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Arch Capital favors buybacks as property reinsurance conditions soften
The insurer repurchased $1.2 billion of shares in the second quarter and reported $201 million in catastrophe losses tied to the Iran conflict and U.S. severe convective storms.
Arch Capital Group said it is leaning toward capital returns through share repurchases as underwriting conditions shift in property and other short-tail lines, citing tougher competition, falling rates, and less capacity in the market. At its second-quarter 2026 earnings call on July 29, management said the overall underwriting environment remains attractive, but growth is expected to become more difficult.
Arch repurchased $1.2 billion of shares during the second quarter, bringing total first-half buybacks to $1.95 billion. Management said it cannot deploy all capital at acceptable returns, making buybacks its preferred option when underwriting opportunities do not justify additional deployment, though M&A or other opportunities could change that view.
The company also highlighted mid-teens rate reductions during midyear property catastrophe renewals and said pricing is still above 2022 levels, potentially closer to 2023 depending on the region. Reinsurance net premiums written declined 10% as some clients retained more risk, and increased competition pushed down property rates.
Arch recorded $201 million in catastrophe losses during the quarter related to the Iran conflict and U.S. severe convective storms, with most insurance-segment catastrophe losses tied to physically damaged assets such as refineries rather than precautionary reserves. The insurer said it bought more retrocession and shifted business to third-party capital to manage its net exposure, while noting ongoing challenges from too much reinsurance capacity competing for limited business, especially via quota-share arrangements with high ceding commissions.