results from our decisions to reduce credit exposure, to change duration targets, to rebalance our portfolios or due to relative value determinations.

Net realized gains or losses also include realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries See note 8, “Investment Information—Net Realized Gains (Losses)” and note 8, “Investment Information—Allowance for Expected Credit Losses,” to our consolidated financial statements for additional information.

Equity in Net Income or Losses of Investments Accounted for Using the Equity Method.

Equity in net income of investments accounted for using the equity method was $134 million in the 2025 third quarter, compared to $171 million for the 2024 third quarter, and $349 million for the nine months ended September 30, 2025, compared to $437 million for the 2024 period. Such investments are generally recorded on a one to three month lag based on the availability of reports from the investment funds. Investment funds accounted for using the equity method totaled $6.2 billion at September 30, 2025, compared to $6.0 billion at December 31, 2024. See note 8, “Investment Information—Investments Accounted For Using the Equity Method,” to our consolidated financial statements for additional information.

Net Foreign Exchange Gains or Losses.

Net foreign exchange losses for the 2025 third quarter were $7 million, compared to losses of $63 million for the 2024 third quarter. Net foreign exchange losses for the nine months ended September 30, 2025 were $122 million, compared to losses of $31 million for the 2024 period. Amounts in both periods were primarily unrealized and resulted from the effects of revaluing our net insurance liabilities required to be settled in foreign currencies at each balance sheet date.

Income Tax Expense.

Our income tax provision on income or loss before income taxes, including income or loss from operating affiliates, resulted in an expense of 13.7% for the 2025 third quarter, compared to an expense of 9.0% for the 2024 third quarter, and an expense of 14.8% for the nine months ended September 30, 2025, compared to an expense of 8.1% for the 2024 period. The increase in the 2025 period is primarily attributed to the Government of Bermuda enacting the Corporate Income Tax Act 2023, which established a 15% corporate income tax effective January 1, 2025. See note 14, “Income Taxes” to our consolidated financial statements for additional information.

Income or Losses from Operating Affiliates.

Income from operating affiliates for the 2025 third quarter was $62 million, compared to income of $36 million for the 2024 third quarter, and income of $119 million for the nine months ended September 30, 2025, compared to income of $136 million for the 2024 period. Such amounts primarily related to the Company’s investment in Somers Group Holdings Ltd. (“Somers”) and Coface SA. The decrease in income from operating affiliates for the nine months ended September 30, 2025 was primarily driven by lower level of affiliated income from Somers, partly due to the impact of California wildfires. See note 8, “Investment Information—Investments in Operating Affiliates,” to our consolidated financial statements for additional information.

CRITICAL ACCOUNTING POLICIES,

ESTIMATES AND RECENT ACCOUNTING PRONOUNCEMENTS

Critical accounting policies, estimates and recent accounting pronouncements are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our 2024 Form 10-K, updated where applicable in the notes accompanying our consolidated financial statements, including note 1, “Basis of Presentation and Recent Accounting Pronouncements.”


ARCH CAPITAL			52			2025 THIRD QUARTER FORM 10-Q

FINANCIAL CONDITION

Investable Assets Held by Arch

At September 30, 2025, approximately $29.1 billion, or 62.3%, of total investable assets held by Arch were internally managed, compared to $25.6 billion, or 61.9%, at December 31, 2024. See note 8, “Investment Information” to our consolidated financial statements for additional information.

The following table summarizes the duration and average credit quality of fixed income assets held by Arch:


	September 30, 2025	December 31, 2024
Average effective fixed maturities duration (in years)	3.24	3.31
Average S&P/Moody’s credit ratings (1)	AA-/Aa3	AA-/Aa3

(1)Average credit ratings on our investment portfolio on securities with ratings assigned by S&P and Moody’s.

The following table provides the credit quality distribution of our fixed maturities. For individual fixed maturities, S&P ratings are used. In the absence of an S&P rating, ratings from Moody’s are used, followed by ratings from Fitch Ratings.


	Estimated Fair Value		% of Total
September 30, 2025
U.S. government and gov’t agencies (1)	$	8,409	25.5
AAA	5,425		16.5
AA	2,449		7.4
A	6,904		20.9
BBB	7,167		21.7
BB	1,175		3.6
B	685		2.1
Lower than B	29		0.1
Not rated	715		2.2
Total	$	32,958	100.0

December 31, 2024
U.S. government and gov’t agencies (1)	$	7,498	26.9
AAA	4,330		15.5
AA	2,285		8.2
A	5,138		18.4
BBB	6,467		23.2
BB	978		3.5
B	458		1.6
Lower than B	28		0.1
Not rated	707		2.5
Total	$	27,889	100.0

(1)Includes U.S. government-sponsored agency residential mortgage-backed securities and agency commercial mortgage-backed securities.

