Good morning, and welcome to Arch's first quarter 2026 earnings call. We delivered a strong quarter, reflecting both attractive underwriting margins and the disciplined execution of our underwriting and capital management strategies.

After-tax operating income for the quarter was $901 million, or $2.50 per share, producing an annualized net income return on average common equity of 17.8%. Today's market is clearly more competitive than in recent years.

That said, rates and terms and conditions, in aggregate, still support strong returns. Capturing those returns requires the ability and willingness to actively manage the portfolio across and within lines of business.

This is embedded in Arch's operating principles and among our differentiating traits to dynamically add to areas where returns are attractive while declining those risks that no longer provide an adequate margin of safety. Regardless of where we are in the cycle, Arch is committed to generating superior returns for our shareholders.

I'll now provide updates across our reporting segments, beginning with insurance, which generated $66 million of underwriting income in the first quarter. This compares favorably to the first quarter in 2025 that was impacted by the California wildfires.

Overall, market conditions remain favorable. However, top-line growth in the segment was essentially flat in the quarter, reflecting our focus on profitability over volume as competitive pressures increase.

Growth opportunities remain across most casualty-focused businesses, including excess and surplus line casualty, construction, alternative markets, as well as a number of our London market businesses. Growth was offset by softening rates in a few areas, including large account and excess and surplus lines property, as well as in some short-tail lines in London.

We also chose not to renew certain program business acquired in the middle-market commercial transaction that did not align with our risk appetite or meet our profitability requirements. As we have discussed on prior calls, these non-renewals are expected to reduce net premium written by approximately $250 million throughout 2026.

I also want to note a significant operational milestone achieved in our middle-market commercial business. Earlier this month, our team successfully completed the data and system migration of the acquired businesses from Allianz to Arch's own systems.

The ability to complete this effort in just 18 months speaks not only to the dedication of our teams, but also represents a strong use case for artificial intelligence in accelerating systems and platform transformations. With this significant step completed, the business can now pursue its objective of creating a scalable, best-in-class experience for clients and distribution partners.

Our reinsurance segment delivered an excellent $441 million of underwriting income in the quarter, a significant increase from the $167 million in the first quarter of 2025, which was heavily impacted by the California wildfires. Rate reductions and increased retentions by our cedants contributed to a 6% decline in net premiums written versus the same quarter last year.

Short-tail lines, including other property, property catastrophe, and marine, were the primary driver of these declines. Strong industry results over the past few years have attracted significant new capacity from traditional markets and third-party capital, resulting in a broadly competitive environment.

This additional supply continues to put downward pressure on property catastrophe and short-tail rates, while also moderating the push for needed rate increases in some casualty lines. However, underwriting performance remained excellent.

Our focused and disciplined underwriting led to the reinsurance group's 76% combined ratio, marking the fourth straight quarter of sub-80% combined ratios. Consistent with our cycle management philosophy, our reinsurance team actively manages the portfolio mix by continuing to write new business that meets our risk-adjusted return targets and by reducing our share of business that falls below our minimum return thresholds.

The mortgage segment delivered another strong quarter with $221 million of underwriting income to go along with $266 million of net premiums written. Mortgage originations picked up modestly in the first quarter, though affordability challenges tied to high mortgage rates and home prices continue to constrain demand.

Credit quality across our mortgage insurance portfolio remains excellent, with delinquencies normalizing from seasonally higher levels in the fourth quarter of 2025. Competition remains disciplined, and we continue to pursue growth through innovation and new product introductions across our global footprint.

Overall, mortgage performance continues to exceed expectations and provides shareholders with a differentiated and diversifying source of earnings that support long-term value creation. Turning to investments, which contributed $408 million, or $1.13 of net investment income per share in the quarter.

The decline in net investment income from the fourth quarter of 2025 was driven, in part, by lower cash yields, lower qualified refundable tax credit benefits, and seasonal compensation payouts. Our nearly $48 billion investment portfolio provides a material contribution to earnings and book value growth, effectively raising our quarterly earnings floor.

In the first quarter, we repurchased $783 million worth of Arch common stock while still increasing book value per share by 1.7%. Our first priority remains to deploy capital into our business.

