What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-26 compared with 2025-02-27 · 417 added, 395 removed, 2876 unchanged (22% of the section changed)

38 unchanged sentences

Note 25 - Statutory Information

Note 26 - Subsequent Events

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded the acquired U.S.

Middle Market Property & Casualty and U.S.

Entertainment Property and Casualty Insurance Business (“MCE”) from its assessment of internal control over financial reporting as of December 31, 2024, because it was acquired by the Company in a purchase business combination during 2024.

We have also excluded MCE from our audit of internal control over financial reporting.

MCE represents 1.6% of total assets and 3.5% of total revenues as of and for the year ended December 31, 2024.

Definition and Limitations of Internal Control over Financial Reporting

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A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

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expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Commitments and Contingencies (refer to Note 18 )

Redeemable noncontrolling interests — 2

Shareholders’ Equity

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( 6,410 ) ( 4,487 )

Total shareholders' equity available to Arch 20,820 18,353

Total liabilities, noncontrolling interests and shareholders' equity $ 70,906 $ 58,906

Total shareholders' equity 24,206 20,820

Total liabilities and shareholders' equity $ 79,241 $ 70,906

See Notes to Consolidated Financial Statements

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Unrealized holding gains (losses) during period, net of reclassification adjustment

58 947 ( 1,525 )

Balance at end of year 134 ( 507 ) ( 565 )

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All amounts are in millions, except per share amounts, unless otherwise noted.

On August 1, 2024, the Company completed the acquisition of Allianz’s U.S Middle Market Property & Casualty Insurance and U.S.

Entertainment Property and Casualty Insurance Business (“MCE Acquisition”).

This business is written by Fireman’s Fund Insurance Company, an affiliate of Allianz, and its subsidiaries (collectively, the “Business Entities”), in each case, relating to relevant policies with accident years 2016 and onwards (collectively, the “Business”), as well as certain assets of Allianz and its affiliates related to the Business.

On August 1, 2024, the Company completed the acquisition of Allianz’s U.S Middle Market Property and Casualty insurance business and U.S.

Entertainment business (“MCE Acquisition”).This business is written by Fireman’s Fund Insurance Company, an affiliate of Allianz, and its subsidiaries (collectively, the “Business Entities”), in each case, relating to relevant policies with accident years 2016 and onwards (collectively, the “Business”), as well as certain assets of Allianz and its affiliates related to the Business.

In connection with the acquisition of the Business, the Company also entered into certain reinsurance agreements relating to the Business and the Business Entities and other agreements providing for administration and other services for the Business Entities by the Company for the applicable policies being reinsured following the closing.

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It further enhances the Company’s capabilities in the U.S.

middle markets and represents an attractive way to enter a new niche entertainment insurance market.

middle markets and represents an attractive way to enter the entertainment insurance market, a new niche for us.

Aggregate cash consideration for the transaction was $ 450 million.

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The Business acquired is included within the Company’s insurance segment beginning from the acquisition date.

The MCE Acquisition was accounted for as a business combination under FASB Accounting Standards Codification Topic 805, Business Combinations (“Topic 805”).

Pursuant to Topic 805, the Company allocated the MCE Acquisition purchase price to tangible and identifiable intangible assets

acquired and liabilities assumed based on their estimated fair values as of the acquisition date.

The excess of the purchase price over those fair values was recorded to goodwill.

During the measurement period, the Company adjusted the provisional amounts to reflect new information obtained about facts and circumstances that existed as of the acquisition date, which, if known, would have affected the measurement of the amounts recognized as of that date.

Such adjustments impacted certain identifiable assets acquired and liabilities assumed, resulting in a decrease in net assets acquired and a corresponding increase to goodwill of $ 10 million.

The Company completed the analysis of the fair value of the assets, liabilities assumed and the related allocation of the purchase price during the second quarter 2025.

The following table summarizes the Company’s allocation of the purchase price to the acquired assets and liabilities assumed based on estimated fair values on August 1, 2024.

The fair value of the assets and liabilities are preliminary and may change with offsetting adjustments to goodwill.

The Company may make further adjustments to its purchase price allocation through the end of the permissible one-year measurement period.

Total Useful Life

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At the date of the acquisition, the Company established a net deferred tax asset of $ 24 million related to the estimated fair value of reserves for losses and loss adjustment expenses and unearned premiums.

Intangible assets resulting from the acquisition are amortized as part of ‘amortization of intangible assets’ in the Company’s consolidated statements of income.

The significant fair value adjustments and related future amortization are as follows:

Value of business acquired (“VOBA”)— which represents the present value of the expected underwriting profit within the unearned premium liability, less costs to service the related policies and a risk premium.

The fair value of VOBA was determined after taking into consideration certain key assumptions, including the estimated cost of capital,

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investment yield, loss ratio and related expenses;

Intangible assets resulting from the acquisition are amortized as part of ‘amortization of intangible assets’ in the Company’s consolidated statements of income.

The significant fair value adjustments and related future amortization are as follows:

The fair value of VOBA was determined after taking into consideration certain key assumptions, including the estimated cost of capital, investment yield, loss ratio and related expenses.

Reserves for losses and loss adjustment expenses— to reflect a decrease related to the present value of the reserve for losses and loss adjustment expenses based on the estimated payout patterns, partially offset by an increase in losses and loss adjustment expenses related to the estimated market based risk margin.

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The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of Arch Capital and its subsidiaries, including Arch Reinsurance Ltd.

(“Arch Re Bermuda”), Arch Reinsurance Company (“Arch Re U.S.”), Arch Capital Group (U.S.) Inc.(“Arch-U.S.”), Arch Insurance Company, Arch Specialty Insurance Company, Arch Property Casualty Insurance Company (“Arch P&C”), Arch Indemnity Insurance Company (“Arch Indemnity Insurance”), Arch Insurance Canada Ltd.

(“Arch Re Bermuda”), Arch Reinsurance Company (“Arch Re U.S.”), Arch Capital Group (U.S.) Inc.(“Arch-U.S.”), Arch Insurance Company, Arch Specialty

Insurance Company, Arch Property Casualty Insurance Company, Arch Indemnity Insurance Company, Arch Wilsure Insurance Company, Arch Insurance Canada Ltd.

(“Arch Insurance Canada”), Arch Reinsurance Europe Designated Activity Company (“Arch Re Europe”), Arch Mortgage Insurance Company (“AMIC”), Arch Mortgage Guaranty Company (“AMG”), United Guaranty Residential Insurance Company (“UGRIC”), Arch Lenders Mortgage Indemnity Ltd.

(“Arch Indemnity”), Arch Insurance (EU) Designated Activity Company (“Arch Insurance (EU)”), Arch Insurance (U.K.) Limited (“Arch Insurance (U.K.)”) and the Company’s participation on Lloyd’s of London syndicates:

2012 (“Arch Syndicate 2012”)

and 1955 (“Arch Syndicate 1955” and together with Arch Syndicate 2012, the Company’s “Lloyd’s Syndicates”).

2012 (“Arch Syndicate 2012”) and 1955 (“Arch Syndicate 1955” and together with Arch Syndicate 2012, the Company’s “Lloyd’s Syndicates”).

All significant intercompany transactions and balances have been eliminated in consolidation.

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Unearned premium reserves represent the portion of premiums written that relates to the unexpired terms of in-force insurance policies.

Reinsurance premiums written include amounts reported by brokers and ceding companies, supplemented by the Company’s own estimates of premiums where reports have not been received.

The determination of premium estimates requires a review of the Company’s experience with the ceding companies, familiarity with each market, the timing of the reported information, an analysis and understanding of the characteristics of each line of business, and management’s judgment of the impact of various factors, including premium or loss trends, on the volume of business written and ceded to the Company.

On an ongoing basis, the Company’s underwriters review the amounts reported by these third parties for reasonableness based on their experience and knowledge of the subject class of business, taking into account the Company’s historical experience with the brokers or ceding companies.

In addition, reinsurance contracts under which the Company assumes business

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

generally contain specific provisions which allow the Company to perform audits of the ceding company to ensure compliance with the terms and conditions of the contract, including accurate and timely reporting of information.

Reinsurance premiums written include amounts reported by brokers and ceding companies, supplemented by the Company’s own estimates of premiums where reports have not been received.

In addition, reinsurance contracts under which the Company assumes business generally contain specific provisions which allow the Company to perform audits of the ceding company to ensure compliance with the terms and conditions of the contract, including accurate and timely reporting of information.

Based on a review of all available information, management establishes premium estimates where reports have not been received.

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Accordingly, the premium is earned evenly over the term.

Contracts which are written on a “risks attaching” basis cover claims which attach to the underlying insurance policies written during the terms of such contracts.

Premiums earned on such contracts usually extend beyond the original term of the reinsurance contract, typically resulting in recognition of premiums earned over a 24 -month period.

Contracts which are written on a “risks attaching” basis cover claims which attach to the underlying insurance policies written during

the terms of such contracts.

Premiums earned on such contracts usually extend beyond the original term of the reinsurance contract, typically resulting in recognition of premiums earned in proportion to the period of risk coverage.

Certain of the Company’s reinsurance contracts include provisions that adjust premiums or acquisition expenses based upon the experience under the contracts.

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Under these contracts, the Company assumes a measured amount of insurance risk in exchange for an anticipated margin, which is typically lower than on traditional reinsurance contracts.

The terms and conditions of these contracts may include additional or return premiums based on loss experience, loss

corridors, sublimits and caps.

The terms and conditions of these contracts may include additional or return premiums based on loss experience, loss corridors, sublimits and caps.

Examples of such business include aggregate stop-loss coverages, financial quota share coverages and multi-year retrospectively rated excess of loss coverages.

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Unearned premiums for the Company’s mortgage operations represent the portion of premiums written that is applicable to the estimated unexpired risk of insured loans.

A portion of premium payments may be refundable if the insured cancels coverage, which generally occurs when the loan is repaid, the loan amortizes to a sufficiently low amount to trigger a lender permitted or legally required cancellation, or the value of the property has increased sufficiently in accordance with the terms of the contract.

Premium refunds reduce premiums earned in the consolidated statements of income.

A portion of premium payments may be refundable if the insured cancels coverage, which generally occurs when the loan is repaid and the policy is refundable, the loan amortizes to a sufficiently low amount to trigger a lender

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

permitted or legally required cancellation, or the value of the property has increased sufficiently to trigger a lender permitted cancellation.Premium refunds reduce premiums earned in the consolidated statements of income.

Generally, only unearned premiums are refundable.

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Such review includes a comparison of actual reported premiums to expected ultimate premiums along with a review of the aging and collection of premium estimates.

Based on management’s review, the appropriateness of the premium estimates is evaluated, and any adjustment to these estimates is recorded in the period in which it becomes

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Based on management’s review, the appropriateness of the premium estimates is evaluated, and any adjustment to these estimates is recorded in the period in which it becomes known.

Adjustments to premium estimates could be material and such adjustments could directly and significantly impact earnings favorably or unfavorably in the period they are determined because the estimated premium may be fully or substantially earned.

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No premium deficiency charges were recorded by the Company during 2025, 2024 or 2023.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Periodically the Company reassesses the estimated ultimate liability and the related expected rate of return.

The accretion of the deposit

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accounting liability as well as changes to the estimated ultimate liability and the accretion rate would be reflected as part of interest expense in the Company’s results of operations.

The accretion of the deposit accounting liability as well as changes to the estimated ultimate liability and the accretion rate would be reflected as part of interest expense in the Company’s results of operations.

