Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
In connection with the filing of this Form 10-K, our management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our disclosure controls and procedures, as of December 31, 2023, for the purposes set forth in the applicable rules under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2023, the disclosure controls and procedures were effective.
We continue to enhance our operating procedures and internal controls (including information technology initiatives and controls over financial reporting) to effectively support our business and our regulatory and reporting requirements. Our management does not expect that our disclosure controls or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. As a result of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons or by collusion of two or more people.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate
because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. As a result of the inherent limitations in a cost-effective control system, misstatement due to error or fraud may occur and not be detected. Accordingly, our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the disclosure controls and procedures are met.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in Internal Control-Integrated Framework (2013) .
Based on our assessment, management determined that, as of December 31, 2023, our internal control over financial reporting was effective. The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report included in Item 8.
Changes in Internal Control Over Financial Reporting
There have been no changes in internal control over financial reporting that occurred in connection with our evaluation required pursuant to Rules 13a-15 and 15d-15 under the Exchange Act during the fiscal quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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ITEM 9B. OTHER INFORMATION
During the three months ended December 31, 2023, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item is incorporated by reference from the information to be included in our definitive proxy statement (“Proxy Statement”) for our annual meeting of shareholders to be held in 2024 , which we intend to file with the SEC pursuant to Regulation 14A no later than 120 days after the end of the Company’s fiscal year which ended on December 31, 2023. Copies of our code of ethics applicable to our chief executive officer, chief financial officer and principal accounting officer or controller are available free of charge to investors upon written request addressed to the attention of Arch Capital’s corporate secretary, Waterloo House, 100 Pitts Bay Road, Pembroke HM 08, Bermuda. In addition, our code of ethics and certain other basic corporate documents, including the charters of our audit committee, compensation committee and nominating committee are posted on our website located at www.archgroup.com .
If any substantive amendments are made to the code of ethics or if there is a grant of a waiver, including any implicit waiver, we will disclose the nature of such amendment or waiver on our website or in a report on Form 8-K, to the extent required by applicable law or the rules and regulations of any exchange applicable to us. Our website address is intended to be an inactive, textual reference only and none of the material on our website is incorporated by reference into this report.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference from the information to be included in the Proxy Statement which we intend to file pursuant to Regulation 14A with the SEC no later than 120 days after the end of the Company’s fiscal year ended on December 31, 2023, which Proxy Statement is incorporated by reference.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Other than the information set forth below, the information required by this item is incorporated by reference from the information to be included in the Proxy Statement which we intend to file pursuant to Regulation 14A with the SEC no later than 120 days after the end of the Company’s fiscal year ended on December 31, 2023, which Proxy Statement is incorporated by reference.
The following information is as of December 31, 2023:
Column A Column B Column C
Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Stock Options(1), Warrants and Rights Weighted-Average Exercise Price of Outstanding
Stock Options(1), Warrants and Rights ($) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column A)
Equity compensation plans approved by security holders 12.9 $ 31.14 17.2
Equity compensation plans not approved by security holders — — —
Total 12.9 $ 31.14 17.2 (2)
________________________
(1) Includes all vested and unvested stock options outstanding of 12.5 million and restricted stock and performance units outstanding of 0.4 million. The weighted average exercise price does not take into account restricted stock units. In addition, the weighted average remaining contractual life of the Company's outstanding exercisable stock options and SARs at December 31, 2023 was 4.1 years.
(2) Includes 3.6 million common shares remaining available for future issuance under our Employee Share Purchase Plan and 13.6 million common shares remaining available for future issuance under our equity compensation plans. Shares available for future issuance under our equity compensation plans may be issued in the form of stock options, SARs, restricted shares, restricted share units payable in common shares or cash, share awards in lieu of cash awards, dividend equivalents, performance shares and performance units and other share-based awards. In addition, 9.4 million common shares, or 54.7% of the 17.2 million common shares remaining available for future issuance may be issued in connection with full value awards ( i.e ., awards other than stock options or SARs).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated by reference from the information to be included in the Proxy Statement which we intend to file pursuant to Regulation 14A with the SEC no later than 120 days after the end of the Company’s fiscal year ended on December 31, 2023, which Proxy Statement is incorporated by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated by reference from the information to be included in our Proxy Statement which we intend to file pursuant to Regulation 14A with the SEC no later than 120 days after the end of the Company’s fiscal year ended on December 31, 2023, which Proxy Statement is incorporated by reference.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements, Financial Statement Schedules and Exhibits.