When organic opportunities do not meet our return threshold, we view repurchasing our shares as an attractive use of excess capital, reflecting our conviction in the intrinsic value of the franchise. The board's recent $3 billion increase to our share repurchase authorization underscores its support to capital allocation.

To conclude, Arch delivered another strong quarter by staying true to our principles of disciplined cycle management and by leveraging the strengths of the Arch brand and our diversified platform. In today's market, underwriting discipline powered by insights from our investment in data and analytics, rewarding our underwriter for profit, not volume, and prudent capital management continues to differentiate Arch and drive long-term value for our investors.

Arch's 25-year record of strong return and compounding book value at double-digit rates is a direct result of hard work and discipline. That is Arch.

That is our DNA. That is why we believe we will continue to deliver best-in-class results across market cycles and into the future.

I will now turn the call over to François, who will talk through the financials in more detail. François?

Thank you, Nicolas, and good morning to all. Last night, we reported our first quarter results with after-tax operating income of $2.50 per share and an annualized operating income return on average common equity of 15.4%.

Book value per share grew by 1.7% in the quarter. Our three business segments once again delivered excellent underlying results with an overall ex-cat accident year combined ratio of 82.3%, up 130 basis points from the same quarter last year and consistent with the more competitive environment we are facing.

I will provide more color on trends in each of our segments shortly. Our underwriting income included $200 million of favorable prior year development on a pretax basis in the first quarter, or 5 points on the overall combined ratio.

We recognized favorable development across all three of our segments and in many of our lines of business, but mainly in short-tail lines in our P&C segments and in mortgage due to strong cure activity. Of note this quarter, we commuted a large transaction which increased the level of favorable prior year development in our reinsurance segment by approximately 25% in the quarter.

Current year catastrophe losses were $174 million net of reinsurance and reinstatement premiums, and were mainly the result of winter storms in the US and the Iran conflict. All in, these losses were slightly lower than our seasonally adjusted expectations for natural catastrophes.

The insurance segment's gross premiums written grew 2%, while net premiums written declined 1.4% year-over-year. As Nicolas explained, the non-renewal of certain program business acquired as part of the MCE transaction impacted our top line this quarter.

In addition, net premiums written were also impacted by a shift in business mix toward lines with lower net-to-gross retention ratios. The ex-cat accident year loss ratio improved by 70 basis points to 56.7% compared to the same quarter one year ago.

The acquisition expense ratio for the current accident year increased by 160 basis points as the benefit we observed in the first quarter of 2025 from the write-off of deferred acquisition costs from the MCE acquired business rolled off. We would expect the most recent acquisition expense ratio to be more representative of long-term expectations.

Our operating expense ratio was higher this quarter as we incurred additional expenses related to the transition of our middle-market business to Arch systems. We would expect our operating expense ratio to revert back to a level closer to historical levels during the second half of the year.

The reinsurance segment had an excellent quarter, $441 million in pretax underwriting income. Overall, gross premiums written were down by 2.3%, while net premiums written were down by 6% from the same quarter one year ago.

Net premiums written were up in specialty, partly due to timing differences in the recognition of certain treaty renewals that impacted our financials in the first quarter of 2025. Over one-third of the decrease in net premiums written in property catastrophe was attributable to a lower level of reinstatement premiums compared to a year ago, which were impacted by the California wildfires.

Overall, our ex-catastrophe accident year combined ratio of 78.1% is comparable to last year's result for the same quarter. Our mortgage segment produced another very strong quarter with underwriting income of $221 million.

Net premiums earned were down by approximately $6 million from last quarter, mostly driven by lower levels of cancellation premiums in our CRT business. Of note this quarter, new insurance written at USMI reflects a large non-GSE transaction of $2.2 billion in NIW.

Absent this transaction, which increased our NIW by 15%, we would expect our market share of the PMI market to remain relatively unchanged from the prior quarter. The delinquency rate for our USMI business decreased to 2.06%, consistent with our expectations and seasonal trends.

On the investment front, we earned a combined $568 million from net investment income and income from funds accounted using the equity method, or $1.57 per share pretax, slightly down from the $1.60 per share we earned last quarter. Cash flow from operations remained positive at $1.2 billion for the quarter.

Our portfolio remains of very high quality with a short duration and in line with our asset allocation targets. Income from operating affiliates was $36 million for the quarter, up from $17 million from the same quarter one year ago, which was impacted by the California wildfires.

