Item 1. CONSOLIDATED FINANCIAL STATEMENTS

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Item 1. CONSOLIDATED FINANCIAL STATEMENTS


						Page No.



Consolidated Balance Sheets
June 30, 2026 and December 31, 2025 (unaudited)						5

Consolidated Statements of Income
For the three and six month periods ended June 30, 2026 and 2025 (unaudited)						6

Consolidated Statements of Comprehensive Income
For the three and six month periods ended June 30, 2026 and 2025 (unaudited)						7

Consolidated Statements of Changes in Shareholders’ Equity
For the three and six month periods ended June 30, 2026 and 2025 (unaudited)						8

Consolidated Statements of Cash Flows
For the six month periods ended June 30, 2026 and 2025 (unaudited)						9

Notes to Consolidated Financial Statements (unaudited)
Note 1 - Basis of Presentation and Recent Accounting Pronouncements						10
Note 2 - Acquisitions						11
Note 3 - Share Transactions						12
Note 4 - Earnings Per Common Share						12
Note 5 - Segment Information						13
Note 6 - Reserve for Losses and Loss Adjustment Expenses						18
Note 7 - Allowance for Expected Credit Losses						20
Note 8 - Investment Information						22
Note 9 - Fair Value						28
Note 10 - Derivative Instruments						34
Note 11 - Commitments and Contingencies						35

Note 12 - Variable Interest Entities						36
Note 13 - Other Comprehensive Income (Loss)						37

Note 14 - Income Taxes						38
Note 15 - Legal Proceedings						38
Note 16 - Transactions with Related Parties						38


ARCH CAPITAL			4			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(U.S. dollars and shares in millions)


	(Unaudited)
	June 30, 2026		December 31, 2025
Assets
Investments:
Fixed maturities available for sale, at fair value (amortized cost: $33,427 and $32,329; net of allowance for credit losses: $16 and $20)	$	33,155	$	32,426
Short-term investments available for sale, at fair value (amortized cost: $3,298 and $2,624; net of allowance for credit losses: $0 and $0)	3,298		2,625

Equity securities, at fair value	2,280		1,864

Other investments, at fair value	3,381		3,136
Investments accounted for using the equity method	6,852		6,453
Total investments	48,966		46,504

Cash	1,109		993
Accrued investment income	325		338


Investment in operating affiliates	1,323		1,313
Premiums receivable (net of allowance for credit losses: $41 and $43)	7,160		5,723
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses (net of allowance for credit losses: $18 and $17)	9,964		9,526
Contractholder receivables (net of allowance for credit losses: $7 and $7)	2,264		2,270
Ceded unearned premiums	3,669		2,659
Deferred acquisition costs	1,794		1,717
Receivable for securities sold	564		180
Goodwill and intangible assets	1,163		1,222

Other assets	6,878		6,796
Total assets	$	85,179	$	79,241

Liabilities
Reserve for losses and loss adjustment expenses	$	34,775	$	33,547
Unearned premiums	11,493		10,100
Reinsurance balances payable	3,234		2,320
Contractholder payables	2,270		2,277
Collateral held for insured obligations	240		237
Senior notes	4,286		2,729


Payable for securities purchased	1,136		308
Other liabilities	3,715		3,517
Total liabilities	61,149		55,035

Commitments and contingencies (refer to Note 11)


Shareholders' Equity
Non-cumulative preferred shares	830		830

Common shares ($0.0011 par, shares issued: 602.7 and 599.8)	1		1
Additional paid-in capital	2,873		2,735
Retained earnings	29,129		27,045
Accumulated other comprehensive income (loss), net of deferred income tax	(413)		5
Common shares held in treasury, at cost (shares: 261.8 and 240.8)	(8,390)		(6,410)
Total shareholders' equity available to Arch	24,030		24,206


Total liabilities and shareholders' equity	$	85,179	$	79,241

See Notes to Consolidated Financial Statements


ARCH CAPITAL			5			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(U.S. dollars and shares in millions, except per share data)


	(Unaudited)				(Unaudited)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2026		2025		2026		2025
Revenues


Net premiums earned	$	3,985	$	4,337	$	7,971	$	8,525
Net investment income	417		405		825		783
Net realized gains (losses)	(17)		229		(104)		232





Other underwriting income	57		62		116		115
Equity in net income of investments accounted for using the equity method	196		162		356		215
Other income (loss)	30		18		25		16
Total revenues	4,668		5,213		9,189		9,886

Expenses
Losses and loss adjustment expenses	2,196		2,303		4,285		4,890
Acquisition expenses	718		824		1,448		1,588
Other operating expenses	471		454		969		927
Corporate expenses	44		47		93		107
Amortization of intangible assets	30		48		60		97
Interest expense	44		38		81		73
Net foreign exchange (gains) losses	(10)		88		(31)		115
Total expenses	3,493		3,802		6,905		7,797

Income (loss) before income taxes and income (loss) from operating affiliates	1,175		1,411		2,284		2,089
Income tax (expense) benefit	(164)		(214)		(262)		(335)
Income (loss) from operating affiliates	46		40		82		57


Net income (loss) available to Arch	1,057		1,237		2,104		1,811
Preferred dividends	(10)		(10)		(20)		(20)

Net income (loss) available to Arch common shareholders	$	1,047	$	1,227	$	2,084	$	1,791

Net income per common share and common share equivalent
Basic	$	3.05	$	3.30	$	5.99	$	4.81
Diluted	$	3.00	$	3.23	$	5.88	$	4.70

Weighted average common shares and common share equivalents outstanding
Basic	343.2		372.2		348.2		372.6
Diluted	348.8		379.9		354.2		380.8

See Notes to Consolidated Financial Statements


ARCH CAPITAL			6			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(U.S. dollars in millions)


	(Unaudited)				(Unaudited)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2026		2025		2026		2025
Comprehensive Income
Net income (loss)	$	1,057	$	1,237	$	2,104	$	1,811
Other comprehensive income (loss), net of deferred income tax
Unrealized appreciation (decline) in value of available-for-sale investments:
Unrealized holding gains (losses) arising during period	(113)		303		(433)		537

Reclassification of net realized (gains) losses, included in net income (loss)	42		(7)		24		45
Foreign currency translation adjustments	(9)		64		(9)		90



Comprehensive income (loss) available to Arch	$	977	$	1,597	$	1,686	$	2,483

See Notes to Consolidated Financial Statements


ARCH CAPITAL			7			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(U.S. dollars in millions)


	(Unaudited)				(Unaudited)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2026		2025		2026		2025
Non-cumulative preferred shares



Balance at beginning and end of period	$	830	$	830	$	830	$	830







Common shares


Balance at beginning and end of period	1		1		1		1

Additional paid-in capital
Balance at beginning of period	2,831		2,588		2,735		2,510



Amortization of share-based compensation	15		25		97		99



Other changes	27		47		41		51
Balance at end of period	2,873		2,660		2,873		2,660

Retained earnings
Balance at beginning of period	28,082		23,250		27,045		22,686


Net income (loss)	1,057		1,237		2,104		1,811

Preferred share dividends	(10)		(10)		(20)		(20)

Balance at end of period	29,129		24,477		29,129		24,477

Accumulated other comprehensive income (loss), net of deferred income tax
Balance at beginning of period	(333)		(408)		5		(720)
Unrealized appreciation (decline) in value of available-for-sale investments, net of deferred income tax:
Balance at beginning of period	(204)		(221)		134		(507)


Unrealized holding gains (losses) during period, net of reclassification adjustment	(71)		296		(409)		582


Balance at end of period	(275)		75		(275)		75
Foreign currency translation adjustments, net of deferred income tax:
Balance at beginning of period	(129)		(187)		(129)		(213)
Foreign currency translation adjustments	(9)		64		(9)		90

Balance at end of period	(138)		(123)		(138)		(123)
Balance at end of period	(413)		(48)		(413)		(48)

Common shares held in treasury, at cost
Balance at beginning of period	(7,223)		(4,716)		(6,410)		(4,487)
Shares repurchased for treasury	(1,167)		(163)		(1,980)		(392)
Balance at end of period	(8,390)		(4,879)		(8,390)		(4,879)



Total shareholders’ equity	$	24,030	$	23,041	$	24,030	$	23,041

See Notes to Consolidated Financial Statements


ARCH CAPITAL			8			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in millions)


	(Unaudited)
	Six Months Ended
	June 30,
	2026		2025
Operating Activities
Net income (loss)	$	2,104	$	1,811
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net realized (gains) losses	(43)		(231)

Equity in net (income) or loss of investments accounted for using the equity method and other income or loss	(263)		(107)
Amortization of intangible assets	60		97
Share-based compensation	97		99
Changes in:
Reserve for losses and loss adjustment expenses, net of unpaid losses and loss adjustment expenses recoverable	1,039		1,386
Unearned premiums, net of ceded unearned premiums	426		338
Premiums receivable	(1,450)		(1,294)
Deferred acquisition costs	(44)		19
Reinsurance balances payable	915		663
Deferred income tax assets, net	79		109
Other items, net	(410)		(308)
Net cash provided by operating activities	2,510		2,582
Investing Activities
Purchases of fixed maturity investments	(19,163)		(17,568)
Purchases of equity securities	(657)		(987)
Purchases of other investments	(952)		(1,232)
Proceeds from sales of fixed maturity investments	16,367		13,823
Proceeds from sales of equity securities	455		1,043
Proceeds from sales, redemptions and maturities of other investments	546		1,091
Proceeds from redemptions and maturities of fixed maturity investments	2,039		1,326
Net settlements of derivative instruments	(106)		240

Net (purchases) sales of short-term investments	(655)		52




Purchases of fixed assets	(22)		(21)
Other	(26)		(3)
Net cash used for investing activities	(2,174)		(2,236)
Financing Activities


Purchases of common shares under share repurchase program	(1,949)		(359)
Proceeds from common shares issued, net	9		19
Proceeds from borrowings	1,977		—
Repayments of borrowings	(398)		—




Common dividends paid	(5)		(7)
Preferred dividends paid	(20)		(20)
Other	(12)		(2)
Net cash used for financing activities	(398)		(369)
Effects of exchange rate changes on foreign currency cash and restricted cash	1		71
Increase (decrease) in cash and restricted cash	(61)		48
Cash and restricted cash, beginning of year	2,067		1,760
Cash and restricted cash, end of period	$	2,006	$	1,808
Income taxes paid (received)	191		149
Interest paid	65		64

See Notes to Consolidated Financial Statements


ARCH CAPITAL			9			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation and Recent Accounting Pronouncements

General

Arch Capital Group Ltd. (“Arch Capital”) is a publicly listed Bermuda exempted company which provides insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly-owned subsidiaries. As used herein, the “Company” and/or “Arch” means Arch Capital and its subsidiaries.