1. Financial Statements
Included in Part II – see Item 8 of this report.
2. Financial Statement Schedules
Page No.
II. Condensed Financial Information of Registrant
As of December 31, 2023 and 2022, and for the years ended December 31, 2023, 2022 and 2021 180
III. Supplementary Insurance Information
For the years ended December 31, 2023, 2022 and 2021 183
IV. Reinsurance
For the years ended December 31, 2023, 2022 and 2021 184
VI. Supplementary Information for Property and Casualty Insurance Underwriters
For the years ended December 31, 2023, 2022 and 2021 185
Schedules other than those listed above are omitted for the reason that they are not applicable or the information is provided in Item 8 of this report.
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3. Exhibits
Incorporated by Reference
Exhibit Number Exhibit Description Form Original Number Date Filed Filed Herewith
2.1 Memorandum of Association of ACGL
S-4 3.1 September 8, 2000
2.2 Bye-Laws of ACGL
10-Q 3 August 5, 2016
2.3 ACGL Certificate of Deposit of Memorandum of Increase of Share Capital
10-K 3.3 February 28, 2011
3.1 Certificate of Designations of Series F Non-Cumulative Preferred Shares
8-K 4.1 August 17, 2017
3.2 Certificate of Designations of Series G Non-Cumulative Preferred Shares
8-K 4.1 June 11, 2021
3.3 Specimen Common Share Certificate
10-K 4.1 April 2, 2001
3.4 Specimen Series F Non-Cumulative Preferred Share Certificate
8-K 4.2 August 17, 2017
3.5 Specimen Series G Non-Cumulative Preferred Share Certificate
8-K 4.2 June 11, 2021
4.1 Indenture, dated as of May 4, 2004, between ACGL, as issuer, and The Bank of New York Mellon, as successor trustee to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank) (“JPMCB”), as trustee
8-K 4.1 June 30, 2020
4.2 First Supplemental Indenture, dated as of May 4, 2004, between ACGL, as issuer, and JPMCB, as trustee
8-K 99.3 May 7, 2004
4.3 Second Supplemental Indenture, dated as of June 30, 2020, by and between Arch Capital Group Ltd. and The Bank of New York Mellon (including the form of Global Notes for the Notes).
8-K 4.2 June 30, 2020
4.4.1 Indenture, dated as of December 13, 2013, among Arch Capital Group (U.S.) Inc. (“Arch U.S.”), as issuer, ACGL, as guarantor, and The Bank of New York Mellon (“BNYM”), as trustee
8-K 4.1 December 13, 2013
4.4.2 First Supplemental Indenture, dated as of December 13, 2013, among Arch U.S., as issuer, ACGL, as guarantor, and BNYM, as trustee
8-K 4.2 December 13, 2013
4.4.3 Second Supplemental Indenture, dated as of May 10, 2018, among Arch Capital Finance LLC, as issuer, ACGL, as guarantor, and BNYM, as trustee
8-K 4.1 May 15, 2018
4.5.1 Deposit Agreement, dated August 17, 2017, between ACGL, as issuer, and AST, as depositary, registrar and transfer agent and as dividend disbursing agent and redemption agent, and the holders from time to time of the depositary receipts
8-K 4.3 August 17, 2017
4.5.2 Deposit Agreement, dated June 11, 2021, between ACGL, as issuer, and AST, as depositary, registrar and transfer agent and as dividend disbursing agent and redemption agent, and the holders from time to time of the depositary receipts
8-K 4.3 June 11, 2021
4.6.1 Form of Depositary Receipt, dated August 17, 2017
8-K 4.4 August 17, 2017
4.6.2 Form of Depositary Receipt, dated June 11, 2021