The following table provides information on the severity of the unrealized loss position as a percentage of amortized cost for all fixed maturities which were in an unrealized loss position:


Severity of gross unrealized losses:	Estimated Fair Value		Gross Unrealized Losses		% of Total Gross Unrealized Losses
September 30, 2025
0-10%	$	10,881	$	(236)	70.0
10-20%	610		(91)		27.0
20-30%	28		(9)		2.7
Greater than 30%	2		(1)		0.3
Total	$	11,521	$	(337)	100.0

December 31, 2024
0-10%	$	16,044	$	(453)	65.5
10-20%	1,357		(216)		31.2
20-30%	70		(20)		2.9
Greater than 30%	6		(3)		0.4
Total	$	17,477	$	(692)	100.0

The following table summarizes our top ten exposures to fixed income corporate issuers by fair value at September 30, 2025, excluding guaranteed amounts and covered bonds:


	Estimated Fair Value		Credit Rating (1)
JPMorgan Chase & Co.	$	415	A/A1
Morgan Stanley	400		A/A1
Bank of America Corporation	358		A-/A1
Wells Fargo & Company	291		BBB+/A1
The Goldman Sachs Group, Inc.	271		A-/A2
Citigroup Inc.	241		A-/A2
Philip Morris International Inc.	194		A-/A2
The Toronto-Dominion Bank	181		A-/A2
Blue Owl Capital Inc.	171		BBB-/Baa3
UBS Group AG	164		A-/A2
Total	$	2,686

(1)Average credit ratings as assigned by S&P and Moody’s, respectively.


ARCH CAPITAL			53			2025 THIRD QUARTER FORM 10-Q

The following table provides information on our structured securities, which includes residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”):


	Agencies		Investment Grade		Below Investment Grade		Total
September 30, 2025
RMBS	$	2,071	$	650	$	45	$	2,766
CMBS	6		1,165		78		1,249
ABS	—		2,945		204		3,149
Total	$	2,077	$	4,760	$	327	$	7,164

December 31, 2024
RMBS	$	769	$	310	$	—	$	1,079
CMBS	7		959		92		1,058
ABS	—		2,667		233		2,900
Total	$	776	$	3,936	$	325	$	5,037

The following table summarizes our equity securities, which include investments in exchange traded funds:


	September 30, 2025		December 31, 2024
Equities (1)	$	1,263	$	1,041
Exchange traded funds
Fixed income (2)	309		428
Equity and other (3)	238		213
Total	$	1,810	$	1,682

(1)Primarily in technology, communications, consumer non-cyclical, financial and industrial sectors at September 30, 2025.

(2)Primarily in structured and corporate exposures at September 30, 2025.

(3)Primarily in technology, financials, consumer cyclical, communications and healthcare sectors at September 30, 2025.

For details on our other investments and other investable assets, see note 8, “Investment Information—Other Investments” to our consolidated financial statements.

For details on our investments accounted for using the equity method, see note 8, “Investment Information—Investments Accounted For Using the Equity Method,” to our consolidated financial statements.

Our investment strategy allows for the use of derivative instruments. We utilize various derivative instruments such as futures contracts to enhance investment performance, replicate investment positions or manage market exposures and duration risk that would be allowed under our investment guidelines if implemented in other ways. See note 10, “Derivative Instruments,” to our consolidated financial statements for additional disclosures related to derivatives.

Accounting guidance regarding fair value measurements addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under GAAP and provides a common definition of fair value to be used throughout GAAP. See note 9, “Fair Value,” to our consolidated financial statements for a summary of our financial assets and liabilities measured at fair value, segregated by level in the fair value hierarchy.

Reinsurance

The effects of reinsurance on written and earned premiums and losses and loss adjustment expenses (“LAE”) with unaffiliated reinsurers were as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Premiums written:
Direct	$	2,516	$	2,547	$	7,689	$	7,554
Assumed	2,894		2,893		10,380		9,201
Ceded	(1,446)		(1,393)		(5,242)		(4,842)
Net	$	3,964	$	4,047	$	12,827	$	11,913

Premiums earned:
Direct	$	2,576	$	2,470	$	7,596	$	7,228
Assumed	3,300		2,967		9,859		7,825
Ceded	(1,591)		(1,467)		(4,645)		(4,096)
Net	$	4,285	$	3,970	$	12,810	$	10,957

Losses and LAE:
Direct	$	1,480	$	1,405	$	4,221	$	4,004
Assumed	1,500		1,909		5,695		4,369
Ceded	(780)		(911)		(2,826)		(2,415)
Net	$	2,200	$	2,403	$	7,090	$	5,958

See note 7, “Allowance for Expected Credit Losses,” to our consolidated financial statements for information about our reinsurance recoverables and related allowance for credit losses.

Bellemeade Re

We have entered into aggregate excess of loss mortgage reinsurance agreements with various special purpose reinsurance companies domiciled in Bermuda (the “Bellemeade Agreements”). For the respective coverage periods, we will retain the first layer of the respective aggregate losses and the special purpose reinsurance companies will provide second layer coverage up to the outstanding coverage amount. We will then retain losses in excess of the outstanding coverage limit. The aggregate excess of loss reinsurance coverage generally decreases over a ten-year period as the underlying covered mortgages amortize, unless provisional call options embedded within certain of the Bellemeade Agreements are executed or if pre-defined delinquency triggering events occur.