Basis of Presentation

The interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions and balances have been eliminated in consolidation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates and assumptions. In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of results on an interim basis. The results of any interim period are not necessarily indicative of the results for a full year or any future periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted; however, management believes that the disclosures are adequate to make the information presented not misleading. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K”), including the Company’s audited consolidated financial statements and related notes.

The Company has reclassified the presentation of certain prior year information to conform to the current presentation. Such reclassifications had no effect on the Company’s net income, comprehensive income, shareholders’ equity or cash flows. All amounts are in millions, except per share amounts, unless otherwise noted.

Recent Accounting Pronouncements

Recently Issued Accounting Standards Adopted

The Company early adopted ASU 2025-06, “Intangibles—Goodwill and Other—Internal–Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which was issued in September 2025, and applied the guidance prospectively. The new guidance amended the accounting for internal-use software by eliminating references to software development project stages. Under the revised standard, entities must capitalize software costs when (i) management has authorized and committed funding for the project, and (ii) it is probable that the project will be completed and the software will function as intended. The update also clarifies that both internal and external training costs, as well as maintenance costs, must be expensed as incurred. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and related disclosures.

For information regarding additional accounting standards that the Company has not yet adopted, see note 3(u), “Significant Accounting Policies—Recent Accounting Pronouncements,” of the notes to consolidated financial statements in the Company’s 2025 Form 10-K.


ARCH CAPITAL			10			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2. Acquisition

On August 1, 2024, the Company completed the acquisition of the U.S MidCorp and Entertainment insurance business from Allianz (“MCE Acquisition”). This business is written by Fireman’s Fund Insurance Company, an affiliate of Allianz, and its subsidiaries (collectively, the “Business Entities”), in each case, relating to relevant policies with accident years 2016 and onwards (collectively, the “Business”), as well as certain assets of Allianz and its affiliates related to the Business. In connection with the acquisition of the Business, the Company also entered into certain reinsurance agreements relating to the Business and the Business Entities and other agreements providing for administration and other services for the Business Entities by the Company for the applicable policies being reinsured following the closing. The acquisition of the Business is an important part of the Company’s growth strategy, and provides a ballast to our existing insurance business. It further enhances the Company’s capabilities in the U.S. middle markets and represents an attractive way to enter a new niche entertainment insurance market.

Aggregate cash consideration for the transaction was $450 million. Direct costs related to the acquisition are immaterial, and were expensed as incurred. These include one-time costs that are directly attributable to third party consulting fees and other professional and legal fees related to the acquisition. Such costs are included within ‘corporate expenses’ in the consolidated statement of income. The Business acquired is included within the Company’s insurance segment beginning from the acquisition date.

The MCE Acquisition was accounted for as a business combination under FASB Accounting Standards Codification Topic 805, Business Combinations (“Topic 805”). Pursuant to Topic 805, the Company allocated the MCE Acquisition purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values was recorded to goodwill. During the measurement period, the Company adjusted the provisional amounts to reflect new information obtained about facts and circumstances that existed as of the acquisition date, which, if known, would have affected the measurement of the amounts recognized as of that date. Such adjustments impacted certain identifiable assets acquired and liabilities assumed, resulting in a decrease to net assets acquired and a corresponding increase to goodwill of $10 million. The Company completed the analysis of the fair value of the assets, liabilities assumed and the related allocation of the purchase price during the 2025 second quarter.

The following table summarizes the Company’s allocation of the purchase price to the acquired assets and liabilities assumed based on estimated fair values on August 1, 2024.


		Total		Useful Life
Purchase price
	Cash paid (a)	$	450

Assets Acquired
	Cash and investments, at fair value	$	2,332
	Premiums receivable, net of commissions	224
	Intangible asset -- distribution relationships	220		10 years
	Intangible asset -- value of business acquired	165		1-2 years
	Intangible asset -- other (1)	180		5-7 years
	Other assets acquired	175
	Total assets acquired	$	3,296

Liabilities Acquired
	Reserves for losses and loss adjustment expenses	$	2,468
	Unearned premiums	636
	Other liabilities acquired	18
	Total liabilities acquired	3,122
	Identifiable net assets acquired (b)	$	174
Goodwill (a) - (b)		$	276

(1) Includes $130 million related to the net fair value adjustment to reserves for loss and loss adjustment expenses on August 1, 2024.

The Company recognized goodwill of $276 million that is primarily attributed to the expanded presence and long-term growth opportunities in the insurance market provided by this strategic acquisition. Approximately $555 million of the acquired goodwill and intangibles is expected to be deductible for income tax purposes. At the date of the acquisition, the Company established a net deferred tax asset of $24 million related to the estimated fair value of reserves for losses and loss adjustment expenses and unearned premiums.

Intangible assets resulting from the acquisition are amortized as part of ‘amortization of intangible assets’ in the Company’s consolidated statements of income. The significant fair value adjustments and related future amortization are as follows:

Value of business acquired (“VOBA”)— which represents the present value of the expected underwriting profit within the unearned premium liability, less costs to service the related policies and a risk premium. The fair value of VOBA was determined after taking into consideration certain key assumptions, including the estimated cost of capital, investment yield, loss ratio and related expenses.


ARCH CAPITAL			11			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

*Reserves for losses and loss adjustment expenses—*to reflect a decrease related to the present value of the reserve for losses and loss adjustment expenses based on the estimated payout patterns, partially offset by an increase in losses and loss adjustment expenses related to the estimated market based risk margin. The risk margin represents the estimated costs of capital required by a market participant to assume the losses and loss adjustment expenses. The fair value of the reserve for losses and loss adjustment expenses was determined after taking into consideration certain key assumptions, including the estimated cost of capital, and investment yield.

*Distribution relationships—*the value of the distribution relationships was determined after taking into consideration certain key assumptions, including the estimated cost of capital, investment yield, retention rates, loss ratios, related expenses and effective tax rates that would impact the expected cash flows from Business policies written on a go forward basis.

The results of the acquired Business have been included in the Company’s consolidated financial statements beginning as of their acquisition date. It is impracticable to provide historical supplemental pro forma financial information along with revenue and earnings subsequent to the acquisition due to a variety of factors, including access to historical information and the operations of acquirees being integrated within the Company shortly after closing and not operating as discrete operations within the Company’s organizational structure.

3. Share Transactions

Share Repurchases

The Board of Directors of Arch Capital has authorized the investment in Arch Capital’s common shares through a share repurchase program. Since the inception of the share repurchase program, Arch Capital has repurchased 475.7 million common shares for an aggregate purchase price of $9.7 billion. For the six months ended June 30, 2026, Arch Capital repurchased 20.7 million common shares under the share repurchase program with an aggregate purchase price of approximately $1.9 billion. Arch Capital repurchased 4.1 million common shares under the share repurchase program with an aggregate purchase price of approximately $359.7 million during the six months ended June 30, 2025. At June 30, 2026, $2.2 billion of share repurchases were available under the program.

On April 19, 2026, the Company increased its authorization for its existing share repurchase program by $3.0 billion, which, as in the past, may be effected from time to time in open market or privately negotiated transactions. The timing and amount of the repurchase transactions under this program will depend on a variety of factors, including market conditions and corporate and regulatory considerations.

4. Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per common share:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2026		2025		2026		2025
Numerator:


Net income (loss) available to Arch	$	1,057	$	1,237	$	2,104	$	1,811
Preferred dividends	(10)		(10)		(20)		(20)

Net income (loss) available to Arch common shareholders	$	1,047	$	1,227	$	2,084	$	1,791

Denominator:


Weighted average common shares and common share equivalents outstanding — basic	343.2		372.2		348.2		372.6
Effect of dilutive common share equivalents:
Nonvested restricted shares	1.4		1.6		1.5		1.7
Stock options (1)	4.2		6.1		4.5		6.5
Weighted average common shares and common share equivalents outstanding — diluted	348.8		379.9		354.2		380.8

Earnings per common share:
Basic	$	3.05	$	3.30	$	5.99	$	4.81
Diluted	$	3.00	$	3.23	$	5.88	$	4.70

(1) Certain stock options were not included in the computation of diluted earnings per share where the exercise price of the stock options exceeded the average market price and would have been anti-dilutive or where, when applying the treasury stock method to in-the-money options, the sum of the proceeds, including unrecognized compensation, exceeded the average market price and would have been anti-dilutive. For the 2026 second quarter and 2025 second quarter, the number of stock options excluded were 2.4 million and 2.2 million, respectively. For the six months ended June 30, 2026 and 2025, the number of stock options excluded were 2.4 million and 2.4 million, respectively.


ARCH CAPITAL			12			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5. Segment Information

The Company’s 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 the Company’s chief operating decision makers (“CODMs”), the Chief Executive Officer of Arch Capital and the Chief Financial Officer and Treasurer of Arch Capital. The CODMs do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis. Management measures segment performance for its three segments based on underwriting income or loss. The Company does not manage its assets by segment, with the exception of goodwill and intangible assets and accordingly investment income is not allocated to each underwriting segment.

The Company has determined its 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 the Company’s consolidated financial statements. Intersegment business is allocated to the segment accountable for the underwriting results.

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.

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

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 Company’s results also include net investment income, net realized gains or losses (which include, but are not limited to, 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 (loss), corporate expenses, transaction costs and other, amortization of intangible assets, interest expense, net foreign exchange gains or losses, income tax items, income or loss from operating affiliates and items related to the Company’s non-cumulative preferred shares.