As a reminder, this quarter's result reflects our lower ownership stake in Somers Re since the start of the year. Our effective tax rate on pretax operating income was 14.8%, reflecting the mix of income by tax jurisdiction.

It was slightly below the 16% to 18% previously guided range, mostly due to a 1.7% benefit from discrete items. As of January 1, our peak zone natural catastrophe probable maximum loss from a single event, 1-in-250-year return level on a net basis, remained flat at $1.9 billion and now stands at 8.2% of tangible shareholders' equity.

On the capital management front, we repurchased $783 million of our shares in the quarter, or 8.3 million shares. We have repurchased an additional $311 million in shares so far this quarter through last night.

Our balance sheet remains in excellent health with strong capitalization and low leverage. With these introductory comments, we are now prepared to take your questions.

Hi, thanks. Good morning.

My first question is on property cat on the reinsurance side. Was just hoping to get some of your expectations for the mid-year renewals.

Then if you expect declines in the book to continue, would you expect your cat load to come down after the mid-years?

Yes, good morning, Elyse. Yes, so as we always say, we don't have a crystal ball, but for the 6/1, I think we really expect the market to remain competitive and to adjust our underwriting stand based on the actual rate decrease that we will see at that time.

We don't really have a forecast there. On the overall trend of the catastrophe portfolio, I think we have huge headwinds because of the double-digit rate decrease.

As I said it in prior call, we really monitor the property cat through a lens of 50 separate zones. I think if I go back two years ago, they were all green.

Now we have a bunch of them that are still green. I think Florida is still green, but we have a bunch of them that are yellow and some of them that have turned red.

I think depending of where the business renew and our perception of the attractiveness of that zone, our underwriting team will make the decision,

so. Thanks.

Then on the casualty side, you guys were mentioning still some good opportunities, I think, on both the insurance and the reinsurance side. Can you just talk through within casualty where you're currently seeing the best growth opportunities?

Yes, I think we're still optimistic on the casualty, and we think that the pain is not gone through yet as you may have seen, I think we're still seeing some little development from the year 2016 and '17, but the most recent years, '21, '22, '23, '24, we've seen additional adverse development, and so that should, in our view, continue to sustain price increases above trend. In term of our risk appetite on the insurance and the reinsurance, I think it hasn't changed.

I think we like the specialty casualty, the excess and surplus line casualty, primary position on the large accounts. That's where we play.

We stay away from the commercial auto and also the large account excess towers, which we think are still very challenging despite some of the rate increases that we've seen.

Hey, thanks. Good morning.

I was hoping maybe just to get an update on the insurance book where we stand just on rate versus trend in both the US and internationally.

Yes, yes. Good morning.

On on, starting with the US, I think on the US, I think we we are broadly getting rate at trend. I think, so as I mentioned earlier, we we are getting rate above trend on the on the casualty lines of business.

We are getting, as as detractor on the trend is really the the short-tail property lines of business where, we we've seen rapid rate decrease. When you you sum it up for for North America, I think we're seeing rate slightly below below trend.

If you go to international, I think we have more short-tail lines on the international book of business. We're seeing some rate pressure on the on the short-tail lines.

Overall, a low single-digit rate decrease over over trend overall. We started there with pretty high margin, we feel very good about the business there.

Got it. Thanks.

Then I believe you mentioned just in reinsurance some of the supply there, and good returns and short-tail lines trickling into casualty re. Just wondering, does that change sort of how you're thinking about the growth opportunity there as an offset to the headwinds on the property side?

On the casualty on the reinsurance side, I think we're mainly talking about quota shares. As I mentioned earlier, I think we like the fundamental of the specialty casualty business.

The difficulty there, it's really the ceding commissions. I think based on the past experience of the casualty market, ceding commissions should have gone down, but we get excess supply.

I think there's a lot of other competitors wanting to get on that business or increase share on that business. That allows for the ceding commission to stay flat, and on the best account, to continue to go up.

The latest flavor of the day with the casualty sidecar is just going to add to that dynamic.

Thank you. Good morning.

One of the largest primary insurers had said on their earnings call some pretty pessimistic views of property pricing, particularly shared and layered in North America and London, and the culprit is cheaper forms of capital coming in from MGAs, reinsurers, and alternative capital. From your vantage point, is this a real structural shift in the market, and how does that influence your underwriting appetite?