Any negative accretion in a deposit accounting liability is shown in other underwriting income in the Company’s results of operations.

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See note 7, for additional information.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash includes cash equivalents, which are investments with original maturities of three months or less which are not part of the investment portfolio.

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The Company’s investment portfolio includes certain funds that, due to their ownership structure, are accounted for by the Company using the equity method.

In applying the equity method, these investments are initially recorded at cost and are subsequently adjusted based on the Company’s

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

proportionate share of the net income or loss of the funds (which include changes in the fair value of the underlying securities in the funds).

In applying the equity method, these investments are initially recorded at cost and are subsequently adjusted based on the Company’s proportionate share of the net income or loss of the funds (which include changes in the fair value of the underlying securities in the funds).

Such investments are generally recorded on a one to three month lag based on the availability of reports from the investment funds.

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These investments can often have characteristics of a variable interest entity (“VIE”).

A VIE refers to entities that have characteristics such as (i) insufficient equity at risk to allow the entity to finance its activities without additional financial support or (ii) instances where the equity investors, as a group, do not have the characteristic of a controlling

financial interest.

If the Company is determined to be the primary beneficiary, it is required to consolidate the VIE.

The primary beneficiary is defined as the variable interest holder that is determined to have the controlling financial interest as a result of having both (i) the power to direct the activities of a VIE that most significantly impact the economic performance of the VIE and (ii) the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE.

At inception of the VIE as well as on an ongoing basis, the Company determines whether it is the primary beneficiary based on an analysis of the Company’s level of involvement in the VIE, the contractual terms, and the overall structure of the VIE.

At inception of the VIE as well as on an ongoing basis, the Company determines whether it is the primary beneficiary based on an analysis of the Company’s level of

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involvement in the VIE, the contractual terms, and the overall structure of the VIE.

The Company's maximum exposure to loss with respect to these investments is limited to the investment carrying amounts reported in the Company's consolidated balance sheet and any unfunded commitment.

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Net investment income includes interest and dividend income together with amortization of market premiums and discounts and is net of investment management and custody fees.

Anticipated prepayments and expected maturities are used in applying the interest method for certain investments such as

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mortgage and other asset-backed securities.

Anticipated prepayments and expected maturities are used in applying the interest method for certain investments such as mortgage and other asset-backed securities.

When actual prepayments differ significantly from anticipated prepayments, the effective yield is recalculated to reflect actual payments to date and anticipated future payments.

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The reserve for unpaid reported losses and loss adjustment expenses, established by management based on reports from ceding companies and claims from insureds, excludes estimates of amounts related to losses under high deductible policies, and represents the estimated ultimate cost of events or conditions that have been reported to or specifically identified by the Company.

reserves are supplemented by management’s estimates of reserves for losses incurred for which reports or claims have not been received.

Such reserves are supplemented by management’s estimates of reserves for losses incurred for which reports or claims have not been received.

The Company’s reserves are based on a combination of reserving methods, incorporating both Company and industry loss development patterns.

The Company selects the initial expected loss and loss adjustment expense ratios based on information derived by its underwriters and actuaries during the initial pricing of the business, supplemented by industry data where appropriate.

Such ratios consider, among other things, rate changes and changes in terms and conditions that have been observed in the market.

Such ratios consider, among other

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things, rate changes and changes in terms and conditions that have been observed in the market.

These estimates are reviewed regularly and, as experience develops and new information becomes known, the reserves are adjusted as necessary.

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To determine this reserve, the Company estimates the number of delinquencies not yet reported using historical information regarding late reported delinquencies and applies estimated claim rates and claim sizes for the estimated delinquencies not yet reported.

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The establishment of reserves across the Company’s segments is an inherently uncertain process, are necessarily based on estimates, and the ultimate net cost may vary from such estimates.

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The net effect of the translation adjustments for foreign operations is included in accumulated other comprehensive income, net of applicable deferred income tax.

Monetary assets and liabilities, such as premiums receivable and the reserve for losses and loss adjustment expenses, denominated in foreign currencies are revalued at the exchange rate in effect at the balance sheet date with the resulting foreign exchange gains and losses

included in net income.

Accounts that are classified as non-monetary, such as deferred acquisition costs and the unearned premium reserves, are not revalued.

In the case of foreign currency denominated fixed maturity securities which are classified as “available for sale,” the change in exchange rates between the local currency in which the investments are denominated and the Company’s functional currency at each balance sheet date is included in unrealized appreciation or decline in value of securities, a component of accumulated other comprehensive income, net of applicable deferred income tax.

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appreciation or decline in value of securities, a component of accumulated other comprehensive income, net of applicable deferred income tax.

(m) Income Taxes

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The Company records interest and penalties related to unrecognized tax benefits in the provision for income taxes.

On December 27, 2023 the Bermuda government enacted tax legislation referred to as the Corporate Income Tax Act 2023 (“Bermuda CIT Act”).

The Bermuda CIT Act establishes a 15% corporate income tax, for in-scope businesses, for fiscal years beginning on or after January 1, 2025.

The enacted legislation includes a provision referred to as the Economic Transition Adjustment, which requires Bermuda Constituent entities to establish tax basis in their assets and liabilities, excluding goodwill, based on fair value as of September 30, 2023.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the

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measurement date.

See note 15, for additional information regarding Company’s deferred income tax asset.

(n) Share-Based Payment Arrangements

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The share-based compensation expense associated with awards that have graded vesting features and vest based on service conditions only is calculated on a straight-line basis over the requisite service period for the entire award.

Compensation expense recognized in connection with performance awards is based on the achievement of the specified performance and service conditions.

expense recognized in connection with performance awards is based on the achievement of the specified performance and service conditions.

The final measure of compensation expense recognized over the requisite service period reflects the final performance outcome.

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Indefinite-lived intangible assets, such as insurance licenses are evaluated for impairment similar to goodwill.

Finite-lived intangible assets and liabilities include the value of acquired insurance and reinsurance contracts, which are estimated based on the present value of future expected cash flows and amortized in proportion to the estimated profits expected to be realized.

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expected to be realized.

Other finite-lived intangible assets, including customer lists, trade name and IT platforms, are amortized over their useful lives.

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Changes in the carrying value of these investments are recorded in income (loss) from operating affiliates.

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(s) Funds Held Arrangements

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Funds held as collateral by the Company are included in “Other liabilities” and changes to the funds held liability are reflected as part of interest expense in the Company’s consolidated results of operations.

(t) Recent Accounting Pronouncements

(t) Government Grants

The Company claims substance-based government grants and refundable tax credits based on eligible expenditures in the jurisdictions in which it operates.

Such amounts are recognized as reductions to the related expenses from which they are derived in the period where it is probable, the conditions for receiving the grant or refundable tax credits are satisfied.

Government grants and refundable tax credits receivable are included in ‘Other assets’ and the benefit is primarily reflected as a reduction to ‘other operating expenses’ and ‘corporate expenses’ in the Company’s consolidated results of operations.

(u) Recent Accounting Pronouncements

Recently Issued Accounting Standards Adopted

The Company adopted ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which was issued in March 2020 and amended in December 2022 with ASU 2022-06, “Reference Rate Reform (Topic 848)”.

This ASU provides optional expedients and exceptions for applying GAAP to investments, derivatives, or other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.

Along with the optional expedients, the amendments include a general principle that permits an entity to consider contract modifications due to reference reform to be an event that does not require contract re-measurement at the modification date or reassessment of a previous accounting determination.

The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

The Company adopted ASU 2023-07, “Segment Reporting – Improvements to Reportable Segments Disclosures,” which was issued in November 2023.

This ASU enhances public entities’ segment disclosures by requiring the disclosures of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), and included within each reported measure of segment profit or loss.

The ASU also extends certain annual disclosures to interim periods and allows the reporting of more than one measure of segment profit or loss under certain conditions.

The Company adopted ASU 2023-09, “Improvements to Income Tax Disclosures,” which was issued in December 2023 with the stated purpose of enhancing the transparency and decision usefulness of income tax disclosures.

The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information.

The Company adopted this ASU on a prospective basis.

The adoption of this ASU did not have any effect on the Company’s consolidated financial statements.

Recently Issued Accounting Standards Not Yet Adopted

ASU 2023-09, “Improvements to Income Tax Disclosures,” was issued in December 2023 with the stated purpose of enhancing the transparency and decision usefulness of income tax disclosures.

The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information.

While early adoption is permitted, a public entity should apply the amendments in ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024.

The Company is currently evaluating the impact of this standard on the Company’s consolidated financial statements and related disclosures.

ASU 2024-03, “Disaggregation of Income Statement Expenses” was issued in November 2024, which requires disaggregated disclosure of income statement expenses for public business entities.

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The Company is currently evaluating the impact of this standard on the Company’s consolidated financial statements and related disclosures.

ASU 2025-06, “Intangibles – Goodwill and Other – Internal- Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software,” was issued in September 2025.

The new guidance amends the accounting for the internal-use software by eliminating references to software development project stages.

Under the revised standard, entities must capitalize software costs when (i) management has authorized and committed funding for the project, and (ii) it is probable that the project will be completed and the software will function as intended.

The update also clarifies that both internal and external training costs, as well as maintenance costs, must be expensed as incurred.

The ASU is effective for annual reporting periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods.

The requirements may be applied prospectively, with options for modified retrospective or full retrospective application.

The Company plans to early adopt this ASU on a prospective basis beginning January 1, 2026, consistent with the permitted early adoption rules.

The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements and related disclosures.

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ASU 2025-10, “Accounting for Government Grants Received by Business Entities”, was issued in December 2025.

The ASU establishes authoritative guidance for the recognition, measurement, and presentation of government grants.

The amendments in this ASU are effective for public business entities for annual reporting periods beginning after December 15, 2028, and interim periods within those annual reporting periods.

Early adoption is permitted.

The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

Segment Information

The Company classifies its businesses into three segments – insurance, reinsurance and mortgage.

The Company classifies its businesses into three segments:

insurance, reinsurance and mortgage.

The Company determined its segments using the management approach described in accounting guidance regarding disclosures about segments of an enterprise and related information.

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Intersegment business is allocated to the segment accountable for the underwriting results.

The Company’s insurance, reinsurance and mortgage segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to the Company’s CODMs, the Chief Executive Officer of Arch Capital and the Chief Financial Officer and Treasurer of Arch Capital.

the Chief Executive Officer of Arch Capital and the Chief Financial Officer and Treasurer of Arch Capital.

The CODMs do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis.

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marine and aviation;

other specialty;

property catastrophe;

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and international mortgage insurance and reinsurance business covering loans primarily in Australia and Europe.

The Company’s results also include net investment income, net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investment funds accounted for using the equity method, other income (loss), corporate expenses, transaction costs and other, amortization of intangible assets, interest expense, net foreign exchange gains or losses, income tax items, income or loss from operating affiliates and items related to the Company’s non-cumulative preferred shares.

The Company’s results also include net investment income, net realized gains or losses (which includes, but is not limited to, realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investment funds accounted for using the equity method, other income (loss), corporate expenses, transaction costs and other, amortization of intangible assets, interest expense, net foreign exchange gains or losses, income tax items, income or loss from operating affiliates and items related to the Company’s non-cumulative preferred shares.

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Income (loss) from operating affiliates 180

Net income (loss) 4,399

Amounts attributable to redeemable noncontrolling interests —

Net income (loss) available to Arch 4,399

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Accordingly, the sum of such transactions for each segment does not agree to the total due to eliminations.

