QUOTE AND NEWS
Insurance Journal  Mar 20  Comment 
Marc Grandisson is the new CEO of Arch Capital Group. Ltd., following the previously announced retirement of longtime leader Constantine “Dinos” Iordanou. Arch disclosed in a regulatory filing that Grandisson, 50, most recently president and...
Insurance Journal  Jan 10  Comment 
Arch Capital Group reports estimated pre-tax losses of $60 million to $75 million from fourth quarter catastrophic events, primarily the California wildfires. This estimated range of losses – net of reinsurance recoveries and reinstatement...
Insurance Journal  Oct 11  Comment 
Arch Capital Group Ltd. has announced a number of senior management changes in its worldwide reinsurance group. Jerome Halgan, currently the president and chief executive officer of Arch Reinsurance Co. in the U.S., has been promoted to the role...
Insurance Journal  Sep 20  Comment 
Arch Capital Group Ltd. announced that Nicolas Papadopoulo will become chairman and CEO of Arch Worldwide Insurance Group and chief underwriting pfficer for Property & Casualty operations. Papadopoulo, who joined Arch in 2001 and currently serves...




 

Arch Capital Group Ltd. (NASDAQ:ACGL) writes major insurance policies for businesses and sells reinsurance to other insurance companies. The company targets insurance policies that have an anticipated minimum return (ROE) of 15%,[1] which is problematic in economic downturns as companies become more price sensitive. This ROE litmus test means that Arch first evaluates a projected combined ratio for a potential policy, and from that ratio Arch attaches a projected net income to the policy. If this is below what is needed to generate a 15% ROE, then Arch does not write the policy.

Like other insurance companies, Arch invests the premiums it collects to earn income. Its portfolio consists solely of fixed income securities rated in the range of AAA to AA, with virtually no investment in hedge funds or private equity.[2] Importantly, its portfolio of investments holds no collateralized debt obligations (CDOs) or loan obligations (CLOs). This conservative investment strategy stands in stark contrast to the investments of many other insurance companies, most notably AIG, whose well-publicized write-offs were centered on collateralized debt obligations (CDOs). [3]

Corporate Overview

This piece was cogent, well-wrtietn, and pithy.

Ah yes, nceily put, everyone.

Competition

Competitors are insurance subsidiaries of global conglomerates or independent companies. As defined by Arch Capital Group, its competitors in insurance are: [4]


In response to price competition from larger insurers and subsidiary companies, Arch is aggressively shifting its strategy toward opening smaller insurance policies with businesses in a diverse set of specialty markets, where it can offer a higher level of expertise than many of its larger competitors. [5]

The company also faces competition from emerging alternatives to insurance, such as catastrophe bonds and alternatives to traditional reinsurance such as finite reinsurance products.

References

  1. ACGL. ACGL Annual Report 2007, To Our Shareholders Letter, Pg 1.
  2. ACGL. Annual Report 2007, Cash Flow, Investable Assets and Investment Income, Pg 2.
  3. WSJ. AIG reports $5.36 billion quarterly net loss.
  4. ACGL. Annual Report 2007, Pg 23.
  5. ACGL. Annual Report 2007, Market Positions and Strategic Principles, Pg 2.
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