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

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

The following is a discussion and analysis of our financial condition and results of operations. This should be read in conjunction with our consolidated financial statements included in Item 1 of this report and also our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K”). In addition, readers should review “Risk Factors” set forth in Item 1A of Part I of our 2025 Form 10-K and “ITEM 1A—Risk Factors” of this Form 10-Q. All amounts are in millions, except per share amounts, unless otherwise noted.

Arch Capital Group Ltd. (“Arch Capital” and, together with its subsidiaries, “Arch”, “the Company”, “we”, “our” or “us”) is a publicly listed Bermuda exempted company with approximately $28.3 billion in capital at June 30, 2026 and, through operations in Bermuda, the United States, Europe, Canada and Australia, writes insurance, reinsurance and mortgage insurance on a worldwide basis.


		Page No.

Current Outlook		40
Financial Measures		41
Comment on Non-GAAP Financial Measures		42
Results of Operations		44
	Insurance Segment	44
	Reinsurance Segment	47
	Mortgage Segment	49
	Corporate	51
Critical Accounting Policies, Estimates and Recent Accounting Pronouncements		53
Financial Condition		53
Liquidity		58
Capital Resources		59
Catastrophic and Severe Economic Events		60
Market Sensitive Instruments and Risk Management		61


ARCH CAPITAL			39			2026 SECOND QUARTER FORM 10-Q

CURRENT OUTLOOK

We delivered a strong 2026 second quarter, with attractive underwriting margins reflecting the disciplined execution of our underwriting and capital management strategies. For the quarter, we generated an annualized net income return on average common equity and an annualized operating return on average common equity of 18.0% and 15.3%, respectively. See “Comment on Non-GAAP Financial Measures.” Critical to our cycle management is emphasizing risk selection, as we continue to leverage our diversified specialty platform and the expertise of our underwriting teams. We invest and use data and analytics to sharpen insights, enhance risk selection and deliver a differentiated customer experience while fostering a culture that attracts the best-in-class talent. We believe our balance sheet is in excellent health, giving us optionality as we remain prudent stewards of the capital entrusted to us by our shareholders. Our strong balance sheet permits us to both invest in our business and return capital to investors. During the 2026 second quarter, we repurchased 12.4 million common shares for an aggregate $1.2 billion. Through the first half of the year, we have repurchased approximately 94% of our net income in our own shares.

Although competitive conditions have increased across portions of the insurance and reinsurance markets, we believe the market remains constructive. While there is softening in certain lines, others continue to benefit from favorable pricing and underwriting conditions. We believe in this environment, our diversified specialty platform, underwriting expertise and disciplined approach to cycle management, position us to continue to generate attractive risk-adjusted returns while delivering long-term solutions for our clients. We remain focused on allocating capital to the opportunities that best meet our return objectives while maintaining the flexibility to adapt as market conditions evolve and remaining a reliable business partner throughout the insurance cycle.

Our insurance segment reported $27 million of underwriting income for the 2026 second quarter. Growth opportunities remained across most casualty-focused lines of business, including E&S casualty, construction and national accounts in the U.S., as well as select lines of our London market business, including war and terrorism. As a market leader in specialty insurance, we look to support our clients with underwriting expertise, claims capabilities and risk solutions while maintaining disciplined underwriting standards. Our diversified platform provides us with the flexibility to grow in areas where pricing supports our return objectives. These opportunities were partially offset by our decision not to renew certain middle market commercial program business which we acquired from Allianz in 2024 (the “MCE

Acquisition”) along with a reduction in E&S property business due to competitive rate pressure.

Our reinsurance segment contributed $410 million of underwriting income in the 2026 second quarter, benefiting from relatively light catastrophe losses. Net premiums written were $1.8 billion, down roughly 10% when compared to the 2025 second quarter, reflecting pricing pressures and higher retentions by cedants in certain property and short‑tail lines along with targeted increased retrocessions. As increased capacity has contributed to competitive conditions across portions of the reinsurance market, our underwriting teams are actively managing the cycle by selectively writing new business where returns are attractive and adjusting participation where pricing does not meet our minimum return thresholds. At the same time, our scale, market position and access to traditional reinsurance and third party capital allow us to continue providing meaningful solutions to brokers and cedants while managing our net risk profile.

Our mortgage segment continued to deliver a steady level of earnings, generating $220 million of underwriting income in the 2026 second quarter. New originations remained modest due to affordability challenges tied to mortgage rates and home prices, which continued to constrain demand. We believe the underlying fundamentals of our mortgage portfolio remain strong, and our U.S. market share was stable. The persistency of our in-force U.S. primary mortgage insurance portfolio remained a healthy 79.9%, and our delinquency rate remained low. We continue to expect the mortgage segment to serve as a steady diversifying contributor to our overall earnings and generate attractive underwriting income given the high credit quality and embedded equity of our in-force portfolio.


ARCH CAPITAL			40			2026 SECOND QUARTER FORM 10-Q

FINANCIAL MEASURES

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

Book Value per Share

Book value per share represents total common shareholders’ equity available to Arch divided by the number of common shares outstanding. Management uses growth in book value per share as a key measure of the value generated for our common shareholders each period and believes that book value per share is the key driver of Arch Capital’s share price over time. Book value per share is impacted by, among other factors, our underwriting results, investment returns and share repurchase activity, which has an accretive or dilutive impact on book value per share depending on the purchase price. Book value per share was $68.04 at June 30, 2026, compared to $66.19 at March 31, 2026, and $59.17 at June 30, 2025. The 2.8% increase in book value per share for the 2026 second quarter primarily reflected strong underwriting and investment returns, partially offset by $1.2 billion of shares purchased at an average price higher than the book value per share.

Operating Return on Average Common Equity

Operating return on average common equity (“Operating ROAE”) represents annualized after-tax operating income available to Arch common shareholders divided by the average of beginning and ending common shareholders’ equity available to Arch during the period. After-tax operating income available to Arch common shareholders, a non-GAAP financial measure as defined in Regulation G, represents net income available to Arch common shareholders, excluding net realized gains or losses (which 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, net foreign exchange gains or losses, transaction costs and other and income taxes. Management uses Operating ROAE as a key measure of the return generated to common shareholders. See “Comment on Non-GAAP Financial Measures.”

Our annualized net income return on average common equity was 18.0% for the 2026 second quarter, compared to 22.9% for the 2025 second quarter, and 17.9% for the six months ended June 30, 2026, compared to 17.0% for the 2025 period. Our Operating ROAE was 15.3% for the 2026 second quarter, compared to 18.2% for the 2025 second quarter and 15.4% for the six months ended June 30, 2026, compared to 14.8% for the 2025 period. Returns for the 2026 periods reflected strong underwriting and investment returns.

Total Return on Investments

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


	Arch Portfolio		Benchmark Return
Pre-tax total return (before investment expenses):
2026 Second Quarter	1.62	%	1.76	%
2025 Second Quarter	3.09	%	3.26	%

Six Months Ended June 30, 2026	1.72	%	1.76	%
Six Months Ended June 30, 2025	5.17	%	5.37	%

Total return for the 2026 periods reflected interest income and gains on risk assets outweighing the impact of rising US Treasury yields. The portfolio slightly underperformed their benchmark returns, primarily due to a small underweight to alternatives. We continue to maintain a relatively short duration on our fixed income portfolio of 3.50 years at June 30, 2026, in line with our asset allocation targets.

The benchmark return index is a customized combination of indices intended to approximate a target portfolio by asset mix and average credit quality with a fixed income component matching the approximate estimated duration and currency mix of our insurance and reinsurance liabilities. It is recalibrated annually. Although the estimated fixed income duration and average credit quality of this index will move as the duration and rating of its constituent securities change, generally we do not adjust the composition of the benchmark return index during the year except to incorporate changes to the mix of liability currencies and


ARCH CAPITAL			41			2026 SECOND QUARTER FORM 10-Q

durations noted above. The benchmark return index should not be interpreted as expressing a preference for or aversion to any particular sector or sector weight. At June 30, 2026, the fixed income portion of the benchmark had an average credit quality of “A1” by Moody’s and an estimated fixed income duration of 3.34 years.