(2) Other operating expenses primarily include expenses that are related to compensation and employee benefits, information technology and professional fees.

(2) ‘Other underwriting income’ includes revenue earned from underwriting-related activities covered under existing service contracts.

(3) Other operating expenses primarily include expenses that are related to compensation and employee benefits, information technology and professional fees, reduced in part by substance based credits.

See note 3 (u) .

(4) Certain expenses have been excluded from ‘Corporate expenses’ and reflected in ‘Transaction costs and other.’ See note 3(u) .

(5) The ‘Other operating expense ratio’ for the 2025 period includes ‘Other underwriting income.’

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Losses and loss adjustment expenses ( 4,070 ) ( 4,327 ) 55 ( 8,342 )

Acquisition expenses, net ( 1,055 ) ( 1,240 ) ( 17 ) ( 2,312 )

Acquisition expenses ( 1,217 ) ( 1,432 ) ( 2 ) ( 2,651 )

Other operating expenses (2) ( 995 ) ( 270 ) ( 207 ) ( 1,472 )

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(2) Other operating expenses primarily include expenses that are related to compensation and employee benefits, information technology and professional fees.

(3) Certain expenses have been excluded from ‘Corporate expenses’ and reflected in ‘Transaction costs and other.’

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Losses and loss adjustment expenses ( 3,122 ) ( 3,227 ) 103 ( 6,246 )

Acquisition expenses, net ( 887 ) ( 813 ) ( 40 ) ( 1,740 )

Acquisition expenses ( 1,055 ) ( 1,240 ) ( 17 ) ( 2,312 )

Other operating expenses (2) ( 819 ) ( 288 ) ( 194 ) ( 1,301 )

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(2) Other operating expenses primarily include expenses that are related to compensation and employee benefits, information technology and professional fees.

(3) Certain expenses have been excluded from ‘Corporate expenses’ and reflected in ‘Transaction costs and other.’

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Other liability - claims made 786 843 866

Workers compensation 549 495 415

Commercial automobile 459 343 287

Commercial multi-peril 792 435 193

Commercial automobile 581 459 343

Workers compensation 591 549 495

Other 291 309 290

12 unchanged sentences

Net premiums earned

Other specialty $ 2,619 $ 2,097 $ 1,378

Specialty $ 2,906 $ 2,619 $ 2,097

Property excluding property catastrophe 2,252 2,148 1,645

45 unchanged sentences

Reserve for losses and loss adjustment expenses at end of year $ 33,547 $ 29,369 $ 22,752

(1) Activity in the 2024 period primarily related to the MCE Acquisition (see note 2 ), along with acquisitions of Watford Insurance Company (see note 16 ) and RMIC Companies, Inc.

and its wholly-owned subsidiaries (“RMIC”) that, together, comprise the run-off mortgage insurance business of Old Republic International Corporation .

(1) Activity in the 2025 and 2024 periods primarily related to the MCE Acquisition (see note 2 ).

Prior year development (“PYD”) arises from changes in loss estimates during the current period related to events occurring in prior calendar years.

22 unchanged sentences

Year Ended December 31, 2025

The insurance segment’s short-tailed lines included $ 32 million of favorable development in travel and accident, primarily from the 2023 accident year, ( i.e ., the year in which a loss occurred), and $ 31 million of favorable development in surety, primarily from the 2007, 2022 and 2023 accident years.

Net adverse development in long-tailed lines included adverse development in programs, mainly from the 2023 accident year.

The insurance segment’s short-tailed lines included $ 26 million of favorable development in travel and accident, primarily from the 2023 and 2024 accident years, ( i.e ., the year in which a loss occurred), and $ 21 million of favorable development in property, energy, marine and aviation, primarily from the 2023 and 2024 accident years.

Net adverse development in long-tailed lines included adverse development in programs, mainly from the 2021 to 2023 accident years.

The reinsurance segment’s short-tailed lines included $ 178 million of favorable development from property other than property catastrophe, primarily from the 2023 and 2024 underwriting years ( i.e.

, all premiums and losses attributable to contracts having an inception or renewal date within the given 12 month period), $ 74 million of favorable development from other specialty lines, primarily from the 2015 to 2022 underwriting years, and $ 64 million of favorable development from property catastrophe, primarily from the 2020 to 2023 underwriting years.

, all premiums and losses attributable to contracts having an inception or renewal date within the given 12 month period), and $ 141 million of favorable development from property catastrophe, primarily from the 2023 and 2024 underwriting years.

Long-tailed lines included $ 64 million of adverse development in casualty, primarily from the 2021, 2023 and 2024 underwriting years.

3 unchanged sentences

Year Ended December 31, 2024

The insurance segment’s short-tailed lines included $ 43 million of favorable development in property and marine, primarily from the 2021 and 2022 accident years, $ 22 million of favorable development in warranty and lenders solutions, primarily from the 2022 accident year, and $ 15 million of favorable development related to travel and accident business, primarily from the 2022 accident year.

The insurance segment’s short-tailed lines included $ 32 million of favorable development in travel and accident, primarily from the 2023 accident year, and $ 31 million of favorable development in surety, primarily from the 2007, 2022 and 2023 accident years.

Net adverse development in long-tailed lines included adverse development in programs, mainly from the 2023 accident year.

The reinsurance segment’s short-tailed lines included $ 99 million of favorable development from property other than property catastrophe, primarily from the 2022 and 2023 underwriting years, $ 74 million of favorable development from specialty lines, primarily from the 2015 to 2022 underwriting years, and $ 64 million of favorable development from property catastrophe, primarily from the 2020 to 2023 underwriting years.

Long-tailed lines included $ 44 million of adverse development in casualty, primarily from the 2016, 2017 and 2020 underwriting years.

The mortgage segment’s favorable development was driven by reserve releases associated with the U.S.

first lien portfolio from the 2022 and 2023 accident years.

The Company’s credit risk transfer and international businesses also contributed to the favorable development.

Year Ended December 31, 2023

The insurance segment’s short-tailed lines included $ 43 million of favorable development in property, energy marine and aviation, primarily from the 2021 and 2022 accident years, $ 22 million of favorable development in warranty and lenders solutions, primarily from the 2022 accident year, and $ 15 million of favorable development in travel and accident, primarily from the 2022 accident year.

Long-tailed lines included $ 50 million of adverse development in professional liability, primarily from the 2017 to 2020 accident years.

The reinsurance segment’s short-tailed lines included $ 93 million of favorable development in property other than property catastrophe, primarily from the 2020 to 2022 underwriting years, $ 51 million of favorable development in property catastrophe, primarily from the 2019 to 2022 underwriting years, and $ 35 million from other specialty lines, primarily from the 2021 underwriting year.

The reinsurance segment’s short-tailed lines included $ 93 million of favorable development in property other than property catastrophe, primarily from the 2020 to 2022 underwriting years, $ 51 million of favorable development in property catastrophe, primarily from the 2019 to 2022 underwriting years, and $ 35 million from specialty lines, primarily from the 2021 underwriting year.

Long-tailed lines included $ 45 million of adverse development in casualty business, primarily from the 2013 to 2020 underwriting years.

2 unchanged sentences

The Company’s credit risk transfer and international businesses also contributed to the favorable development.

Year Ended December 31, 2022

The insurance segment’s short-tailed lines included $ 37 million of favorable development in warranty and lenders solutions, primarily from the 2021 accident year, and $ 15 million of favorable development related to travel and accident business, primarily from the 2021 accident year.

Long-tailed lines included $ 25 million of adverse development in professional liability, primarily from the 2013 to 2015 and 2018 to 2020 accident years, and $ 18 million related to casualty business, primarily from the 2020 and 2021 accident years.

The reinsurance segment’s short-tailed lines included $ 109 million of favorable development from property other than property catastrophe business, primarily from the 2018 to 2021 underwriting years, $ 35 million from other specialty business, primarily from the 2016 and 2021 underwriting years, $ 28 million in marine and aviation lines, across most underwriting years, and $ 24 million of favorable development from property catastrophe business, primarily from the 2018 to 2020 underwriting years.

Net adverse development in long-tailed lines included $ 5 million in casualty, spread across many prior underwriting years.

The mortgage segment’s favorable development was driven by reserve releases related to COVID-19 delinquencies associated with the U.S.

first lien portfolio from the 2020 and 2021 accident years.

The Company’s credit risk transfer, international, second lien and student loan businesses also contributed to the favorable development.

ARCH CAPITAL 127

23 unchanged sentences

Marine and aviation Marine and aviation

Other specialty Other specialty

Specialty Specialty

Mortgage Direct mortgage insurance in the U.S.

7 unchanged sentences

The Company is required to establish reserves for losses and loss adjustment expenses (“Loss Reserves”) that arise from the business the Company underwrites.

Loss Reserves for the insurance, reinsurance and mortgage segments represent estimates of future amounts required to pay losses and loss adjustment expenses for insured or reinsured events which have occurred at or before the balance sheet date.

Loss Reserves do not reflect contingency reserve allowances to account for future loss occurrences.

Losses arising from

future events will be estimated and recognized at the time the losses are incurred and could be substantial.

Losses arising from future events will be estimated and recognized at the time the losses are incurred and could be substantial.

Insurance Segment

13 unchanged sentences

Uncertainties in estimating ultimate losses and loss adjustment expenses are magnified by the length of the time lag between when a claim actually occurs and when it is reported and settled.

This time lag is sometimes referred to as the “claim-tail.” During this period additional facts regarding coverages written in prior accident years, as well as about actual claims and trends, may become known and, as a result, may lead to adjustments of the related Loss Reserves.

If the Company determines that an adjustment is appropriate, the adjustment is recorded in the accounting period in which such determination is made.

Accordingly, should Loss

ARCH CAPITAL 128

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reserves need to be increased or decreased in the future from amounts currently established, future results of operations would be negatively or positively impacted respectively.

adjustments of the related Loss Reserves.

If the Company determines that an adjustment is appropriate, the adjustment is recorded in the accounting period in which such determination is made.

Accordingly, should Loss Reserves need to be increased or decreased in the future from amounts currently established, future results of operations would be negatively or positively impacted respectively.

The Company authorizes managing general agents, general agents and other producers to write program business on the Company’s behalf within prescribed underwriting authorities.

10 unchanged sentences

Each quarter, as part of the reserving process, the segments’ actuaries reaffirm that the assumptions used in the reserving process continue to form a sound basis for the projection of liabilities.

If actual loss activity differs substantially from expectations based on historical information, an adjustment to Loss Reserves may be supported.

If actual loss activity differs

substantially from expectations based on historical information, an adjustment to Loss Reserves may be supported.

The Company places more or less reliance on a particular actuarial method based on the facts and circumstances at the time the estimates of Loss Reserves are made.

12 unchanged sentences

These methods use historical loss payments over discrete periods of time to estimate future losses and necessarily assume that factors that have affected paid losses in the past, such as inflation or the effects of litigation, will remain constant in the future.

Because historical paid loss development methods do not use incurred losses to estimate ultimate losses, they may be more reliable than the other methods that use incurred losses in situations where there are significant changes in how incurred losses are established by a company’s claims adjusters.

However, historical paid loss development methods are more leveraged (meaning that small changes in payments have a larger impact on estimates of ultimate losses) than

Because historical paid loss development methods do not use incurred losses to

ARCH CAPITAL 129

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

actuarial methods that use incurred losses because cumulative loss payments take much longer to equal the expected ultimate losses than cumulative incurred amounts.

estimate ultimate losses, they may be more reliable than the other methods that use incurred losses in situations where there are significant changes in how incurred losses are established by a company’s claims adjusters.