8-K 4.4 June 11, 2021
4.7.1 Indenture, dated as of December 8, 2016, among Arch Capital Finance LLC, as issuer, ACGL, as guarantor, and BNYM, as trustee
8-K 4.1 December 9, 2016
4.7.2 First Supplemental Indenture, dated as of December 8, 2016, among Arch Capital Finance LLC, as issuer, ACGL, as guarantor, and BNYM, as trustee
8-K 4.2 December 9, 2016
4.8 Description of Securities
10-K 4.8 February 25, 2022
10.2.1 Third Amended and Restated ACGL Incentive Compensation Plan†
10-Q 10.7 August 5, 2016
10.2.2 First Amendment to Third Amended and Restated ACGL Incentive Compensation Plan†
10-Q 10.1 May 5, 2017
10.2.3 Second Amendment to Third Amended and Restated ACGL Incentive Compensation Plan†
10-K 4.8 February 25, 2022
10.2.4 Third Amendment to Third Amended and Restated ACGL Incentive Compensation Plan†
10-Q 10.1 May 4, 2023
10.3.1 ACGL 2007 Long Term Incentive and Share Award Plan†
DEF 14A April 3, 2007
10.3.2 ACGL 2012 Long Term Incentive and Share Award Plan†
DEF 14A March 27, 2012
10.3.3 ACGL 2015 Long Term Incentive and Share Award Plan†
DEF 14A March 26, 2015
10.3.4 ACGL 2018 Long Term Incentive and Share Award Plan†
DEF 14A March 28, 2018
10.3.5 ACGL Amended and Restated 2007 Employee Share Purchase Plan†
DEF 14A March 23, 2023
10.3.6 ACGL 2022 Long Term Incentive and Share Award Plan†
8-K 10.1 May 4, 2022
10.4.1 Form of Restricted Share Agreement, dated as of May 13, 2015, between ACGL and each of, Marc Grandisson, Nicolas Papadopoulo, Maamoun Rajeh and Louis T. Petrillo†
10-Q 10.2 August 7, 2015
10.4.2 Form of Restricted Share Agreement, dated as of May 13, 2016, between ACGL and each of Marc Grandisson, Nicolas Papadopoulo, Maamoun Rajeh and Louis T. Petrillo†
10-Q 10.2 August 5, 2016
10.4.3 Form of Restricted Share Agreement, dated as of May 4, 2017, between ACGL and each of the Non-Employee Directors of ACGL†
10-Q 10.3 August 4, 2017
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10.4.4 Form of Restricted Share Agreement, dated as of May 8, 2017, between ACGL and each of Marc Grandisson, Nicolas Papadopoulo, Maamoun Rajeh and Louis T. Petrillo†
10-Q 10.4 August 4, 2017
10.4.5 Form of Restricted Share Agreement, dated as of September 19, 2017, between ACGL and each of Nicolas Papadopoulo and Maamoun Rajeh†
10-K 10.4.13 February 28, 2018
10.4.6 Form of Restricted Share Agreement for Named Executive Officers and certain Executive Officers of ACGL and subsidiaries†
10-Q 10.3 August 8, 2018
10.4.7 Form of Restricted Share Agreement between ACGL and each of the Non-Employee Directors of ACGL†
10-Q 10.6 August 8, 2018
10.5 Form of Performance Restricted Share Agreement for Named Executive Officers and certain Executive Officers of ACGL and subsidiaries†
10-Q 10.5 August 8, 2018
10.6.1 Form of Non-Qualified Stock Option Agreement, dated as of May 13, 2015, between ACGL and each of Marc Grandisson†
10-Q 10.3 August 7, 2015
10.6.2 Form of Non-Qualified Stock Option Agreement, dated as of May 13, 2016, between ACGL and each of Marc Grandisson, Nicolas Papadopoulo, Maamoun Rajeh and Louis T. Petrillo†
10-Q 10.3 August 5, 2016
10.6.3 Form of Non-Qualified Stock Option Agreement, dated as of May 8, 2017, between ACGL and each of Marc Grandisson, Nicolas Papadopoulo, Maamoun Rajeh and Louis T. Petrillo†
10-Q 10.5 August 4, 2017