The benchmark return index included weightings to the following indices:


	%

ICE BofA 1-10 Year U.S. Corporate Index	24.80
Yield on 3-5 Year U.S. Treasury Index plus 5.5%	16.00
ICE BofA 1-10 Year U.S. Treasury Index	15.00
ICE BofA 0-3 Month U.S. Treasury Index	3.00
ICE BofA BB-B U.S. High Yield Constrained Index	5.50
JPM CLOIE Investment Grade	5.00
ICE BofA 3-5 Year U.S. Agency CMO Excluding IO & PO Index	5.00
ICE BofA U.S. Fixed Rate CMBS Index	4.00
ICE BofA U.S. Fixed & Floating Rate Asset Backed Securities Index	2.50
S&P 500 Total Return Index	4.25
ICE BofA 1-5 Year U.K. Gilt Index	5.90
ICE BofA German Government 1-5 Year Index	3.00
ICE BofA German Government 5-7 Year Index	1.00
ICE BofA 1-5 Year Canada Government Index	2.75
ICE BofA 15+ Year Canada Government Index	0.25
ICE BofA 1-5 Year Australia Government Index	1.50
ICE BofA 5-10 Year Australia Government Index	0.40
ICE BofA 1-5 Year Japan Government Index	0.15
Total	100.00	%

COMMENT ON NON-GAAP FINANCIAL MEASURES

Throughout this filing, we present our operations in the way we believe will be the most meaningful and useful to investors, analysts, rating agencies and others who use our financial information in evaluating the performance of our company. This presentation includes the use of after-tax operating income available to Arch common shareholders, which is defined as net income available to Arch common shareholders, excluding net realized gains or losses (which 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, net foreign exchange gains or losses, transaction costs and other, income taxes, and the use of annualized operating return on average common equity. The presentation of after-tax operating income available to Arch common shareholders and annualized operating return on average

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

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

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

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


ARCH CAPITAL			42			2026 SECOND QUARTER FORM 10-Q

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

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

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

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

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


ARCH CAPITAL			43			2026 SECOND QUARTER FORM 10-Q

RESULTS OF OPERATIONS

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2026		2025		2026		2025
Net income available to Arch common shareholders	$	1,047	$	1,227	$	2,084	$	1,791
Net realized (gains) losses (1)	17		(229)		104		(232)

Equity in net (income) loss of investments accounted for using the equity method	(196)		(162)		(356)		(215)
Net foreign exchange (gains) losses	(10)		88		(31)		115
Transaction costs and other	32		18		50		28

Income tax expense (benefit) (2)	3		37		(57)		79
After-tax operating income available to Arch common shareholders	$	893	$	979	$	1,794	$	1,566

Beginning common shareholders’ equity	$	23,358	$	20,715	$	23,376	$	19,990
Ending common shareholders’ equity	23,200		22,211		23,200		22,211
Average common shareholders’ equity	$	23,279	$	21,463	$	23,288	$	21,101

Annualized net income return on average common equity %	18.0		22.9		17.9		17.0
Annualized operating return on average common equity %	15.3		18.2		15.4		14.8

(1) Net realized gains or losses 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.

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

Segment Information

We classify our businesses into three underwriting segments: insurance, reinsurance and mortgage. Our insurance, reinsurance and mortgage segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to our chief operating decision makers (“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 our three underwriting segments based on underwriting income or loss. We do not manage our assets by underwriting segment, with the exception of goodwill and intangible assets and accordingly investment income is not allocated to each underwriting segment.

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

Insurance Segment

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


ARCH CAPITAL			44			2026 SECOND QUARTER FORM 10-Q

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


	Three Months Ended June 30,
	2026			2025			% Change
Gross premiums written	$	2,603		$	2,681		(2.9)
Premiums ceded	(670)			(645)
Net premiums written	1,933			2,036			(5.1)
Change in unearned premiums	(53)			(67)
Net premiums earned	1,880			1,969			(4.5)
Other underwriting income (1)	15			13
Losses and loss adjustment expenses	(1,185)			(1,178)
Acquisition expenses	(375)			(387)
Other operating expenses	(308)			(288)
Underwriting income (loss)	$	27		$	129		(79.1)

Underwriting Ratios							% Point Change
Loss ratio	63.0		%	59.8		%	3.2
Acquisition expense ratio	19.9		%	19.6		%	0.3
Other operating expense ratio (2)	15.6		%	14.0		%	1.6
Combined ratio	98.5		%	93.4		%	5.1

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

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


	Six Months Ended June 30,
	2026			2025			% Change
Gross premiums written	$	5,300		$	5,326		(0.5)
Premiums ceded	(1,461)			(1,357)
Net premiums written	3,839			3,969			(3.3)
Change in unearned premiums	(88)			(140)
Net premiums earned	3,751			3,829			(2.0)
Other underwriting income (1)	26			16
Losses and loss adjustment expenses	(2,311)			(2,406)
Acquisition expenses	(750)			(730)
Other operating expenses	(623)			(582)
Underwriting income (loss)	$	93		$	127		(26.8)

Underwriting Ratios							% Point Change
Loss ratio	61.6		%	62.8		%	(1.2)
Acquisition expense ratio	20.0		%	19.1		%	0.9
Other operating expense ratio (2)	15.9		%	14.8		%	1.1
Combined ratio	97.5		%	96.7		%	0.8

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

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

Premiums Written.

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


	Three Months Ended June 30,
	2026			2025
	Amount		%	Amount		%
North America
Other liability - occurrence	$	364	18.8	$	366	18.0
Property and short-tail specialty	362		18.7	369		18.1
Other liability - claims made	212		11.0	206		10.1
Commercial automobile	158		8.2	165		8.1
Commercial multi-peril	130		6.7	205		10.1
Workers compensation	121		6.3	130		6.4
Other	87		4.5	89		4.4
Total North America	1,434		74.2	1,530		75.1

International
Property and short-tail specialty	$	280	14.5	$	296	14.5
Casualty and other	219		11.3	210		10.3
Total International	499		25.8	506		24.9
Total	$	1,933	100.0	$	2,036	100.0

2026 Second Quarter versus 2025 Period. Gross premiums written by the insurance segment in the 2026 second quarter were 2.9% lower than in the 2025 second quarter, while net premiums written were 5.1% lower than in the 2025 second quarter. Adjusting for the non-renewal of certain programs related to the MCE Acquisition, net premiums written would have decreased by 1.8% compared to the same quarter one year ago.


	Six Months Ended June 30,
	2026			2025
	Amount		%	Amount		%
North America
Other liability - occurrence	$	679	17.7	$	696	17.5
Property and short-tail specialty	684		17.8	717		18.1
Other liability - claims made	387		10.1	355		8.9
Commercial automobile	307		8.0	326		8.2
Commercial multi-peril	303		7.9	403		10.2
Workers compensation	278		7.2	283		7.1
Other	161		4.2	165		4.2
Total North America	2,799		72.9	2,945		74.2

International
Property and short-tail specialty	$	562	14.6	$	567	14.3
Casualty and other	478		12.5	457		11.5
Total International	1,040		27.1	1,024		25.8
Total	$	3,839	100.0	$	3,969	100.0

Six Months Ended June 30, 2026 versus 2025 period. Gross premiums written by the insurance segment for the six months ended June 30, 2026 were 0.5% lower than in the 2025 period, while net premiums written were 3.3% lower than in the 2025 period. Adjusting for the non-renewal of


ARCH CAPITAL			45			2026 SECOND QUARTER FORM 10-Q

certain programs related to the MCE Acquisition, net premiums written would have decreased by 0.4% compared to a year ago.

Net Premiums Earned.

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


	Three Months Ended June 30,
	2026			2025
	Amount		%	Amount		%
North America
Other liability - occurrence	$	289	15.4	$	338	17.2
Property and short-tail specialty	334		17.8	363		18.4
Other liability - claims made	199		10.6	186		9.4
Commercial automobile	148		7.9	147		7.5
Commercial multi-peril	185		9.8	203		10.3
Workers compensation	135		7.2	147		7.5
Other	76		4.0	71		3.6
Total North America	1,366		72.7	1,455		73.9

International
Property and short-tail specialty	$	277	14.7	$	278	14.1
Casualty and other	237		12.6	236		12.0
Total International	514		27.3	514		26.1
Total	$	1,880	100.0	$	1,969	100.0


	Six Months Ended June 30,
	2026			2025
	Amount		%	Amount		%
North America
Other liability - occurrence	$	589	15.7	$	667	17.4
Property and short-tail specialty	649		17.3	696		18.2
Other liability - claims made	399		10.6	378		9.9
Commercial automobile	294		7.8	292		7.6
Commercial multi-peril	380		10.1	404		10.6
Workers compensation	270		7.2	278		7.3
Other	145		3.9	143		3.7
Total North America	2,726		72.7	2,858		74.6

International
Property and short-tail specialty	$	556	14.8	$	524	13.7
Casualty and other	469		12.5	447		11.7
Total International	1,025		27.3	971		25.4
Total	$	3,751	100.0	$	3,829	100.0

Net premiums written are primarily earned on a pro rata basis over the terms of the policies for all products, usually 12 months. Net premiums earned reflect changes in net premiums written over the previous five quarters. Net premiums earned for the 2026 second quarter were 4.5% lower than in the 2025 second quarter, while net premiums earned for the six months ended June 30, 2026 were 2.0% lower than in the 2025 period.

Other Underwriting Income.

Other underwriting income, which includes revenue earned from underwriting-related activities covered under existing service contracts, was $15 million for the 2026 second quarter, compared to $13 million for the 2025 second quarter, and $26 million for the six months ended June 30, 2026, compared to $16 million for the 2025 period.

Losses and Loss Adjustment Expenses.

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2026		2025		2026		2025
Current year	64.4	%	60.2	%	62.7	%	63.4	%
Prior period reserve development	(1.4)	%	(0.4)	%	(1.1)	%	(0.6)	%
Loss ratio	63.0	%	59.8	%	61.6	%	62.8	%

Current Year Loss Ratio.