However, historical paid loss development methods are more leveraged (meaning that small changes in payments have a larger impact on estimates of ultimate losses) than actuarial methods that use incurred losses because cumulative loss payments take much longer to equal the expected ultimate losses than cumulative incurred amounts.

In addition, and for similar reasons, historical paid loss development methods are often slow to react to situations when new or different factors arise than those that have affected paid losses in the past.

11 unchanged sentences

In the initial reserving process for short-tail insurance lines (consisting of property, energy, marine and aviation and other exposures including travel, accident and health, and warranty and lenders solutions), the Company relies on a combination of the reserving methods discussed above.

For catastrophe-exposed business, the reserving process also includes the usage of catastrophe models for known events

and a heavy reliance on analysis of individual catastrophic events and management judgment.

For catastrophe-exposed business, the reserving process also includes the usage of catastrophe models for known events and a heavy reliance on analysis of individual catastrophic events and management judgment.

The development of losses on short-tail business can be unstable, especially for policies characterized by high severity, low frequency losses.

7 unchanged sentences

As time passes, for a given accident year, additional weight is given to the paid and incurred B-F loss development methods and historical paid and incurred loss development methods in the reserving process.

The Company makes a number of key assumptions in reserving for long-tail lines, including that the pricing loss ratio is the best estimate of the ultimate loss ratio at the time the policy is entered into, that the loss development patterns, which are based on a combination of company and industry loss development patterns and adjusted to reflect differences in the insurance segment’s mix of business, are reasonable and that claims personnel and underwriters analyses of our exposure to major events are assumed to be the best estimate of exposure to the known claims on those events.

The expected loss ratios used in the initial reserving process for long-tail business for recent accident years have varied over time, in some cases significantly, from earlier accident years.

ARCH CAPITAL 130

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

accident year expected loss ratios, adjusted for changes in pricing, loss trends, terms and conditions and reinsurance structure.

estimate of exposure to the known claims on those events.

The expected loss ratios used in the initial reserving process for long-tail business for recent accident years have varied over time, in some cases significantly, from earlier accident years.

As the credibility of historical experience for earlier accident years increases, the experience from these accident years will be given a greater weighting in the actuarial analysis to determine future accident year expected loss ratios, adjusted for changes in pricing, loss trends, terms and conditions and reinsurance structure.

From time to time, the Company enters into loss portfolio transfer and adverse development cover reinsurance agreements accounted for as retroactive reinsurance.

These agreements transfer Loss Reserves and future favorable or adverse development on certain runoff programs and certain third party occurrence business, within multi-line and other specialty business (the “Covered Lines”).

As incurred losses and allocated loss adjustment expenses for the Covered Lines

are ceded to the reinsurer, the Company is not exposed to changes in the amount, timing and uncertainty of cash flows arising from the Covered Lines.

These agreements transfer Loss Reserves and future favorable or adverse development on certain runoff programs and

certain third party occurrence business, within multi-line and other specialty business (the “Covered Lines”).

As incurred losses and allocated loss adjustment expenses for the Covered Lines are ceded to the reinsurer, the Company is not exposed to changes in the amount, timing and uncertainty of cash flows arising from the Covered Lines.

To avoid distortion, the incurred losses and allocated loss adjustment expenses and cumulative paid losses and loss adjustment expenses for the Covered Lines are excluded entirely from the tables below.

163 unchanged sentences

Property, energy, marine and aviation 23.0 % 41.4 % 18.2 % 8.9 % 3.3 % 1.0 % — % 1.1 % ( 0.1 ) % 0.1 %

21.5 % 43.8 % 17.2 % 6.1 % 2.4 % — % — % 0.3 % ( 1.2 ) % — %

Third party occurrence business 3.7 % 10.1 % 12.4 % 13.4 % 11.3 % 10.5 % 6.1 % 5.0 % 4.6 % 2.0 %

Third party claims-made business 4.7 % 16.1 % 16.3 % 12.0 % 13.3 % 11.8 % 6.4 % 7.7 % 1.3 % 2.4 %

4.4 % 15.6 % 16.3 % 10.9 % 14.3 % 10.9 % 7.0 % 6.2 % 4.0 % 2.4 %

Multi-line and other specialty 31.2 % 29.0 % 11.0 % 8.5 % 5.6 % 3.7 % 2.1 % 1.4 % 1.1 % 0.4 %

4 unchanged sentences

In certain instances, the Company establishes ACRs even when the ceding company does not report any liability on a known event.

In addition, specific claim information reported by ceding companies or obtained through claim audits can alert the Company to emerging trends such as changing legal interpretations of coverage and liability, claims from unexpected sources or classes of

business, and significant changes in the frequency or severity of individual claims.

In addition, specific claim information reported by ceding companies or obtained through claim audits can alert the Company to emerging trends such as changing legal interpretations of coverage

and liability, claims from unexpected sources or classes of business, and significant changes in the frequency or severity of individual claims.

Such information is often used in the process of estimating IBNR reserves.

3 unchanged sentences

The process of estimating Loss Reserves involves a considerable degree of judgment by management and, as of any given date, is inherently uncertain.

The estimation of Loss Reserves for the reinsurance segment is subject to the same risk factors as the estimation of Loss Reserves for the insurance segment.

In addition, the inherent uncertainties of estimating such reserves are even greater for

ARCH CAPITAL 133

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

reinsurers, due primarily to the following factors:

The estimation of Loss Reserves for the reinsurance segment is subject to the same risk factors as the estimation of Loss Reserves for the insurance segment.

In addition, the inherent uncertainties of estimating such reserves are even greater for reinsurers, due primarily to the following factors:

(1) the claim-tail for reinsurers is generally longer because claims are first reported to the ceding company and then to the reinsurer through one or more intermediaries, (2) the reliance on premium estimates, where reports have not been received from the ceding company, in the reserving process, (3) the potential for writing a number of reinsurance contracts with different ceding companies with the same exposure to a single loss event, (4) the diversity of loss development patterns among different types of reinsurance contracts, (5) the necessary reliance on the ceding companies for information regarding reported claims and (6) the differing reserving practices among ceding companies.

27 unchanged sentences

For known catastrophic events, the reserving process also includes the usage of catastrophe models and a heavy reliance on analysis which includes ceding company inquiries and management judgment.

The development of property losses may be unstable, especially where there is high catastrophic exposure, may be characterized by high severity, low frequency losses for excess and catastrophe-exposed business and may be highly correlated across contracts.

As time passes, for a given underwriting year, additional weight is given to the paid and incurred B-F loss development methods and historical paid and incurred loss development methods in the reserving process.

The Company makes a number of key assumptions in reserving for short-tail lines, including that historical paid and reported development

The development of property losses may be unstable, especially where there is high catastrophic exposure, may be characterized by high

ARCH CAPITAL 134

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

patterns are stable, catastrophe models provide useful information about our exposure to catastrophic events that have occurred and our underwriters’ judgment and guidance received from ceding companies as to potential loss exposures may be relied on.

severity, low frequency losses for excess and catastrophe-exposed business and may be highly correlated across contracts.

The Company makes a number of key assumptions in reserving for short-tail lines, including that historical paid and reported development patterns are stable, catastrophe models provide useful information about our exposure to catastrophic events that have occurred and our underwriters’ judgment and guidance received from ceding companies as to potential loss exposures may be relied on.

The expected loss ratios used in the initial reserving process for property exposures have varied over time due to changes in pricing, reinsurance structure, estimates of catastrophe losses, terms and conditions and geographical distribution.

1 unchanged sentence

Due to the short-tail nature of property business, reported loss experience emerges quickly and ultimate losses are known in a reasonably short period of time.

In the initial reserving process for long-tail reinsurance lines (consisting of casualty, other specialty, marine and aviation and other exposures), the Company primarily relies on the expected loss method.

The development of long-tail business may be unstable, especially if there are high severity major

events, with business written on an excess of loss basis typically having a longer tail than business written on a pro rata basis.

In the initial reserving process for long-tail reinsurance lines (consisting of casualty, specialty, marine and aviation and other exposures), the Company primarily relies on the expected loss method.

The development of long-tail business may be unstable, especially if there are high severity major events, with business written on an excess of loss basis typically having a longer tail than business written on a pro rata basis.

As time passes, for a given underwriting year, additional weight is given to the paid and incurred B-F loss development methods and eventually to the historical paid and incurred loss development methods in the reserving process.

2 unchanged sentences

As the credibility of historical experience for earlier underwriting years increases, the experience from these underwriting years is used in the actuarial analysis to determine future underwriting year expected loss ratios, adjusted for changes in pricing, loss trends, terms and conditions and reinsurance structure.

ARCH CAPITAL 135

2025 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables present information on the reinsurance segment’s short-duration insurance contracts:

145 unchanged sentences

2025 227 172 N/A

Total $ 1,041

Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance

9 unchanged sentences

Liabilities for losses and loss adjustment expenses, net of reinsurance $ 612

Other specialty (in millions)

ARCH CAPITAL 138

2025 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Specialty (in millions)

Incurred losses and allocated loss adjustment expenses, net of reinsurance December 31, 2025

34 unchanged sentences

Liabilities for losses and loss adjustment expenses, net of reinsurance $ 3,669

ARCH CAPITAL 133

2024 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the average annual percentage payout of incurred losses and allocated loss adjustment expenses by age, net of reinsurance, as of December 31, 2025:

1 unchanged sentence

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

2.8 % 8.3 % 11.9 % 11.9 % 11.5 % 8.4 % 7.5 % 7.2 % 6.0 % 3.4 %

Casualty 2.9 % 8.2 % 11.8 % 12.1 % 11.5 % 7.8 % 7.6 % 6.8 % 4.7 % 3.0 %

Property catastrophe ( 62.4 ) % 110.1 % ( 23.8 ) % 138.8 % ( 24.8 ) % 17.4 % ( 4.8 ) % 1.0 % 2.2 % 5.7 %

Property excluding property catastrophe 20.9 % 37.0 % 14.5 % 7.3 % 5.4 % 1.8 % 1.2 % 0.7 % 1.1 % ( 0.7 ) %

23.6 % 36.2 % 14.7 % 6.8 % 4.7 % 0.2 % 0.8 % 0.2 % 1.1 % 0.1 %

Marine and aviation 1.8 % 24.3 % 19.8 % 15.0 % 12.2 % 6.4 % 2.0 % 1.1 % 1.1 % 6.2 %

1.4 % 28.9 % 20.3 % 13.8 % 10.0 % 4.9 % 2.3 % 1.4 % 0.6 % 0.4 %

Other specialty 27.7 % 29.2 % 14.2 % 6.4 % 5.2 % 4.0 % 1.6 % 0.7 % 0.3 % 0.3 %

Specialty 26.2 % 28.2 % 14.6 % 6.7 % 5.4 % 3.8 % 1.2 % 0.5 % — % 0.1 %

Mortgage Segment

5 unchanged sentences

The Company also reserves for the expenses of adjusting claims related to these delinquencies.

The trigger that creates a case reserve estimate is that an insured loan is reported to us as being two payments in arrears.

The trigger that creates a case reserve estimate is that an insured loan is reported to us as being

two payments in arrears.

The actuarial reviews and documentation created in the reserving process are completed in accordance with generally accepted actuarial standards.

