Arch Capital (ACGL) Stock Forecast & Price Target

Arch Capital Group Ltd has demonstrated robust growth in its Insurance segment, particularly following the acquisition of Allianz's US MidCorp and Entertainment businesses, which has positively impacted top-line performance year-to-date. The Reinsurance unit has experienced substantial expansion, emerging as the dominant segment by net written premium, with gross written premiums escalating from $1.9 billion in 2018 to over $11 billion in 2024, indicating strong demand in a hard market. Additionally, the company has shown significant net investment income growth and anticipates strong book value per share increases, supported by consistent underwriting profits and healthy equity invested earnings, reflecting solid capital generation and a proactive approach to buybacks.

Arch Capital Group's property insurance premiums experienced a significant decline of 13.5% year-over-year in the second quarter of 2025, indicating potential weaknesses in customer retention and pricing strategy. Projections suggest that underwriting income could decrease by nearly 25% by 2027, with an overall estimated deterioration in underwriting income contribution of approximately 18% from fiscal year 2025 to fiscal year 2027, alongside modest increases in the combined ratio. Additionally, escalating risks such as high social inflation and potential large catastrophe losses pose substantial threats to the company’s financial stability and could undermine reserve adequacy, further impacting its book value.