2026 Second Quarter versus 2025 Period. The insurance segment’s current year loss ratio in the 2026 second quarter was 4.2 points higher than in the 2025 second quarter. The 2026 second quarter loss ratio reflected 7.6 points of current year catastrophic activity, primarily related to the Iran conflict and severe conductive storms in the U.S., compared to 2.9 points of current year catastrophic activity in the 2025 second quarter. The balance of the change in the loss ratio resulted, in part, from changes in mix of business.

Six Months Ended June 30, 2026 versus 2025 Period. The insurance segment’s current year loss ratio for the six months ended June 30, 2026 was 0.7 points lower than in the 2025 period and reflected 5.9 points of current year catastrophic activity, primarily related to the Iran conflict and severe conductive storms in the U.S., compared to 6.1 points in the 2025 period, primarily related to the California wildfires. The balance of the change in the loss ratio resulted, in part, from changes in mix of business.

Prior Period Reserve Development.

The insurance segment’s net favorable development was $27 million, or 1.4 points, for the 2026 second quarter, compared to $8 million, or 0.4 points, for the 2025 second quarter, and $41 million, or 1.1 points, for the six months ended June 30, 2026, compared to $25 million, or 0.6 points, for the 2025 period. See note 6, “Reserve for Losses and Loss Adjustment Expenses,” to our consolidated financial statements for information about the insurance segment’s prior year reserve development.


ARCH CAPITAL			46			2026 SECOND QUARTER FORM 10-Q

Underwriting Expenses.

2026 Second Quarter versus 2025 Period. The insurance segment’s underwriting expense ratio was 35.5% in the 2026 second quarter, compared to 33.6% in the 2025 second quarter. The 2026 second quarter ratio reflected transitional expenses associated with the MCE Acquisition, and a lower level of net premiums earned compared to the 2025 second quarter. In the 2025 second quarter, the impact of the MCE Acquisition lowered the underwriting expense ratio by approximately 0.6 points, primarily due to the effects of the fair value estimation of the assets acquired at closing, including the non-recognition of deferred acquisition costs.

Six Months Ended June 30, 2026 versus 2025 period. The insurance segment’s underwriting expense ratio was 35.9% for the six months ended June 30, 2026, compared to 33.9% for the 2025 period. The 2026 ratio reflected transitional expenses associated with the MCE Acquisition, and a lower level of net premiums earned compared to the 2025 period.

Reinsurance Segment

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

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


	Three Months Ended June 30,
	2026			2025			% Change
Gross premiums written	$	3,202		$	3,196		0.2
Premiums ceded	(1,358)			(1,137)
Net premiums written	1,844			2,059			(10.4)
Change in unearned premiums	(24)			28
Net premiums earned	1,820			2,087			(12.8)
Other underwriting income (1)	37			46
Losses and loss adjustment expenses	(992)			(1,128)
Acquisition expenses	(341)			(436)
Other operating expenses	(114)			(118)
Underwriting income	$	410		$	451		(9.1)

Underwriting Ratios							% Point Change
Loss ratio	54.6		%	54.1		%	0.5
Acquisition expense ratio	18.7		%	20.9		%	(2.2)
Other operating expense ratio (2)	4.2		%	3.5		%	0.7
Combined ratio	77.5		%	78.5		%	(1.0)

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

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


	Six Months Ended June 30,
	2026			2025			% Change
Gross premiums written	$	6,616		$	6,690		(1.1)
Premiums ceded	(2,596)			(2,315)
Net premiums written	4,020			4,375			(8.1)
Change in unearned premiums	(369)			(260)
Net premiums earned	3,651			4,115			(11.3)
Other underwriting income (1)	74			85
Losses and loss adjustment expenses	(1,940)			(2,484)
Acquisition expenses	(688)			(853)
Other operating expenses	(246)			(245)
Underwriting income (loss)	$	851		$	618		37.7

Underwriting Ratios							% Point Change
Loss ratio	53.1		%	60.4		%	(7.3)
Acquisition expense ratio	18.8		%	20.7		%	(1.9)
Other operating expense ratio (2)	4.7		%	3.9		%	0.8
Combined ratio	76.6		%	85.0		%	(8.4)

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

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

Premiums Written.

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


	Three Months Ended June 30,
	2026			2025
	Amount		%	Amount		%
Specialty	$	563	30.5	$	729	35.4
Property excluding property catastrophe	451		24.5	430		20.9
Property catastrophe	392		21.3	484		23.5
Casualty	312		16.9	308		15.0
Marine and aviation	58		3.1	68		3.3
Other	68		3.7	40		1.9
Total	$	1,844	100.0	$	2,059	100.0

2026 Second Quarter versus 2025 Period. Gross premiums written by the reinsurance segment in the 2026 second quarter were 0.2% higher than in the 2025 second quarter, while net premiums written were 10.4% lower than in the 2025 second quarter. Reductions in net premiums written this quarter were due, in part, to non-renewals, share reductions as well as targeted increased retrocessions.


ARCH CAPITAL			47			2026 SECOND QUARTER FORM 10-Q


	Six Months Ended June 30,
	2026			2025
	Amount		%	Amount		%
Specialty	$	1,250	31.1	$	1,323	30.2
Property excluding property catastrophe	999		24.9	1,011		23.1
Property catastrophe	699		17.4	961		22.0
Casualty	790		19.7	807		18.4
Marine and aviation	136		3.4	189		4.3
Other	146		3.6	84		1.9
Total	$	4,020	100.0	$	4,375	100.0

Six Months Ended June 30, 2026 versus 2025 period. Gross premiums written by the reinsurance segment for the six months ended June 30, 2026 were 1.1% lower than in the 2025 period, while net premiums written were 8.1% lower than in the 2025 period. Reductions in net premiums written in the 2026 period were due, in part, to non-renewals, share reductions as well as targeted increased retrocessions.

Net Premiums Earned.

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


	Three Months Ended June 30,
	2026			2025
	Amount		%	Amount		%
Specialty	$	617	33.9	$	760	36.4
Property excluding property catastrophe	489		26.9	587		28.1
Property catastrophe	208		11.4	260		12.5
Casualty	367		20.2	355		17.0
Marine and aviation	71		3.9	82		3.9
Other	68		3.7	43		2.1
Total	$	1,820	100.0	$	2,087	100.0


	Six Months Ended June 30,
	2026			2025
	Amount		%	Amount		%
Specialty	$	1,203	32.9	$	1,487	36.1
Property excluding property catastrophe	1,008		27.6	1,135		27.6
Property catastrophe	434		11.9	566		13.8
Casualty	720		19.7	680		16.5
Marine and aviation	141		3.9	162		3.9
Other	145		4.0	85		2.1
Total	$	3,651	100.0	$	4,115	100.0

Net premiums written, irrespective of the class of business, are generally earned on a pro rata basis over the terms of the underlying policies or reinsurance contracts. Net premiums earned reflect changes in net premiums written over the previous five quarters. Net premiums earned for the 2026 second quarter were 12.8% lower than in the 2025 second quarter, while net premiums earned for the six months ended June 30, 2026 were 11.3% lower than in the 2025 period.

Other Underwriting Income.

Other underwriting income, which includes revenue earned from underwriting-related activities covered under existing service contracts, was $37 million for the 2026 second quarter, compared to $46 million for the 2025 second quarter, and $74 million for the six months ended June 30, 2026, compared to $85 million for the 2025 period.

Losses and Loss Adjustment Expenses.

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2026		2025		2026		2025
Current year	59.9	%	58.0	%	59.9	%	65.3	%
Prior period reserve development	(5.3)	%	(3.9)	%	(6.8)	%	(4.9)	%
Loss ratio	54.6	%	54.1	%	53.1	%	60.4	%

Current Year Loss Ratio.

2026 Second Quarter versus 2025 Period. The reinsurance segment’s current year loss ratio in the 2026 second quarter was 1.9 points higher than in the 2025 second quarter. The 2026 second quarter loss ratio reflected 3.0 points of current year catastrophic activity, compared to 5.5 points of current year catastrophic activity in the 2025 second quarter. The balance of the change in the loss ratio primarily resulted from changes in the mix of business, due in part to increased retrocessions on short-tailed lines.

Six Months Ended June 30, 2026 versus 2025 Period. The reinsurance segment’s current year loss ratio for the six months ended June 30, 2026 was 5.4 points lower than in the 2025 period and reflected 4.2 points of current year catastrophic activity, compared to 13.5 points in the 2025 period, primarily related to the California wildfires. The balance of the change in the loss ratio resulted, in part, from changes in mix of business.

Prior Period Reserve Development.

The reinsurance segment’s net favorable development was $97 million, or 5.3 points, for the 2026 second quarter, compared to $81 million, or 3.9 points, for the 2025 second quarter, and $249 million, or 6.8 points, for the six months ended June 30, 2026, compared to $200 million, or 4.9 points, for the 2025 period. See note 6, “Reserve for Losses and Loss Adjustment Expenses,” to our consolidated financial statements for information about the reinsurance segment’s prior year reserve development.


ARCH CAPITAL			48			2026 SECOND QUARTER FORM 10-Q

Underwriting Expenses.