3 unchanged sentences

Additionally, changes in estimates are likely to occur from period to period as economic conditions change, and the ultimate liability may vary significantly from the estimates used.

Major risk factors include (but are not limited to) changes in home prices and borrower equity, which can limit the borrower’s ability to sell the property and satisfy the outstanding loan balance, and changes in unemployment, which can affect the borrower’s income and ability to make mortgage payments.

The unique nature of the COVID-19 pandemic, with no historical precedent, adds further uncertainty to current reserve estimates.

Major risk factors

ARCH CAPITAL 139

2025 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

include (but are not limited to) changes in home prices and borrower equity, which can limit the borrower’s ability to sell the property and satisfy the outstanding loan balance, and changes in unemployment, which can affect the borrower’s income and ability to make mortgage payments.

The lead actuarial methodology used by the Company is a frequency-severity method based on the inventory of pending delinquencies.

Each month the loan servicers report the delinquency status of each insured loan.

Using the frequency-

severity method allows the Company to take advantage of its knowledge of the number of delinquent loans and the coverage provided (“risk size”) on those loans by directly relating the reserves to these amounts.

Using the frequency-severity method allows the Company to take advantage of its knowledge of the number of delinquent loans and the coverage provided (“risk size”) on those loans by directly relating the reserves to these amounts.

The delinquencies are grouped into homogeneous cohorts for analysis, reflecting the age of delinquency.

4 unchanged sentences

This is done based on a review of historical development patterns, an assessment of economic conditions and the level of equity the borrowers may have in their homes, as well as considering economic conditions and loss mitigation opportunities.

Mortgage insurance is generally not subject to large claim sizes, as with some other lines of insurance.

Mortgage insurance is generally not subject

to large claim sizes, as with some other lines of insurance.

A claim size over $ 250,000 is rare, and this helps reduce the volatility of claim size estimates.

3 unchanged sentences

Mortgage insurance Loss Reserves are short-tail, in the sense that the vast majority of delinquencies are resolved within two years of being reported.

Due to the forbearances and foreclosure moratoriums associated with COVID-19, settlement timelines have been extended.

While reserves are initially analyzed by reserve cohort, as described above, they are also rolled up by underwriting year to ensure that reserve assumptions are consistent with the performance of the underwriting year.

The accuracy of prior reserve assumptions

The accuracy of prior reserve assumptions is also checked in hindsight to determine if adjustments to the assumptions are needed.

Loss Reserves for the Company’s mortgage reinsurance business and GSE credit risk sharing transactions are comprised of case reserves and IBNR reserves.

The Company’s mortgage reinsurance operations receive reports of delinquent loans and claims notices from ceding companies and record case reserves based upon the amount of reserves recommended by the ceding company.

In addition, specific claim and delinquency information reported by ceding companies is used in the process of estimating IBNR reserves.

ARCH CAPITAL 140

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

is also checked in hindsight to determine if adjustments to the assumptions are needed.

Loss Reserves for the Company’s mortgage reinsurance business and GSE credit risk sharing transactions are comprised of case reserves and IBNR reserves.

The Company’s mortgage reinsurance operations receive reports of delinquent loans and claims notices from ceding

companies and record case reserves based upon the amount of reserves recommended by the ceding company.

In addition, specific claim and delinquency information reported by ceding companies is used in the process of estimating IBNR reserves.

The following table presents information on the mortgage segment’s short-duration insurance contracts:

31 unchanged sentences

2021 — 2 5 8 10

2022 — 3 10 14

All outstanding liabilities before 2016, net of reinsurance 9

16 unchanged sentences

Multi-line and other specialty 2,827

Casualty 3,785

Property catastrophe 920

1 unchanged sentence

Marine and aviation 612

Other specialty

Specialty 3,669

Other short duration lines not included in disclosures (1) 1,436

8 unchanged sentences

Marine and aviation 549

Other specialty

Specialty 1,386

Other short duration lines not included in disclosures (2) 271

5 unchanged sentences

Reserve for losses and loss adjustment expenses $ 33,547

(1) Includes amounts associated with the loss portfolio reinsurance agreement related to the MCE Acquisition.

(1) Includes amounts primarily associated with the loss portfolio reinsurance agreement related to the MCE Acquisition.

(2) Includes unpaid loss and loss adjustment expenses recoverable of $ 121 million related to the loss portfolio transfer reinsurance agreements.

4 unchanged sentences

Balance at beginning of period $ 5,634 $ 45

Provision on business acquired (1) 16

Change for provision of expected credit losses (1) ( 2 )

2 unchanged sentences

Balance at beginning of period $ 4,644 $ 34

Provision on business acquired (2) 16

Change for provision of expected credit losses (1) ( 5 )

Balance at end of period $ 5,634 $ 45

(1) Reflects provision for current expected credit losses on premiums receivable related to the MCE Acquisition.

(1) Amounts deemed uncollectible are written-off in operating expenses.

For the 2025 and 2024 periods, amounts written off totaled $ 3 million and $ 3 million, respectively.

(2) Reflects provision for current expected credit losses on premiums receivable related to the MCE Acquisition.

Reinsurance Recoverables

19 unchanged sentences

Best rating of “A-” or better 62.1 % 63.8 %

% due from all other rated carriers — % 0.1 %

% due from all other carriers with no A.M.

1 unchanged sentence

Largest balance due from any one carrier as % of total shareholders’ equity 8.1 % 7.8 %

(1) At December 31, 2024 and 2023 period, over 95 % of such amount were collateralized through reinsurance trusts, funds withheld arrangements, letters of credit or other, respectively .

(1) At December 31, 2025 and 2024 period, over 96 % of such amounts were collateralized through reinsurance trusts, funds withheld arrangements, letters of credit or other.

Contractholder Receivables

52 unchanged sentences

(5) 204 163 170

(6) 249 239 166

Total $ 1,969 $ 811 $ 952

19 unchanged sentences

by a separate panel of reinsurers.

(6) Issued in November 2025, covering in-force policies issued between July 1, 2024 and September 30, 2025.

$ 199 million was directly funded by Bellemeade Re 2025-1 Ltd.

via insurance-linked notes, with an additional $ 50 million capacity provided directly to Arch MI U.S.

by a separate panel of reinsurers .

ARCH CAPITAL 144

13 unchanged sentences

government securities 3,270 53 ( 81 ) ( 1 ) 3,299

Commercial mortgage backed securities 1,058 6 ( 11 ) ( 1 ) 1,064

Residential mortgage backed securities 2,705 34 ( 21 ) — 2,692

Commercial mortgage backed securities 1,212 11 ( 5 ) ( 1 ) 1,207

Municipal bonds 162 — ( 4 ) — 166

8 unchanged sentences

government securities 2,538 30 ( 107 ) ( 1 ) 2,616

Commercial mortgage backed securities 1,213 3 ( 34 ) ( 2 ) 1,246

Residential mortgage backed securities 1,079 6 ( 31 ) — 1,104

Commercial mortgage backed securities 1,058 6 ( 11 ) ( 1 ) 1,064

Municipal bonds 263 — ( 16 ) — 279

69 unchanged sentences

Short-term investments 102 144 68

Equity securities 40 22 22

Equity securities (dividends) 41 40 22

Other (1) 109 136 93

25 unchanged sentences

(1) See note 11, for information on the Company’s derivative instruments.

(2) Amounts in the 2024 period include benefits from the sale of Castel Underwriting Agencies Limited and the acquisition of RMIC.

Other Investments

(2) Amounts in the 2025 periods primarily include losses related to the sale of certain alternative investments accounted for under the equity method, while amounts in the 2024 period include benefits from the sale of Castel Underwriting Agencies Limited and the acquisition of RMIC Companies, Inc .

Other Investments, at Fair Value

The following table summarizes the Company’s assets and liabilities which are accounted for using the fair value option:

6 unchanged sentences

Investment grade fixed income 1,225 1,055

Term loan investments 430 272

Lending 303 427

Private equity 250 229

Lending 220 303

Term loan investments 173 430

Credit related funds 87 99

21 unchanged sentences

Lending 558 616

Infrastructure 425 320

Fixed income 501 384

Infrastructure 346 425

Equities 231 217

15 unchanged sentences

Net income (loss) $ 12,951 $ 11,891 $ 592

Certain of the Company’s other investments and investments accounted for using the equity method are in investment funds for which the Company has the option to redeem at

agreed upon values as described in each investment fund’s subscription agreement.

Certain of the Company’s other investments and investments accounted for using the equity method are in investment funds for which the Company has the option to redeem at agreed upon values as described in each investment fund’s subscription agreement.

Depending on the terms of the various subscription agreements, investments in investment funds may be redeemed daily, monthly, quarterly or on other terms.

9 unchanged sentences

The consideration paid was € 9.95 per share, or an aggregate € 453 million (approximately $ 546 million) including related fees.

Income (loss) from operating affiliates reflected a one-time gain of $ 75 million realized from the acquisition.

As a result of equity method accounting rules, approximately $ 36 million of additional gain was deferred and will generally be recognized over the next five years .

As of December 31, 2025, the Company owned approximately 29.9 % of the issued shares of Coface, or 30 % excluding treasury shares, with a carrying value of $ 707 million, compared to $ 592 million at December 31, 2024.

In 2021, the Company completed acquisition of Somers Group Holdings Ltd.

and its wholly owned subsidiaries (collectively, “Somers”) by Greysbridge for a cash purchase price of $ 35.00 per common share.

Somers is wholly owned by Greysbridge, and Greysbridge is owned 40 % by the Company, 30 % by certain investment funds managed by

In 2021, the Company’s investment in Somers Group Holdings Ltd.

and its wholly owned subsidiaries (collectively, “Somers”) was acquired by Greysbridge for a cash purchase price of $ 35.00 per common share.

As of December 31, 2025, the Company owns 30 % of Greysbridge, compared to 40 % at December 31, 2024, with the remaining interests held by third party investors.

At December 31, 2025 the

ARCH CAPITAL 148

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Kelso & Company (“Kelso”) and 30 % owned by certain investment funds managed by Warburg Pincus LLC (“Warburg”).

At December 31, 2024 the Company’s carrying value in Greysbridge was $ 523 million, compared to $ 430 million at December 31, 2023.

The Company’s carrying value in Greysbridge reflected aggregate purchase price of $ 279 million along with income (loss) from operating affiliates, which included a one-time gain of $ 96 million recognized from the acquisition.

Company’s carrying value in Greysbridge was $ 486 million, compared to $ 523 million at December 31, 2024.

The Company recorded income from operating affiliates of $ 180 million for 2025, compared to $ 200 million for 2024 and $ 184 million for 2023.

26 unchanged sentences

Total restricted assets $ 14,953 $ 13,048

(1) 2024 period includes amounts related to the MCE Acquisition.

(2) Primarily includes Funds at Lloyds, deposits with non-U.S.

(1) Primarily includes Funds at Lloyd’s, deposits with non-U.S.

regulatory authorities and other restricted assets.