ARCH CAPITAL			54			2025 THIRD QUARTER FORM 10-Q

The following table summarizes the respective coverages and retentions at September 30, 2025:


Bellemeade Entities (Issue Date)	Initial Coverage at Issuance		Current Coverage		Remaining Retention, Net

2021-3 Ltd. (1)	639		37		130
2022-1 Ltd. (2)	317		56		136
2022-2 Ltd. (3)	327		137		190
2023-1 Ltd. (4)	233		205		168
2024-1 Ltd. (5)	204		192		164
Total	$	1,720	$	627	$	788

(1) Issued in September 2021, covering in-force policies issued between April 1, 2021 and June 30, 2021. $508 million was directly funded by Bellemeade Re 2021-3 Ltd. via insurance-linked notes, with an additional $131 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

(2) Issued in January 2022, covering in-force policies issued between July 1, 2021 and November 30, 2021. $284 million was directly funded by Bellemeade Re 2022-1 Ltd. via insurance-linked notes, with an additional $33 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

(3) Issued in September 2022, covering in-force policies issued between November 1, 2021 and June 30, 2022. $201 million was directly funded by Bellemeade Re 2022-2 Ltd. via insurance-linked notes, with an additional $126 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

(4) Issued in October 2023, covering in-force policies issued between January 1, 2023 and September 30, 2023. $186 million was directly funded by Bellemeade Re 2023-1 Ltd. via insurance-linked notes, with an additional $47 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

(5) Issued in August 2024, covering in-force policies issued between September 1, 2023 and July 31, 2024. $163 million was directly funded by Bellemeade Re 2024-1 Ltd. via insurance-linked notes, with an additional $41 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

Reserve for Losses and Loss Adjustment Expenses

We establish reserve for losses and loss adjustment expenses (“Loss Reserves”) which represent estimates involving actuarial and statistical projections, at a given point in time, of our expectations of the ultimate settlement and administration costs of losses incurred. Estimating Loss Reserves is inherently difficult. We utilize actuarial models as well as available historical insurance industry loss ratio experience and loss development patterns to assist in the establishment of Loss Reserves. Actual losses and loss adjustment expenses paid will deviate, perhaps substantially, from the reserve estimates reflected in our financial statements.

At September 30, 2025 and December 31, 2024, our Loss Reserves, net of unpaid losses and loss adjustment expenses recoverable, by type and by operating segment were as follows:


	September 30, 2025		December 31, 2024
Insurance segment:
Case reserves	$	3,729	$	3,730
IBNR reserves	9,003		8,238
Total net reserves	12,732		11,968
Reinsurance segment:
Case reserves	2,884		2,721
Additional case reserves	943		806
IBNR reserves	7,143		5,580
Total net reserves	10,970		9,107
Mortgage segment:
Case reserves	328		331
IBNR reserves	125		142
Total net reserves	453		473





Total:
Case reserves	6,941		6,782
Additional case reserves	943		806
IBNR reserves	16,271		13,960
Total net reserves	$	24,155	$	21,548

At September 30, 2025 and December 31, 2024, the insurance segment’s Loss Reserves by major line of business, net of unpaid losses and loss adjustment expenses recoverable, were as follows:


	September 30, 2025		December 31, 2024
Insurance segment:
Third party occurrence business	$	4,488	$	4,104
Multi-line and other specialty	4,433		4,105
Third party claims-made business	2,883		2,630
Property, energy, marine and aviation	928		1,129
Total net reserves	$	12,732	$	11,968

At September 30, 2025 and December 31, 2024, the reinsurance segment’s Loss Reserves by major line of business, net of unpaid losses and loss adjustment expenses recoverable, were as follows:


	September 30, 2025		December 31, 2024
Reinsurance segment:
Casualty	$	3,624	$	3,089
Specialty	3,553		2,791
Property excluding property catastrophe	2,104		1,778
Property catastrophe	949		845
Marine and aviation	554		461
Other	186		143
Total net reserves	$	10,970	$	9,107


ARCH CAPITAL			55			2025 THIRD QUARTER FORM 10-Q

At September 30, 2025 and December 31, 2024, the mortgage segment’s Loss Reserves by major line of business, net of unpaid losses and loss adjustment expenses recoverable, were as follows:


	September 30, 2025		December 31, 2024
Mortgage segment:
U.S. primary mortgage insurance (1)	$	322	$	333
U.S. credit risk transfer (CRT) and other	72		85
International mortgage insurance/ reinsurance	59		55
Total net reserves	$	453	$	473

(1) At September 30, 2025, 27.6% of total net reserves represents policy years 2015 and prior and the remainder from later policy years. At December 31, 2024, 36.1% of total net reserves represent policy years 2015 and prior and the remainder from later policy years.

Mortgage Operations Supplemental Information

The mortgage segment’s insurance in force (“IIF”) and risk in force (“RIF”) were as follows at September 30, 2025 and December 31, 2024:


	September 30, 2025					December 31, 2024
Amount			%		Amount			%
Insurance In Force (IIF) (1):
U.S. primary mortgage insurance	$	286,785		57.9		$	290,435		58.0
U.S. credit risk transfer (CRT) and other	141,889			28.7		145,892			29.1
International mortgage insurance/reinsurance	66,277			13.4		64,822			12.9
Total	$	494,951		100.0		$	501,149		100.0

Risk In Force (RIF) (2):
U.S. primary mortgage insurance	$	74,952		84.9		$	76,034		85.3
U.S. credit risk transfer (CRT) and other	5,688			6.4		5,876			6.6
International mortgage insurance/reinsurance	7,633			8.6		7,215			8.1
Total	$	88,273		100.0		$	89,125		100.0

(1)Represents the aggregate dollar amount of each insured mortgage loan’s current principal balance. Such amounts are shown before external reinsurance.

(2)The aggregate dollar amount of each insured mortgage loan’s current principal balance multiplied by the insurance coverage percentage specified in the policy for insurance policies issued and after contract limits and/or loss ratio caps for risk-sharing or reinsurance. Such amounts are shown before external reinsurance.