10.6.4 Non-Qualified Stock Option Agreement, dated as of September 19, 2017, between ACGL and Maamoun Rajeh†
10-K 10.5.6 February 28, 2018
10.6.5 Non-Qualified Stock Option Agreement, dated as of September 19, 2017, between ACGL and Nicolas Papadopoulo†
10-K 10.5.7 February 28, 2018
10.6.6 Form of Non-Qualified Stock Option Agreement for Named Executive Officers and certain Executive Officers of ACGL and subsidiaries†
10-Q 10.4 August 8, 2018
10.6.7 Non-Qualified Stock Option Agreement, dated as of April 9, 2018, between ACGL and Marc Grandisson†
10-Q 10.5 May 9, 2018
10.7.1 Form of Share Appreciation Right Agreement, dated as of May 9, 2013, between ACGL and each of Marc Grandisson, Maamoun Rajeh and Louis T. Petrillo†
10-Q 10.2 November 8, 2013
10.7.2 Form of Share Appreciation Right Agreement, dated as of May 13, 2014, between ACGL and each of Marc Grandisson, Maamoun Rajeh and Louis T. Petrillo†
10-Q 10.3 August 8, 2014
10.7.3 Share Appreciation Right Agreement, dated as of July 1, 2014, between ACGL and Maamoun Rajeh†
10-Q 10.15 November 3, 2017
10.7.4 Share Appreciation Right Agreement, dated as of November 6, 2014, between ACGL and Marc Grandisson†
10-Q 10.2 May 8, 2015
10.8.1 Employment Agreement, dated as of October 27, 2008, between ACGL and John D. Vollaro†
8-K 10.1 October 28, 2008
10.8.2 Amendment to Employment Agreement, dated February 27, 2015, between ACGL and John D. Vollaro†
10-Q 10.1 May 8, 2015
10.8.3 Second Amendment to Employment Agreement, dated as of January 1, 2018, between ACGL and John D. Vollaro†
10-Q 10.1 May 9, 2018
10.10 Employment Agreement, dated as of September 19, 2017 between ACGL and Maamoun Rajeh†
10-Q 10.26 November 3, 2017
10.11 Employment Agreement, dated as of September 19, 2017 between ACGL and Nicholas Papadopoulo†
10-Q 10.27 November 3, 2017
10.12 Employment Agreement, dated as of May 25, 2018, between ACGL and François Morin†
8-K/A 10.1 July 26, 2018
10.13 Employment Agreement, dated as of April 9, 2018, between ACGL and Marc Grandisson†
8-K/A 10.1 April 11, 2018
10.14 Employment Agreement, dated as of November 13, 2018, between Arch Capital Services Inc. and Louis Petrillo†
10-K 10.16 February 28, 2019
10.15 Employment Agreement dated as of October 1,2019 between Arch Capital Group Ltd. and David Gansberg †
10-K 10.16 February 28, 2020
10.16 Employment Agreement dated as of May 7, 2021 between Arch Capital Group Ltd. and Christine Todd †
10-Q 10.1 August 5, 2021
10.17 Arch U.S. Executive Supplemental Non-Qualified Savings and Retirement Plan†
10-K 10.24 March 2, 2009
10.18.1 Third Amended and Restated Credit Agreement, dated as of December 17, 2019, by and among ACGL, certain of its subsidiaries as subsidiary borrowers, Bank of America, N.A., as Administrative Agent, Fronting Bank and L/C Administrator, and the lenders party thereto
8-K 10.1 December 18, 2019
10.18.2 First Amendment to Third Amended and Restated Credit Agreement, dated as of August 12, 2020 by and among Arch Capital Group Ltd., the other Loan Parties party hereto, the Lenders party hereto, and Bank of America, N.A., as Administrative Agent .
10-Q 10.1 November 4, 2021
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10.18.3 The LIBOR Transition Amendment to the Third Amended and Restated Credit Agreement, dated as of September 29, 2021.