2026 Second Quarter versus 2025 Period. The underwriting expense ratio for the reinsurance segment was 22.9% in the 2026 second quarter, compared to 24.4% in the 2025 second quarter, with the decrease primarily reflecting the impact of higher profit commissions on retrocessions.

Six Months Ended June 30, 2026 versus 2025 period. The underwriting expense ratio for the reinsurance segment was 23.5% for the six months ended June 30, 2026, compared to 24.6% for the 2025 period.

Mortgage Segment

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

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


	Three Months Ended June 30,
	2026			2025			% Change
Gross premiums written	$	324		$	323		0.3
Premiums ceded	(52)			(70)
Net premiums written	272			253			7.5
Change in unearned premiums	13			28
Net premiums earned	285			281			1.4
Other underwriting income (1)	5			3
Losses and loss adjustment expenses	(19)			3
Acquisition expenses	(2)			(1)
Other operating expenses	(49)			(48)
Underwriting income	$	220		$	238		(7.6)

Underwriting Ratios							% Point Change
Loss ratio	6.5		%	(1.2)		%	7.7
Acquisition expense ratio	0.9		%	0.4		%	0.5
Other operating expense ratio (2)	15.4		%	16.0		%	(0.6)
Combined ratio	22.8		%	15.2		%	7.6

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

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


	Six Months Ended June 30,
	2026			2025			% Change
Gross premiums written	$	640		$	649		(1.4)
Premiums ceded	(102)			(130)
Net premiums written	538			519			3.7
Change in unearned premiums	31			62
Net premiums earned	569			581			(2.1)
Other underwriting income (1)	16			14
Losses and loss adjustment expenses	(34)			—
Acquisition expenses	(10)			(5)
Other operating expenses	(100)			(100)
Underwriting income	$	441		$	490		(10.0)

Underwriting Ratios							% Point Change
Loss ratio	5.9		%	—		%	5.9
Acquisition expense ratio	1.9		%	0.9		%	1.0
Other operating expense ratio (2)	14.8		%	14.9		%	(0.1)
Combined ratio	22.6		%	15.8		%	6.8

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

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

Premiums Written.

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


	Three Months Ended June 30,
	2026			2025
	Amount		%	Amount		%
U.S. primary mortgage insurance	$	202	74.3	$	184	72.7
U.S. credit risk transfer (CRT) and other	35		12.9	51		20.2
International mortgage insurance/ reinsurance	35		12.9	18		7.1
Total	$	272	100.0	$	253	100.0

2026 Second Quarter versus 2025 Period. Gross premiums written by the mortgage segment in the 2026 second quarter were 0.3% higher than in the 2025 second quarter, with growth in international business offset by a reduction in U.S. monthly premium volume. Net premiums written were 7.5% higher than in the 2025 second quarter, reflecting the termination of certain Bellemeade Re and quota share agreements on U.S. primary business.


ARCH CAPITAL			49			2026 SECOND QUARTER FORM 10-Q


	Six Months Ended June 30,
	2026			2025
	Amount		%	Amount		%
U.S. primary mortgage insurance	$	406	75.5	$	387	74.6
U.S. credit risk transfer (CRT) and other	72		13.4	101		19.5
International mortgage insurance/ reinsurance	60		11.2	31		6.0
Total	$	538	100.0	$	519	100.0

Six Months Ended June 30, 2026 versus 2025 Period. Gross premiums written by the mortgage segment for the six months ended June 30, 2026 were 1.4% lower than in the 2025 period, while net premiums written for the six months ended June 30, 2026 were 3.7% higher than in the 2025 period, reflecting reduced cessions on U.S. primary business.

The persistency rate was 79.9% for the Arch MI U.S. portfolio of primary mortgage insurance policies at June 30, 2026, compared to 81.9% at June 30, 2025. The persistency rate represents the percentage of mortgage insurance in force at the beginning of a 12 month period that remains in force at the end of such period.

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


	Three Months Ended June 30,
2026				2025
	Amount		%		Amount		%
Total new insurance written (NIW)	$	15,624			$	12,254

Credit quality:
>=740	$	12,637	80.9		$	9,411	76.8
680-739	2,619		16.8		2,527		20.6
620-679	357		2.3		313		2.6
<620	11		0.1		3		0.0
Total	$	15,624	100.0		$	12,254	100.0

Loan-to-value (LTV):
95.01% and above	$	1,108	7.1		$	814	6.6
90.01% to 95.00%	6,560		42.0		5,632		46.0
85.01% to 90.00%	5,359		34.3		3,945		32.2
85.00% and below	2,597		16.6		1,863		15.2
Total	$	15,624	100.0		$	12,254	100.0

Monthly vs. single:
Monthly	$	14,941	95.6		$	11,779	96.1
Single	683		4.4		475		3.9
Total	$	15,624	100.0		$	12,254	100.0

Purchase vs. refinance:
Purchase	$	13,854	88.7		$	11,633	94.9
Refinance	1,770		11.3		621		5.1
Total	$	15,624	100.0		$	12,254	100.0


	Six Months Ended June 30,
2026				2025
	Amount		%		Amount		%
Total new insurance written (NIW)	$	30,436			$	21,444

Credit quality:
>=740	$	24,357	80.0		$	16,246	75.8
680-739	5,317		17.5		4,630		21.6
620-679	728		2.4		562		2.6
<620	34		0.1		6		0.0
Total	$	30,436	100.0		$	21,444	100.0

Loan-to-value (LTV):
95.01% and above	$	3,172	10.4		$	1,570	7.3
90.01% to 95.00%	12,364		40.6		10,006		46.7
85.01% to 90.00%	10,049		33.0		6,865		32.0
85.01% and below	4,851		15.9		3,003		14.0
Total	$	30,436	100.0		$	21,444	100.0

Monthly vs. single:
Monthly	$	29,214	96.0		$	20,276	94.6
Single	1,222		4.0		1,168		5.4
Total	$	30,436	100.0		$	21,444	100.0

Purchase vs. refinance:
Purchase	$	25,608	84.1		$	20,428	95.3
Refinance	4,828		15.9		1,016		4.7
Total	$	30,436	100.0		$	21,444	100.0

Net Premiums Earned.

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


	Three Months Ended June 30,
	2026			2025
	Amount		%	Amount		%
U.S. primary mortgage insurance	$	206	72.3	$	188	66.9
U.S. credit risk transfer (CRT) and other	35		12.3	51		18.1
International mortgage insurance/ reinsurance	44		15.4	42		14.9
Total	$	285	100.0	$	281	100.0

2026 Second Quarter versus 2025 Period. Net premiums earned for the 2026 second quarter were 1.4% higher than in the 2025 second quarter, reflecting changes in net premiums written over the previous five quarters.


	Six Months Ended June 30,
	2026			2025
	Amount		%	Amount		%
U.S. primary mortgage insurance	$	415	72.9	$	397	68.3
U.S. credit risk transfer (CRT) and other	72		12.7	101		17.4
International mortgage insurance/ reinsurance	82		14.4	83		14.3
Total	$	569	100.0	$	581	100.0

Six Months Ended June 30, 2026 versus 2025 Period. For the six months ended June 30, 2026, net premiums earned were 2.1% lower than in the 2025 period.


ARCH CAPITAL			50			2026 SECOND QUARTER FORM 10-Q

Other Underwriting Income.

Other underwriting income, which is primarily related to GSE credit risk-sharing transactions, was $5 million for the 2026 second quarter, consistent with $3 million for the 2025 second quarter, and $16 million for the six months ended June 30, 2026, compared to $14 million for the 2025 period.

Losses and Loss Adjustment Expenses.

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2026		2025		2026		2025
Current year	22.2	%	21.6	%	23.3	%	21.6	%
Prior period reserve development	(15.7)	%	(22.8)	%	(17.4)	%	(21.6)	%
Loss ratio	6.5	%	(1.2)	%	5.9	%	—	%

Current Year Loss Ratio.

2026 Second Quarter versus 2025 Period. The mortgage segment’s current year loss ratio was 0.6 points higher in the 2026 second quarter than in the 2025 second quarter. The current year loss ratio for the 2026 second quarter was relatively flat compared to the 2025 second quarter.

Six Months Ended June 30, 2026 versus 2025 Period. The mortgage segment’s current year loss ratio was 1.7 points higher for the six months ended June 30, 2026 than for the 2025 period. The higher current year loss ratio for the 2026 period reflected slightly higher new delinquencies.

Prior Period Reserve Development.

The mortgage segment’s net favorable development was $45 million, or 15.7 points, for the 2026 second quarter, compared to $64 million, or 22.8 points, for the 2025 second quarter, and $99 million, or 17.4 points, for the six months ended June 30, 2026, compared to $125 million, or 21.6 points, for the 2025 period. See note 6, “Reserve for Losses and Loss Adjustment Expenses,” to our consolidated financial statements for information about the mortgage segment’s prior year reserve development.

Underwriting Expenses.

2026 Second Quarter versus 2025 Period. The underwriting expense ratio for the mortgage segment was 16.3% in the 2026 second quarter, compared to 16.4% in the 2025 second quarter.

