Arch Capital Group (ACGL) Financial History

The adoption of the tax laws described above (in particular, the adoption of an “under-taxed profit rule” by certain countries in which we and our affiliates do business and the enactment of a corporate income tax reg…

It is expected that the Bermuda CIT Act generally will prevent or mitigate the risk of other adopting countries from collecting “top-up” taxes from Bermuda companies to reach the 15% minimum rate, although the continu…

The Bermuda CIT Act was enacted in December 2023 and is effective for tax years beginning on or after January 1, 2025.

The members of the EU have either already adopted domestic legislation implementing the minimum tax rules, pursuant to the EU’s minimum tax directive, unanimously agreed by the member states in 2022 or have exercised…

Pillar II addresses the remaining BEPS risk of profit shifting to certain in-scope entities in low tax jurisdictions by introducing a global minimum tax (15%).

economy and focuses on the allocation of group profits among taxing jurisdictions based on a market-based concept rather than historical “permanent establishment” concepts.

We are subject to increased taxation in Bermuda as a result of the Bermuda CIT Act, effective January 1, 2025 and may become subject to increased taxation in other countries as a result of the implementation of the OE…

The jurisdictions where we operate have laws and regulations that require regulatory approval of a change in control of an insurer or an insurer's holding company.

Among other things, our bye-laws provide: for a classified Board, in which the directors of the class elected at each annual general meeting holds office for a term of three years, with the term of each class expiring…

Risks Relating to Our Company and Our Shares

The ERCF includes higher risk-capital charges for residential mortgages and continues to take into account the benefits of private mortgage insurance, provided the mortgage insurer is compliant with the PMIERs.

In 2020, the FHFA published a new Enterprise Regulatory Capital Framework (“ERCF”) for Fannie Mae and Freddie Mac that significantly increased minimum capital requirements for the GSEs.

In 2023, the Federal banking agencies released a proposed rule to implement the Basel III Endgame in the United States, which would apply to banks with assets greater than $100 billion.

In 2017, the Basel Committee on Banking Supervision published final revisions to the Basel Capital Accord which is informally denominated in the U.S., as “Basel III Endgame.” The Basel Committee expects the new rules…

The implementation of the Basel III Capital Accord and FHFA’s Enterprise Regulatory Capital Framework may adversely affect the use of mortgage insurance and SRT and CRT opportunities.

On January 2, 2025, the U.S.

To reduce pressure on housing affordability in Australia, the Australian Government introduced the First Home Guarantee Scheme (“HGS”) in 2020, designed to support eligible first home buyers by allowing them to purcha…

The FHFA as conservator of the GSEs continues to evaluate loan level price adjustments (“LLPAs”) and guarantees fees assessed by the GSEs when purchasing loans.

The private mortgage insurers’ principal government competitor in the U.S.

The size of the U.S.

Monthly interest rate changes in Australia or the increasing cost of homeowners insurance in the U.S.

Mortgage insurance premiums are set at the time coverage is procured, based in part on the expected duration of the coverage.

The mix of business in our insured loan portfolio may affect losses.

Arch Re Bermuda is a registered Bermuda insurance company and is not licensed or admitted as an insurer in any jurisdiction in the U.S., although Arch Re Bermuda has been approved as a “certified reinsurer” and a “rec…

On a quarterly basis, we review our investments by applying an approach based on the CECL and whether declines in fair value below the cost basis requires an estimate of the expected credit loss.

Disruption in the financial markets and the downturn in global economic activity resulting from geopolitical conflict or economic decisions/trade wars, elevated financing rates, property market declines or other macro…

We must comply with all applicable economic sanctions and anti-bribery laws and regulations of the U.S.

business, information technology or information security failures and failure to train employees appropriately or adequately.

We can offer no assurances that our ratings will remain at their current levels.

We are subject to many laws and regulations relating to the adequacy of cybersecurity programs and business resiliency, including the SEC Cybersecurity Rules, and comprehensive privacy, security and business resilienc…

We rely on information technology systems to securely process, transmit, store and protect the confidential and electronic information, financial data and proprietary models that are critical to our business.

Our customers and regulators require that our information technology systems perform as intended, whether they are hosted by us, managed by a third party on our behalf or rely on seamless electronic integrations with…

Our information technology systems and our pace of adoption of new technologies, including AI, may not be adequate to meet the demands of our customers or impact negatively our ability to compete with our peers.

coverages, and (ii) an industry aggregate retention of $53.4 billion.

We have substantial exposure to unexpected, large losses resulting from man-made catastrophic events, such as acts of war, regional hostilities, acts of terrorism, political instability, social unrest, cyber attacks a…

Shareholders, investors and regulators have historically focused on climate and sustainability matters, leading to evolving and sometimes conflicting expectations and standards.

The ongoing Russia-Ukraine hostilities have created disruptions in certain sectors of the global economy.

