Arch Capital Group Ltd - 4.55% PRF PERPETUAL USD 25 - Ser G 1/1,000th Int

Strong operating results + capital return - Reported Q1’26 after-tax operating income: $901m ($2.50/share); annualized net income return on avg. common equity: 17.8% (per Nicholas) / 15.4% (per Francois). - Book value per share up 1.7% in the quarter. - Share repurchases: $783m in Q1 (8.3m shares); $311m additional repurchased so far in Q2 through last night. Board also increased authorization by $3bn. - Key investor takeaway: Management views buybacks as an attractive deployment of excess capital when underwriting growth/margins don’t meet thresholds.

Underwriting: discipline over volume as competition increases - Insurance segment underwriting income: $66m (improved vs Q1’25 impacted by California wildfires). - Top-line essentially flat; net premiums written down 1.4% YoY, gross written up 2%—driven by profitability focus and nonrenewal of some program business that didn’t meet risk appetite. - Company explicitly expects those nonrenewals to reduce net premium return by ~ $250m throughout 2026. - Insurance ex-cat accident year combined ratio: 82.3% overall (group); insurance loss ratio ex-cat improved (down 70 bps to 56.7% YoY), but acquisition expense ratio up (timing/roll-off effects) and operating expense ratio elevated due to middle-market system transition, expected to normalize in 2H’26.

Reinsurance strong profitability but premiums down (market softness headwind) - Reinsurance underwriting income: $441m (vs $167m in Q1’25, also wildfires-impacted). - Net premiums written down 6% YoY (gross down 2.3%), with declines concentrated in short-term lines (other property, property catastrophe, marine). - Ex-cat accident year combined ratio: 78.1%, 4th straight quarter <80%, supported by disciplined cycle management (portfolio mix/targets; reduced share where returns fall below thresholds). - Cat pricing pressure: Management highlighted double-digit rate decreases and “huge headwinds,” with property cat managed dynamically across ~50 zones; some zones remain “green,” others “yellow,” so underwriting appetite varies by geography/layer attractiveness.