Six Months Ended June 30, 2026 versus 2025 period. The underwriting expense ratio for the mortgage segment was 16.7% for the six months ended June 30, 2026, compared to 15.8% for the 2025 period.

Corporate

The Company’s corporate results 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 or loss, corporate expenses, transaction costs and other, amortization of intangible assets, interest expense, net foreign exchange gains or losses, income taxes, income from operating affiliates and items related to our non-cumulative preferred shares.

Net Investment Income.

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2026		2025		2026		2025
Fixed maturities	$	386	$	360	$	770	$	702

Short-term investments	26		24		50		50
Equity securities (dividends)	9		10		17		21

Other (1)	21		35		42		63
Gross investment income	442		429		879		836
Investment expenses (2)	(25)		(24)		(54)		(53)
Net investment income	$	417	$	405	$	825	$	783

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

(2) Investment expenses were approximately 0.24% of average invested assets for the 2026 second quarter, compared to 0.25% for the 2025 second quarter, and 0.26% for the six months ended June 30, 2026, consistent with 0.28% for the 2025 period.

The higher level of net investment income for the 2026 periods primarily reflected growth in average invested assets, due in part to strong operating cash flows. Net cash flow from operating activities contributed $2.5 billion for the six months ended June 30, 2026. The pre-tax investment income yield, calculated based on amortized cost and on an annualized basis, was 3.91% for the 2026 second quarter, compared to 4.25% for the 2025 second quarter, and 3.98% for the six months ended June 30, 2026, compared to 4.19% for the 2025 period.


ARCH CAPITAL			51			2026 SECOND QUARTER FORM 10-Q

Corporate Expenses.

Corporate expenses were $12 million for the 2026 second quarter, compared to $29 million for the 2025 second quarter, and $43 million for the six months ended June 30, 2026, compared to $79 million for the 2025 period. Such amounts primarily represent certain holding company costs necessary to support our worldwide operations and costs associated with operating as a publicly traded company. The decline in the 2026 periods primarily reflected the benefit of Bermuda qualified refundable tax credits.

Transaction Costs and Other.

Transaction costs and other for the 2026 second quarter was $32 million, compared to $18 million for the 2025 second quarter, and $50 million for the six months ended June 30, 2026, compared to $28 million for the 2025 period. Amounts in both periods primarily includes direct costs related to the MCE Acquisition.

Other Income or Losses.

Other income for the 2026 second quarter was $30 million, compared to $18 million for the 2025 second quarter, and $25 million for the six months ended June 30, 2026, compared to $16 million for the 2025 period. Amounts in both periods primarily reflect changes in the cash surrender value of our investment in corporate-owned life insurance.

Amortization of Intangible Assets.

Amortization of intangible assets for the 2026 second quarter was $30 million, compared to $48 million for the 2025 second quarter, and $60 million for the six months ended June 30, 2026, compared to $97 million for the 2025 period. Amounts in both periods primarily related to the MCE Acquisition.

Interest Expense.

Interest expense was $44 million for the 2026 second quarter, compared to $38 million for the 2025 second quarter, and $81 million for the six months ended June 30, 2026, compared to $73 million for the 2025 period. Interest expense primarily reflects amounts related to our outstanding senior notes. See note 11, “Commitments and Contingencies," to our consolidated financial statements for additional information.

Net Realized Gains or Losses.

Net realized losses for the 2026 second quarter were $17 million, compared to net realized gains of $229 million for the 2025 second quarter. Net realized losses were $104 million for the six months ended June 30, 2026, compared to net realized gains of $232 million for the 2025 period. Amounts in both periods reflected sales of investments as well as net unrealized gains or losses related to financial market movements on the Company’s equity securities and investments accounted for under the fair value option method. Amounts in the 2026 periods also include a litigation-related loss contingency recorded pursuant to ASC 450, while amounts in the 2025 periods include losses related to the sale of certain alternative investments accounted for under the equity method.

Currently, our portfolio is actively managed to maximize total return within certain guidelines. The effect of financial market movements on the investment portfolio will directly impact net realized gains or losses as the portfolio is adjusted and rebalanced. Net realized gains or losses from the sale of fixed maturities primarily results from our decisions to reduce credit exposure, to change duration targets, to rebalance our portfolios or due to relative value determinations.

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

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

Equity in net income of investments accounted for using the equity method was $196 million in the 2026 second quarter, compared to $162 million for the 2025 second quarter, and $356 million for the six months ended June 30, 2026, compared to $215 million for the 2025 period. Such investments are generally recorded on a one to three month lag based on the availability of reports from the investment funds. Investment funds accounted for using the equity method totaled $6.9 billion at June 30, 2026, compared to $6.5 billion at December 31, 2025. See note 8, “Investment Information—Investments Accounted For Using the Equity Method,” to our consolidated financial statements for additional information.


ARCH CAPITAL			52			2026 SECOND QUARTER FORM 10-Q

Net Foreign Exchange Gains or Losses.

Net foreign exchange gains for the 2026 second quarter were $10 million, compared to losses of $88 million for the 2025 second quarter. Net foreign exchange gains for the six months ended June 30, 2026 were $31 million, compared to losses of $115 million for the 2025 period. Amounts in both periods were primarily unrealized and resulted from the effects of revaluing our net insurance liabilities required to be settled in foreign currencies at each balance sheet date.

Income Tax Expense.

Our income tax provision on income or loss before income taxes, including income or loss from operating affiliates, resulted in an expense of 13.4% for the 2026 second quarter, compared to an expense of 14.7% for the 2025 second quarter, and an expense of 11.1% for the six months ended June 30, 2026, compared to an expense of 15.6% for the 2025 period. See note 14, “Income Taxes” to our consolidated financial statements for additional information.

Income or Losses from Operating Affiliates.

Income from operating affiliates for the 2026 second quarter was $46 million, compared to income of $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 the 2025 period. Such amounts primarily related to the Company’s investment in Somers Group Holdings Ltd. and Coface SA. See note 8, “Investment Information—Investments in Operating Affiliates,” to our consolidated financial statements for additional information.

CRITICAL ACCOUNTING POLICIES,

ESTIMATES AND RECENT ACCOUNTING PRONOUNCEMENTS

Critical accounting policies, estimates and recent accounting pronouncements are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our 2025 Form 10-K, updated where applicable in the notes accompanying our consolidated financial statements, including note 1, “Basis of Presentation and Recent Accounting Pronouncements.”

FINANCIAL CONDITION

Investable Assets Held by Arch

At June 30, 2026, approximately $30.5 billion, or 61.6%, of total investable assets held by Arch were internally managed, compared to $29.5 billion, or 62.2%, at December 31, 2025. See note 8, “Investment Information” to our consolidated financial statements for additional information.

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


	June 30, 2026	December 31, 2025
Average effective fixed maturities duration (in years)	3.50	3.34
Average S&P/Moody’s credit ratings (1)	AA-/Aa3	AA-/Aa3

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

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


	Estimated Fair Value		% of Total
June 30, 2026
U.S. government and gov’t agencies (1)	$	10,011	29.2
AAA	5,580		16.3
AA	2,638		7.7
A	6,526		19.0
BBB	6,698		19.5
BB	1,391		4.1
B	818		2.4
Lower than B	42		0.1
Not rated	626		1.8
Total	$	34,330	100.0

December 31, 2025
U.S. government and gov’t agencies (1)	$	9,561	28.5
AAA	5,667		16.9
AA	2,564		7.6
A	6,448		19.2
BBB	6,533		19.5
BB	1,330		4.0
B	734		2.2
Lower than B	35		0.1
Not rated	664		2.0
Total	$	33,536	100.0

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


ARCH CAPITAL			53			2026 SECOND QUARTER FORM 10-Q

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


Severity of gross unrealized losses:	Estimated Fair Value		Gross Unrealized Losses		% of Total Gross Unrealized Losses
June 30, 2026
0-10%	$	22,504	$	(327)	79.0
10-20%	558		(81)		19.6
20-30%	13		(5)		1.2
Greater than 30%	2		(1)		0.2
Total	$	23,077	$	(414)	100.0

December 31, 2025
0-10%	$	11,702	$	(202)	69.9
10-20%	556		(80)		27.7
20-30%	20		(6)		2.1
Greater than 30%	1		(1)		0.3
Total	$	12,279	$	(289)	100.0

The following table summarizes our top ten exposures to fixed income corporate issuers by fair value at June 30, 2026, excluding guaranteed amounts and covered bonds:


	Estimated Fair Value		Credit Rating (1)
Morgan Stanley	$	482	A/A1
The Goldman Sachs Group, Inc.	293		BBB+/A2
JPMorgan Chase & Co.	261		A/A1
Citigroup Inc.	256		A-/A2
Bank of America Corporation	255		A-/A1
Amazon.com, Inc.	221		AA/A1
The Toronto-Dominion Bank	213		A-/A2
UBS Group AG	175		A/A1
Hyundai Motor Company	155		A-/A3
Oracle Corporation	146		BBB/Baa2
Total	$	2,457

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

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


	Agencies		Investment Grade		Below Investment Grade		Total
June 30, 2026
RMBS	$	1,942	$	697	$	4	$	2,643
CMBS	6		1,431		112		1,549
ABS	—		3,376		301		3,677
Total	$	1,948	$	5,504	$	417	$	7,869

December 31, 2025
RMBS	$	2,105	$	600	$	—	$	2,705
CMBS	6		1,129		77		1,212
ABS	—		3,368		206		3,574
Total	$	2,111	$	5,097	$	283	$	7,491

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


	June 30, 2026		December 31, 2025
Equities (1)	$	1,540	$	1,296
Exchange traded funds
Fixed income (2)	538		316
Equity and other (3)	207		257
Total	$	2,285	$	1,869

(1)Primarily in technology, communications, financial, consumer non-cyclical and industrial sectors at June 30, 2026.

