Highlights

  • Arch shows 32.66% one-year basic EPS growth, a P/E of 7.92 and PEG of 0.57.
  • Third quarter net income available to Arch common shareholders was $1,025 million.
  • Combined ratio was 82.5% in the third quarter, against 79.8% a year earlier.
  • Arch repurchased 14.8 million shares for $1,433.0 million in the third quarter.

An undervalued growth stock pairs earnings growth with its P/E and PEG ratios, and Arch Capital Group (NASDAQ:ACGL) shows all three: basic earnings per share grew 32.66% over one year, the trailing twelve-month P/E ratio is 7.92 and the PEG ratio, on an expected basis, is 0.57, with shares trading at USD 103.15 on October 28, 2026, up 2.80%. Alongside those figures, the Bermuda-based insurance, reinsurance and mortgage insurance group raised capital in June 2026, repurchased 14.8 million common shares in the third quarter and reported net income available to common shareholders of $1,025 million for the third quarter on October 27.

Arch Capital Group is a publicly listed Bermuda exempted company with its principal executive offices at Waterloo House, 100 Pitts Bay Road, Pembroke, Bermuda. It provides insurance, reinsurance and mortgage insurance on a worldwide basis through wholly owned subsidiaries and reports three underwriting segments: Insurance, Reinsurance and Mortgage. The insurance segment primarily consists of commercial lines with a focus on specialty products, offered mainly in North America, Bermuda, the United Kingdom, continental Europe and Australia. The company had approximately $27.3 billion in capital at September 30, 2026.

Growth: Third Quarter Earnings, Premiums and Segment Underwriting

Net income available to Arch common shareholders was $1,025 million, or $3.00 per diluted share, in the third quarter against $1,340 million, or $3.56, a year earlier. Basic earnings per share were $3.05 against $3.63. For the nine months, basic earnings per share were $9.04 against $8.43. After-tax operating income, a non-GAAP measure, was $910 million, or $2.67 per diluted share, against $1,042 million, or $2.77.

Net premiums written were $3,845 million against $3,964 million, and net premiums earned were $4,014 million against $4,285 million. Underwriting income, a non-GAAP measure, was $702 million against $871 million. By segment, Insurance underwriting income was $108 million, Reinsurance $393 million and Mortgage $201 million, against $129 million, $482 million and $260 million. Pre-tax net investment income was $451 million against $408 million, which the company attributed to growth in average investable assets.

Valuation: P/E of 7.92, PEG of 0.57 and Book Value

The P/E ratio of 7.92 is measured on trailing twelve-month earnings, and the PEG ratio of 0.57 on expected growth. Book value per common share was $67.90 at September 30, 2026, a 0.2% decrease from June 30, 2026. Annualized net income return on average common equity was 18.1% against 23.8%, and annualized operating return on average common equity, a non-GAAP measure, was 16.0% against 18.5%. Net cash provided by operating activities was $1,759 million in the third quarter against $2,186 million.

Chief Executive Officer Nicolas Papadopoulo said the company is operating in a transitioning market where conditions are increasingly uneven, and that it remains focused on producing risk-adjusted returns over the long term.

Capital Returns, Debt and Liquidity

Arch repurchased 14.8 million common shares at an average price of $96.62 for $1,433.0 million in the third quarter, and $725.1 million remained under the repurchase authorization at September 30, 2026.

Total debt was $4,286 million against $2,729 million at March 31, 2026. The June 2026 senior notes comprised $600 million at 5.250% due June 15, 2036 and $1,400 million at 5.950% due June 15, 2056. Debt was 15.7% of total capital available to Arch, which was $27,278 million, and no borrowings were outstanding under the revolving credit agreement due August 23, 2028. Total investable assets were $49,208 million.

Disclosed Risks and Outlook

Reinsurance segment net premiums written were 9.3% lower, which the company linked in part to non-renewals and share reductions. Pre-tax current accident year catastrophic losses for the insurance and reinsurance segments, net of reinsurance and reinstatement premiums, were $234 million, and the insurance segment's loss ratio included 5.7 points of catastrophic activity, including losses related to the Iran conflict.

The Mortgage segment combined ratio was 25.5% against 13.5%; the company cited a modestly higher level of delinquencies and lower ceding and profit commissions. Net realized losses were $99 million against gains of $210 million, and total return on investments was negative 0.42%, which the company said primarily reflected rising interest rates on fixed income securities. Interest expense was $62 million against $37 million, an increase attributed to the June 2026 capital raising.

The release contained no numerical financial guidance. The company's list of forward-looking risks includes competition, catastrophic events, the adequacy of loss reserves, and the OECD Pillar I and Pillar II initiative and the enactment of the Bermuda corporate income tax.