The IIF and RIF for our U.S. primary mortgage insurance business by policy year were as follows at September 30, 2025:


	IIF					RIF					Delinquency
Amount			%		Amount			%		Rate (1)
Policy year:
2015 and prior	$	16,567		5.8		$	4,221		5.6		5.34	%
2016	3,484			1.2		870			1.2		3.41	%
2017	4,553			1.6		1,212			1.6		3.51	%
2018	6,062			2.1		1,579			2.1		4.18	%
2019	11,092			3.9		2,911			3.9		2.90	%
2020	33,095			11.5		9,049			12.1		1.65	%
2021	52,827			18.4		14,425			19.2		1.73	%
2022	51,437			17.9		13,712			18.3		1.72	%
2023	33,165			11.6		8,548			11.4		1.51	%
2024	41,681			14.5		10,418			13.9		0.85	%
2025	32,822			11.4		8,007			10.7		0.12	%
Total	$	286,785		100.0		$	74,952		100.0		2.04	%

(1)Represents the ending percentage of loans in default.

The IIF and RIF for our U.S. primary mortgage insurance business by policy year were as follows at December 31, 2024:


	IIF					RIF					Delinquency
Amount			%		Amount			%		Rate (1)
Policy year:
2015 and prior	$	18,329		6.3		$	4,670		6.1		5.85	%
2016	5,240			1.8		1,371			1.8		3.23	%
2017	5,554			1.9		1,489			2.0		3.52	%
2018	7,081			2.4		1,843			2.4		4.31	%
2019	12,919			4.4		3,386			4.5		2.85	%
2020	39,426			13.6		10,718			14.1		1.52	%
2021	62,382			21.5		16,620			21.9		1.52	%
2022	57,175			19.7		15,113			19.9		1.51	%
2023	36,827			12.7		9,479			12.5		1.12	%
2024	45,502			15.7		11,345			14.9		0.30	%

Total	$	290,435		100.0		$	76,034		100.0		2.09	%

(1)Represents the ending percentage of loans in default.


ARCH CAPITAL			56			2025 THIRD QUARTER FORM 10-Q

The following tables provide supplemental disclosures on risk in force for our U.S. primary mortgage insurance business at September 30, 2025 and December 31, 2024:


	September 30, 2025						December 31, 2024
Amount				%		Amount				%
Credit quality:
>=740	$	47,575			63.5		$	47,360			62.3
680-739	23,638				31.5		24,688				32.5
620-679	3,419				4.6		3,638				4.8
<620	320				0.4		348				0.5
Total	$	74,952			100.0		$	76,034			100.0
Weighted average credit score	749						748

Loan-to-value (LTV):
95.01% and above	$	7,362			9.8		$	7,420			9.8
90.01% to 95.00%	44,720				59.7		45,311				59.6
85.01% to 90.00%	20,251				27.0		20,637				27.1
85.00% and below	2,619				3.5		2,666				3.5
Total	$	74,952			100.0		$	76,034			100.0
Weighted average LTV	93.2		%				93.2		%

Total RIF, net of external reinsurance	$	60,662					$	60,085


	September 30, 2025					December 31, 2024
Amount			%		Amount			%
Total RIF by State:
California	$	5,892		7.9		$	5,989		7.9
Texas	5,393			7.2		5,613			7.4
North Carolina	3,358			4.5		3,355			4.4
Minnesota	3,137			4.2		3,108			4.1
Illinois	3,046			4.1		3,056			4.0
Georgia	3,043			4.1		3,143			4.1
Massachusetts	2,829			3.8		2,885			3.8
Michigan	2,822			3.8		2,855			3.8
Ohio	2,697			3.6		2,716			3.6
Florida	2,690			3.6		2,824			3.7
Other	40,045			53.4		40,490			53.3
Total	$	74,952		100.0		$	76,034		100.0

The following table provides supplemental disclosures for our U.S. primary mortgage insurance business related to insured loans and loss metrics:


(U.S. Dollars in thousands, except policy, loan and claim count)	Nine Months Ended
September 30,
2025				2024
Roll-forward of insured loans in default:
Beginning delinquent number of loans	22,982				19,457
New notices	34,553				33,047
Cures	(34,720)				(32,242)
Paid claims	(994)				(909)
Acquired delinquent loans (1)	—				2,525
Ending delinquent number of loans (2)	21,821				21,878

Ending number of policies in force (2)	1,067,147				1,114,251

Ending percentage of loans in default (2)	2.04		%		1.96		%

Losses:
Number of claims paid	994				909
Total paid claims	$	37,587			$	31,216
Average per claim	$	37.8			$	34.3
Severity (3)	75.1		%		69.5		%
Average case reserve per default (2)	$	16.1			$	15.9

(1)Represents delinquent loans related to the acquisition of RMIC Companies, Inc.

(2)Includes first lien primary and pool policies.

(3)Represents total direct first lien paid claims divided by RIF of loans for which claims were paid, excluding paid claim settlements.

The risk to capital ratio, which represents total current (non-delinquent) risk in force, net of reinsurance, divided by total statutory capital, for Arch MI U.S. was approximately 7.9 to 1 at September 30, 2025, compared to 7.8 to 1 at December 31, 2024.

Shareholders’ Equity and Book Value per Share

The following table presents the calculation of book value per share:


	September 30, 2025		December 31, 2024
Total shareholders’ equity available to Arch	$	23,719	$	20,820
Less preferred shareholders’ equity	830		830
Common shareholders’ equity available to Arch	$	22,889	$	19,990
Common shares and common share equivalents outstanding, net of treasury shares (1)	367.3		376.4
Book value per share	$	62.32	$	53.11

(1)Excludes the effects of 10.7 million and 12.4 million stock options and 0.3 million and 0.3 million restricted and performance share units outstanding at September 30, 2025 and December 31, 2024, respectively.


