Arch Capital’s first-quarter profit dropped 49.2% due to significant catastrophe losses from California wildfires, echoing similar trends in the industry with peers like W R Berkley and Chubb. California faced severe wildfires, leading to fatalities and economic damage estimated at $250 billion. Insurance regulations in the state restrict premium price adjustments based on risk, which has frustrated insurers.
Arch reported a pre-tax catastrophe loss of $547 million, primarily from these wildfires, and forecasted an insured market loss of $35-45 billion, with its own losses estimated between $450-550 million. Gross premiums rose 8.9% to $6.46 billion, and net investment income increased 15.6% to $378 million. The company’s losses for the quarter were $2.59 billion, up from $1.73 billion the previous year, with profit available to shareholders at $564 million ($1.48 per share), down from $1.11 billion ($2.92 per share) last year. The combined ratio was 90.1%, indicating better premium earnings compared to claims.
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