Yes, for us, it's more business as usual. The advantage that we have is that we are not retail large-account players.

We don't play in that space, so that has gone up and rapidly going down. We don't play in that space.

We play in the excess and surplus line property business, and so that space is getting competitive, and we are taking a very careful approach to that line of business right now, so.

Excellent. There was also a recent settlement development early in the second quarter around Francis Scott Bridge collapse.

How are you currently sizing industry loss, and has that pushed your loss estimate upward?

In that particular case, I think we were holding much more conservative loss estimates than the market, no real change for us.

Hey, thanks. Good morning.

In the insurance segment, the underlying loss ratio continues to show some healthy improvement. If you can kind of talk about some of the drivers, I believe some of the non-renewals on some programs is I think helping that.

If you can kind of talk around the dynamics we should consider, thanks.

The Good morning, Mike. The this quarter in particular was, we benefited from a a relatively benign, amount of activity in in attritional losses in in in London in particular.

Our international segment or, book did very well this quarter. That explains most of the favorable or reduction in the kind of ex-cat loss ratio compared to a year ago.

Again, as a reminder, we'd encourage you all to look at trailing 12-month kind of rolling numbers to kind of get a view on on performance of the book. The impact of the MCE non-renewals is is yet to be seen, right?

I think it's, we're we're as as the business earns out, it's, it will show up in the numbers, but at this time, we don't think it'll be material. I think it's it's still a relatively small part of the book.

On you think of an $8 billion insurance segment book of business, the impact of non-renewing some of these programs will be somewhat, immaterial or limited. Hopefully, that explains it.

Really, the quarter was all about kind of really good performance out of London.

Got it. François, my follow-up, I think you mentioned on the catastrophe side that this quarter's losses were I think you said a bit lower than quote-unquote "normal," and you also added a bit on the Iran conflict.

Maybe you can kind of just elaborate on the Iran conflict, how you guys are thinking about that. Is it all IBNR or are there real losses or?

Thank you.

There's nothing paid, but it's certainly there are some real losses. Specialty book out of London like terror, political violence, those are the some of the lines that are exposed, will be exposed.

It's ongoing. We took a first stab at it this quarter based on what had happened and call it in in the month of in the month of March, but, we we we we will expect we do expect more losses to come through in in the second quarter.

We'll keep reporting on it. It's, yeah, it's it's ongoing, and the point in my comments was really to to, indicate that we have been able to absorb those losses in the first quarter as part of our overall cat load, even though, technically, the cat load is only on on the natural catastrophe side.

It's, it's a man-made we call that, man-made cat, but we still report it as part of our cat losses to to the out to the street, and that's kind of kind of included in in the overall number.

Hi, and good morning. I know you've gotten a lot of questions about property, and just to kind of gauge a sense of where we are in the cycle, which you are very good at.

I'm wondering if you could share, and again, this is blunt, where are you seeing risk-adjusted returns in property catastrophe reinsurance? I know there are different layers and risk on lines, etc.

If you had to gauge a risk-adjusted return range, what are we seeing today? Maybe the same question with the E&S property that you've been writing.

The way you have to understand is that as I explained, property cat we manage very dynamically based on the actual underlying profitability we see in 50 zones, we said earlier that two or three years ago, we were in the 30s. I think the business we have on the book today is still in our mind very attractive, because again, we're not writing some of the business that we think has fallen below the threshold for us to write the business.

We think the business, it's a different mix than it was probably three years ago. The mix has shifted, but the business that we have today remains attractive on our book, so.

We are still in the high teens, I think.

I see. Just following up on that, Nicolas.

It sounds like that there is business out there that Arch Capital won't write that is well below your upper-teens return threshold. Is that fair?

That's fair.

Okay.

Thank you. First question is on share repurchases.

Was nice to see a little uptick. I think this quarter it was 87% of your operating income versus roughly 70% over each of the past two quarters.

My question is, if the current pricing trends continue, you don't really need any capital to grow, and you're starting from a pretty healthy capital position. Without any obvious M&A targets, is there any reason why you couldn't pay out 100% of income, potentially even more given that you're releasing capital when you're shrinking?

I guess, I don't want to sound greedy, but I'm wondering what held you back from doing more this quarter.

There's nothing stopping us. We don't set targets in how much we're going to buy back, we go at it.

We look at what's in front of us. We look at both in terms of the stock price and also liquidity in the stock, which is still very liquid, so that so far hasn't been a problem.

In terms of could we buy back 100% of our income for the year? We could.

That's not how we think about it. It's more I'd say an outcome if things work out in a certain way in terms of kind of, again, the stock price and the volume, etc.

You saw the reauthorization by the board. I think, hopefully, that gives you a little bit of some direction in terms of how we think about the opportunity there and how much capital we think we can buy back or are looking to buy back.

Whether it happens this quarter or next quarter or next year, I think that's nothing set in stone. We'll react to what's in front of us.

To answer your question, there's really no structural limitations in, beyond, again, the regulations around buying back stock that we have to deal with.

That's great to hear. Thank you.

My second question, just want to pivot to cyber insurance. Maybe you can help us separate the cyclical versus structural pieces for us.

I guess first question, where are we in the underwriting clock today for cyber? Then structurally, given the recent developments in AI and the potential for cyber attacks to become more frequent and more destructive, does that change your view of tail risk, aggregation risk, or even the long-term insurability of the product?

Yes,

I think in terms of the clock, I would think cyber is probably around 3:00 p.m. I think, it's still okay, but it's getting to that point.

In terms of the recent AI, Anthropic Mythos, we see it as a real current threat, but we don't really see as changing the cyber product. I think that we see the cyber market as more of an arm race between attacker and defender, and certainly, Mythos is accelerating that trend, but Mythos can help the attacker, but the defender can also reinforce in defense using the same models.

We think it's really an acceleration of the speed at which maybe cyber attacks can be conducted, and to your point, it's also an acceleration of the scale. I would think because the scale would be larger, I would think we see it more as an increase systemic risk.

We are taking a very careful approach to that, and in our RDS scenarios, so.

I know you don't give guidance, certainly not on margins, but it's an interesting time. Obviously, property declines and price are well noted.

Broadly speaking, at Arch and other companies, loss ratios are generally in the same sort of range they were a year ago, but growth is about zero. I guess maybe it's another clock question, but as you sort of give an outlook to internally for the next year, do you expect Arch's and the industry's loss ratios to begin to deteriorate from here, or do you think the current levels are supportable?

I don't know about the industry, to be honest. It's hard to predict, because as far as we are concerned, we are confident in our ability to manage a cycle.

That's what we do. I think that's of our first line of defense.

If things fall below our threshold, we reduce, and we are confident in our ability to continue to find attractive opportunities to be able to expand. I think we have certainly the property market is coming down, everybody can see that.

We still think we have a good opportunity on the casualty side. Overall, I think we Again, as I said, based on our own mix of business, we think that we see rates just below trend.

That would support a thesis that margins are sustainable, at least for the near future.

Then in terms of SME commercial business, the mid-corp acquisition was in part to be less cyclical. Are you seeing fruits of that play out in 2026 that you're able to capture some incremental share in less cyclical SME business?

Again, we just, as I mentioned in my remark, we just finished the cutover. The main focus for us has been to roll over the portfolio and to create an entirely workbench with which we can underwrite the business on Arch paper.

Those have been the primary goal. Now that this is done, it opens our abilities to try to enhance the value proposition of that business and build scale.

I think I would doubt, I think it's more of a 2027 game than it is a 2026, because after you do the cutover, you have to stabilize, then we have to start to, we'll be focusing on building new tools to really help our underwriters with better selection, triage, and so on that will make them more productive, so.

Hey, good morning. Just a question on premium leverage.

On the one hand, the business is shifting away from property and property cat, which should allow for an increase to premium leverage. In the past, we've noticed it's been hard to right-size leverage in a softening market like this due to the lack of growth opportunities.

I guess the question is, do you foresee premium leverage would continue to fall like this as we get further into the soft market, and how does that impact your view on the future ROEs?

Certainly we're managing the equity side of the leverage, if we can't grow, we can't deploy the capital in the business, as we've been doing the last few quarters, we'll be returning more of the capital to the shareholders. That's certainly a tool we have that we have been using, we'll keep using, and make sure that our ROEs remain attractive.

I'd say, for sure, if the mix goes more long-tail than short-tail, there it helps on the leverage, and again, the equity part of it is something we're watching carefully.

Thanks, that's helpful. Then just a follow-up on terms and conditions.

Just curious if any negotiations on terms and conditions started to change in the quarter, and which terms you think could start to get further negotiated as we move deeper into the soft market?

Which lines of business are you talking about? Property cat,

or do you or? Particularly property cat reinsurance.

We've talked to our team, and we're seeing a bit more, but it remains a very small portion of some of the aggregates, a bit more aggregate, a bit more top and drops. It's at the margin so far.

As the market gets more competitive, we'd expect more of those structure that are much more difficult to price to come back to the market, yeah.

Thank you.

Hey, thanks. Good afternoon.

The company's obviously a much larger company today than it was seven years ago, both from a premium side, but also from an OpEx side, and imagine a lot of that increasing OpEx is in support of hard market growth. My question is no longer being in a hard market, to what extent are you looking at managing the OpEx side of things as a potential source of boosting margins?

I think the answer is yes. We, that's something that's in our mind.

I think the loss ratio part is probably more important as the market gets softer, but yes, I think, I would say especially in the insurance group, the expense side is important, and we're actually paying attention to it.

Okay. Then just a follow-up for François.

Underlying loss ratio in the mortgage insurance segment looked a little elevated. Nothing really stood out to me, maybe a little bit higher reserve per default.

Not sure if that's seasonal, but how should we interpret that loss ratio result this quarter in MI?

It's definitely some of it is a result of the change or the growth in the average mortgage that goes into NOD. If you think of the loans that are currently going in NOD this quarter are more from more recent vintage years, and the post-COVID, effectively, right?

That's when mortgage loans were up in size. As you look at the, frequency assumptions have not changed, they've been flat for us the last couple of years, I want to say.

The math behind the reserve levels is such that we apply the frequency with the severity per loan, and the severity remains stable, but it's the average size of the loan that's hitting the loss ratio. I think it's a little bit kind of like an evolving kind of thing within the loss ratios.

I think for mortgage, it's gone up a little bit, but still very much within what we would expect it to be.

Hey, thanks for taking it. I guess I wanted to follow up on the excess capital, and less about just asking how much you buy back, but thinking more broadly, you don't have the business that you can really lean into growth in right now like you have in sort of most environments in the past.

It's been one of your three businesses has been attractive to really leg into. Does it create any need to sort of look at potentially diversifying transaction?

Then is legging into an artificial intelligence investment and doing it that way to try to achieve growth something that you think is achievable? Just trying to understand how you're thinking about the different ways you could invest.

I'll take the first part. Certainly, the business are all doing well.

Yes, you're right. I think the growth opportunities in all three of our segments are somewhat limited.

We're working hard trying to find new opportunities internationally and, etc., like in mortgage and insurance for sure. At this point, it's harder to see how the market will support massive or outsized growth in any of our segments.

The share buybacks, again, as we keep generating meaningful earnings, I think that we don't want to accumulate excess capital beyond what we think is prudent, we're certainly looking to return it or do something with it. M&A is, we look at a lot of things, but for us to do something given our scale, we truly think it has to be something that is additive.

We're not interested in doing deals just for the sake of doing deals. It has to make us better.

It has to make us more competitive, increase our presence or our scale in a market, etc. We're very selective there.

We're trying to think outside the box, too. If there's things that we don't do currently that could make us better, we'll explore those.

In terms of AI, it's certainly something that is coming at us really quickly, really fast. We're trying to think of ways where we can kind of, again, automate things, and we're doing some of that, but I think it's still very early innings, very early days of that, I think that will evolve and we'll see where it goes.

I think we've been investing in AI for the last 10 years, both in mortgage and P&C. We've deployed a bunch of AI machine learning models, but it's changing really fast, and I think the industry and our struggle is really to really show results.

At the same time, working on our data strategy and our integration of our system to really support AI at scale, and third, really figure out what AI would look like three years from now, because it's changing so quickly. If you look at the Anthropic model, they open huge opportunities to do certain things, but what's next?

I think you really have to take and it's a lot of investment. At the same time, you're trying to create productivity and the insight for your underwriters to be able to compete, I think it's

All helpful. Thanks.

As a follow-up, I wanted to see if you could talk a little bit about exposure to private credit. I know, I think in the past you've talked about the alternatives portfolio allocation to private credit, have a rough idea of that.

Wanted to see if you could tell us about anything that would be sort of considered private credit within the fixed maturity part of the book.

We have some, but limited, right? We have it both in our, again, call it public markets and private markets.

The strategy with our investment guys has been to go more on the high-quality loans, kind of low loan-to-value and kind of very very good collateral supporting the investments. Yes, it's something we're watching like everybody else, but at this point, there's no red flags, nothing that really is rising to a level where we have to take action.

Got it. Thank you.

You're welcome.

Hi. Good morning, everybody.

I just wanted to follow up on your call related to using AI in the technology rollover of MidCorp and just curious how that experience has been different than past. I recognize that you're not a significant acquirer, universe of past might be smaller, but just thought that was provocative comment.

I think the ways it really helped us and speed up the process is to write some of the codes. I think we probably didn't do enough there, but when we did, it was really helpful.

The big help was on the testing. A lot of the testing was done by AI, and that really accelerated the time to market.

Those are the two aspects that when we talk to the teams, they really highlight as the impact of AI on this shift, on this cutover.

Right, Matt, just quickly. Again, it was a build-out of a brand-new, effectively, platform infrastructure, right?

It's unusual in that sense that we bought the business, but without the systems, we had to create this infrastructure, this platform, brand-new that we ourselves at Arch did not have. That's where I think, to Nicolas's point, the AI kind of capabilities really came through and help speed up the process.

That's helpful. I just want to make sure I understand You said the word "testing" correctly.

Should I think about that as auditing outputs

of It's running scenarios. We created a new platform, to a good point, François, for context.

Every time you create a new software, you have a lot of testing to make sure that the software is doing what it's supposed to do. A lot of it today can be done through AI, as opposed to individuals going in and asking the underwriter to test, the guys that collect the cash to test, that what they enters gets to the right places, and so on.

So.

Great, thanks so much. François, starting question for you.

I guess I expected operating expense in reinsurance to go down because you should have more Bermuda tax credits, and I guess I didn't see that. I was hoping you could talk us through the moving parts.

Down relative to last year or last quarter?

Last year, because they're up for last quarter.

They're certainly up from last quarter. From last year, yes, there's no question that there's some QRTCs this quarter in reinsurance.

What explains the increase is more investments in staffing and building out further the reinsurance group. I know that there's been kind of hiring around technology and improving systems, so that's certainly a big part of it.

Then, a little bit of noise around some of our structured deals that we wrote a year ago. They were actually beneficial to the expense ratio, the OpEx ratio, a year ago.

If you adjust for that, that explains a little bit of the difference as well. Nothing, I'd say, structural that was a surprise to us.

That's very helpful. Then shifting gears, there are some reports of very significant rate increases for product lines exposed to the Iran conflict, and I was wondering whether Arch is trying to write more of that business or being more cautious because of the risk.

We do that. That would be with our London office where we write some political violence and war on land.

We've been cautious, but the rates have spiked up, we actually wrote a little bit more business, but in a very cautious way.

Hi. Good morning.

I just wanted to ask on your PML disclosure, because I found it curious. Do you think that the catastrophe models are fully capturing the improved loss environment in Florida from AOB benefit reform?

The PMLs that we report?

I'm just curious on when you model the cat losses out in the state, if it's fully capturing how the sort of personal lines side of the business has seen

significant returns

in the loss environment.

Florida? It's been reflected.

I think we historically, as we do our modeling, had loads for certain features specific to the Florida market that, with the reforms, I think have changed, we've changed how we model those things on fraud and additional expenses around kind of claim handling, etc. That's all captured right now.

Yes, our thinking has changed, and what we report to you is how we see the business, how we expect the environment to respond given what we know about the latest reforms.

All right, that's perfect. Thank you so much.

Yep.

Thanks for fitting me in. Back on the PMLs, I noticed your PMLs did not decline.

In fact, kind of stayed the same at 4/1 versus your 1/1 disclosure, but you're declining property cat and everything. Can you help us reconcile kind of what's going on with the PMLs relative to what you're doing with property reinsurance and insurance?

I think right, Brian, it's the 4/1 number, not a ton. Again, think of it, it's the peak zone.

I would expect changes at 7/1 next quarter. There's not a ton of activity for us necessarily at the 4/1 renewal that impacts our peak zone.

That would be the answer, being Florida, tri-state, tri-county in particular. We'll see what 6/1 and 7/1 does for us, but that's where I would expect maybe a more meaningful change.

Gotcha. Even look at what happened between your September and 1/1, it still was up despite the reduction in business you had at 1/1 renewals, right?

Is it simply we're just looking at changes in rate or are you dropping exposure as well?

At 1/1, we held onto most of the business. We actually grew a little.

Yes, we gave up some rate, but we still found that that business was still attractive in terms of returns. Dollars of PML didn't really change a whole lot.

There's always, you lose one account, you replace it with another, it might on the margin change the PMLs a little bit. You're right.

The rates went down, some returns weren't as good as they had been a year before. As, again, looking ahead, 6/1, 7/1, don't know how it's all going to shake out, but that's when there could be some more significant changes in the PMLs depending on kind of what we renew or not.

As we said earlier, we thought Florida was green. I think for us, getting the return, we're not going to let go the renewals, and we're going to try at the margin to write more.

I think that was not a zone where we decided to cut back.

Great. Thanks, appreciate it.

You're welcome.

Hey, thanks for squeezing me in. This will be a quick one.

Nicolas, just wanted to follow up on your comments regarding casualty sidecars. Do you think this is a blip or is there a risk of specialty re facing the same structural headwinds that property cat experienced with alternative capital exacerbating the soft market cycles there?

Thanks.

I couldn't hear you well. Which line of business?

Just the specialty sidecars, and do you think that ultimately it will have the same effect that alternative capital had on property cat?

It's hard to tell. The thing we know is that it's not helping.

I think the thing that may mitigate that is the security risk. I think the people that have used those sidecars, they usually use it because they want to write the business, but they don't like it.

I haven't seen people that are in the market like Arch using those tools yet. I think for the buyer and for the broker, they have a decision to make, because those claims are going to get paid 5, 6 years, 7 years from now, and will the vehicle and the cedant, which are usually not the best-rated cedants, be there to pay the claims?

I think that may be a mitigation factor compared to property cat where the loss is imminent, and we know the capital loads are high. I think that's

Thank you.

That would be the difference, yeah.

Thank you, good morning. Just want to circle back to the man-made kind of Iran-related losses.

Can you break them out for us for insurance and reinsurance, and maybe what the associated premiums are, as well, earned premiums?

We don't break out. We report everything as part of cats, but, again, it's priced, right?

When we write some of these perils or these lines of business, again, political violence, terror, etc., which in this case are generating cat losses to us, again, just in terms of how we report them to you, it's part of the pricing, but it's not really captured in the call it our cat load per se that we report to you.

I think to give you an idea, I think we when we talk to our teams, we think the political violence, war on land loss early is about $3 billion, and we think the it's about, the the the premium that you collect for those lines of business. That gives you it's not a precise information, but that's that's the sense that we we have, $2 billion maybe.

$2 billion. That's across both reinsurance and insurance?

No, no, the loss for the market today, I think, is estimated at $3 billion. We estimate, it's an estimate, the premium for those lines of business that have been impacted to be around $2 billion.

Got it.

Cuz

I guess what I'm trying to get at here is when I look at kind of the underlying loss ratio here, it now doesn't capture some losses, but we still have the premiums associated with that book and the attritional. As we think forward, I want to make sure that we're using the right kind of base for the underlying loss ratio.

Good point, and maybe we can do that offline with you if that's okay. I think we can kind of walk you through what the Yeah.

That would be perfect. Then my other question was, in the insurance book, I saw that the other liability claims-made line grew quite nicely in the quarter.

Can you talk about what drove that?

It's really the transaction liability. I think we write transaction liability both in North America and in our London office, and it's really driven by higher pricing in that line of business as well as the M&A activity that has picked up in the last couple of quarters.

Yes, I want to thank you all to participate to our call, and we feel good about the business as it is. A challenging with the market condition, for sure, but I think as we said, we think we are equipped, and our teams are equipped and ready to compete in that market environment and generate decent return for our shareholders, thank you.