Sanctions imposed by the U.S., U.K.

Our efforts to address these risks rely on loss‑mitigation measures, risk modeling, operating results and engagement with customers and shareholders.

We are subject to CSRD and other EU and U.K.

Governments, regulators, legislators and influential non-governmental organizations (“NGOs”) continue to develop laws, regulations and other requirements related to climate change.

We may not be able to comply fully with, or obtain appropriate exemptions from, these statutes and regulations, which could result in restrictions on our ability to do business or undertake activities that are regulat…

We attempt to manage our exposure to these risks relating to climate change through the use of underwriting controls, proprietary and third party risk models, and the purchase of third party reinsurance.

Changing weather patterns and climatic conditions, such as global warming, have added to the unpredictability, severity and frequency of natural disasters.

While our business has not been directly impacted by the existing and proposed Trump administration tariffs on imported goods, there may be a ripple effect on how these impact certain industries where we provide insur…

•We are subject to increased taxation in Bermuda as a result of the Bermuda CIT Act, effective January 1, 2025 and may become subject to increased taxation in other countries as a result of the implementation of the O…

•The implementation of the Basel III Capital Accord and FHFA’s Enterprise Regulatory Capital Framework may adversely affect the use of mortgage insurance and SRT and CRT opportunities.

•The determination of the amount of current expected credit losses (“CECL”) allowances taken on our investments is highly subjective and could materially

•Our information technology systems and our pace of adoption of new technologies, including AI, may not be adequate to meet the demands of our customers or impact negatively our ability to compete with our peers.

•Sanctions imposed by the U.S., U.K.

•Our insurance, reinsurance and mortgage subsidiaries are subject to supervision and regulation.

threshold is expected to be reduced to €10 billion following future review of the operation of Amount A.

representing at least 65% of the total voting power of our shares entitled generally to vote at an election of directors.

On January 2, 2025, the U.S.

The private mortgage insurers’ principal government competitor is the Federal Housing Administration (“FHA”).

Mortgage insurance premiums are set at the time coverage is procured, based in part on the expected duration of the coverage.

On a quarterly basis, we review our investments by applying an approach based on the CECL and whether declines in fair value below the cost basis requires an estimate of the expected credit loss.

realized losses, impairments and changes in unrealized positions in our investment portfolio.

business and/or damage our reputation, resulting in a material adverse effect on our financial condition and results of operations.

circumvention of controls.

technologies or update our existing systems to keep pace with our competitors and customer needs.

•Application of the EU Anti-Tax Avoidance Directives.

•Legislation enacted in Bermuda as to Economic Substance may affect our operations.

•Proposed Treasury Regulations issued on January 24, 2022, if finalized in their current form, could (on prospective basis) cause our U.S.

•The continuing implementation of the Tax Cuts Act may have a material and adverse impact on our operations and financial condition.

•We and our non-U.S.

•We operate in a highly competitive environment.

December 31, 2023, with the “under-taxed profit rule” taking effect for periods beginning on or after January 1, 2025.

In 2019, the OECD published a “Programme of Work,” divided into two pillars, which is designed to address the tax challenges created by an increasing digitalized economy.

Holders of our preferred shares have no voting rights with

company if it appears to the regulator that the person is not or is no longer fit and proper to be such a holder.

While some countries outside of the EU have begun implementing the Basel III Endgame, both the U.K.

change (legislative or administrative) is uncertain, making the actual impact on the mortgage insurance industry difficult to predict.

which would limit their ability to sell the property without incurring a loss and could increase the frequency and severity of claims.

The frequency and severity of claims we incur is uncertain and will depend largely on general economic factors outside of our control, including, among others, changes in unemployment and home prices affordability.

“terminated” or 100% collateral upon the entry of an order of rehabilitation, liquidation or conservation against a ceding insurer.

imposed by the U.S., U.K.

We operate within an ERM framework designed to identify, assess and monitor our risks.

preferences and privileges that are senior to those of our outstanding securities.

remediation costs, increased insurance premiums, employee dissatisfaction and/or monetary fines, penalties or litigation, any of which could adversely affect our business.

Additionally, the regulatory landscape surrounding traditional AI and generative AI is evolving, and the expanded use of these technologies may become subject to regulatory scrutiny under new or existing laws.

With new technologies and AI tools emerging at a rapid pace, there is no assurance that we will be able to evaluate and integrate new technologies or update our existing systems to keep pace with our competitors and c…

Recent U.S.

Certain U.S.

continuation and worsening of recent trends could have an adverse effect on our results of operations and financial condition.

droughts in recent years and may continue to increase in the future.

We operate in a highly competitive environment, and we may not be able to compete successfully in our industry.

impact our results of operations or financial position.

•Certain U.S.

with applicable requirements, could adversely affect our business and results of operations.