ARCH CAPITAL			57			2025 THIRD QUARTER FORM 10-Q

LIQUIDITY

Liquidity is a measure of our ability to access sufficient cash flows to meet the short-term and long-term cash requirements of our business operations.

Arch Capital is a holding company whose assets primarily consist of the shares in its subsidiaries. Generally, Arch Capital depends on its available cash resources, liquid investments and dividends or other distributions from its subsidiaries to make payments, including the payment of debt service obligations and operating expenses it may incur and any dividends or liquidation amounts with respect to our preferred and common shares.

For the nine months ended September 30, 2025, Arch Capital received dividends of $1.2 billion from Arch Reinsurance Ltd. (“Arch Re Bermuda”), our Bermuda based reinsurer and insurer, which can pay approximately $4.0 billion to Arch Capital during the remainder of 2025 without providing an affidavit to the Bermuda Monetary Authority.

We expect that our liquidity needs, including our anticipated (re)insurance obligations and operating and capital expenditure needs, for the next 12 months and for the foreseeable future thereafter, will be met by funds generated from underwriting activities and investment income, as well as by our balance of cash, short-term investments, proceeds on the sale or maturity of our investments, and our credit facilities.

Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities:


	Nine Months Ended
	September 30,
	2025		2024
Total cash provided by (used for):
Operating activities	$	4,768	$	5,100
Investing activities	(3,619)		(4,881)
Financing activities	(1,112)		(35)
Effects of exchange rate changes on foreign currency cash and restricted cash	57		30
Increase (decrease) in cash and restricted cash	$	94	$	214

Cash provided by operating activities for the nine months ended September 30, 2025 was lower than in the 2024 period. Activity for the nine months ended September 30, 2025 primarily reflected a higher level of losses paid than in the 2024 period.

Cash used for investing activities for the nine months ended September 30, 2025 was lower than in the 2024 period. Activity for the nine months ended September 30, 2025 reflected lower net purchases of investments than in the 2024 period, due in part to a higher level of repurchases under our share repurchase program and a higher level of losses paid than in the 2024 period.

Cash used for financing activities for the nine months ended September 30, 2025 was higher than in the 2024 period, primarily due to the higher level of repurchases under our share repurchase program. We repurchased approximately $1.1 billion of our common shares in the 2025 period, compared to nil in the 2024 period.

CAPITAL RESOURCES

The following table provides an analysis of our capital structure:


	September 30, 2025		December 31, 2024







Senior notes	$	2,728	$	2,728

Shareholders’ equity available to Arch:

Series F non-cumulative preferred shares	$	330	$	330
Series G non-cumulative preferred shares	500		500
Common shareholders’ equity	22,889		19,990
Total	$	23,719	$	20,820

Total capital available to Arch	$	26,447	$	23,548



Debt to total capital (%)	10.3		11.6
Preferred to total capital (%)	3.1		3.5
Debt and preferred to total capital (%)	13.5		15.1

Arch MI U.S. is required to maintain compliance with the GSEs requirements, known as the Private Mortgage Insurer Eligibility Requirements or “PMIERs.” The financial requirements require an eligible mortgage insurer’s available assets, which generally include only the most liquid assets of an insurer, to meet or exceed “minimum required assets” as of each quarter end. Minimum required assets are calculated from PMIERs tables with several risk dimensions (including origination year, original loan-to-value and original credit score of performing loans, and the delinquency status of non-performing loans) and are subject to a minimum amount. Arch MI U.S. satisfied the PMIERs’ financial requirements with an estimated PMIER sufficiency ratio of 176% at September 30, 2025, compared to 186% at December 31, 2024. On August 21, 2024, Fannie Mae and Freddie Mac each updated their PMIERs to incorporate new deductions to available assets for investment risk. This update became effective on March 31, 2025, but the impact will be phased in through September 30, 2026. If the GSEs had fully implemented this update to PMIERs as of September 30, 2025, the changes would have reduced the available assets by 5% and resulted in a pro-forma PMIERs sufficiency ratio of 172%.


ARCH CAPITAL			58			2025 THIRD QUARTER FORM 10-Q

Arch Capital, through its subsidiaries, provides financial support to certain of its insurance subsidiaries and affiliates, through certain reinsurance arrangements beneficial to the ratings of such subsidiaries. Historically, our insurance, reinsurance and mortgage insurance subsidiaries have entered into separate reinsurance arrangements with Arch Re Bermuda covering individual lines of business.

GUARANTOR INFORMATION

The below table provides a description of our senior notes payable at September 30, 2025:


	Interest		Principal		Carrying
Issuer/Due	(Fixed)		Amount		Amount
Arch Capital:
May 1, 2034	7.350	%	$	300	$	298
June 30, 2050	3.635	%	1,000		990
Arch-U.S.:
Nov. 1, 2043 (1)	5.144	%	500		495
Arch Finance:
Dec. 15, 2026 (1)	4.011	%	500		499
Dec. 15, 2046 (1)	5.031	%	450		446
Total			$	2,750	$	2,728

(1)Fully and unconditionally guaranteed by Arch Capital.