(2)Primarily in structured, corporate and government exposures at June 30, 2026.

(3)Primarily in technology, financials, communications, consumer cyclical and healthcare sectors at June 30, 2026.

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

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

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


ARCH CAPITAL			54			2026 SECOND QUARTER FORM 10-Q

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

Reinsurance

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2026		2025		2026		2025
Premiums written:
Direct	$	2,622	$	2,581	$	5,348	$	5,173
Assumed	3,504		3,615		7,203		7,486
Ceded	(2,077)		(1,848)		(4,154)		(3,796)
Net	$	4,049	$	4,348	$	8,397	$	8,863

Premiums earned:
Direct	$	2,587	$	2,560	$	5,139	$	5,020
Assumed	2,989		3,332		5,965		6,559
Ceded	(1,591)		(1,555)		(3,133)		(3,054)
Net	$	3,985	$	4,337	$	7,971	$	8,525

Losses and LAE:
Direct	$	1,596	$	1,464	$	3,075	$	2,741
Assumed	1,426		1,624		2,778		4,195
Ceded	(826)		(785)		(1,568)		(2,046)
Net	$	2,196	$	2,303	$	4,285	$	4,890

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

Bellemeade Re

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

The following table summarizes the respective coverages and retentions at June 30, 2026:


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

2021-3 Ltd. (1)	$	639	$	29	$	128
2022-1 Ltd. (2)	317		52		132
2022-2 Ltd. (3)	327		124		181
2023-1 Ltd. (4)	233		153		152
2024-1 Ltd. (5)	204		118		161
2025-1 Ltd. (6)	249		215		161
Total	$	1,969	$	691	$	915

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

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

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

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

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

(6) Issued in November 2025, covering in-force policies issued between July 1, 2024 and September 30, 2025. $199 million was directly funded by Bellemeade Re 2025-1 Ltd. via insurance-linked notes, with an additional $50 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

Reserve for Losses and Loss Adjustment Expenses

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


ARCH CAPITAL			55			2026 SECOND QUARTER FORM 10-Q

At June 30, 2026 and December 31, 2025, our Loss Reserves, net of unpaid losses and loss adjustment expenses recoverable, by type and by operating segment were as follows:


	June 30, 2026		December 31, 2025
Insurance segment:
Case reserves	$	3,549	$	3,489
IBNR reserves	9,630		9,251
Total net reserves	13,179		12,740
Reinsurance segment:
Case reserves	2,947		2,929
Additional case reserves	941		1,034
IBNR reserves	7,937		7,349
Total net reserves	11,825		11,312
Mortgage segment:
Case reserves	341		324
IBNR reserves	119		117
Total net reserves	460		441





Total:
Case reserves	6,837		6,742
Additional case reserves	941		1,034
IBNR reserves	17,686		16,717
Total net reserves	$	25,464	$	24,493

At June 30, 2026 and December 31, 2025, the insurance segment’s Loss Reserves by major line of business, net of unpaid losses and loss adjustment expenses recoverable, were as follows:


	June 30, 2026		December 31, 2025
Insurance segment:
Third party occurrence business	$	4,777	$	4,610
Multi-line and other specialty	4,360		4,345
Third party claims-made business	2,946		2,861
Property, energy, marine and aviation	1,096		924
Total net reserves	$	13,179	$	12,740

At June 30, 2026 and December 31, 2025, the reinsurance segment’s Loss Reserves by major line of business, net of unpaid losses and loss adjustment expenses recoverable, were as follows:


	June 30, 2026		December 31, 2025
Reinsurance segment:
Casualty	$	4,131	$	3,823
Specialty	3,840		3,658
Property excluding property catastrophe	2,191		2,107
Property catastrophe	886		953
Marine and aviation	572		582
Other	205		189
Total net reserves	$	11,825	$	11,312

At June 30, 2026 and December 31, 2025, the mortgage segment’s Loss Reserves by major line of business, net of unpaid losses and loss adjustment expenses recoverable, were as follows:


	June 30, 2026		December 31, 2025
Mortgage segment:
U.S. primary mortgage insurance	$	341	$	321
U.S. credit risk transfer (CRT) and other	58		64
International mortgage insurance/ reinsurance	61		56
Total net reserves	$	460	$	441

Mortgage Operations Supplemental Information

The mortgage segment’s insurance in force (“IIF”) and risk in force (“RIF”) were as follows at June 30, 2026 and December 31, 2025:


	June 30, 2026					December 31, 2025
Amount			%		Amount			%
Insurance In Force (IIF) (1):
U.S. primary mortgage insurance	$	286,399		59.8		$	286,318		59.1
U.S. credit risk transfer (CRT) and other	128,228			26.8		132,205			27.3
International mortgage insurance/reinsurance	64,254			13.4		66,084			13.6
Total	$	478,881		100.0		$	484,607		100.0

Risk In Force (RIF) (2):
U.S. primary mortgage insurance	$	73,978		84.3		$	74,679		85.0
U.S. credit risk transfer (CRT) and other	5,194			5.9		5,358			6.1
International mortgage insurance/reinsurance	8,599			9.8		7,864			8.9
Total	$	87,771		100.0		$	87,901		100.0

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

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


ARCH CAPITAL			56			2026 SECOND QUARTER FORM 10-Q

The IIF and RIF for our U.S. primary mortgage insurance business by policy year were as follows at June 30, 2026:


	IIF					RIF					Delinquency
Amount			%		Amount			%		Rate (1)
Policy year:
2016 and prior	$	18,210		6.4		$	4,632		6.3		4.72	%
2017	3,188			1.1		825			1.1		4.48	%
2018	4,956			1.7		1,293			1.7		4.46	%
2019	9,003			3.1		2,374			3.2		2.97	%
2020	26,603			9.3		7,338			9.9		1.88	%
2021	45,079			15.7		12,454			16.8		1.92	%
2022	45,532			15.9		12,290			16.6		1.94	%
2023	27,590			9.6		7,125			9.6		2.09	%
2024	35,074			12.2		8,807			11.9		1.45	%
2025	41,632			14.5		10,106			13.7		0.45	%
2026	29,532			10.3		6,734			9.1		0.06	%
Total	$	286,399		100.0		$	73,978		100.0		2.07	%

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

The IIF and RIF for our U.S. primary mortgage insurance business by policy year were as follows at December 31, 2025:


	IIF					RIF					Delinquency
Amount			%		Amount			%		Rate (1)
Policy year:
2016 and prior	$	19,384		6.8		$	4,923		6.6		5.08	%
2017	4,250			1.5		1,127			1.5		3.87	%
2018	5,673			2.0		1,479			2.0		4.48	%
2019	10,553			3.7		2,770			3.7		3.08	%
2020	30,968			10.8		8,487			11.4		1.85	%
2021	50,141			17.5		13,767			18.4		1.88	%
2022	49,492			17.3		13,236			17.7		1.87	%
2023	31,049			10.8		8,006			10.7		1.93	%
2024	39,306			13.7		9,840			13.2		1.17	%
2025	45,502			15.9		11,044			14.8		0.20	%

Total	$	286,318		100.0		$	74,679		100.0		2.17	%

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

The following tables provide supplemental disclosures on risk in force for our U.S. primary mortgage insurance business at June 30, 2026 and December 31, 2025:


	June 30, 2026						December 31, 2025
Amount				%		Amount				%
Credit quality:
>=740	$	48,123			65.1		$	47,757			63.9
680-739	22,351				30.2		23,271				31.2
620-679	3,208				4.3		3,340				4.5
<620	296				0.4		311				0.4
Total	$	73,978			100.0		$	74,679			100.0
Weighted average credit score	751						749

Loan-to-value (LTV):
95.01% and above	$	7,417			10.0		$	7,314			9.8
90.01% to 95.00%	43,944				59.4		44,494				59.6
85.01% to 90.00%	19,727				26.7		20,195				27.0
85.00% and below	2,890				3.9		2,676				3.6
Total	$	73,978			100.0		$	74,679			100.0
Weighted average LTV	93.2		%				93.2		%