ARCH CAPITAL			13			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following tables summarize the Company’s underwriting income or loss by segment, together with a reconciliation of underwriting income or loss to net income available to Arch common shareholders:


	Three Months Ended
	June 30, 2026
	Insurance			Reinsurance			Mortgage			Total

Gross premiums written (1)	$	2,603		$	3,202		$	324		$	6,126
Premiums ceded (1)	(670)			(1,358)			(52)			(2,077)
Net premiums written	1,933			1,844			272			4,049
Change in unearned premiums	(53)			(24)			13			(64)
Net premiums earned	1,880			1,820			285			3,985
Other underwriting income (2)	15			37			5			57
Losses and loss adjustment expenses	(1,185)			(992)			(19)			(2,196)
Acquisition expenses	(375)			(341)			(2)			(718)
Other operating expenses (3)	(308)			(114)			(49)			(471)
Underwriting income (loss)	$	27		$	410		$	220		657

Net investment income										417
Net realized gains (losses)										(17)

Equity in net income of investments accounted for using the equity method										196
Other income (loss)										30
Corporate expenses (4)										(12)
Transaction costs and other (4)										(32)
Amortization of intangible assets										(30)
Interest expense										(44)
Net foreign exchange gains (losses)										10
Income (loss) before income taxes and income (loss) from operating affiliates										1,175
Income tax (expense) benefit										(164)
Income (loss) from operating affiliates										46



Net income (loss) available to Arch										1,057
Preferred dividends										(10)

Net income (loss) available to Arch common shareholders										$	1,047

Underwriting Ratios
Loss ratio	63.0		%	54.6		%	6.5		%	55.1		%
Acquisition expense ratio	19.9		%	18.7		%	0.9		%	18.0		%
Other operating expense ratio (5)	15.6		%	4.2		%	15.4		%	10.4		%
Combined ratio	98.5		%	77.5		%	22.8		%	83.5		%

Goodwill and intangible assets	$	747		$	91		$	325		$	1,163

(1) Certain assumed and ceded amounts related to intersegment transactions are included in individual segment results. Accordingly, the sum of such transactions for each segment does not agree to the total due to eliminations.

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

(3) ‘Other operating expenses’ primarily include expenses that are related to compensation and employee benefits, information technology and professional fees.

(4) Certain expenses have been excluded from ‘Corporate expenses’ and reflected in ‘Transaction costs and other.’

(5) The ‘Other operating expense ratio’ includes ‘Other underwriting income.’


ARCH CAPITAL			14			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


	Three Months Ended
	June 30, 2025
	Insurance			Reinsurance			Mortgage			Total

Gross premiums written (1)	$	2,681		$	3,196		$	323		$	6,196
Premiums ceded (1)	(645)			(1,137)			(70)			(1,848)
Net premiums written	2,036			2,059			253			4,348
Change in unearned premiums	(67)			28			28			(11)
Net premiums earned	1,969			2,087			281			4,337
Other underwriting income (2)	13			46			3			62
Losses and loss adjustment expenses	(1,178)			(1,128)			3			(2,303)
Acquisition expenses	(387)			(436)			(1)			(824)
Other operating expenses (3)	(288)			(118)			(48)			(454)
Underwriting income (loss)	$	129		$	451		$	238		818

Net investment income										405
Net realized gains (losses)										229

Equity in net income of investments accounted for using the equity method										162
Other income (loss)										18
Corporate expenses (4)										(29)
Transaction costs and other (4)										(18)
Amortization of intangible assets										(48)
Interest expense										(38)
Net foreign exchange gains (losses)										(88)
Income (loss) before income taxes and income (loss) from operating affiliates										1,411
Income tax (expense) benefit										(214)
Income (loss) from operating affiliates										40



Net income (loss) available to Arch										1,237
Preferred dividends										(10)

Net income (loss) available to Arch common shareholders										$	1,227

Underwriting Ratios
Loss ratio	59.8		%	54.1		%	(1.2)		%	53.1		%
Acquisition expense ratio	19.6		%	20.9		%	0.4		%	19.0		%
Other operating expense ratio (5)	14.0		%	3.5		%	16.0		%	9.1		%
Combined ratio	93.4		%	78.5		%	15.2		%	81.2		%

Goodwill and intangible assets	$	875		$	105		$	339		$	1,319

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

(3) ‘Other operating expenses’ primarily include expenses that are related to compensation and employee benefits, information technology and professional fees.

(4) Certain expenses have been excluded from ‘Corporate expenses’ and reflected in ‘Transaction costs and other.’

(5) The ‘Other operating expense ratio’ includes ‘Other underwriting income.’


ARCH CAPITAL			15			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


	Six Months Ended
	June 30, 2026
	Insurance			Reinsurance			Mortgage			Total

Gross premiums written (1)	$	5,300		$	6,616		$	640		$	12,551
Premiums ceded (1)	(1,461)			(2,596)			(102)			(4,154)
Net premiums written	3,839			4,020			538			8,397
Change in unearned premiums	(88)			(369)			31			(426)
Net premiums earned	3,751			3,651			569			7,971
Other underwriting income (2)	26			74			16			116
Losses and loss adjustment expenses	(2,311)			(1,940)			(34)			(4,285)
Acquisition expenses	(750)			(688)			(10)			(1,448)
Other operating expenses (3)	(623)			(246)			(100)			(969)
Underwriting income (loss)	$	93		$	851		$	441		1,385

Net investment income										825
Net realized gains (losses)										(104)

Equity in net income of investments accounted for using the equity method										356
Other income (loss)										25
Corporate expenses (4)										(43)
Transaction costs and other (4)										(50)
Amortization of intangible assets										(60)
Interest expense										(81)
Net foreign exchange gains (losses)										31
Income (loss) before income taxes and income (loss) from operating affiliates										2,284
Income tax (expense) benefit										(262)
Income (loss) from operating affiliates										82



Net income (loss) available to Arch										2,104
Preferred dividends										(20)

Net income (loss) available to Arch common shareholders										$	2,084

Underwriting Ratios
Loss ratio	61.6		%	53.1		%	5.9		%	53.8		%
Acquisition expense ratio	20.0		%	18.8		%	1.9		%	18.2		%
Other operating expense ratio (5)	15.9		%	4.7		%	14.8		%	10.7		%
Combined ratio	97.5		%	76.6		%	22.6		%	82.7		%

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

(3) ‘Other operating expenses’ primarily include expenses that are related to compensation and employee benefits, information technology and professional fees.

(4) Certain expenses have been excluded from ‘Corporate expenses’ and reflected in ‘Transaction costs and other.’

(5) The ‘Other operating expense ratio’ includes ‘Other underwriting income.’


ARCH CAPITAL			16			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


	Six Months Ended
	June 30, 2025
	Insurance			Reinsurance			Mortgage			Total

Gross premiums written (1)	$	5,326		$	6,690		$	649		$	12,659
Premiums ceded (1)	(1,357)			(2,315)			(130)			(3,796)
Net premiums written	3,969			4,375			519			8,863
Change in unearned premiums	(140)			(260)			62			(338)
Net premiums earned	3,829			4,115			581			8,525
Other underwriting income (2)	16			85			14			115
Losses and loss adjustment expenses	(2,406)			(2,484)			—			(4,890)
Acquisition expenses	(730)			(853)			(5)			(1,588)
Other operating expenses (3)	(582)			(245)			(100)			(927)
Underwriting income (loss)	$	127		$	618		$	490		1,235

Net investment income										783
Net realized gains (losses)										232

Equity in net income of investments accounted for using the equity method										215
Other income (loss)										16
Corporate expenses (4)										(79)
Transaction costs and other (4)										(28)
Amortization of intangible assets										(97)
Interest expense										(73)
Net foreign exchange gains (losses)										(115)
Income (loss) before income taxes and income (loss) from operating affiliates										2,089
Income tax (expense) benefit										(335)
Income (loss) from operating affiliates										57



Net income (loss) available to Arch										1,811
Preferred dividends										(20)

Net income (loss) available to Arch common shareholders										$	1,791

Underwriting Ratios
Loss ratio	62.8		%	60.4		%	—		%	57.4		%
Acquisition expense ratio	19.1		%	20.7		%	0.9		%	18.6		%
Other operating expense ratio (5)	14.8		%	3.9		%	14.9		%	9.5		%
Combined ratio	96.7		%	85.0		%	15.8		%	85.5		%

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

(3) ‘Other operating expenses’ primarily include expenses that are related to compensation and employee benefits, information technology and professional fees.

(4) Certain expenses have been excluded from ‘Corporate expenses’ and reflected in ‘Transaction costs and other.’

(5) The ‘Other operating expense ratio’ includes ‘Other underwriting income.’


ARCH CAPITAL			17			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6. Reserve for Losses and Loss Adjustment Expenses

The following table represents an analysis of losses and loss adjustment expenses and a reconciliation of the beginning and ending reserve for losses and loss adjustment expenses:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2026		2025		2026		2025
Reserve for losses and loss adjustment expenses at beginning of period	$	34,105	$	30,946	$	33,547	$	29,369
Unpaid losses and loss adjustment expenses recoverable	9,142		8,379		9,054		7,821
Net reserve for losses and loss adjustment expenses at beginning of period	24,963		22,567		24,493		21,548

Net incurred losses and loss adjustment expenses relating to losses occurring in:
Current year	2,365		2,456		4,674		5,240
Prior years	(169)		(153)		(389)		(350)
Total net incurred losses and loss adjustment expenses	2,196		2,303		4,285		4,890

Net losses and loss adjustment expense reserves of acquired businesses (1)	—		50		—		50





Net foreign exchange (gains) losses and other	2		400		(68)		593

Net paid losses and loss adjustment expenses relating to losses occurring in:
Current year	(269)		(424)		(329)		(865)
Prior years	(1,428)		(1,320)		(2,917)		(2,640)
Total net paid losses and loss adjustment expenses	(1,697)		(1,744)		(3,246)		(3,505)

Net reserve for losses and loss adjustment expenses at end of period	25,464		23,576		25,464		23,576
Unpaid losses and loss adjustment expenses recoverable	9,311		8,513		9,311		8,513
Reserve for losses and loss adjustment expenses at end of period	$	34,775	$	32,089	$	34,775	$	32,089

(1) Activity in the 2025 periods related to the MCE Acquisition (see note 2).