Our senior notes were issued by Arch Capital, Arch Capital Group (U.S.) Inc. (“Arch-U.S.”) and Arch Capital Finance LLC (“Arch Finance”). Arch-U.S. is a wholly-owned subsidiary of Arch Capital and Arch Finance is a wholly-owned finance subsidiary of Arch-U.S. Our 2034 senior notes and 2050 senior notes issued by Arch Capital are unsecured and unsubordinated obligations of Arch Capital and ranked equally with all of its existing and future unsecured and unsubordinated indebtedness. The 2043 senior notes issued by Arch-U.S. are unsecured and unsubordinated obligations of Arch-U.S. and Arch Capital and rank equally and ratably with the other unsecured and unsubordinated indebtedness of Arch-U.S. and Arch Capital. The 2026 senior notes and 2046 senior notes issued by Arch Finance are unsecured and unsubordinated obligations of Arch Finance and Arch Capital and rank equally and ratably with the other unsecured and unsubordinated indebtedness of Arch Finance and Arch Capital.

Arch-U.S. and Arch Finance depend on their available cash resources, liquid investments and dividends or other distributions from their subsidiaries or affiliates to make payments, including the payment of debt service obligations and operating expenses they may incur.

The following tables present condensed financial information for Arch Capital (parent guarantor) and Arch-U.S. (subsidiary issuer):


	September 30, 2025				December 31, 2024
	Arch Capital		Arch-U.S.		Arch Capital		Arch-U.S.
Assets
Total investments	$	48	$	518	$	43	$	549
Cash	10		4		13		5

Investment in operating affiliates	3		—		3		—
Due from subsidiaries and affiliates	5		—		6		10






Other assets	116		117		66		101
Total assets	$	182	$	639	$	131	$	665

Liabilities






Senior notes	1,288		495		1,287		495

Due to subsidiaries and affiliates	7		1,022		11		994
Other liabilities	50		64		48		50
Total liabilities	$	1,345	$	1,581	$	1,346	$	1,539

Non-cumulative preferred shares	$	830	—		$	830	—


	Nine Months Ended

	September 30, 2025
	Arch Capital	Arch-U.S.
Revenues

Net investment income		$	3	$	20
Net realized gains (losses)		(10)		—


Total revenues		(7)		20

Expenses
Corporate expenses		107		5
Interest expense		44		20
Interest expense (intercompany)		—		42
Total expenses		151		67

Income (loss) before income taxes and income (loss) from operating affiliates		(158)		(47)
Income tax (expense) benefit		57		5
Income (loss) before income (loss) from operating affiliates		(1)		—



Net income available to Arch		(102)		(42)
Preferred dividends		(30)		—
Net income (loss) available to Arch common shareholders		$	(132)	$	(42)


ARCH CAPITAL			59			2025 THIRD QUARTER FORM 10-Q

CATASTROPHIC AND SEVERE ECONOMIC EVENTS

We have large aggregate exposures to natural and man-made catastrophic events, pandemic events and severe economic events. Natural catastrophes can be caused by various events, including hurricanes, floods, windstorms, earthquakes, hailstorms, tornadoes, explosions, severe winter weather, fires, droughts and other natural disasters. Man-made catastrophic events may include acts of war, acts of terrorism and political instability. Catastrophes can also cause losses in non-property business such as mortgage insurance, workers’ compensation or general liability. In addition to the nature of property business, we believe that economic and geographic trends affecting insured property, including inflation, property value appreciation and geographic concentration, tend to generally increase the size of losses from catastrophic events over time.

Our models employ both proprietary and vendor-based systems and include cross-line correlations for property, marine, offshore energy, aviation, workers compensation and personal accident. We seek to limit the probable maximum pre-tax loss to a specific level for severe catastrophic events. Currently, we seek to limit our 1-in-250 year return period net probable maximum loss from a severe catastrophic event in any geographic zone to approximately 25% of tangible shareholders’ equity available to Arch (total shareholders’ equity available to Arch less goodwill and intangible assets). We reserve the right to change this threshold at any time.

Based on in-force exposure estimated as of October 1, 2025, our modeled peak zone catastrophe exposure was a windstorm affecting the Florida Tri-County regions, with a net probable maximum pre-tax loss of $1.9 billion, or 8.4% of tangible shareholders’ equity available to Arch, followed by windstorms affecting the Northeastern U.S. and the Gulf of Mexico regions with net probable maximum pre-tax losses of $1.7 billion and $1.5 billion, respectively. Our exposures to other perils, such as U.S. earthquake and international events, were less than the exposures arising from U.S. windstorms and hurricanes. As of October 1, 2025, our modeled peak zone earthquake exposure (San Francisco earthquake) represented approximately 60% of our peak zone catastrophe exposure, and our modeled peak zone international exposure (Germany windstorm) was substantially less than both our peak zone windstorm and earthquake exposures.

We also have significant exposure to losses due to mortgage defaults resulting from severe economic events in the future. For our U.S. mortgage insurance business, we have developed a proprietary risk model (“Realistic Disaster Scenario” or “RDS”) that simulates the maximum loss resulting from a severe economic downturn impacting the housing market. The RDS models the collective impact of

adverse conditions for key economic indicators, the most significant of which is a decline in home prices. The RDS model projects paths of future home prices, unemployment rates, income levels and interest rates and assumes correlation across states and geographic regions. The resulting future performance of our in-force portfolio is then estimated under the economic stress scenario, reflecting loan and borrower information.