138 unchanged sentences

government securities 3,270 — 3,270 —

Commercial mortgage backed securities 1,058 — 1,058 —

Residential mortgage backed securities 2,705 — 2,705 —

Commercial mortgage backed securities 1,212 — 1,212 —

Municipal bonds 162 — 162 —

39 unchanged sentences

government securities 2,538 — 2,538 —

Commercial mortgage backed securities 1,213 — 1,213 —

Residential mortgage backed securities 1,079 — 1,079 —

Commercial mortgage backed securities 1,058 — 1,058 —

Municipal bonds 263 — 263 —

30 unchanged sentences

Fair Value Option

Corporate Bonds

Investments Other Investments

Structured Securities (1) Corporate

Bonds Short-term

Investments Other

Investments Short-term

Investments Equity Securities

Equity Securities

Other Liabilities

Year Ended December 31, 2025

30 unchanged sentences

$ — $ 97 $ — $ 189 $ 33 $ 4 $ 7 $ ( 73 )

(1) Includes asset backed securities, mortgage backed securities and commercial mortgage backed securities.

(2) Gains or losses were included in net realized gains (losses).

83 unchanged sentences

Reinsurers (1) Total VIE Assets

(Mar-19) $ — $ — $ 71

(Jul-19) — — 99

(Sep-21) $ 21 $ 14 $ 363

3 unchanged sentences

(Aug-24) 130 33 163

(Nov-25) 191 48 —

Total $ 576 $ 235 $ 1,094

87 unchanged sentences

For 2025, 2024 and 2023, the number of stock options excluded were 2.4 million, 2.2 million and 0.5 million, respectively.

Arch Capital is incorporated under the laws of Bermuda and, under Bermuda law in effect as of December 31, 2024, is not obligated to pay taxes on income or capital gains in Bermuda.

Arch Capital is incorporated under the laws of Bermuda and, under Bermuda law in effect prior to 2025, was not obligated to pay taxes on income or capital gains in Bermuda.

Upon its formation in 2000, the Company received a written undertaking from the Minister of Finance in Bermuda under the Exempted Undertakings Tax Protection Act 1966 assuring that, in the event that any legislation is enacted in Bermuda imposing any tax computed on profits, income, gain or appreciation on any capital asset, or any tax in the nature of estate duty or inheritance tax, such tax will not be applicable to Arch Capital or any of its operations until March 31, 2035.

However, on December 27, 2023, the Government of Bermuda enacted the Bermuda CIT Act, which is effective for tax years beginning on or after January 1, 2025.

Once in effect, the new corporate income tax regime in Bermuda is expected to supersede the Minister of Finance’s assurance, and the Company will become subject to taxes in Bermuda before March 31, 2035.

The Bermuda CIT Act will apply a 15% corporate income tax to certain Bermuda constituent entities of multi-national groups in fiscal years beginning on or after January 1, 2025.

The Company expects to incur and pay increased taxes in Bermuda beginning in 2025.

The Bermuda CIT Act, together with the widespread adoption of the OECD Pillar II minimum tax proposal, is expected to result in a minimum effective tax rate of 15% in most jurisdictions in which the Company operates.

Arch Capital has subsidiaries and branches that operate in various jurisdictions around the world that are subject to tax in the jurisdictions in which they operate.

The significant jurisdictions in which Arch Capital’s subsidiaries and branches are subject to tax are the United States, United Kingdom, Ireland, Switzerland, Australia, Canada, and Gibraltar.

However, on December 27, 2023, the Government of Bermuda enacted the Bermuda Corporate Income Tax Act (“Bermuda CIT Act”), imposing a 15% tax on certain Bermuda constituent entities of multi-national groups for tax years beginning on or after January 1, 2025.

The Bermuda CIT Act was drafted to supersede the Company’s previously granted tax assurance, resulting in the Company becoming subject to Bermuda corporate income tax starting in 2025.

The Bermuda CIT Act and amendments, together with the widespread adoption of the OECD Pillar II minimum tax proposal, has resulted in an increase to the minimum effective tax rate to approximately 15% in most jurisdictions in which Arch operates.

Arch Capital has subsidiaries and branches that operate in various jurisdictions around the world.

The significant jurisdictions in which Arch Capital’s subsidiaries and branches are subject to tax are the United States, Bermuda, United Kingdom, Ireland, Switzerland, Australia, Canada, and Gibraltar.

ARCH CAPITAL 160

7 unchanged sentences

Current expense (benefit):

United States $ 332 $ 251 $ 195

Federal - Bermuda $ 211 $ 1 $ 7

Foreign - United States 270 332 251

Foreign - Other 105 64 30

Deferred expense (benefit):

United States ( 21 ) ( 20 ) ( 96 )

( 14 ) ( 1,141 ) ( 25 )

Federal - Bermuda 100 12 ( 1,179 )

Foreign - United States 60 ( 21 ) ( 20 )

Foreign - Other 14 ( 26 ) 38

174 ( 35 ) ( 1,161 )

4 unchanged sentences

Income (Loss) Before Income Taxes:

Bermuda $ 2,611 $ 2,099 $ 986

United States 1,438 1,239 401

Other 625 232 175

Domestic - Bermuda $ 3,121 $ 2,611 $ 2,099

Foreign - United States 1,660 1,438 1,239

Foreign - Other 378 625 232

Total $ 5,159 $ 4,674 $ 3,570

1 unchanged sentence

The 2025 applicable statutory tax rates by jurisdiction were as follows:

Bermuda ( 0.0 %), United States ( 21.0 %), United Kingdom ( 25.0 %), Ireland ( 12.5 %), Switzerland ( 19.6 %), Australia ( 30.0 %), Canada ( 26.4 %) and Gibraltar ( 13.8 %).

Australia ( 30.0 %), Canada ( 25.7 %) United Kingdom ( 25.0 %), United States ( 21.0 %), Switzerland ( 19.6 %), Bermuda ( 15.0 %), Gibraltar ( 15.0 %) and Ireland ( 12.5 %).

The following table presents a reconciliation of the difference between the provision for income taxes and the expected tax provision at the Bermuda statutory income tax rate:

Year Ended December 31,

2025 Rate Impact

Bermuda Federal Statutory Tax Rate $ 774 15.0 %

Foreign tax effects

United States

Tax rate differential 99 1.9 %

Other ( 17 ) ( 0.3 ) %

Foreign tax credits ( 56 ) ( 1.1 ) %

Other 20 0.4 %

United Kingdom

Effect of cross-border tax laws 45 0.9 %

Other 9 0.2 %

Other foreign taxes 7 0.1 %

Effect of changes in tax laws or rates enacted in the current period ( 65 ) ( 1.3 ) %

Nontaxable or nondeductible items / other

Investment income ( 54 ) ( 1.0 ) %

Other ( 22 ) ( 0.4 ) %

Other 20 0.3 %

Total $ 760 14.7 %

ARCH CAPITAL 161

2025 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the difference between the provision for income taxes and the expected tax provision at the weighted average tax rate follows:

Year Ended December 31,

2024 2023 2022

Expected income tax expense (benefit) computed on pre-tax income at weighted average income tax rate $ 424 $ 300

14 unchanged sentences

Deferred income tax assets and liabilities reflect temporary differences based on enacted tax rates between the carrying amounts of assets and liabilities for financial reporting and income tax purposes.

ARCH CAPITAL 155

2024 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Significant components of the Company’s deferred income tax assets and liabilities were as follows:

11 unchanged sentences

Fair value adjustment to senior notes 47 41

Advance claim payments 59 —

Other, net 10 —

13 unchanged sentences

As of December 31, 2025, the Company’s valuation allowance was $ 46 million, compared to $ 18 million at December 31, 2024.

The valuation allowance at December 31, 2024, was primarily attributable to valuation allowances on the Company’s Australia, Gibraltar and Hong Kong operations and certain other deferred income tax assets relating to tax attributes that have a limited use.

The valuation allowance at December 31, 2025, was primarily attributable to Foreign Tax Credits generated by the Company’s branch in Switzerland, and Net Operating Losses related to the Company’s operations in Australia, Gibraltar and Hong Kong.

ARCH CAPITAL 162

2025 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2025, the Company’s net operating loss carryforwards and tax credits were as follows:

3 unchanged sentences

United Kingdom $ 118 No expiration

Ireland 26 No expiration

United States (1) 70 2029 - 2038

Australia 44 No expiration

1 unchanged sentence

Gibraltar 31 No expiration

Ireland 30 No expiration

Cyprus 1 No expiration

United States (1) 70 2029 - 2038

Netherlands 1 No expiration

Ireland foreign tax credits 27 No expiration

foreign tax credits 20 No expiration

8 unchanged sentences

T&L Bonds are reflected in ‘other assets’ on the Company’s balance sheet and totaled approximately $ 107 million at December 31, 2025, compared to $ 47 million at December 31, 2024.

Deferred income tax liabilities have not been accrued with respect to the undistributed earnings of the Company's U.S., U.K.

and Ireland subsidiaries as it is the Company’s intention that all such earnings will be indefinitely reinvested.

If the earnings were to be distributed, as dividends or otherwise, such amounts may be subject to withholding tax in the jurisdiction of the paying entity.

The Company does not intend to indefinitely reinvest earnings from the Company's Canada subsidiary, however, no income or withholding taxes have been accrued as the Canada subsidiary does not have positive cumulative earnings and profits and therefore a distribution from this particular subsidiary would not be subject to income taxes or withholding taxes.

Deferred income tax liabilities have not been accrued with respect to the undistributed earnings of the Company's U.S., U.K., Ireland, and Canadian subsidiaries because Management has concluded that all such earnings will either be indefinitely reinvested or can be distributed in a tax-free manner.

Earnings that can be distributed free of tax will not attract dividend withholding taxes in the paying jurisdiction, nor will the dividend receipts be taxable in the recipient jurisdiction .

Potential tax implications of repatriation from the Company’s unremitted earnings that are indefinitely reinvested are driven by facts at the time of distribution.

Therefore, it is not practicable to estimate the income tax liabilities that might be incurred if such earnings were remitted.

Distributions from the U.K.

or Ireland would not be subject to withholding tax and no deferred income tax liability would need to be accrued.

ARCH CAPITAL 156

2024 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company recognizes interest and penalties relating to unrecognized tax benefits in the provision for income taxes.

18 unchanged sentences

Gibraltar 2020 - 2025

As of December 31, 2024, the Company’s current income tax recoverable (included in “Other assets”) was $ 3 million.

As of December 31, 2025, the Company’s current income tax payable (included in “Other liabilities”) was $ 75 million.

The Company’s taxes paid by jurisdiction were as follows:

Federal Bermuda taxes paid $ 131

Foreign taxes paid

United States - federal taxes paid 227

United States - other taxes paid 19

Total Foreign taxes paid 327

ARCH CAPITAL 163

2025 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Transactions with Related Parties

5 unchanged sentences

Arch Re Bermuda is providing a quota share reinsurance treaty on certain business written by Premia, and subsidiaries of Arch Capital are providing certain administrative and support services to Premia, in each case pursuant to separate multi-year agreements.

During the 2024 period, the Company did not enter into any new reinsurance transactions with Premia, compared to $ 80 million and $ 81 million of net premiums

written and earned, respectively in 2023.

During the 2025 and 2024 periods, the Company did not enter into any new reinsurance transactions with Premia.

At December 31, 2025, the Company recorded a funds held asset from Premia of $ 124 million, compared to $ 137 million at December 31, 2024.

In 2021, the Company completed the acquisition of Somers.

Somers is wholly owned by Greysbridge, and Greysbridge is owned 40 % by the Company and by certain funds managed by Kelso and Warburg.

Somers is wholly owned by Greysbridge, and Greysbridge is owned 30 % by the Company with the remaining interests held by third party investors.

The Company entered into certain reinsurance transactions with Somers.

During 2024 and 2023 periods, the Company’s net premiums written was reduced by $ 738 million and $ 574 million, respectively.

