PEMBROKE, Bermuda–(BUSINESS WIRE)–During the fourth quarter of 2018, there were a number of catastrophes
around the globe, including Hurricane Michael, wildfires in California
and a series of smaller events. Arch Capital Group Ltd. [NASDAQ: ACGL]
has established a range of pre-tax losses of $110 million to $130
million for these events, net of reinsurance recoveries and
reinstatement premiums. For clarity, this estimated range incorporates
and updates the $40 million to $60 million range previously disclosed by
the Company in its Quarterly Report on Form 10-Q for the 2018 third
quarter. The previous range reflected only Hurricane Michael, whereas
this current range also reflects the California wildfires and other
catastrophic events from around the globe. At this time, there are
significant uncertainties surrounding the number of claims and scope of
damage for these events. The Company’s estimate for these events is
based on currently available information derived from modeling
techniques, industry assessment of exposure, preliminary claims
information obtained from the Company’s clients and brokers to date and
a review of in-force contracts. Actual losses from these events may vary
materially from the estimates due to the inherent uncertainties in
making such determinations.
Additionally, the Company estimates that the effective tax rate on
pre-tax operating income for the fourth quarter of 2018 will be in a
range of 12 to 15 percent. This estimate is based on both statutory
income tax rates applied to underwriting income, expenses and investment
returns by jurisdiction, as well as an amalgam of discrete items. The
effective tax rate for the 2018 fourth quarter reflects a higher
proportion of U.S.-based operating income. The losses related to the
2018 fourth quarter catastrophic occurrences emanated mostly from our
non-U.S. underwriting operations. This tax rate range is subject to
change as analyses of group-wide loss reserves and investment returns,
among other areas, are finalized.
Arch Capital Group Ltd., a Bermuda-based company with approximately
$11.21 billion in capital at September 30, 2018, provides insurance,
reinsurance and mortgage insurance on a worldwide basis through its
wholly owned subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a “safe
harbor” for forward−looking statements. This release or any other
written or oral statements made by or on behalf of Arch Capital Group
Ltd. and its subsidiaries may include forward−looking statements, which
reflect our current views with respect to future events and financial
performance. All statements other than statements of historical fact
included in or incorporated by reference in this release are
forward−looking statements.
Forward−looking statements can generally be identified by the use of
forward−looking terminology such as “may,” “will,” “expect,” “intend,”
“estimate,” “anticipate,” “believe” or “continue” or their negative or
variations or similar terminology. Forward−looking statements involve
our current assessment of risks and uncertainties. Actual events and
results may differ materially from those expressed or implied in these
statements. A non-exclusive list of the important factors that could
cause actual results to differ materially from those in such
forward-looking statements includes the following: adverse general
economic and market conditions; increased competition; pricing
and policy term trends; fluctuations in the actions of rating
agencies and our ability to maintain and improve our ratings;
investment performance; the loss of key personnel; the
adequacy of our loss reserves, severity and/or frequency of
losses, greater than expected loss ratios and adverse development on
claim and/or claim expense liabilities; greater frequency or
severity of unpredictable natural and man-made catastrophic events; the
impact of acts of terrorism and acts of war; changes in regulations
and/or tax laws in the United States or elsewhere; our ability to
successfully integrate, establish and maintain operating procedures as
well as integrate the businesses we have acquired or may acquire into
the existing operations; changes in accounting principles or
policies; material differences between actual and expected
assessments for guaranty funds and mandatory pooling arrangements; availability
and cost to us of reinsurance to manage our gross and net exposures; the
failure of others to meet their obligations to us; and other
factors identified in our filings with the U.S. Securities and Exchange
Commission.
The foregoing review of important factors should not be construed as
exhaustive and should be read in conjunction with other cautionary
statements that are included herein or elsewhere. All subsequent written
and oral forward−looking statements attributable to us or persons acting
on our behalf are expressly qualified in their entirety by these
cautionary statements. We undertake no obligation to publicly update or
revise any forward−looking statement, whether as a result of new
information, future events or otherwise.