Prior year development (“PYD”) arises from changes in loss estimates during the current period related to events occurring in prior calendar years. Long-tailed lines include lines of business that typically take many years for claims to settle, such as third-party liability, while short-tailed lines are those that settle more quickly, such as property. The table below summarizes (favorable) and adverse net PYD by segment and tail length:


	Three Months Ended						Six Months Ended
(Favorable) Adverse	June 30,						June 30,
2026	Short-tailed		Long-tailed		Total		Short-tailed		Long-tailed		Total
Insurance	$	(33)	$	6	$	(27)	$	(43)	$	2	$	(41)
Reinsurance	(123)		26		(97)		(295)		46		(249)
Mortgage	(45)		—		(45)		(99)		—		(99)
Total	$	(201)	$	32	$	(169)	$	(437)	$	48	$	(389)

2025
Insurance	$	(13)	$	5	$	(8)	$	(28)	$	3	$	(25)
Reinsurance	(75)		(6)		(81)		(202)		2		(200)
Mortgage	(64)		—		(64)		(125)		—		(125)
Total	$	(152)	$	(1)	$	(153)	$	(355)	$	5	$	(350)


ARCH CAPITAL			18			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2026 Second Quarter

The insurance segment’s short-tailed lines included $22 million of favorable development in property, energy, marine and aviation business, primarily from the 2023 and 2024 accident years (i.e., the year in which a loss occurred). Long-tailed lines primarily included adverse development in programs business, primarily from the 2021 to 2023 accident years.

The reinsurance segment’s short-tailed lines included $61 million of favorable development from property other than property catastrophe business, primarily from the 2024 and 2025 underwriting years (i.e., all premiums and losses attributable to contracts having an inception or renewal date within the given 12 month period), and $44 million of favorable development from property catastrophe business, primarily from the 2024 underwriting year. Long-tailed lines included $26 million of adverse development in casualty, primarily from the 2022 and 2023 underwriting years.

The mortgage segment’s favorable development was driven by reductions on reserves for delinquent loans associated with the U.S. first lien portfolio primarily from the 2025 accident year, with the credit risk transfer and international businesses also contributing.

2025 Second Quarter

The insurance segment’s short-tailed lines included $7 million of favorable development in travel and accident, primarily from the 2024 accident year. Long-tailed lines included $14 million of adverse development in programs business, primarily from the 2018 and 2023 accident years.

The reinsurance segment’s short-tailed lines included $60 million of favorable development from property other than property catastrophe business, primarily from the 2023 and 2024 underwriting years. Long-tailed lines included $6 million of favorable development, primarily from the 2022 to 2023 underwriting years.

The mortgage segment’s favorable development was driven by reductions on reserves for delinquent loans associated with the U.S. first lien portfolio from the 2024 accident year, with the credit risk transfer and international businesses also contributing.

Six Months Ended June 30, 2026

The insurance segment’s short-tailed lines included $29 million of favorable development in property, energy, marine and aviation business, primarily from the 2023 and 2024 accident years. Net adverse development in long-tailed lines primarily included adverse development in healthcare business, mainly from the 2018 and 2023 accident years.

The reinsurance segment’s short-tailed lines included $133 million of favorable development from property other than property catastrophe business, primarily from the 2023 to 2025 underwriting years, and $79 million of favorable development from property catastrophe, primarily from the 2023 to 2025 underwriting years. Long-tailed lines included $46 million of adverse development in casualty, primarily from the 2022 to 2024 underwriting years.

The mortgage segment’s favorable development was driven by reserve releases associated with the U.S. first lien portfolio from the 2024 and 2025 accident years, with the Company’s credit risk transfer and international businesses also contributing.

Six Months Ended June 30, 2025

The insurance segment’s short-tailed lines included $15 million of favorable development in travel and accident, primarily from the 2023 and 2024 accident years, and $11 million of favorable development in property, energy, marine and aviation, primarily from the 2024 accident year.

The reinsurance segment’s short-tailed lines included $89 million of favorable development from property other than property catastrophe business and $86 million of favorable development from property catastrophe, primarily from the 2023 and 2024 underwriting years for both lines.

The mortgage segment’s favorable development was driven by reserve releases associated with the U.S. first lien portfolio from the 2024 accident year, with the credit risk transfer and international businesses also contributing.


ARCH CAPITAL			19			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

7. Allowance for Expected Credit Losses

Premiums Receivable

The following table provides a roll forward of the allowance for expected credit losses of the Company’s premium receivables:


	Premium Receivables, Net of Allowance		Allowance for Expected Credit Losses
Three Months Ended June 30, 2026
Balance at beginning of period	$	6,526	$	39

Change for provision of expected credit losses (1)			2
Balance at end of period	$	7,160	$	41

Three Months Ended June 30, 2025
Balance at beginning of period	$	6,607	$	43

Change for provision of expected credit losses (1)			3
Balance at end of period	$	7,067	$	46

Six Months Ended June 30, 2026
Balance at beginning of year	$	5,723	$	43

Change for provision of expected credit losses (1)			(2)
Balance at end of period	$	7,160	$	41

Six Months Ended June 30, 2025
Balance at beginning of year	$	5,634	$	45

Change for provision of expected credit losses (1)			1
Balance at end of period	$	7,067	$	46

(1) Amounts deemed uncollectible are written-off in operating expenses. For the 2026 second quarter and 2025 second quarter, amounts written off were nil and $1 million, respectively. For the six months ended June 30, 2026 and 2025 period, amounts written off were nil and $1 million, respectively.

Reinsurance Recoverables

The following table provides a roll forward of the allowance for expected credit losses of the Company’s reinsurance recoverables:


	Reinsurance Recoverables, Net of Allowance		Allowance for Expected Credit Losses
Three Months Ended June 30, 2026
Balance at beginning of period	$	9,732	$	18
Change for provision of expected credit losses			—
Balance at end of period	$	9,964	$	18

Three Months Ended June 30, 2025
Balance at beginning of period	$	8,969	$	17
Change for provision of expected credit losses			2
Balance at end of period	$	9,044	$	19

Six Months Ended June 30, 2026
Balance at beginning of year	$	9,526	$	17
Change for provision of expected credit losses			1
Balance at end of period	$	9,964	$	18

Six Months Ended June 30, 2025
Balance at beginning of year	$	8,260	$	17
Change for provision of expected credit losses			2
Balance at end of period	$	9,044	$	19

The following table summarizes the Company’s reinsurance recoverables on paid and unpaid losses (not including ceded unearned premiums):


	June 30,			December 31,
	2026			2025
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses	$	9,964		$	9,526
% due from carriers with A.M. Best rating of “A-” or better	62.3		%	62.1		%

% due from all other carriers with no A.M. Best rating (1)	37.7		%	37.9		%
Largest balance due from any one carrier as % of total shareholders’ equity	8.4		%	8.1		%

(1) At June 30, 2026 and December 31, 2025 over 95% of such amount were collateralized through reinsurance trusts, funds withheld arrangements, letters of credit or other.


ARCH CAPITAL			20			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Contractholder Receivables

The following table provides a roll forward of the allowance for expected credit losses of the Company’s contractholder receivables:


	Contract-holder Receivables, Net of Allowance		Allowance for Expected Credit Losses
Three Months Ended June 30, 2026
Balance at beginning of period	$	2,253	$	7
Change for provision of expected credit losses			—
Balance at end of period	$	2,264	$	7

Three Months Ended June 30, 2025
Balance at beginning of period	$	2,212	$	6
Change for provision of expected credit losses			—
Balance at end of period	$	2,280	$	6

Six Months Ended June 30, 2026
Balance at beginning of year	$	2,270	$	7
Change for provision of expected credit losses			—
Balance at end of period	$	2,264	$	7

Six Months Ended June 30, 2025
Balance at beginning of year	$	2,161	$	5
Change for provision of expected credit losses			1
Balance at end of period	$	2,280	$	6


ARCH CAPITAL			21			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

8. Investment Information

Available For Sale Investments

The following table summarizes the fair value and cost or amortized cost of the Company’s securities classified as available for sale:


	Estimated Fair Value		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Expected Credit Losses		Cost or Amortized Cost
June 30, 2026
Fixed maturities:
Corporate bonds	$	14,231	$	102	$	(198)	$	(6)	$	14,333
U.S. government and government agencies	8,060		8		(64)		—		8,116
Asset backed securities	3,677		6		(26)		(9)		3,706
Non-U.S. government securities	2,876		26		(77)		(1)		2,928
Residential mortgage backed securities	2,643		11		(38)		—		2,670
Commercial mortgage backed securities	1,549		5		(7)		—		1,551
Municipal bonds	119		—		(4)		—		123
Total	33,155		158		(414)		(16)		33,427

Short-term investments	3,298		1		(1)		—		3,298
Total	$	36,453	$	159	$	(415)	$	(16)	$	36,725

December 31, 2025
Fixed maturities:
Corporate bonds	$	14,058	$	265	$	(142)	$	(10)	$	13,945
U.S. government and government agencies	7,445		23		(21)		—		7,443
Asset backed securities	3,574		20		(15)		(8)		3,577
Non-U.S. government securities	3,270		53		(81)		(1)		3,299
Residential mortgage backed securities	2,705		34		(21)		—		2,692
Commercial mortgage backed securities	1,212		11		(5)		(1)		1,207
Municipal bonds	162		—		(4)		—		166
Total	32,426		406		(289)		(20)		32,329

Short-term investments	2,625		2		(1)		—		2,624
Total	$	35,051	$	408	$	(290)	$	(20)	$	34,953


ARCH CAPITAL			22			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes, for all available for sale securities in an unrealized loss position, the fair value and gross unrealized loss by length of time the security has been in a continual unrealized loss position:


	Less than 12 Months				12 Months or More				Total
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
June 30, 2026
Fixed maturities:
Corporate bonds	$	8,333	$	(116)	$	1,205	$	(82)	$	9,538	$	(198)
U.S. government and government agencies	6,483		(57)		128		(7)		6,611		(64)
Non-U.S. government securities	1,976		(32)		489		(45)		2,465		(77)
Asset backed securities	1,839		(15)		316		(11)		2,155		(26)
Residential mortgage backed securities	1,414		(19)		144		(19)		1,558		(38)
Commercial mortgage backed securities	591		(2)		40		(5)		631		(7)
Municipal bonds	—		—		119		(4)		119		(4)
Total	20,636		(241)		2,441		(173)		23,077		(414)

Short-term investments	1,106		(1)		—		—		1,106		(1)
Total	$	21,742	$	(242)	$	2,441	$	(173)	$	24,183	$	(415)

December 31, 2025
Fixed maturities:
Corporate bonds	$	2,972	$	(64)	$	1,364	$	(78)	$	4,336	$	(142)
U.S. government and government agencies	3,092		(15)		274		(6)		3,366		(21)
Non-U.S. government securities	2,087		(35)		432		(46)		2,519		(81)
Asset backed securities	806		(2)		332		(13)		1,138		(15)
Residential mortgage backed securities	312		(3)		178		(18)		490		(21)
Commercial mortgage backed securities	239		(1)		48		(4)		287		(5)
Municipal bonds	6		—		137		(4)		143		(4)
Total	9,514		(120)		2,765		(169)		12,279		(289)

Short-term investments	614		(1)		—		—		614		(1)
Total	$	10,128	$	(121)	$	2,765	$	(169)	$	12,893	$	(290)

At June 30, 2026, on a lot level basis, approximately 13,090 security lots out of a total of approximately 26,340 security lots were in an unrealized loss position and the largest single unrealized loss from a single lot in the Company’s fixed maturity portfolio was $4 million. At December 31, 2025, on a lot level basis, approximately 7,240 security lots out of a total of approximately 25,330 security lots were in an unrealized loss position and the largest single unrealized loss from a single lot in the Company’s fixed maturity portfolio was $4 million.