Currently, we seek to limit our modeled RDS loss from a severe economic event to approximately 25% of tangible shareholders’ equity available to Arch. We reserve the right to change this threshold at any time. Based on in-force exposure estimated as of October 1, 2025, our modeled RDS loss was approximately $0.9 billion, or 4.0% of tangible shareholders’ equity available to Arch.

Net probable maximum loss estimates are net of expected reinsurance recoveries, before income tax and before excess reinsurance reinstatement premiums. RDS loss estimates are net of expected reinsurance recoveries and before income tax. Catastrophe loss estimates are reflective of the zone indicated and not the entire portfolio. Since hurricanes and windstorms can affect more than one zone and make multiple landfalls, our catastrophe loss estimates include clash estimates from other zones. Our catastrophe loss estimates and RDS loss estimates do not represent our maximum exposures and it is highly likely that our actual incurred losses would vary materially from the modeled estimates. There can be no assurances that we will not suffer pre-tax losses greater than 25% of our tangible shareholders’ equity from one or more catastrophic events or severe economic events due to several factors. These factors include the inherent uncertainties in estimating the frequency and severity of such events and the margin of error in making such determinations resulting from potential inaccuracies and inadequacies in the data provided by clients and brokers, the modeling techniques and the application of such techniques or as a result of a decision to change the percentage of shareholders' equity exposed to a single catastrophic event or severe economic event. In addition, actual losses may increase if our reinsurers fail to meet their obligations to us or the reinsurance protections purchased by us are exhausted or are otherwise unavailable. See “Risk Factors—Risks Relating to Our Industry” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Catastrophic Events and Severe Economic Events” in our 2024 Form 10-K.


ARCH CAPITAL			60			2025 THIRD QUARTER FORM 10-Q

MARKET SENSITIVE INSTRUMENTS AND RISK MANAGEMENT

In accordance with the SEC’s Financial Reporting Release No. 48, we performed a sensitivity analysis to determine the effects that market risk exposures could have on the future earnings, fair values or cash flows of our financial instruments as of September 30, 2025. Market risk represents the risk of changes in the fair value of a financial instrument and is comprised of several components, including liquidity, basis and price risks.

An analysis of material changes in market risk exposures at September 30, 2025 that affect the quantitative and qualitative disclosures presented in our 2024 Form 10-K (see section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Market Sensitive Instruments and Risk Management”) were as follows:

Investment Market Risk

Fixed Income Securities. We invest in interest rate sensitive securities, which are primarily debt securities. We consider the effect of interest rate movements on the fair value of our fixed maturities, short-term investments and certain of our other investments, equity securities and investments accounted for using the equity method which invest in fixed income securities (collectively, “Fixed Income Securities”) and the corresponding change in unrealized appreciation. As interest rates rise, the fair value of our Fixed Income Securities falls, and the converse is also true. Based on historical observations, there is a low probability that all interest rate yield curves would shift in the same direction at the same time. Furthermore, at times interest rate movements in certain credit sectors exhibit a much lower correlation to changes in U.S. Treasury yields. Accordingly, the actual effect of interest rate movements may differ materially from the amounts set forth in the following tables.

The following table summarizes the effect that an immediate, parallel shift in the interest rate yield curve would have had on our Fixed Income Securities:


(U.S. dollars in billions)	Interest Rate Shift in Basis Points
-100				-50				—			+50				+100
September 30, 2025
Total fair value	$	45.2			$	44.6			$	44.0		$	43.4			$	42.8
Change from base	2.8		%		1.4		%					(1.4)		%		(2.8)		%
Change in unrealized value	$	1.2			$	0.6						$	(0.6)			$	(1.2)

December 31, 2024
Total fair value	$	40.0			$	39.5			$	38.9		$	38.4			$	37.9
Change from base	2.8		%		1.4		%					(1.4)		%		(2.7)		%
Change in unrealized value	$	1.1			$	0.5						$	(0.5)			$	(1.1)

In addition, we consider the effect of credit spread movements on the market value of our Fixed Income Securities and the corresponding change in unrealized value. As credit spreads widen, the fair value of our Fixed Income Securities falls, and the converse is also true. In periods where the spreads on our Fixed Income Securities are much higher than their historical average due to short-term market dislocations, a parallel shift in credit spread levels would result in a much more pronounced change in unrealized value.

The following table summarizes the effect that an immediate, parallel shift in credit spreads in a static interest rate environment would have had on our Fixed Income Securities:


(U.S. dollars in billions)	Credit Spread Shift in Percentage Points
-100				-50				—			+50				+100
September 30, 2025
Total fair value	$	45.2			$	44.6			$	44.0		$	43.4			$	42.8
Change from base	2.7		%		1.4		%					(1.4)		%		(2.7)		%
Change in unrealized value	$	1.2			$	0.6						$	(0.6)			$	(1.2)

December 31, 2024
Total fair value	$	40.0			$	39.5			$	38.9		$	38.4			$	37.8
Change from base	2.8		%		1.4		%					(1.4)		%		(2.8)		%
Change in unrealized value	$	1.1			$	0.5						$	(0.5)			$	(1.1)

Another method that attempts to measure portfolio risk is Value-at-Risk (“VaR”). VaR measures the worst expected loss under normal market conditions over a specific time interval at a given confidence level. The 1-year 95th percentile parametric VaR reported herein estimates that 95% of the time, the portfolio loss in a one-year horizon would be less than or equal to the calculated number, stated as a percentage of the measured portfolio’s initial value. The VaR is a variance-covariance based estimate, based on linear sensitivities of a portfolio to a broad set of systematic market risk factors and idiosyncratic risk factors mapped to the portfolio exposures. The relationships between the risk


ARCH CAPITAL			61			2025 THIRD QUARTER FORM 10-Q

factors are estimated using historical data, and the most recent data points are generally given more weight. As of September 30, 2025, our portfolio’s 95th percentile VaR was estimated to be 6.2%, compared to an estimated 5.6% at December 31, 2024. In periods where the volatility of the risk factors mapped to our portfolio’s exposures is higher due to market conditions, the resulting VaR is higher than in other periods.