10-Q 10.2 November 4, 2021
10.18.4 Second Amendment to Third Amended and Restated Credit Agreement, effective as of April 7, 2022, by and among Arch Capital Group Ltd., certain of its subsidiaries, Bank of America, N.A., as Administrative Agent, and the lenders party thereto
8-K 10.1 April 12, 2022
10.18.5 Fourth Amended and Restated Credit Agreement, dated as of August 23, 2023, by and among Arch Capital Group Ltd., certain of its subsidiaries, Bank of America, N.A., as Administrative Agent, and the lenders party thereto (1)
10-Q 10.1 November 9, 2023
10.19 Letter of Credit Facility Agreement, dated as of September 27, 2023, by and between Arch Reinsurance Ltd., as the borrower and Lloyds Bank Corporate Markets plc, as the L/C Issuer (1)
8-K 10.1 October 2, 2023
10.20 Amendment No. 3 and Joinder to Letter of Credit Facility Agreement, dated as of October 25, 2023, by and between Arch Reinsurance Ltd., as the borrower and Lloyds Bank Corporate Markets plc, as the Administrative Agent and L/C Agent. (1)
8-K 10.1 October 30, 2023
21 Subsidiaries of Registrant
X
23 Consent of PricewaterhouseCoopers LLP
X
24 Power of Attorney
X
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X
32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X
97.1 Policy relating to recovery of erroneously awarded compensation, as required by Nasdaq listing standards adopted pursuant to 17 CFR 240.10D.
X
101 The following financial information from ACGL’s Annual Report on Form 10-K for the year ended December 31, 2023 formatted in Inline XBRL: (i) Consolidated Balance Sheets at December 31, 2023 and 2022; (ii) Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021; (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021; (iv) Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2023, 2022 and 2021; (v) Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021; and (vi) Notes to Consolidated Financial Statements
X
104 Cove Page Interactive Data File (embedded within the Inline XBRL document)
(1) Certain schedules and exhibits have been omitted pursuant to Item 601(b)(10) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits to the SEC upon request.
† Management contract or compensatory plan or arrangement.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ARCH CAPITAL GROUP LTD.
(Registrant)
By: /s/ Marc Grandisson
Name: Marc Grandisson
Title: Chief Executive Officer (Principal Executive Officer)
February 23, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Name Title Date
/s/ Marc Grandisson
Marc Grandisson Chief Executive Officer (Principal Executive Officer)
February 23, 2024
/s/ François Morin
François Morin Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) and Treasurer February 23, 2024
*
John M. Pasquesi Chairman of the Board
February 23, 2024
*
John L. Bunce, Jr. Director February 23, 2024
*
Eric W. Doppstadt Director February 23, 2024
*
Francis Ebong Director February 23, 2024
*
Laurie S. Goodman Director February 23, 2024
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Name Title Date
*
Moira Kilcoyne Director February 23, 2024
*
Eileen Mallesch Director February 23, 2024
*
Louis J. Paglia Director February 23, 2024
*
Brian S. Posner
Director February 23, 2024
*
Eugene S. Sunshine Director February 23, 2024
*
John D. Vollaro Director February 23, 2024
___________________
* By François Morin, as attorney-in-fact and agent, pursuant to a power of attorney, a copy of which has been filed with the Securities and Exchange Commission as Exhibit 24 to this report.
/s/ François Morin
Name: François Morin
Attorney-in-Fact
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SCHEDULE II
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(U.S. dollars in millions)
Balance Sheet
(Parent Company Only)
December 31,
2023 2022
Assets
Total investments $ 17 $ 7
Cash 9 11
Investments in subsidiaries 19,590 14,191
Investment in operating affiliates 4 5
Due from subsidiaries and affiliates — 2
Other assets 58 18
Total assets $ 19,678 $ 14,234
Liabilities
Senior notes $ 1,287 $ 1,287
Other liabilities 38 37
Total liabilities 1,325 1,324
Shareholders' Equity
Non-cumulative preferred shares 830 830
Common shares ($ 0.0011 par, shares issued: 591.9 and 588.3 )
1 1
Additional paid-in capital 2,327 2,211
Retained earnings 20,295 15,892
Accumulated other comprehensive income (loss), net of deferred income tax ( 676 ) ( 1,646 )
Common shares held in treasury, at cost (shares: 218.5 and 217.9 )
( 4,424 ) ( 4,378 )
Total shareholders' equity $ 18,353 $ 12,910
Total liabilities and shareholders' equity $ 19,678 $ 14,234
The financial information for the parent company (Arch Capital Group Ltd.) should be read in conjunction with the Consolidated Financial Statements and Notes thereto .