The contractual maturities of the Company’s fixed maturities are shown in the following table. Expected maturities, which are management’s best estimates, will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	June 30, 2026				December 31, 2025
Maturity	Estimated Fair Value		Amortized Cost		Estimated Fair Value		Amortized Cost
Due in one year or less	$	692	$	693	$	370	$	366
Due after one year through five years	16,827		16,940		17,053		16,989
Due after five years through 10 years	7,231		7,315		6,893		6,877
Due after 10 years	536		552		619		621
	25,286		25,500		24,935		24,853
Residential mortgage backed securities	2,643		2,670		2,705		2,692
Commercial mortgage backed securities	1,549		1,551		1,212		1,207
Asset backed securities	3,677		3,706		3,574		3,577
Total	$	33,155	$	33,427	$	32,426	$	32,329


ARCH CAPITAL			23			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Equity Securities, at Fair Value

At June 30, 2026, the Company held $2.3 billion of equity securities, at fair value, compared to $1.9 billion at December 31, 2025. Such holdings include publicly traded common stocks, primarily in the consumer cyclical and non-cyclical, technology, communication and financial sectors, and exchange-traded funds in fixed income, equity and other sectors.

Other Investments, at Fair Value

The following table summarizes the Company’s other investments:


	June 30, 2026		December 31, 2025
Other investments	$	2,144	$	1,957
Fixed maturities	1,175		1,110
Short term investments	57		64
Equity securities	5		5



Total	$	3,381	$	3,136

The following table summarizes the Company’s other investments, as detailed in the previous table, by strategy:


	June 30, 2026		December 31, 2025
Investment grade fixed income	$	1,364	$	1,225
Private equity	249		250
Lending	245		220
Term loan investments	175		173
Credit related funds	94		87
Equities	15		—


Energy	2		2
Total	$	2,144	$	1,957

Net Investment Income

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


	June 30,
	2026		2025
Three Months Ended
Fixed maturities	$	386	$	360

Short term investments	26		24
Equity securities (dividends)	9		10
Other (1)	21		35
Gross investment income	442		429
Investment expenses	(25)		(24)
Net investment income	$	417	$	405

Six Months Ended
Fixed maturities	$	770	$	702

Short term investments	50		50
Equity securities (dividends)	17		21
Other (1)	42		63
Gross investment income	879		836
Investment expenses	(54)		(53)
Net investment income	$	825	$	783

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


ARCH CAPITAL			24			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Net Realized Gains (Losses)

Net realized gains (losses), which include changes in the allowance for credit losses on financial assets and net impairment losses recognized in earnings were as follows:


	June 30,
	2026		2025
Three Months Ended
Available for sale securities:
Gross gains on investment sales	$	35	$	69
Gross losses on investment sales	(83)		(56)
Change in fair value of assets and liabilities accounted for using the fair value option:
Fixed maturities	9		20
Other investments	6		(11)

Short-term investments	—		3
Equity securities, at fair value:
Net realized gains (losses) on sales during the period	24		7
Net unrealized gains (losses) on equity securities still held at reporting date	217		129
Allowance for credit losses:
Investments related	(4)		(8)
Underwriting related	(3)		(2)

Derivative instruments (1)	(76)		163
Other (2)	(142)		(85)
Net realized gains (losses)	$	(17)	$	229

Six Months Ended
Available for sale securities:
Gross gains on investment sales	$	115	$	120
Gross losses on investment sales	(146)		(169)
Change in fair value of assets and liabilities accounted for using the fair value option:
Fixed maturities	(18)		22
Other investments	14		2

Short-term investments	—		3
Equity securities, at fair value:
Net realized gains (losses) on sales during the period	44		54
Net unrealized gains (losses) on equity securities still held at reporting date	116		34
Allowance for credit losses:
Investments related	1		(8)
Underwriting related	3		(1)

Derivative instruments (1)	(94)		262
Other (2)	(139)		(87)
Net realized gains (losses)	$	(104)	$	232

(1) See note 10 for information on the Company’s derivative instruments.

(2) Amounts in the 2026 periods primarily reflect a litigation-related loss contingency recorded pursuant to ASC 450, while amounts recorded in the 2025 periods primarily relate to losses arising from the sale of certain alternative investments accounted for under the equity method.

Investments Accounted For Using the Equity Method

The following table summarizes the Company’s investments accounted for using the equity method, by strategy:


	June 30, 2026		December 31, 2025
Private equity	$	2,485	$	2,397
Credit related funds	1,643		1,616
Real estate	818		767
Lending	649		558
Fixed income	534		501
Infrastructure	349		346
Equities	324		231
Energy	50		37
Total	$	6,852	$	6,453

Certain of the Company’s other investments are in investment funds for which the Company has the option to redeem at agreed upon values as described in each investment fund’s subscription agreement. Depending on the terms of the various subscription agreements, investments in investment funds may be redeemed daily, monthly, quarterly or on other terms. Two common redemption restrictions that may impact the Company’s ability to redeem these investment funds are gates and lockups. A gate is a suspension of redemptions that may be implemented by the general partner or investment manager of the fund in order to defer, in whole or in part, the redemption request in the event the aggregate amount of redemption requests exceeds a predetermined percentage of the investment fund’s net assets and which may otherwise hinder the general partner or investment manager’s ability to liquidate holdings in an orderly fashion in order to generate the cash necessary to fund extraordinarily large redemption payouts. A lockup period is the initial amount of time an investor is contractually required to hold the security before having the ability to redeem. If the investment funds are eligible to be redeemed, the time to redeem such fund can take weeks or months following the notification.

Limited Partnership Interests

In the normal course of its activities, the Company invests in limited partnerships as part of its overall investment strategy. Such amounts are included in ‘investments accounted for using the equity method’ and ‘investments accounted for using the fair value option.’ The Company has determined that it is not required to consolidate these investments because it is not the primary beneficiary of the funds. The Company’s maximum exposure to loss with respect to these investments is limited to the investment carrying amounts reported in the Company’s consolidated balance sheet and any unfunded commitment.


ARCH CAPITAL			25			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes investments in limited partnership interests where the Company has a variable interest by balance sheet line item:


	June 30, 2026		December 31, 2025
Investments accounted for using the equity method (1)	$	6,852	$	6,453
Investments accounted for using the fair value option (2)	16		—
Total	$	6,868	$	6,453

(1) Aggregate unfunded commitments were $4.1 billion at June 30, 2026, compared to $3.6 billion at December 31, 2025.

(2) Aggregate unfunded commitments were $245 million at June 30, 2026, compared to $65 million at December 31, 2025.

Equity in Net Income (Loss) of Investments Accounted for Using the Equity Method

Income from investment funds accounted for using the equity method for the 2026 second quarter was $196 million, compared to $162 million for the 2025 second quarter and an income of $356 million for the six months ended June 30, 2026, compared to income of $215 million for the six months ended June 30, 2025. In applying the equity method, investments are initially recorded at cost and are subsequently adjusted based on the Company’s 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). Such investments are generally recorded on a one to three month lag based on the availability of reports from the investment funds.

Investments in Operating Affiliates

Investments in which the Company has significant influence over the operating and financial policies are classified as ‘investments in operating affiliates’ on the Company’s balance sheets and are accounted for under the equity method. Such investments primarily include the Company’s investment in Coface SA (“Coface”), Greysbridge Holdings Ltd. (“Greysbridge”), and Premia Holdings Ltd. Investments in Coface and Premia Holdings Ltd. are generally recorded on a three month lag, while the Company’s investment in Greysbridge is not recorded on a lag.

As of June 30, 2026, the Company owned approximately 29.9% of the issued shares of Coface, or 30% excluding treasury shares, with a carrying value of $664 million, compared to $707 million at December 31, 2025.

As of June 30, 2026, the Company owned 31.75% of Greysbridge with a carrying value of $554 million, compared to a 30% ownership interest with a carrying value of $486 million at December 31, 2025. The increase in share ownership is a result of the settlement of certain put options during the second quarter of 2026.

Income from operating affiliates for the 2026 second quarter was $46 million, compared to $40 million for the 2025 second quarter and income of $82 million for the six months ended June 30, 2026, compared to income of $57 million for six months ended June 30, 2025.

See note 16 for information on Company’s transactions with related parties.


ARCH CAPITAL			26			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Allowance for Expected Credit Losses

The following table provides a roll forward of the allowance for expected credit losses of the Company’s securities classified as available for sale:


	Structured Securities (1)		Corporate Bonds		Non-U.S. Government Securities		Total
Three Months Ended June 30, 2026
Balance at beginning of period	$	6	$	6	$	1	$	13

Additions for current-period provision for expected credit losses	—		—		—		—
Additions (reductions) for previously recognized expected credit losses	3		1		—		4
Reductions due to disposals	—		(1)		—		(1)

Balance at end of period	$	9	$	6	$	1	$	16

Three Months Ended June 30, 2025
Balance at beginning of period	$	8	$	12	$	1	$	21

Additions for current-period provision for expected credit losses	—		2		—		2
Additions (reductions) for previously recognized expected credit losses	2		4		1		7
Reductions due to disposals	—		(2)		—		(2)

Balance at end of period	$	10	$	16	$	2	$	28

Six Months Ended June 30, 2026
Balance at beginning of year	$	9	$	10	$	1	$	20

Additions for current-period provision for expected credit losses	1		1		—		2
Additions (reductions) for previously recognized expected credit losses	(1)		(2)		—		(3)
Reductions due to disposals	—		(3)		—		(3)

Balance at end of period	$	9	$	6	$	1	$	16

Six Months Ended June 30, 2025
Balance at beginning of year	$	9	$	12	$	1	$	22

Additions for current-period provision for expected credit losses	3		2		—		5
Additions (reductions) for previously recognized expected credit losses	(2)		5		1		4
Reductions due to disposals	—		(3)		—		(3)

Balance at end of period	$	10	$	16	$	2	$	28

(1) Includes asset backed securities, residential mortgage backed securities and commercial mortgage backed securities.