Total RIF, net of external reinsurance	$	61,982					$	60,259


	June 30, 2026					December 31, 2025
Amount			%		Amount			%
Total RIF by State:
California	$	5,945		8.0		$	5,901		7.9
Texas	5,385			7.3		5,382			7.2
North Carolina	3,266			4.4		3,343			4.5
Minnesota	3,099			4.2		3,129			4.2
Illinois	3,067			4.1		3,042			4.1
Georgia	2,927			4.0		3,005			4.0
Michigan	2,766			3.7		2,816			3.8
Florida	2,678			3.6		2,672			3.6
Ohio	2,648			3.6		2,666			3.6
Massachusetts	2,635			3.6		2,780			3.7
Other	39,562			53.5		39,943			53.5
Total	$	73,978		100.0		$	74,679		100.0


ARCH CAPITAL			57			2026 SECOND QUARTER FORM 10-Q

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


(U.S. Dollars in thousands, except policy, loan and claim count)	Six Months Ended
June 30,
2026				2025
Roll-forward of insured loans in default:
Beginning delinquent number of loans	22,985				22,982
New notices	23,060				22,385
Cures	(23,793)				(24,005)
Paid claims	(733)				(600)

Ending delinquent number of loans (1)	21,519				20,762

Ending number of policies in force (1)	1,039,751				1,073,477

Ending percentage of loans in default (1)	2.07		%		1.93		%

Losses:
Number of claims paid	733				600
Total paid claims	$	34,648			$	24,653
Average per claim	$	47.3			$	41.1
Severity (2)	78.4		%		76.0		%
Average case reserve per default (1)	$	16.9			$	16.8

(1)Includes first lien primary and pool policies.

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

The risk to capital ratio, which represents total current (non-delinquent) risk in force, net of reinsurance, divided by total statutory capital, for Arch MI U.S. was approximately 8.8 to 1 at June 30, 2026, compared to 8.2 to 1 at December 31, 2025.

Shareholders’ Equity and Book Value per Share

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


	June 30, 2026		December 31, 2025
Total shareholders’ equity available to Arch	$	24,030	$	24,206
Less preferred shareholders’ equity	830		830
Common shareholders’ equity available to Arch	$	23,200	$	23,376
Common shares and common share equivalents outstanding, net of treasury shares (1)	341.0		359.0
Book value per share	$	68.04	$	65.11

(1)Excludes the effects of 8.5 million and 10.2 million stock options and 0.4 million and 0.3 million restricted and performance share units outstanding at June 30, 2026 and December 31, 2025, respectively.

LIQUIDITY

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

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

For the six months ended June 30, 2026, Arch Capital received dividends of $1.9 billion from Arch Reinsurance Ltd. (“Arch Re Bermuda”), our Bermuda based reinsurer and insurer, which can pay approximately $4.5 billion to Arch Capital during the remainder of 2026 without providing an affidavit to the Bermuda Monetary Authority.

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

Cash Flows

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


	Six Months Ended
	June 30,
	2026		2025
Total cash provided by (used for):
Operating activities	$	2,510	$	2,582
Investing activities	(2,174)		(2,236)
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 provided by operating activities for the six months ended June 30, 2026 was lower than in the 2025 period. Activity for the six months ended June 30, 2026 primarily reflected a lower level of premium collected than in the 2025 period.

Cash used for investing activities for the six months ended June 30, 2026 was lower than in the 2025 period. Activity for the six months ended June 30, 2026 reflected higher purchases and sales of investments than in the 2025 period.


ARCH CAPITAL			58			2026 SECOND QUARTER FORM 10-Q

Cash used for financing activities for the six months ended June 30, 2026 was higher than in the 2025 period and reflected the issuance of $2.0 billion of senior notes, partially offset by tender offer activity of $398 million. In addition, we repurchased approximately $1.9 billion of our common shares in the 2026 period, compared to $359.7 million in the 2025 period.

CAPITAL RESOURCES

The following table provides an analysis of our capital structure:


	June 30, 2026		December 31, 2025







Senior notes	$	4,286	$	2,729

Shareholders’ equity available to Arch:

Series F non-cumulative preferred shares	$	330	$	330
Series G non-cumulative preferred shares	500		500
Common shareholders’ equity	23,200		23,376
Total	$	24,030	$	24,206

Total capital available to Arch	$	28,316	$	26,935



Debt to total capital (%)	15.1		10.1
Preferred to total capital (%)	2.9		3.1
Debt and preferred to total capital (%)	18.1		13.2

On June 9, 2026, Arch Capital completed a public offering of $2.0 billion of senior notes, consisting of $600 million of 5.250% senior notes due in 2036 and $1.4 billion of 5.950% senior notes due in 2056. Arch Capital used a portion of the net proceeds to pay the tender price for the cash tender offers described below and expects to use the remaining net proceeds from this offering to redeem, repurchase, repay or otherwise retire its 4.011% senior notes due in 2026 and the balance for general corporate purposes. On June 16, 2026, the Company completed the cash tender offers for certain outstanding senior notes, with Arch Capital Group (U.S.) Inc. (“Arch-U.S.”) repurchasing $218.7 million of its 5.144% senior notes due in 2043, and Arch Capital Finance LLC (“Arch Finance”) repurchasing $199.1 million of its 5.031% senior notes due in 2046. See note 11, “Commitments and Contingencies," to our consolidated financial statements for additional information.

Arch MI U.S. is required to maintain compliance with the GSEs requirements, known as the Private Mortgage Insurer Eligibility Requirements or “PMIERs.” The financial requirements require an eligible mortgage insurer’s available assets, which generally include only the most liquid assets of an insurer, to meet or exceed “minimum required assets” as of each quarter end. Minimum required assets are calculated from PMIERs tables with several risk dimensions (including origination year, original loan-to-value and original credit score of performing loans, and the delinquency status of non-performing loans) and are subject

to a minimum amount. Arch MI U.S. satisfied the PMIERs’ financial requirements with an estimated PMIERs sufficiency ratio of 165% at June 30, 2026, compared to 179% at December 31, 2025. On August 21, 2024, Fannie Mae and Freddie Mac each updated their PMIERs to incorporate new deductions to available assets for investment risk. This update became effective on March 31, 2025, but the impact will be phased in through September 30, 2026. If the GSEs had fully implemented this update to PMIERs as of June 30, 2026, the changes would have reduced the available assets by 3% and resulted in a pro-forma PMIERs sufficiency ratio of 162%.

As part of our capital management program, we may seek to raise additional capital or may seek to return capital to our shareholders through share repurchases, cash dividends or other methods (or a combination of such methods). We may also seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Any such determination will be at the discretion of the Board and will be dependent upon our profits, financial requirements and other factors, including legal restrictions, rating agency requirements, prevailing market conditions and such other factors as our Board deems relevant. The amounts involved may be material.

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

GUARANTOR INFORMATION

The below table provides a description of our senior notes payable at June 30, 2026:


	Interest		Principal		Carrying
Issuer/Due	(Fixed)		Amount		Amount
Arch Capital:
May 1, 2034	7.350	%	$	300	$	298
June 15, 2036	5.250	%	600		591
June 30, 2050	3.635	%	1,000		990
June 15, 2056	5.950	%	1,400		1,379
Arch-U.S.:
Nov. 1, 2043 (1)	5.144	%	281		279
Arch Finance:
Dec. 15, 2026 (1)	4.011	%	500		500
Dec. 15, 2046 (1)	5.031	%	251		249
Total			$	4,332	$	4,286

(1)Fully and unconditionally guaranteed by Arch Capital.


ARCH CAPITAL			59			2026 SECOND QUARTER FORM 10-Q

Our senior notes were issued by Arch Capital, Arch-U.S. and Arch Finance. Arch-U.S. is a wholly-owned subsidiary of Arch Capital and Arch Finance is a wholly-owned finance subsidiary of Arch-U.S. Our 2034 senior notes, 2036 senior notes, 2050 senior notes and 2056 senior notes issued by Arch Capital are unsecured and unsubordinated obligations of Arch Capital and ranked equally with all of its existing and future unsecured and unsubordinated indebtedness. The 2043 senior notes issued by Arch-U.S. are unsecured and unsubordinated obligations of Arch-U.S. and Arch Capital and rank equally and ratably with the other unsecured and unsubordinated indebtedness of Arch-U.S. and Arch Capital. The 2026 senior notes and 2046 senior notes issued by Arch Finance are unsecured and unsubordinated obligations of Arch Finance and Arch Capital and rank equally and ratably with the other unsecured and unsubordinated indebtedness of Arch Finance and Arch Capital.