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SCHEDULE II
(continued)
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(U.S. dollars in millions)
Statement of Income
(Parent Company Only)
Year Ended
December 31,
2023 2022 2021
Revenues
Net investment income $ 2 $ 2 $ 2
Total revenues 2 2 2
Expenses
Corporate expenses 93 86 72
Interest expense 59 59 59
Total expenses 152 145 131
Income (loss) before income taxes and income (loss) from operating affiliates ( 150 ) ( 143 ) ( 129 )
Income tax (expense) benefit 41 — —
Income (loss) from operating affiliates ( 1 ) ( 1 ) ( 1 )
Income (loss) before equity in net income of subsidiaries ( 110 ) ( 144 ) ( 130 )
Equity in net income of subsidiaries 4,553 1,593 2,287
Net income available to Arch 4,443 1,449 2,157
Preferred dividends ( 40 ) ( 40 ) ( 48 )
Loss on redemption of preferred shares — — ( 15 )
Net income available to Arch common shareholders $ 4,403 $ 1,409 $ 2,094
The financial information for the parent company (Arch Capital Group Ltd.) should be read in conjunction with the Consolidated Financial Statements and Notes thereto .
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SCHEDULE II
(continued)
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(U.S. dollars in millions)
Statement of Cash Flows
(Parent Company Only)
Year Ended
December 31,
2023 2022 2021
Operating Activities:
Net Cash Provided By Operating Activities $ 46 $ 621 $ 1,728
Investing Activities:
Net (purchases) sales of short-term investments ( 8 ) ( 5 ) ( 2 )
Capital contributed to subsidiaries — — ( 487 )
Purchase of fixed assets — — ( 1 )
Other 1 ( 1 ) —
Net Cash Used For Investing Activities ( 7 ) ( 6 ) ( 490 )
Financing Activities:
Purchases of common shares under share repurchase program — ( 586 ) ( 1,234 )
Proceeds from common shares issued, net ( 2 ) 6 6
Proceeds from issuance of preferred shares, net — — 486
Redemption of preferred shares — — ( 450 )
Preferred dividends paid ( 40 ) ( 40 ) ( 48 )
Net Cash Used For Financing Activities ( 42 ) ( 620 ) ( 1,240 )
Increase (decrease) in cash and restricted cash ( 3 ) ( 5 ) ( 2 )
Cash and restricted cash, beginning of year 12 17 19
Cash and restricted cash, end of period $ 9 $ 12 $ 17
The financial information for the parent company (Arch Capital Group Ltd.) should be read in conjunction with the Consolidated Financial Statements and Notes thereto .