Restricted Assets

The Company is required to maintain assets on deposit, which primarily consist of fixed maturities, with various regulatory authorities to support its underwriting operations. The Company’s subsidiaries maintain assets in trust accounts as collateral for transactions with affiliated companies and also have investments in segregated portfolios primarily to provide collateral or guarantees for letters of credit to third parties. See note 18, “Commitments and Contingencies,” of the notes to consolidated financial statements in the Company’s 2025 Form 10-K.

The following table details the value of the Company’s restricted assets:


	June 30, 2026		December 31, 2025
Assets used for collateral or guarantees:
Affiliated transactions	$	5,584	$	5,323
Third party agreements	6,437		6,784
Deposits with U.S. regulatory authorities	939		948
Other (1)	1,678		1,898

Total restricted assets	$	14,638	$	14,953

(1) Primarily includes Funds at Lloyds, deposits with non-U.S. regulatory authorities and other restricted assets.


ARCH CAPITAL			27			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Reconciliation of Cash and Restricted Cash

The following table details reconciliation of cash and restricted cash within the Consolidated Balance Sheets:


	June 30, 2026		December 31, 2025
Cash	$	1,109	$	993
Restricted cash (included in ‘other assets’)	897		1,074
Cash and restricted cash	$	2,006	$	2,067

9. Fair Value

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. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly fashion between market participants at the measurement date. In addition, it establishes a three-level valuation hierarchy for the disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The level in the hierarchy within which a given fair value measurement falls is determined based on the lowest level input that is significant to the measurement (Level 1 being the highest priority and Level 3 being the lowest priority).

The levels in the hierarchy are defined as follows:


Level 1:						Inputs to the valuation methodology are observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets

Level 2:						Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument

Level 3:						Inputs to the valuation methodology are unobservable and significant to the fair value measurement

The following is a description of the valuation methodologies used for securities measured at fair value, as well as the general classification of such securities pursuant to the valuation hierarchy. The Company reviews its securities measured at fair value and discusses the proper classification of such investments with investment advisers and others.

The Company determines the existence of an active market based on its judgment as to whether transactions for the financial instrument occur in such market with sufficient frequency and volume to provide reliable pricing information. The independent pricing sources obtain market quotations and actual transaction prices for securities that have quoted prices in active markets. The Company uses quoted values and other data provided by nationally recognized independent pricing sources as inputs into its process for determining fair values of its fixed maturity investments. To validate the techniques or models used by pricing sources, the Company's review process includes, but is not limited to: (i) quantitative analysis (e.g., comparing the quarterly return for each managed portfolio to its target benchmark, with significant differences identified and investigated); (ii) a review of the average number of prices obtained in the pricing process and the range of resulting fair values; (iii) initial and ongoing evaluation of methodologies used by outside parties to calculate fair value; (iv) a comparison of the fair value estimates to the Company’s knowledge of the current market; (v) a comparison of the pricing services' fair values to other pricing services' fair values for the same investments; and (vi) periodic back-testing, which includes randomly selecting purchased or sold securities and comparing the executed prices to the fair value estimates from the pricing service. A price source hierarchy was maintained in order to determine which price source would be used (i.e., a price obtained from a pricing service with more seniority in the hierarchy will be used over a less senior one in all cases). The hierarchy prioritizes pricing services based on availability and reliability and assigns the highest priority to index providers. Based on the above review, the Company will challenge any prices for a security or portfolio which are considered not to be representative of fair value. The Company did not adjust any of the prices obtained from the independent pricing sources at June 30, 2026.

In certain circumstances, when fair values are unavailable from these independent pricing sources, quotes are obtained directly from broker-dealers who are active in the corresponding markets. Such quotes are subject to the validation procedures noted above. Where quotes are unavailable, fair value is determined by the investment manager using quantitative and qualitative assessments such as internally modeled values. Of the $42.5 billion of financial assets and liabilities measured at fair value at June 30, 2026, approximately $363 million, or 0.9%, were priced using non-binding broker-dealer quotes or modeled valuations. Of the $40.3 billion of financial assets and liabilities measured at fair value at December 31, 2025, approximately $278 million, or 0.7%, were priced using non-binding broker-dealer quotes or modeled valuations.


ARCH CAPITAL			28			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Fixed maturities

The Company uses the market approach valuation technique to estimate the fair value of its fixed maturity securities, when possible. The market approach includes obtaining prices from independent pricing services, such as index providers and pricing vendors, as well as to a lesser extent quotes from broker-dealers. The independent pricing sources obtain market quotations and actual transaction prices for securities that have quoted prices in active markets. Each source has its own proprietary method for determining the fair value of securities that are not actively traded. In general, these methods involve the use of “matrix pricing” in which the independent pricing source uses observable market inputs including, but not limited to, investment yields, credit risks and spreads, benchmarking of like securities, broker-dealer quotes, reported trades and sector groupings to determine a reasonable fair value.

The following describes the significant inputs generally used to determine the fair value of the Company’s fixed maturity securities by asset class:

U.S. government and government agencies – valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The Company determined that all U.S. Treasuries would be classified as Level 1 securities due to observed levels of trading activity, the high number of strongly correlated pricing quotes received on U.S. Treasuries and other factors. The fair values of U.S. government agency securities are generally determined using the spread above the risk-free yield curve. As the yields for the risk-free yield curve and the spreads for these securities are observable market inputs, the fair values of U.S. government agency securities are classified within Level 2.

Corporate bonds – valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined using the spread above the risk-free yield curve. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. As the significant inputs used in the pricing process for corporate bonds are observable market inputs, the fair value of these securities are classified within Level 2. A small number of securities are included in Level 3 due to a low level of transparency on the inputs used in the pricing process.

Municipal bonds – valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The fair values of these securities are generally determined using spreads obtained from broker-dealers who trade in the relevant security market, trade prices and the new issue market. As the

significant inputs used in the pricing process for municipal bonds are observable market inputs, the fair value of these securities are classified within Level 2.

Residential mortgage-backed securities – valuations provided by independent pricing services, substantially all through pricing vendors and index providers with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models (including Option Adjusted Spread) which use spreads to determine the expected average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for mortgage-backed securities are observable market inputs, the fair value of these securities are classified within Level 2. A small number of securities are included in Level 3 due to a low level of transparency on the inputs used in the pricing process.

Commercial mortgage-backed securities – valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models which use spreads to determine the appropriate average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for commercial mortgage-backed securities are observable market inputs, the fair value of these securities are classified within Level 2.

Non-U.S. government securities – valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The fair values of these securities are generally based on international indices or valuation models which include daily observed yield curves, cross-currency basis index spreads and country credit spreads. As the significant inputs used in the pricing process for non-U.S. government securities are observable market inputs, the fair value of these securities are classified within Level 2.

Asset-backed securities – valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models (including Option Adjusted Spread) which use spreads to determine the appropriate average life of the securities. These spreads are generally obtained from the new issue


ARCH CAPITAL			29			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for asset-backed securities are observable market inputs, the fair value of these securities are classified within Level 2.

Equity securities

The Company determined that exchange-traded equity securities would be included in Level 1 as their fair values are based on quoted market prices in active markets. Certain equity securities are included in Level 2 of the valuation hierarchy as the significant inputs used in the pricing process for such securities are observable market inputs. Other equity securities are included in Level 3 due to the lack of an available independent price source for such securities. As the significant inputs used to price these securities are unobservable, the fair value of such securities are classified as Level 3.

Other investments

The Company’s other investments include term loan investments for which fair values are estimated by using quoted prices of term loan investments with similar characteristics, pricing models or matrix pricing. Such investments are generally classified within Level 2. The fair values for certain of the Company’s other investments are determined using net asset values as advised by external fund managers. The net asset value is based on the fund manager’s valuation of the underlying holdings in accordance with the fund’s governing documents. In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. A small number of securities are included in Level 3 due to the lack of an available independent price source for such securities.

Derivative instruments

The Company’s futures contracts, foreign currency forward contracts, interest rate swaps and other derivatives trade in the over-the-counter derivative market. The Company uses the market approach valuation technique to estimate the fair value for these derivatives based on significant observable market inputs from third party pricing vendors, non-binding broker-dealer quotes and/or recent trading activity. As the significant inputs used in the pricing process for these derivative instruments are observable market inputs, the fair value of these securities are classified within Level 2.

Short-term investments

The Company determined that certain of its short-term investments held in highly liquid money market-type funds, U.S. Treasury bills and commercial paper would be included in Level 1 as their fair values are based on quoted market prices in active markets. The fair values of certain short-term investments are generally determined using the spread above the risk-free yield curve and are classified within Level 2. Other short-term investments are included in Level 3 due to the lack of an available independent price source for such securities. As the significant inputs used to price these short-term securities are unobservable, the fair value of such securities are classified as Level 3.

Residential mortgage loans

The Company’s residential mortgage loans (included in ‘other assets’ in the consolidated balance sheets) include amounts related to the Company’s whole mortgage loan purchase and sell program. Fair values of residential mortgage loans are generally determined based on market prices. As significant inputs used in the pricing process for these residential mortgage loans are observable market inputs, the fair value of these securities are classified within Level 2.

Other liabilities

The Company’s other liabilities include contingent and deferred consideration liabilities related to the Company’s acquisitions. Contingent consideration liabilities are remeasured at fair value at each balance sheet date with changes in fair value recognized in ‘net realized gains (losses’). To determine the fair value of contingent consideration liabilities, the Company estimates the future payments using an income approach based on modeled inputs which include a weighted average cost of capital. Deferred consideration liabilities are measured at fair value on the transaction date. The Company determined that contingent and deferred consideration liabilities would be included within Level 3.