During 2025, 2024 and 2023 periods, the Company’s net premiums written was reduced by $ 705 million, $ 738 million and $ 574 million, respectively.

In addition, Somers paid certain acquisition costs and administrative fees to the Company.

1 unchanged sentence

At December 31, 2024, reinsurance recoverable on unpaid and paid losses from Somers was $ 1.6 billion, with a reinsurance balance payable to Somers of $ 489 million.

Under the terms of the Greysbridge equity financing, beginning January 1, 2024, the Company has a call right (but not the obligation) and Warburg and Kelso each have a put right (but not the obligation) to buy/sell a certain amount of their initial shares annually at the current year-end tangible book value per share of Greysbridge.

In 2024, Warburg and Kelso both delivered a put option notice to sell a certain amount of their initial shares.

The transaction, which will involve third-party purchasers of such shares, is expected to close in the 2025 calendar year, subject to any required regulatory approvals and other closing conditions.

In association with the put option notice at December 31, 2024, the Company’s balance sheet reflected $ 261 million in both other assets and other liabilities.

During 2024 period, the Company completed the acquisition of Watford Insurance Company from Somers for a total consideration paid of $ 35 million.

As of December 31, 2024, the Company owns $ 35 million in aggregate principal amount of Somers 6.5 % senior notes, due July 2, 2029 .

ARCH CAPITAL 157

2024 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to the terms of the Greysbridge shareholder agreement, as amended, following the expiration of a specified period, Arch Capital has a call right (but not the obligation) and certain third party investors have put rights (but not the obligation) to purchase or sell, as applicable, a specified amount of each such investor’s initial common shares on an annual basis at Greysbridge’s year-end book value per share.

Obligations under put/call option notices are recognized on the Company’s balance sheet in both other assets and other liabilities.

At December 31, 2025, the Company’s balance sheet included $ 162 million in both other assets and other liabilities for such put notices.

Transactions related to the put shares are expected to close in the 2026 calendar year, subject to any regulatory approval.

During the 2024 period, the Company completed the acquisition of Watford Insurance Company from Somers for a total consideration paid of $ 35 million.

As of December 31, 2025, the Company owned $ 35 million in aggregate principal amount of Somers 6.5 % senior notes, due July 2, 2029.

In the ordinary course of business, the Company renews and enters into new leases for office property and equipment.

17 unchanged sentences

(2) The right-of-use assets are included in ‘ other assets ’ while the operating lease liability is included in ‘ other liabilities .’

ARCH CAPITAL 164

2025 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the contractual maturities of the Company's operating lease liabilities at December 31, 2025:

18 unchanged sentences

These amounts are included on a gross basis in the consolidated balance sheet in contractholder payables and contractholder receivables, respectively.

In the event that the Company is unable to collect from the policyholder, the Company would be liable for such

ARCH CAPITAL 158

2024 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

defaulted amounts.

Collateral, primarily in the form of letters of credit, cash and trusts, is obtained from the policyholder to mitigate the Company’s credit risk.

In the event that the Company is unable to collect from the policyholder, the Company would be liable for such defaulted amounts.

Collateral, primarily in

the form of letters of credit, cash and trusts, is obtained from the policyholder to mitigate the Company’s credit risk.

In the instances where the company receives collateral in the form of cash, the Company records a related liability in “Collateral held for insured obligations.”

13 unchanged sentences

Such purchase obligations were approximately $ 307 million and $ 260 million at December 31, 2025 and 2024, respectively.

ARCH CAPITAL 165

2025 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Employment and Other Arrangements

25 unchanged sentences

may redeem the 2043 notes at any time and from time to time, in whole or in part, at a “make-whole” redemption price.

ARCH CAPITAL 159

2024 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The 2026 notes are unsecured and unsubordinated obligations of Arch Finance and Arch Capital, respectively, and rank equally and ratably with the other unsecured and unsubordinated indebtedness of Arch Finance and Arch Capital, respectively.

15 unchanged sentences

Arch Capital and its subsidiaries which are party to the agreement were in compliance with all covenants contained therein at December 31, 2025.

ARCH CAPITAL 166

2025 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Obligations of each borrower for letters of credit under the Secured Facility are secured by cash and eligible securities of such borrower and held in collateral accounts.

11 unchanged sentences

At December 31, 2025, this credit facility had $ 129 million of letters of credit outstanding and remaining capacity of $ 46 million.

Arch Re Bermuda also has access to a letter of credit facility with Lloyds Bank Corporate Markets plc., which expires on December 31, 2027.

Such credit facility provides for a $ 700 million facility for letters of credit in respect of Tier 2 Funds at Lloyds.

Arch Re Bermuda also has access to a letter of credit facility with a syndicate of financial institutions, which expires on December 31, 2029.

Such credit facility provides for a $ 700 million facility for letters of credit in respect of Tier 2 Funds at Lloyd’s.

As of December 31, 2025, $ 700 million face amount of letters of credit had been issued under this facility.

1 unchanged sentence

The principal purpose of the LOC Facilities is to issue, as required, evergreen standby letters of credit in favor of primary insurance or reinsurance counterparties with which certain of Arch Capital’s subsidiaries has entered into reinsurance arrangements.

When issued, all secured letters of credit are secured by a portion of the investment portfolio.

At December 31, 2024, these letters of credit were secured by investments with a fair value of $ 400 million.

When issued, all secured letters of credit are backed by a portion of the investment portfolio and cash.

At December 31, 2025, these letters of credit were secured by investments and cash with a fair value of $ 498 million.

The Company had no outstanding revolving credit agreement borrowings at December 31, 2025 and 2024.

ARCH CAPITAL 160

2024 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Federal Home Loan Bank Membership

6 unchanged sentences

Goodwill Intangible assets (indefinite life) Intangible assets (finite life) Total

Net balance at Dec.

31, 2022 $ 342 $ 69 $ 393 $ 804

Net balance at

December 31, 2023 $ 345 $ 70 $ 316 $ 731

Acquisitions (1) 246 9 637 892

Amortization — — ( 235 ) ( 235 )

Impairment ( 2 ) — — ( 2 )

Foreign currency movements and other adjustments 5 1 7 13

Net balance at Dec.

31, 2023 345 70 316 731

Foreign currency movements and

other adjustments (2) ( 20 ) — ( 17 ) ( 37 )

Net balance at

December 31, 2024 571 79 701 1,351

Acquisitions (1) 30 — 2 32

Amortization — — ( 193 ) ( 193 )

Foreign currency movements and other adjustments (2) ( 20 ) — ( 17 ) ( 37 )

Net balance at Dec.

31, 2024 $ 571 $ 79 $ 701 $ 1,351

Gross balance at Dec.

31, 2024 $ 576 $ 80 $ 1,724 $ 2,380

Foreign currency movements and

other adjustments 6 2 24 32

Net balance at

December 31, 2025 $ 607 $ 81 $ 534 $ 1,222

Gross balance at

December 31, 2025 $ 606 $ 80 $ 1,726 $ 2,412

Accumulated amortization — — ( 1,171 ) ( 1,171 )

Foreign currency movements and other adjustments ( 5 ) ( 1 ) ( 29 ) ( 35 )

Net balance at Dec.

31, 2024 $ 571 $ 79 $ 701 $ 1,351

(1) Certain amounts for the Company’s 2024 acquisitions are considered

(2) Amount primarily related to the sale of Castel Underwriting Agencies Limited.

Foreign currency movements and

other adjustments 1 1 ( 21 ) ( 19 )

Net balance at

December 31, 2025 $ 607 $ 81 $ 534 $ 1,222

(1) See note 2.

(2) Amount primarily related to the sale of Castel Underwriting Agencies

ARCH CAPITAL 167

2025 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the components of goodwill and intangible assets:

1 unchanged sentence

Amortization Foreign Currency Translation Adjustment and Other Net

December 31, 2025

Acquired insurance contracts $ 620 $ ( 619 ) $ — $ 1

7 unchanged sentences

Total $ 2,412 $ ( 1,171 ) $ ( 19 ) $ 1,222

December 31, 2024

Acquired insurance contracts $ 620 $ ( 562 ) $ 1 $ 59

9 unchanged sentences

2031 and thereafter 128

The estimated remaining useful lives of these assets range from one to twelve years at December 31, 2024.

ARCH CAPITAL 161

2024 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The estimated remaining useful lives of these assets range from one to eleven years at December 31, 2025.

Shareholders’ Equity

17 unchanged sentences

The Board has authorized the investment in Arch Capital’s common shares through a share repurchase program.

At December 31, 2024, $ 996.8 million of share repurchases were available under the program.

At December 31, 2025, $ 1.1 billion of share repurchases were available under the program.

Repurchases under the program may be effected from time to time in open market.

The timing and amount of the repurchase transactions under this program will depend on a variety of factors, including market conditions and corporate and regulatory considerations.

From January 1 through February 24, 2026, the Company repurchased approximately 4.3 million common shares for an aggregate purchase price of $ 405 million.

At February 24, 2026, approximately $ 702 million of repurchases were available under the Company’s share repurchase program.

ARCH CAPITAL 168

2025 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Repurchases of Arch Capital’s common shares in connection with the share repurchase plan and other share-based transactions were held in the treasury under the cost method, and the cost of the common shares acquired is included in ‘Common shares held in treasury, at cost.’ At December 31, 2025, Arch Capital held 240.8 million shares for an aggregate cost of $ 6.4 billion in treasury, at cost.

7 unchanged sentences

Series G Preferred Shares

In June 2021, Arch Capital completed a $ 500 million underwritten public offering of 20.0 million depositary shares

(the “Depositary Shares”), each of which represents a 1/1,000th interest in a share of its 4.55 % Non-Cumulative Preferred Shares, Series G, $ 0.01 par value and $ 25,000 liquidation preference per share (equivalent to $ 25 liquidation preference per Depositary Share) (the “Series G Preferred Shares”).

Each Depositary Share, evidenced by a depositary receipt, entitles the holder, through the depositary,

to a proportional fractional interest in all rights and preferences of the Series G Preferred Shares represented thereby (including any dividend, liquidation, redemption and voting rights).

In June 2021, Arch Capital completed a $ 500 million underwritten public offering of 20.0 million depositary shares (the “Depositary Shares”), each of which represents a 1/1,000th interest in a share of its 4.55 % Non-Cumulative Preferred Shares, Series G, $ 0.01 par value and $ 25,000 liquidation preference per share (equivalent to $ 25 liquidation preference per Depositary Share) (the “Series G Preferred Shares”).

Each Depositary Share, evidenced by a depositary receipt, entitles the holder, through the depositary, to a proportional fractional interest in all rights and preferences of the Series G Preferred Shares represented thereby (including any dividend, liquidation, redemption and voting rights).

Holders of Series G Preferred Shares will be entitled to receive dividend payments only when, as and if declared by the Board or a duly authorized committee of the Board.

2 unchanged sentences

The Company will be restricted from paying dividends on or repurchasing its common shares unless certain dividend payments are made on the Series G Preferred Shares.

The Company may not declare or pay a dividend on the Series G Preferred Shares under certain circumstances, including if the Company is or, after giving effect to such payment, would be in breach of applicable individual or group solvency and liquidity requirements or applicable individual or group enhanced capital requirements (“ECR”).

requirements (“ECR”).

The Series G Preferred Shares may not be redeemed at any time if the ECR would be breached immediately before or after giving effect to such redemption, unless the Company replaces the capital represented by preference shares to be redeemed with capital having equal or better capital treatment.