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

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


	June 30, 2026				December 31, 2025
	Arch Capital		Arch-U.S.		Arch Capital		Arch-U.S.
Assets
Total investments	$	27	$	662	$	40	$	442
Cash	30		3		13		4

Investment in operating affiliates	2		—		3		—
Due from subsidiaries and affiliates	13		25		16		14






Other assets	253		136		194		129
Total assets	$	325	$	826	$	266	$	589

Liabilities






Senior notes	3,258		279		1,288		496

Due to subsidiaries and affiliates	6		1,009		6		993
Other liabilities	66		61		41		58
Total liabilities	$	3,330	$	1,349	$	1,335	$	1,547

Non-cumulative preferred shares	$	830	—		$	830	—


	Six Months Ended

	June 30, 2026
	Arch Capital	Arch-U.S.
Revenues

Net investment income		$	1	$	12
Net realized gains (losses)		—		5
Equity in net income (loss) of investments accounted for using the equity method		—		(5)

Total revenues		1		12

Expenses
Corporate expenses		43		3
Interest expense		36		12
Interest expense (intercompany)		—		29
Total expenses		79		44

Income (loss) before income taxes and income (loss) from operating affiliates		(78)		(32)
Income tax (expense) benefit		24		1




Net income available to Arch		(54)		(31)
Preferred dividends		(20)		—
Net income (loss) available to Arch common shareholders		$	(74)	$	(31)

CATASTROPHIC AND SEVERE ECONOMIC EVENTS

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

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


ARCH CAPITAL			60			2026 SECOND QUARTER FORM 10-Q

Based on in-force exposure estimated as of July 1, 2026, our modeled peak zone catastrophe exposure was a windstorm affecting the Florida Tri-County regions, with a net probable maximum pre-tax loss of $1.8 billion, or 8.0% of tangible shareholders’ equity available to Arch, followed by windstorms affecting the Northeastern U.S. and the Gulf of Mexico regions with net probable maximum pre-tax losses of $1.5 billion and $1.4 billion, respectively. Our exposures to other perils, such as U.S. earthquake and international events, were less than the exposures arising from U.S. windstorms and hurricanes. As of July 1, 2026, our modeled peak zone earthquake exposure (San Francisco earthquake) represented approximately 50% of our peak zone catastrophe exposure, and our modeled peak zone international exposure (Australia earthquake) was substantially less than both our peak zone windstorm and earthquake exposures.

We also have significant exposure to losses due to mortgage defaults resulting from severe economic events in the future. For our U.S. and Australian mortgage insurance business, we have developed a proprietary risk model (“Realistic Disaster Scenario” or “RDS”) that simulates the maximum loss resulting from a severe economic downturn impacting the housing market. The RDS models the collective impact of adverse conditions for key economic indicators, the most significant of which is a decline in home prices. The RDS model projects paths of future home prices, unemployment rates, income levels and interest rates and assumes correlation across states and geographic regions. The resulting future performance of our in-force portfolio is then estimated under the economic stress scenario, reflecting loan and borrower information.

Currently, we seek to limit our modeled RDS loss from a severe economic event to approximately 25% of tangible shareholders’ equity available to Arch. We reserve the right to change this threshold at any time. Based on in-force exposure estimated as of July 1, 2026, our modeled RDS loss was approximately $955 million, or 4.2% of tangible shareholders’ equity available to Arch.

Net probable maximum loss estimates are net of expected reinsurance recoveries, before income tax and before excess reinsurance reinstatement premiums. RDS loss estimates are net of expected reinsurance recoveries and before income tax. Catastrophe loss estimates are reflective of the zone indicated and not the entire portfolio. Since hurricanes and windstorms can affect more than one zone and make multiple landfalls, our catastrophe loss estimates include clash estimates from other zones. Our catastrophe loss estimates and RDS loss estimates do not represent our maximum exposures and it is highly likely that our actual incurred losses would vary materially from the modeled estimates. There can be no assurances that we will not suffer pre-tax losses greater than 25% of our tangible

shareholders’ equity from one or more catastrophic events or severe economic events due to several factors. These factors include the inherent uncertainties in estimating the frequency and severity of such events and the margin of error in making such determinations resulting from potential inaccuracies and inadequacies in the data provided by clients and brokers, the modeling techniques and the application of such techniques or as a result of a decision to change the percentage of shareholders' equity exposed to a single catastrophic event or severe economic event. In addition, actual losses may increase if our reinsurers fail to meet their obligations to us or the reinsurance protections purchased by us are exhausted or are otherwise unavailable. See “Risk Factors—Risks Relating to Our Industry” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Catastrophic Events and Severe Economic Events” in our 2025 Form 10-K.

MARKET SENSITIVE INSTRUMENTS AND RISK MANAGEMENT

In accordance with the SEC’s Financial Reporting Release No. 48, we performed a sensitivity analysis to determine the effects that market risk exposures could have on the future earnings, fair values or cash flows of our financial instruments as of June 30, 2026. Market risk represents the risk of changes in the fair value of a financial instrument and is comprised of several components, including liquidity, basis and price risks.

An analysis of material changes in market risk exposures at June 30, 2026 that affect the quantitative and qualitative disclosures presented in our 2025 Form 10-K (see section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Market Sensitive Instruments and Risk Management”) were as follows:

Investment Market Risk

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


ARCH CAPITAL			61			2026 SECOND QUARTER FORM 10-Q

materially from the amounts set forth in the following tables.

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


(U.S. dollars in billions)	Interest Rate Shift in Basis Points
-100				-50				—			+50				+100
June 30, 2026
Total fair value	$	47.7			$	47.0			$	46.3		$	45.6			$	45.0
Change from base	3.0		%		1.5		%					(1.5)		%		(2.9)		%
Change in unrealized value	$	1.4			$	0.7						$	(0.7)			$	(1.3)

December 31, 2025
Total fair value	$	45.8			$	45.2			$	44.6		$	44.0			$	43.3
Change from base	2.8		%		1.4		%					(1.4)		%		(2.8)		%
Change in unrealized value	$	1.2			$	0.6						$	(0.6)			$	(1.2)

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

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


(U.S. dollars in billions)	Credit Spread Shift in Percentage Points
-100				-50				—			+50				+100
June 30, 2026
Total fair value	$	47.5			$	46.9			$	46.3		$	45.7			$	45.1
Change from base	2.6		%		1.3		%					(1.3)		%		(2.6)		%
Change in unrealized value	$	1.2			$	0.6						$	(0.6)			$	(1.2)

December 31, 2025
Total fair value	$	45.8			$	45.2			$	44.6		$	44.0			$	43.3
Change from base	2.8		%		1.4		%					(1.4)		%		(2.8)		%
Change in unrealized value	$	1.2			$	0.6						$	(0.6)			$	(1.2)

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

sensitivities of a portfolio to a broad set of systematic market risk factors and idiosyncratic risk factors mapped to the portfolio exposures. The relationships between the risk factors are estimated using historical data, and the most recent data points are generally given more weight. As of June 30, 2026, our portfolio’s 95th percentile VaR was estimated to be 6.4%, compared to an estimated 6.5% at December 31, 2025. In periods where the volatility of the risk factors mapped to our portfolio’s exposures is higher due to market conditions, the resulting VaR is higher than in other periods.

Equity Securities. At June 30, 2026 and December 31, 2025, the fair value of our investments in equity securities and certain investments accounted for using the equity method with underlying equity strategies totaled $2.1 billion and $1.8 billion, respectively. These investments are exposed to price risk, which is the potential loss arising from decreases in fair value. An immediate hypothetical 10% decline in the value of each position would reduce the fair value of such investments by approximately $209 million and $178 million at June 30, 2026 and December 31, 2025, respectively, and would have decreased book value per share by approximately $0.61 and $0.50, respectively. An immediate hypothetical 10% increase in the value of each position would increase the fair value of such investments by approximately $209 million and $178 million at June 30, 2026 and December 31, 2025, respectively, and would have increased book value per share by approximately $0.61 and $0.50, respectively.

Investment-Related Derivatives. At June 30, 2026, the notional value of all derivative instruments (excluding foreign currency forward contracts which are included in the foreign currency exchange risk analysis below) was $10.9 billion, compared to $8.0 billion at December 31, 2025. If the underlying exposure of each investment-related derivative held at June 30, 2026 depreciated by 100 basis points, it would have resulted in a reduction in net income of approximately $109 million, and a decrease in book value per share of approximately $0.32 per share, compared to $80 million and $0.22 per share, respectively, on investment-related derivatives held at December 31, 2025. If the underlying exposure of each investment-related derivative held at June 30, 2026 appreciated by 100 basis points, it would have resulted in an increase in net income of approximately $109 million, and an increase in book value per share of approximately $0.32 per share, compared to $80 million and $0.22 per share, respectively, on investment-related derivatives held at December 31, 2025. See note 10, “Derivative Instruments,” to our consolidated financial statements for additional disclosures concerning derivatives.

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


ARCH CAPITAL			62			2026 SECOND QUARTER FORM 10-Q

Foreign Currency Exchange Risk

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

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


	June 30, 2026		December 31, 2025
Net assets (liabilities), denominated in foreign currencies, excluding shareholders’ equity and derivatives	$	(601)	$	(498)
Shareholders’ equity denominated in foreign currencies (1)	1,209		1,220
Net foreign currency forward contracts outstanding (2)	1,067		478
Net exposures denominated in foreign currencies	$	1,675	$	1,200

Pre-tax impact of a hypothetical 10% appreciation of the U.S. Dollar against foreign currencies:
Shareholders’ equity	$	(168)	$	(120)
Book value per share	$	(0.49)	$	(0.33)

Pre-tax impact of a hypothetical 10% decline of the U.S. Dollar against foreign currencies:
Shareholders’ equity	$	168	$	120
Book value per share	$	0.49	$	0.33

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

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

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

Effects of Inflation

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

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