ARCH CAPITAL			30			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table presents the Company’s financial assets and liabilities measured at fair value by level at June 30, 2026:


			Estimated Fair Value Measurements Using:
	Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets measured at fair value:
Available for sale securities:
Fixed maturities:
Corporate bonds	$	14,231	$	—	$	14,117	$	114
U.S. government and government agencies	8,060		8,060		—		—
Asset backed securities	3,677		—		3,651		26
Non-U.S. government securities	2,876		—		2,876		—
Residential mortgage backed securities	2,643		—		2,639		4
Commercial mortgage backed securities	1,549		—		1,549		—
Municipal bonds	119		—		119		—
Total	33,155		8,060		24,951		144

Short-term investments	3,298		2,874		424		—

Equity securities, at fair value	2,280		2,256		14		10





Derivative instruments (2)	227		—		227		—

Residential mortgage loans	54		—		54		—

Fair value option:
Corporate bonds	1,168		—		1,168		—
Non-U.S. government securities	3		—		3		—




U.S. government and government agencies	4		4		—		—
Short-term investments	57		—		13		44
Equity securities	4		—		—		4
Other investments	429		—		157		272
Other investments measured at net asset value (1)	1,715
Total	3,380		4		1,341		320

Total assets measured at fair value	$	42,394	$	13,194	$	27,011	$	474

Liabilities measured at fair value:
Other liabilities	$	(14)	$	—	$	—	$	(14)

Derivative instruments (2)	(108)		—		(108)		—
Total liabilities measured at fair value	$	(122)	$	—	$	(108)	$	(14)

(1) In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.

(2) See note 10.


ARCH CAPITAL			31			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table presents the Company’s financial assets and liabilities measured at fair value by level at December 31, 2025:


			Estimated Fair Value Measurements Using:
	Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets measured at fair value:
Available for sale securities:
Fixed maturities:
Corporate bonds	$	14,058	$	—	$	13,930	$	128
U.S. government and government agencies	7,445		7,445		—		—
Asset backed securities	3,574		—		3,557		17
Non-U.S. government securities	3,270		—		3,270		—
Residential mortgage backed securities	2,705		—		2,705		—
Commercial mortgage backed securities	1,212		—		1,212		—
Municipal bonds	162		—		162		—
Total	32,426		7,445		24,836		145

Short-term investments	2,625		2,326		299		—

Equity securities, at fair value	1,864		1,829		26		9





Derivative instruments (2)	180		—		180		—

Residential mortgage loans	24		—		24		—


Fair value option:
Corporate bonds	1,102		—		1,102		—
Non-U.S. government securities	3		—		3		—



Asset backed securities	—		—		—		—
U.S. government and government agencies	5		5		—		—
Short-term investments	64		2		22		40
Equity securities	5		—		—		5
Other investments	398		—		166		232
Other investments measured at net asset value (1)	1,559
Total	3,136		7		1,293		277

Total assets measured at fair value	$	40,255	$	11,607	$	26,658	$	431

Liabilities measured at fair value:
Other liabilities	$	(18)	$	—	$	—	$	(18)

Derivative instruments (2)	(72)		—		(72)		—
Total liabilities measured at fair value	$	(90)	$	—	$	(72)	$	(18)

(2) See note 10.


ARCH CAPITAL			32			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table presents a reconciliation of the beginning and ending balances for all financial assets and liabilities measured at fair value on a recurring basis using Level 3 inputs:


			Assets									Liabilities
s	Available For Sale				Fair Value Option							Fair Value
	Structured Securities (1)		Corporate Bonds			Other Investments		Short-term Investments		Equity Securities			Equity Securities		Other Liabilities
Three Months Ended June 30, 2026
Balance at beginning of period	$	29	$	116		$	249	$	46	$	4		$	9	$	(14)
Total gains or (losses) (realized/unrealized)
Included in earnings (2)	—		—			—		—		—			—		—
Included in other comprehensive income	—		(2)			—		—		—			—		—
Purchases, issuances, sales and settlements
Purchases	5		1			64		25		—			1		—
Issuances	—		—			—		—		—			—		—
Sales	—		—			(3)		—		—			—		—
Settlements	(4)		(1)			(41)		(27)		—			—		—
Transfers in and/or out of Level 3	—		—			3		—		—			—		—
Balance at end of period	$	30	$	114		$	272	$	44	$	4		$	10	$	(14)

Three Months Ended June 30, 2025
Balance at beginning of period	$	—	$	150		$	206	$	29	$	4		$	7	$	(34)
Total gains or (losses) (realized/unrealized)
Included in earnings (2)	—		—			—		—		1			—		—
Included in other comprehensive income	—		—			—		—		—			—		(2)
Purchases, issuances, sales and settlements
Purchases	14		—			44		18		—			1		—
Issuances	—		—			—		—		—			—		—
Sales	—		—			(3)		—		—			—		—
Settlements	(2)		(5)			(39)		(2)		—			—		16
Transfers in and/or out of Level 3	5		—			—		—		—			—		—
Balance at end of period	$	17	$	145		$	208	$	45	$	5		$	8	$	(20)

Six Months Ended June 30, 2026
Balance at beginning of year	$	17	$	128		$	232	$	40	$	5		$	9	$	(18)
Total gains or (losses) (realized/unrealized)
Included in earnings (2)	—		—			—		—		(1)			(1)		1
Included in other comprehensive income	—		(2)			—		—		—			—		—
Purchases, issuances, sales and settlements
Purchases	9		1			90		46		—			2		—
Issuances	—		—			—		—		—			—		—
Sales	—		—			(3)		—		—			—		—
Settlements	(5)		(42)			(60)		(43)		—			—		3
Transfers in and/or out of Level 3	9		29			13		1		—			—		—
Balance at end of period	$	30	$	114		$	272	$	44	$	4		$	10	$	(14)

Six Months Ended June 30, 2025
Balance at beginning of year	$	—	$	97		$	189	$	33	$	4		$	7	$	(73)
Total gains or (losses) (realized/unrealized)
Included in earnings (2)	—		—			—		—		1			—		2
Included in other comprehensive income	—		—			—		—		—			—		(2)
Purchases, issuances, sales and settlements
Purchases	14		—			96		24		—			1		—
Issuances	—		—			—		—		—			—		—
Sales	—		—			(3)		—		—			—		—
Settlements	(2)		(22)			(74)		(12)		—			—		53
Transfers in and/or out of Level 3	5		70			—		—		—			—		—
Balance at end of period	$	17	$	145		$	208	$	45	$	5		$	8	$	(20)

(1) Includes asset backed securities, mortgage backed securities and commercial mortgage backed securities.

(2) Gains or losses were included in net realized gains (losses).


ARCH CAPITAL			33			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Financial Instruments Disclosed, But Not Carried, At Fair Value

The Company uses various financial instruments in the normal course of its business. The carrying values of cash, accrued investment income, receivable for securities sold, certain other assets, payable for securities purchased and certain other liabilities approximated their fair values at June 30, 2026, due to their respective short maturities. As these financial instruments are not actively traded, their respective fair values are classified within Level 2.

At June 30, 2026, the Company’s senior notes were carried at their cost, net of debt issuance costs, of $4.3 billion and had a fair value of $4.1 billion. At December 31, 2025, the Company’s senior notes were carried at their cost, net of debt issuance costs, of $2.7 billion and had a fair value of $2.5 billion. The fair values of the senior notes were obtained from a third party pricing service and are based on observable market inputs. As such, the fair values of the senior notes are classified within Level 2.

10. Derivative Instruments

The Company’s investment strategy allows for the use of derivative instruments. The Company’s derivative instruments are recorded on its consolidated balance sheets at fair value. The Company utilizes exchange traded U.S. Treasury notes, Eurodollar and other futures contracts and commodity futures to manage portfolio duration or replicate investment positions in its portfolios and the Company routinely utilizes foreign currency forward contracts, currency options, index futures contracts and other derivatives as part of its total return objective. In addition, certain of the Company’s investments are managed in portfolios which incorporate the use of foreign currency forward contracts which are intended to provide an economic hedge against foreign currency movements.

From time to time, the Company purchases to-be-announced mortgage backed securities (“TBAs”) as part of its investment strategy. TBAs represent commitments to purchase a future issuance of agency mortgage backed securities. For the period between purchase of a TBA and issuance of the underlying security, the Company’s position is accounted for as a derivative. The Company purchases TBAs in both long and short positions to enhance investment performance and as part of its overall investment strategy.

The following table summarizes information on the fair values and notional values of the Company’s derivative instruments:


	Estimated Fair Value
	Asset Derivatives (1)		Liability Derivatives (1)		Notional Value (2)
June 30, 2026
Futures contracts	$	100	$	(31)	$	10,699
Foreign currency forward contracts	63		(36)		2,273

Other (3)	64		(41)		375
Total	$	227	$	(108)

December 31, 2025
Futures contracts	$	81	$	(19)	$	8,022
Foreign currency forward contracts	75		(38)		2,458

Other (3)	24		(15)		161
Total	$	180	$	(72)

(1) The fair value of asset derivatives are included in ‘other assets’ and the fair value of liability derivatives are included in ‘other liabilities.’

(2) Represents the absolute notional value of all outstanding contracts, consisting of long and short positions.

(3) Includes swaps, options and other derivatives contracts.

The Company did not hold any derivatives that were designated as hedging instruments at June 30, 2026 or December 31, 2025.

The Company’s derivative instruments can be traded under master netting agreements, which establish terms that apply to all derivative transactions with a counterparty. In the event of a bankruptcy or other stipulated event of default, such agreements provide that the non-defaulting party may elect to terminate all outstanding derivative transactions, in which case all individual derivative positions (loss or gain) with a counterparty are closed out and netted and replaced with a single amount, usually referred to as the termination amount, which is expressed in a single currency. The resulting single net amount, where positive, is payable to the party “in-the-money” regardless of whether or not it is the defaulting party, unless the parties have agreed that only the non-defaulting party is entitled to receive a termination payment where the net amount is positive and is in its favor. Contractual close-out netting reduces derivative credit exposure from gross to net exposure.

At June 30, 2026, asset derivatives and liability derivatives of $227 million and $108 million, respectively, were subject to a master netting agreement, compared to $180 million and $72 million, respectively, at December 31, 2025.