ARCH CAPITAL 162

2024 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Except in specified circumstances relating to certain tax or corporate events, the Series G Preferred Shares are not redeemable prior to June 11, 2026.

On and after that date, the

Series G Preferred Shares will be redeemable at the Company’s option, in whole or in part, at a redemption price of $ 25,000 per share of the Series G Preferred Shares (equivalent to $ 25 per depositary share), plus any declared and unpaid dividends, without accumulation of any undeclared dividends to, but excluding, the redemption date.

On and after that date, the Series G Preferred Shares will be redeemable at the Company’s option, in whole or in part, at a redemption price of $ 25,000 per share of the Series G Preferred Shares (equivalent to $ 25 per depositary share), plus any declared and unpaid dividends, without accumulation of any undeclared dividends to, but excluding, the redemption date.

The Depositary Shares will be redeemed if and to the extent the related Series G Preferred Shares are redeemed by the Company.

9 unchanged sentences

The Company will be restricted from paying dividends on or repurchasing its common shares unless certain dividend payments are made on the Series F Preferred Shares.

ARCH CAPITAL 169

2025 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Except in specified circumstances relating to certain tax or corporate events, the Series F Preferred Shares are not redeemable prior to August 17, 2022 (the fifth anniversary of the issue date).

share), plus any declared and unpaid dividends, without accumulation of any undeclared dividends to, but excluding, the redemption date.

On and after that date, the Series F Preferred Shares will be redeemable at the Company’s option, in whole or in part, at a redemption price of $ 25,000 per share of the Series F Preferred Shares (equivalent to $ 25 per depositary share), plus any declared and unpaid dividends, without accumulation of any undeclared dividends to, but excluding, the redemption date.

The Series F Depositary Shares will be redeemed if and to the extent the related Series F Preferred Shares are redeemed by the Company.

17 unchanged sentences

At December 31, 2025, 2.3 million shares are available for future issuance.

ARCH CAPITAL 163

2024 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Upon shareholder approval on May 4, 2023, the Amended and Restated Arch Capital Group Ltd.

7 unchanged sentences

Such grants generally vest over a three year period with one-third vesting on the first, second and third anniversaries of the grant date.

In connection with the Company’s recent leadership transition in November 2024, the Compensation and Human Capital Committee approved the grant of equity awards, which consist of 1.75 million premium-priced stock options to eligible employees.

In connection with the Company’s leadership transition in November 2024, the Compensation and Human Capital Committee approved the grant of equity awards, which consist of 1.75 million premium-priced stock options to eligible employees.

The premium-priced stock options have an exercise price equal to 1.685 times the closing price of the Company's common shares on the grant date (or $ 161.24 per share) and will vest in full on the third anniversary of the grant date.

3 unchanged sentences

The table below summarizes the assumptions used:

ARCH CAPITAL 170

2025 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year Ended December 31,

14 unchanged sentences

Exercisable, end of year 7,587,153 $ 29.84 2.94 $ 501

(1) Includes 1.75 million premium-priced stock options with a weighted average exercise price of $ 161.24 per share.

The aggregate intrinsic value of stock options and SARs exercised represents the difference between the exercise price of the stock options and SARs and the closing market price of the Company’s common shares on the exercise dates.

4 unchanged sentences

Aggregate intrinsic value of Options/SARs exercised (in millions) $ 180 $ 153 $ 116

ARCH CAPITAL 164

2024 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Common Shares and Restricted Units

23 unchanged sentences

The aggregate intrinsic value of restricted units outstanding at December 31, 2025 was $ 28 million.

ARCH CAPITAL 171

2025 FORM 10-K

ARCH CAPITAL GROUP LTD.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Performance Awards

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The performance units were granted at the target level of achievement .

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The following table presents the weighted average grant date fair values of performance awards granted.

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(1) Includes awards granted in connection with 1.75 million premium-priced stock options and 0.3 million time-vested restricted shares granted in November 2024.

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Retirement Plans

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(1) Such amounts include ownership interests in affiliated insurance and reinsurance subsidiaries.

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There were no state-prescribed or permitted regulatory accounting practices for any of the Company’s insurance or reinsurance entities that resulted in reported statutory surplus that differed from that which would have been reported under the prescribed practices of the respective regulatory authorities, including the National Association of Insurance Commissioners.

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Arch Re Bermuda, the Company’s principal reinsurance and insurance subsidiary, is dual licensed as a Class 4 general business insurer and a Class C long-term insurer while Arch Group Reinsurance Ltd.

(“AGRL”) is registered as a Class 3A general insurer and provides affiliated quota share reinsurance covering certain U.S.

(“AGRL”) is registered as a Class 3A general business insurer and provides affiliated quota share reinsurance covering certain U.S.

The Insurance Act requires that both entities maintain minimum statutory capital and surplus equal to the greater of a minimum solvency margin and the enhanced capital requirement (“ECR”) as determined by the Bermuda Monetary Authority (“BMA”).

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At December 31, 2025 and 2024, the actual and required capital and surplus were based on the economic balance sheet requirements.

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Under the Insurance Act, Arch Re Bermuda and AGRL are restricted with respect to the payment of dividends.

Each entity is prohibited from declaring or paying in any financial

year dividends of more than 25 % of its total statutory capital and surplus (as shown on its previous financial year’s statutory balance sheet) unless it files, at least seven days before payment of such dividends, with the BMA an affidavit stating that it will continue to meet the required margins following the declaration of those dividends.

Each entity is prohibited from declaring or paying in any financial year dividends of more than 25 % of its total statutory capital and surplus (as shown on its previous financial year’s statutory balance sheet) unless it files, at least seven days before payment of such dividends, with the BMA an affidavit stating that it will continue to meet the required margins following the declaration of those dividends.

Accordingly, Arch Re Bermuda can pay approximately $ 6.4 billion to Arch Capital during 2026 without providing an affidavit to the BMA.

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The ability of the Company’s regulated insurance subsidiaries to pay dividends or make distributions is dependent on their ability to meet applicable regulatory standards.

These regulations include restrictions that limit the amount of dividends or other distributions, such as loans or cash advances, available to

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shareholders without prior approval of the insurance regulatory authorities.

These regulations include restrictions that limit the amount of dividends or other distributions, such as loans or cash advances, available to shareholders without prior approval of the insurance regulatory authorities.

Dividends or distributions, if any, made by Arch Re U.S.

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can declare a maximum of approximately $ 523 million of dividends during 2026 subject to the approval of the Commissioner of the Delaware Department of Insurance.

AMIC and UGRIC are approved as eligible mortgage insurers by Fannie Mae and Freddie Mac, subject to their comprehensive requirements, known as the Private Mortgage Insurer Eligibility Requirements or “PMIERs.” The GSEs amend the PMIERs from time to time at their discretion and most recently issued PMIERs Guidance 2024-01 on August 21, 2024 (effective March 31, 2025 with a corresponding transition schedule through September 30, 2026), to incorporate new deductions to the definition of “available assets” for investment risk.

Further, the amount of assets required to satisfy the revised financial requirements of the PMIERs may be affected by many factors, including macro-economic conditions, the size and composition of our mortgage insurance portfolio, and the amount of risk ceded to reinsurers that may be deducted in our calculation of “minimum required assets.”

AMIC and UGRIC are approved as eligible mortgage insurers by Fannie Mae and Freddie Mac, subject to their comprehensive requirements, known as the Private Mortgage Insurer Eligibility Requirements or “PMIERs.” In August 2024, the GSEs updated PMIERs to incorporate new deductions to the definition of available assets for investment risk.

This update became effective March 31, 2025, but the impact will be phased in through September 30, 2026.

Further, the amount of assets required to satisfy the revised financial requirements of the PMIERs may be affected by many factors, including macroeconomic conditions, the size and composition of our mortgage insurance portfolio, and the amount of risk ceded to reinsurers that may be deducted in our calculation of “minimum required assets.”

The Company’s U.S.

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mortgage subsidiaries can declare a maximum of approximately $ 295 million of ordinary dividends in 2026, however, dividend capacity is limited by the respective companies unassigned surplus amounts.

Such dividends would increase the available capital at Arch U.S.

Such dividends

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would increase the available capital at Arch U.S.

MI Holdings Inc., a subsidiary of Arch-U.S.

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These amounts generally cannot be withdrawn for a period of 10 years and are separate liabilities for statutory accounting purposes, which affects the ability to pay dividends.

However, with prior regulatory approval, a mortgage insurance company

may make early withdrawals from the contingency reserve when incurred losses exceed 35 % of net premiums earned in a calendar year.

However, with prior regulatory approval, a mortgage insurance company may make early withdrawals from the contingency reserve when incurred losses exceed 35 % of net premiums earned in a calendar year.

Under Wisconsin and North Carolina law, as well as that of 14 other states, a mortgage insurer must maintain a minimum amount of statutory capital relative to its risk in force in order for the mortgage insurer to continue to write new business.

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The amount which the Company provides as funds at Lloyd’s is not available for distribution to the Company for the payment of dividends.

Lloyd’s is supervised by the PRA and required to implement certain rules prescribed by the PRA under the Lloyd’s Act of 1982 regarding the operation

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of the Lloyd’s market.

Lloyd’s is supervised by the PRA and required to implement certain rules prescribed by the PRA under the Lloyd’s Act of 1982 regarding the operation of the Lloyd’s market.

With respect to managing agents and corporate members, Lloyd’s prescribes certain minimum standards relating to management and control, solvency and other requirements and monitors managing agents’ compliance with such standards.

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Arch Re Canada is licensed to carry-on reinsurance business by OSFI and in the provinces of Ontario and Quebec.

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Under the Insurance Companies Act (Canada), Arch Insurance Canada is required to maintain an adequate amount of capital in Canada, calculated in accordance with a test promulgated by OSFI called the Minimum Capital Test (“MCT”), and Arch Re Canada is required to maintain an adequate margin of assets over liabilities in Canada, calculated in accordance with a test promulgated by OSFI called the Branch Adequacy of Assets Test.

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(“Arch LMI”) was formerly authorized by APRA in January 2019 to conduct monoline lenders’ mortgage insurance business in Australia;

however, in December 2022, we converted Arch LMI to a services company for our Australian lenders mortgage insurance operations and the company relinquished its APRA authorization.

however, in 2022, we converted Arch LMI to a services company for our Australian lenders mortgage insurance operations and the company relinquished its APRA authorization.

Major regulatory requirements that are applicable to Arch Indemnity in general as an insurance provider and financial institution in Australia include requirements and compliance with minimum capital levels;

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2025 FORM 10-K

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Subsequent Events

California Wildfires

The Company estimates that its 2025 first quarter results will be negatively impacted by the California wildfires, which occurred in January 2025.

The Company currently estimates that the losses will be in a range of $ 450 million to $ 550 million, net of reinsurance and reinstatement premiums.

This pre-tax preliminary loss estimate is based on industry insured losses ranging from $ 35 billion to $ 45 billion.

The Company’s preliminary estimate is based on currently available information derived from modeling techniques, industry assessments of exposure, preliminary claims information obtained from the Company’s clients and brokers to date and a review of in-force contracts.

The Company’s actual losses from this event may vary materially from the estimates due to the inherent uncertainties in making such determinations.

Share Repurchases

From January 1 to February 27, 2025, the Company repurchased approximately 2.0 million common shares for an aggregate purchase price of $ 180 million.

At February 27, 2025, approximately $ 817 million of repurchases were available under the Company’s share repurchase program.

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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data