ACGL
Arch Capital Group Ltd.$99.36
Hold
Target $123.02
Report: Mar 08, 2026Financial Services • Insurance - Diversified • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$99.36+23.8%
Rec: HoldConviction: High
Entry Target
$94.63
(5% below current)
Fair Value
$123.02
(24% above current)
Stop Loss
$62.10
(38% below current)
Position Size
Half
Time Horizon
Long-Term
Key Metrics
Live Snapshot
Market Data
52 Week High$103.39
52 Week Low$82.45
Avg. 3 Month Volume2.00M
Efficiency
LTM Gross Margin53.0%
LTM EBITDA Margin27.6%
LTM EBIT Margin26.6%
LTM Operating Margin26.4%
LTM ROA5.6%
LTM ROE18.8%
LTM ROIC6.8%
LTM ROCE6.9%
Capital Structure
Market Cap (MM)$34.2B
Enterprise Value (MM)$35.9B
Shares Outstanding359.40M
Total Debt (MM)$2.73B
Cash & Equivalents (MM)$993.00M
LTM Net Debt (MM)$1.74B
LTM Net Debt/EBITDA0.3x
Growth
TTM Rev. Growth14.3%
Last 3-Yr Rev. CAGR27.5%
Last 3-Yr EBITDA CAGR45.3%
Last 3-Yr EPS CAGR44.8%
Valuation
Street Target Price$106.22
LTM EV/Revenue1.8x
LTM EV/Gross Profit3.4x
LTM EV/EBIT6.8x
LTM EV/EBITDA6.5x
LTM P/E7.8x
LTM EV/FCF5.9x
LTM P/FCF5.6x
LTM P/TB0.4x
LTM P/B1.4x
Dividend Yield0.0%
Payout Ratio0.0%
Executive SummarySituation: Current price is $99.36 versus fair value $123.02 (23.8% expected return), and valuation confidence is stable. Debate: Bull case depends on MCE Margin Expansion: As the company completes the non-renewal of 200 million USD in low-margin program business, the consolidated combined ratio is expected to improve, validating the strategy of prioritizing profitability over volume. Bear case centers on Social Inflation in Casualty Lines: Rising litigation costs and jury awards could lead to loss trends exceeding rate increases, permanently impairing the company's pricing power and return on capital. Conclusion: Recommendation is Hold with Half sizing and Long-Term horizon.
Bull Case
Record after-tax operating income of 3.7 billion USD and 20% book value accretion in 2025 validate the underwriting moat. Aggressive buybacks totaling 1.9 billion USD provide a high-conviction signal from management regarding per-share value.
Bear Case
A 13% revenue miss in Q4 2025 and planned non-renewals suggest a period of top-line stagnation. Rising competition in the reinsurance market could lead to margin compression as property catastrophe pricing softens.
Key Catalysts
Mid-Term (6-18 months)Impact: High
MCE Margin Expansion: As the company completes the non-renewal of 200 million USD in low-margin program business, the consolidated combined...
Near-Term (0-6 months)Impact: Moderate
Continued Aggressive Buybacks: The execution of the remaining share-repurchase authorization will continue to drive per-share value accretio...
Long-Term (18+ months)Impact: Moderate
Arch Capital is highly relevant at this moment as it navigates a critical leadership transition and a strategic pivot in its underwriting po...
Primary Risks
Concern: Medium
Social Inflation in Casualty Lines: Rising litigation costs and jury awards could lead to loss trends exceeding rate increases, permanently...
Concern: Low
Property Catastrophe Rate Softening: An influx of alternative capital could drive down reinsurance rates, forcing Arch to either accept lowe...
Concern: Medium
The stewardship of Arch Capital is characterized by a high degree of alignment with long-term value creation, despite significant insider se...
Recent Activity
2024-11-06Market Movement
+5.39%Market/Sector Move +5.39%
2024-10-31SEC Filing (8-K)
-6.26%Arch Capital Group Ltd. reports strong Q3 2024 results with $978 million net income and 19.0% annualized ROE.
2022-10-27SEC Filing (8-K)
+5.94%Arch Capital Group Ltd. reports Q3 2022 net income of $6.9 million amid significant catastrophe losses.
Valuation Table
9.8/10Decision Grade