ARCH CAPITAL			34			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Realized and unrealized contract gains or losses on the Company’s derivative instruments are reflected in ‘net realized gains (losses)’ in the consolidated statements of income, as summarized in the following table:


Derivatives not designated as	June 30,
hedging instruments:	2026		2025

Three Months Ended
Net realized gains (losses):
Futures contracts	$	(27)	$	93
Foreign currency forward contracts	(5)		53

Other (1)	(44)		17
Total	$	(76)	$	163

Six Months Ended
Net realized gains (losses):
Futures contracts	$	(90)	$	139
Foreign currency forward contracts	(11)		83

Other (1)	7		40
Total	$	(94)	$	262

(1) Includes realized gains or losses on swaps, options and other derivatives contracts.

11. Commitments and Contingencies

Senior Notes

On June 9, 2026, Arch Capital completed a public offering of $600 million aggregate principal amount of 5.250% senior notes due 2036 (the “2036 Notes”) and $1.4 billion aggregate principal amount of 5.950% senior notes due 2056, (the “2056 Notes” and, together with the 2036 Notes, the “Notes”). The Notes are senior unsecured obligations of Arch Capital and rank equally with all of its existing and future senior unsecured indebtedness. Interest payments on the Notes are due semi-annually in arrears on June 15 and December 15, beginning on December 15, 2026, to holders of record on the preceding June 1 and December 1, as the case may be. Subject to conditions of redemption, Arch Capital may redeem all or any portion of the 2036 Notes and 2056 Notes at any time and from time to time (i) prior to March 15, 2036 and December 15, 2055, respectively, at a redemption price equal to the “make-whole” redemption price for the notes to be redeemed, plus accrued and unpaid interest thereon to, but excluding, the redemption date; and (ii) on or after March 15, 2036 and December 15, 2055, respectively, at a redemption price for the notes to be redeemed equal to 100% of the principal amount of such notes, plus accrued and unpaid interest to, but excluding, the redemption date.

Arch Capital used a portion of the net proceeds of the Notes to purchase the Tender Offer notes validly tendered (and not withdrawn), as described below, and intends to use the remaining net proceeds to redeem, repurchase, repay or otherwise retire the existing 4.011% Senior Notes due in 2026 and use the balance for general corporate purposes.

Tender Offers

On June 2, 2026, Arch Capital announced the commencement of cash tender offers (the “Tender Offers”) by Arch Capital Group (U.S.) Inc. (“Arch-U.S.”) of its outstanding 5.144% Senior Notes due 2043 (the “2043 Notes”) and Arch Capital Finance LLC (“Arch Finance”) of its outstanding 5.031% Senior Notes due 2046 (the “2046 Notes”). Upon expiration of the Tender Offers, Arch-U.S. repurchased $218.7 million aggregate principal amount of the 2043 Notes and Arch Finance repurchased $199.1 million aggregate principal amount of the 2046 Notes, which resulted in a pre-tax gain of $16 million.

Interest Paid

Interest paid on the Company’s senior notes and other borrowings was $65 million for the six months ended June 30, 2026, compared to $64 million for the 2025 period.

Investment Commitments

The Company’s investment commitments, which are primarily related to agreements entered into by the Company to invest in funds and separately managed accounts when called upon, were approximately $4.4 billion at June 30, 2026, compared to $3.7 billion at December 31, 2025.


ARCH CAPITAL			35			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

12. Variable Interest Entities

Bellemeade Re

The Company has entered into aggregate excess of loss mortgage reinsurance agreements with various special purpose reinsurance companies domiciled in Bermuda (the “Bellemeade Agreements”). At the time the Bellemeade Agreements were entered into, the applicability of the accounting guidance that addresses VIEs was evaluated. As a result of the evaluation of the Bellemeade Agreements, the Company concluded that these entities are VIEs. However, given that the ceding insurers do not have the unilateral power to direct those activities that are significant to their economic performance, the Company does not consolidate such entities in its consolidated financial statements. The reinsurance premium paid in regard to the Bellemeade Agreements is calculated by multiplying the outstanding reinsurance coverage amount at the beginning of the period by the coupon rate, which is the SOFR plus a contractual risk margin, less the actual investment income collected during the preceding month on the assets included in the underlying reinsurance trusts. In the event the assets included in the underlying reinsurance trusts became severely impaired or worthless and the special purpose reinsurance companies were unable to meet their future obligations, the Company’s mortgage insurance subsidiaries would be liable to fulfill claim payments to policyholders. The Company’s maximum exposure to loss associated with these VIEs is determined as the amount of mortgage insurance claim payments on the insured policies, net of aggregate reinsurance payments previously received, up to the full aggregate excess of loss reinsurance coverage amounts.

The following table summarizes the total assets of the Bellemeade entities:



	June 30, 2026		December 31, 2025
Bellemeade Entities (Issue Date)	Total VIE Assets			Coverage Remaining from Reinsurers (1)		Total VIE Assets









2021-3 Ltd. (Sep-21)	20			9		21
2022-1 Ltd. (Jan-22)	42			10		42
2022-2 Ltd. (Sep-22)	43			81		43
2023-1 Ltd. (Oct-23)	122			31		149
2024-1 Ltd. (Aug-24)	94			24		130
2025-1 Ltd. (Nov-25)	172			43		191
Total	$	493		$	198	$	576

(1) Coverage from a separate panel of reinsurers remaining at June 30, 2026.


ARCH CAPITAL			36			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

13. Other Comprehensive Income (Loss)

The following tables present details about amounts reclassified from accumulated other comprehensive income and the tax effects allocated to each component of other comprehensive income (loss):


		Amounts Reclassified from AOCI
	Consolidated Statement of Income	Three Months Ended				Six Months Ended
Details About	Line Item That Includes	June 30,				June 30,
AOCI Components	Reclassification	2026		2025		2026		2025

Unrealized appreciation (decline) on available-for-sale investments
	Net realized gains (losses)	$	(48)	$	14	$	(31)	$	(49)
	Provision for credit losses	(4)		(8)		1		(8)

	Total before tax	(52)		6		(30)		(57)
	Income tax (expense) benefit	10		1		6		12
	Net of tax	$	(42)	$	7	$	(24)	$	(45)


	Before Tax Amount		Tax Expense (Benefit)		Net of Tax Amount
Three Months Ended June 30, 2026
Unrealized appreciation (decline) in value of investments:
Unrealized holding gains (losses) arising during period	$	(63)	$	50	$	(113)

Less reclassification of net realized gains (losses) included in net income	(52)		(10)		(42)
Foreign currency translation adjustments	(7)		2		(9)
Other comprehensive income (loss)	$	(18)	$	62	$	(80)

Three Months Ended June 30, 2025
Unrealized appreciation (decline) in value of investments:
Unrealized holding gains (losses) arising during period	$	304	$	1	$	303

Less reclassification of net realized gains (losses) included in net income	6		(1)		7
Foreign currency translation adjustments	62		(2)		64
Other comprehensive income (loss)	$	360	$	—	$	360

Six Months Ended June 30, 2026
Unrealized appreciation (decline) in value of investments:
Unrealized holding gains (losses) arising during period	$	(430)	$	3	$	(433)

Less reclassification of net realized gains (losses) included in net income	(30)		(6)		(24)
Foreign currency translation adjustments	(7)		2		(9)
Other comprehensive income (loss)	$	(407)	$	11	$	(418)

Six Months Ended June 30, 2025
Unrealized appreciation (decline) in value of investments:
Unrealized holding gains (losses) arising during period	$	549	$	12	$	537

Less reclassification of net realized gains (losses) included in net income	(57)		(12)		(45)
Foreign currency translation adjustments	88		(2)		90
Other comprehensive income (loss)	$	694	$	22	$	672


ARCH CAPITAL			37			2026 SECOND QUARTER FORM 10-Q

ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

14. Income Taxes

The Company’s income tax provision on income before income taxes, including income (loss) from operating affiliates, resulted in an effective tax rate of 11.1% for the six months ended June 30, 2026, compared to 15.6% for the six months ended June 30, 2025. The decrease in the effective tax rate was primarily driven by tax law changes in Bermuda and the United Kingdom. The Company’s effective tax rate, which is based upon the expected annual effective tax rate, may fluctuate from period to period based on the relative mix of income or loss reported by jurisdiction and the varying tax rates in each jurisdiction.

The Company had a net deferred tax asset of $1.3 billion at June 30, 2026, compared to a net deferred tax asset of $1.4 billion at December 31, 2025. In addition, the Company paid $191 million of income taxes for the six months ended June 30, 2026, compared to $149 million of income taxes paid for the six months ended June 30, 2025.

15. Legal Proceedings

The Company, in common with the insurance industry in general, is subject to litigation and arbitration in the normal course of its business. As of June 30, 2026, the Company was not a party to any litigation or arbitration which is expected by management to have a material adverse effect on the Company’s results of operations and financial condition and liquidity.

16. Transactions with Related Parties

Premia Reinsurance Ltd. is a multi-line Bermuda reinsurance company (and its affiliates together with Premia Holdings Ltd., “Premia”). The Company has entered into certain reinsurance transactions with Premia. During the six months ended June 30, 2026 and 2025, the Company did not enter into any new reinsurance transactions with Premia. At June 30, 2026, the Company recorded a funds held asset from Premia of $28 million, compared to $124 million at December 31, 2025.

Somers Group Holdings Ltd. and its wholly owned subsidiaries (collectively, “Somers”) are wholly owned by Greysbridge. For the six months ended June 30, 2026, the Company’s net premiums written was reduced by $308 million as a result of certain reinsurance transactions with Somers, compared to a reduction of $419 million for the six months ended June 30, 2025. In addition, Somers paid certain acquisition costs and administrative fees to the Company. At June 30, 2026, the Company recorded a reinsurance recoverable on unpaid and paid losses from Somers of $2.0 billion and a reinsurance balance payable to Somers of $580 million, compared to $2.0 billion and $550 million, respectively, at December 31, 2025.

Pursuant to the terms of the Greysbridge shareholder agreement, as amended, following the expiration of a specified period, Arch Capital has a call right (but not the obligation) and certain third party investors have put rights (but not the obligation) to purchase or sell, as applicable, a specified amount of each such investor’s initial common shares on an annual basis at Greysbridge’s year-end book value per share. Obligations under put/call option notices are recognized on the Company’s balance sheet in both other assets and other liabilities. At June 30, 2026, the Company’s balance sheet included $163 million in both other assets and other liabilities for such put notices. Transactions related to the put shares are expected to close in the 2026 calendar year, subject to any regulatory approval.


ARCH CAPITAL			38			2026 SECOND QUARTER FORM 10-Q

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