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SCHEDULE III
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION
(U.S. dollars in millions)
Deferred Acquisition Costs Reserves for Losses and Loss Adjustment Expenses Unearned Premiums Net Premiums Earned Net Investment Income (1) Net Losses and Loss Adjustment Expenses Incurred Amortization of Deferred Acquisition Costs Other Operating Expenses (2) Net Premiums Written
December 31, 2023
Insurance $ 566 $ 12,250 $ 3,917 $ 5,446 NM $ 3,122 $ 1,055 $ 819 $ 5,862
Reinsurance 901 9,924 4,254 5,836 NM 3,227 1,240 288 6,554
Mortgage 64 578 637 1,158 NM ( 103 ) 17 194 1,052
Other
Total $ 1,531 $ 22,752 $ 8,808 $ 12,440 NM $ 6,246 $ 2,312 $ 1,301 $ 13,468
December 31, 2022
Insurance $ 301 $ 11,017 $ 3,382 $ 4,560 NM $ 2,784 $ 887 $ 665 $ 5,021
Reinsurance 992 8,306 3,206 3,959 NM 2,568 813 268 4,924
Mortgage ( 30 ) 709 749 1,160 NM ( 324 ) 40 195 1,133
Other
Total $ 1,263 $ 20,032 $ 7,337 $ 9,679 NM $ 5,028 $ 1,740 $ 1,128 $ 11,078
December 31, 2021
Insurance $ 378 $ 9,811 $ 2,938 $ 3,625 NM $ 2,345 $ 606 $ 559 $ 4,149
Reinsurance 424 6,879 2,263 2,841 NM 1,925 537 214 3,254
Mortgage 99 1,068 811 1,283 NM 57 97 193 1,261
Other 333 NM 258 63 33 353
Total $ 901 $ 17,758 $ 6,012 $ 8,082 NM $ 4,585 $ 1,303 $ 999 $ 9,017
(1) The Company does not manage its assets by segment and, accordingly, net investment income is not allocated to each underwriting segment. See note 4, “Segment Information,” to our consolidated financial statements in Item 8 for information related to the ‘other’ segment.
(2) Certain other operating expenses relate to the Company’s corporate segment. Such amounts are not reflected in the table above. See note 4, “Segment Information,” to our consolidated financial statements in Item 8 for information related to the corporate segment.
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SCHEDULE IV
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES
REINSURANCE
(U.S. dollars in millions)
Gross Amount Ceded to Other Companies (1) Assumed From Other Companies (1) Net
Amount Percentage of Amount Assumed to Net
Year Ended December 31, 2023
Premiums Written:
Insurance
$ 7,865 $ ( 2,049 ) $ 46 $ 5,862 0.8 %
Reinsurance
626 ( 2,559 ) 8,487 6,554 129.5 %
Mortgage
1,161 ( 335 ) 226 1,052 21.5 %
Total
$ 9,652 $ ( 4,935 ) $ 8,751 $ 13,468 65.0 %
Year Ended December 31, 2022
Premiums Written:
Insurance
$ 6,889 $ ( 1,910 ) $ 42 $ 5,021 0.8 %
Reinsurance
397 ( 2,024 ) 6,553 4,924 133.1 %
Mortgage
1,256 ( 322 ) 199 1,133 17.6 %
Total
$ 8,542 $ ( 4,249 ) $ 6,785 $ 11,078 61.2 %
Year Ended December 31, 2021
Premiums Written:
Insurance
$ 5,834 $ ( 1,719 ) $ 34 $ 4,149 0.8 %
Reinsurance
409 ( 1,840 ) 4,685 3,254 144.0 %
Mortgage
1,213 ( 247 ) 294 1,261 23.3 %
Other
251 ( 105 ) 206 353 58.4 %
Total
$ 7,707 $ ( 3,735 ) $ 5,045 $ 9,017 55.9 %
(1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions and are included in the gross premiums written of each segment. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total.
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SCHEDULE VI
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION FOR PROPERTY AND CASUALTY INSURANCE UNDERWRITERS
(U.S. dollars in millions)
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Affiliation with Registrant Deferred Acquisition Costs Reserves for Losses and Loss Adjustment Expenses Discount, if any, deducted in Column C Unearned Premiums Net
Premiums Earned Net Investment Income Net Losses and Loss Adjustment Expenses Incurred Related to Amortization
of Deferred Acquisition Costs Net Paid Losses and Loss Adjustment Expenses Net
Premiums Written
(a) Current Year (b)
Prior Years
Consolidated Subsidiaries
2023 $ 1,531 $ 22,752 $ 66 $ 8,808 $ 12,440 $ 1,023 $ 6,784 $ ( 538 ) $ 2,312 $ 4,093 $ 13,468
2022 1,263 20,032 61 7,337 9,679 496 5,797 ( 769 ) 1,740 3,141 11,078
2021 901 17,758 56 6,012 8,082 389 4,940 ( 355 ) 1,303 2,827 9,017
ITEM 16. FORM 10-K SUMMARY
Not applicable.
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