Equity Securities. At September 30, 2025 and December 31, 2024, the fair value of our investments in equity securities and certain investments accounted for using the equity method with underlying equity strategies totaled $1.7 billion and $1.5 billion, respectively. These investments are exposed to price risk, which is the potential loss arising from decreases in fair value. An immediate hypothetical 10% decline in the value of each position would reduce the fair value of such investments by approximately $169 million and $149 million at September 30, 2025 and December 31, 2024, respectively, and would have decreased book value per share by approximately $0.46 and $0.40, respectively. An immediate hypothetical 10% increase in the value of each position would increase the fair value of such investments by approximately $169 million and $149 million at September 30, 2025 and December 31, 2024, respectively, and would have increased book value per share by approximately $0.46 and $0.40, respectively.

Investment-Related Derivatives. At September 30, 2025, the notional value of all derivative instruments (excluding foreign currency forward contracts which are included in the foreign currency exchange risk analysis below) was $5.8 billion, compared to $5.0 billion at December 31, 2024. If the underlying exposure of each investment-related derivative held at September 30, 2025 depreciated by 100 basis points, it would have resulted in a reduction in net income of approximately $58 million, and a decrease in book value per share of approximately $0.16 per share, compared to $50 million and $0.13 per share, respectively, on investment-related derivatives held at December 31, 2024. If the underlying exposure of each investment-related derivative held at September 30, 2025 appreciated by 100 basis points, it would have resulted in an increase in net income of approximately $58 million, and an increase in book value per share of approximately $0.16 per share, compared to $50 million and $0.13 per share, respectively, on investment-related derivatives held at December 31, 2024. See note 10, “Derivative Instruments,” to our consolidated financial statements for additional disclosures concerning derivatives.

For further discussion on investment activity, please refer to “Financial Condition—Investable Assets.”

Foreign Currency Exchange Risk

Foreign currency rate risk is the potential change in value, income and cash flow arising from adverse changes in foreign currency exchange rates. Through our subsidiaries and branches located in various foreign countries, we conduct our insurance and reinsurance operations in a variety of local currencies other than the U.S. Dollar. We generally hold investments in foreign currencies which are intended to mitigate our exposure to foreign currency fluctuations in our net insurance liabilities. We may also utilize foreign currency forward contracts and currency options as part of our investment strategy. See note 10, “Derivative Instruments,” to our consolidated financial statements for additional information.

The following table provides a summary of our net foreign currency exchange exposures, as well as foreign currency derivatives in place to manage these exposures:


	September 30, 2025		December 31, 2024
Net assets (liabilities), denominated in foreign currencies, excluding shareholders’ equity and derivatives	$	(531)	$	(815)
Shareholders’ equity denominated in foreign currencies (1)	1,201		1,120
Net foreign currency forward contracts outstanding (2)	294		453
Net exposures denominated in foreign currencies	$	964	$	758

Pre-tax impact of a hypothetical 10% appreciation of the U.S. Dollar against foreign currencies:
Shareholders’ equity	$	(96)	$	(76)
Book value per share	$	(0.26)	$	(0.20)

Pre-tax impact of a hypothetical 10% decline of the U.S. Dollar against foreign currencies:
Shareholders’ equity	$	96	$	76
Book value per share	$	0.26	$	0.20

(1) Represents capital contributions held in the foreign currencies of our operating units.

(2) Represents the net notional value of outstanding foreign currency forward contracts.

Although we generally attempt to match the currency of our projected liabilities with investments in the same currencies, from time to time we may elect to over or underweight one or more currencies, which could increase our exposure to foreign currency fluctuations and increase the volatility of our shareholders’ equity. Historical observations indicate a low probability that all foreign currency exchange rates would shift against the U.S. Dollar in the same direction and at the same time and, accordingly, the actual effect of foreign currency rate movements may differ materially from the amounts set forth above. For further discussion on foreign exchange activity, please refer to “Results of Operations.”


ARCH CAPITAL			62			2025 THIRD QUARTER FORM 10-Q

Effects of Inflation

General economic inflation has increased in recent quarters and may continue to remain at elevated levels for an extended period of time. The potential also exists, after a catastrophe loss or pandemic events, for the development of inflationary pressures in a local economy. This risk may be heightened from time to time by geopolitical tensions, global supply chain disruptions, tariffs, and other contributing factors. This may have a material effect on the adequacy of our reserves for losses and loss adjustment expenses, especially in longer-tailed lines of business, and on the market value of our investment portfolio through rising interest rates. The anticipated effects of inflation are considered in our pricing models, reserving processes and exposure management, across all lines of business and types of loss including natural catastrophe events. The actual effects of inflation on our results cannot be accurately known until claims are ultimately settled and will vary by the specific type of inflation affecting each line of business.

Previous: Item 1. CONSOLIDATED FINANCIAL STATEMENTS · Next: Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK