Arch Capital (ACGL) Stock Forecast & Price Target

Arch Capital Group Ltd has demonstrated robust growth in its Insurance unit, particularly following the acquisition of Allianz's US MidCorp and Entertainment businesses, contributing to a strong year-to-date top-line performance. The Reinsurance unit has emerged as the largest segment by net written premiums, expanding significantly from $1.9 billion in gross written premiums in 2018 to over $11 billion in 2024, aided by favorable market conditions. In addition, the company expects to achieve a book value per share growth to approximately $75 by year-end 2027, driven by solid operating earnings, healthy equity investments, and a history of steady book value growth since its inception in 2001.

Arch Capital Group is facing a challenging outlook, primarily due to a significant 13.5% year-over-year decline in property premiums during the second quarter of 2025, which is likely to impact overall earnings negatively. Projections indicate a nearly 25% decline in underwriting income by 2027, coupled with an expected 18% deterioration in overall underwriting income contribution by fiscal year 2027, despite moderate underwriting profit forecasts. Additionally, heightened pricing competition and potential risks such as accelerating social inflation and large catastrophe losses pose substantial threats to the company’s financial stability and book value.