Arch Capital Group

Methodology

Arch Capital's insurance earnings fluctuate dramatically with underwriting cycles and catastrophe losses, making year-to-year calculations unreliable. Specialty insurance exposure means results swing with major hurricanes or liability claims. Using normalized combined ratios over full underwriting cycles provides more meaningful estimates than current quarterly earnings.

Methodology

PEG ratios mislead for insurers since earnings growth swings wildly with pricing cycles and reserve releases rather than reflecting business quality. Hard markets with rising premiums inflate growth rates temporarily while soft markets reverse gains. For property and casualty insurers, compare price-to-book against return on equity rather than relying on earnings-based metrics.

Methodology

Arch Capital pays minimal dividends as management prioritizes retaining capital for underwriting capacity and opportunistic acquisitions. The insurer focuses on compounding book value through disciplined underwriting rather than current shareholder yield. PEGY offers little additional insight where book value growth and ROE trends matter far more than dividend-adjusted multiples.