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Here's How Much You'd Have If You Invested $1000 in Arch Capital Group a Decade Ago

For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.

The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.

What if you'd invested in Arch Capital Group (ACGL) ten years ago? It may not have been easy to hold on to ACGL for all that time, but if you did, how much would your investment be worth today?

Arch Capital Group's Business In-Depth

With that in mind, let's take a look at Arch Capital Group's main business drivers.

Established in 1995 and headquartered in Pembroke, Bermuda, Arch Capital Group Ltd. offers insurance, reinsurance and mortgage insurance across the world. Through its wholly owned subsidiaries, the property and casualty (P&C) insurer provides a wide range of products and services, which include primary and excess casualty coverages, professional indemnity,  workers compensation and umbrella liability and employers  liability insurance coverages to name a few. The company offers a full range of property, casualty and mortgage insurance and reinsurance lines, while maintaining focus on writing specialty lines of insurance and reinsurance.

Arch Capital classifies its operations into three underwriting segments and two other operating segments (non-underwriting). The underwriting segments are Insurance, Reinsurance and Mortgage. The other two operating (non-underwriting) segments are ‘Other’ and Corporate.

The Insurance (47% of 2021 gross premiums written) segment provides primary and excess casualty coverages, loss sensitive primary casualty insurance programs, professional indemnity, and other financial coverages as well as commercial automobile and inland marine products to name a few. This apart the segment deals in property, energy, marine, and aviation insurance, captive insurance programs, employers liability insurance coverages. This segment markets its products through a group of licensed independent retail and wholesale brokers.

Reinsurance (40.9%) segment primarily offers reinsurance for third-party liability and workers compensation exposures, reinsurance protection for catastrophic losses and commercial property risks; life reinsurance, risk management solutions accident and health, workers compensation catastrophe to name a few. This segment markets its reinsurance products through brokers, and directly to ceding companies.

Mortgage (12.1%) segment provides private mortgage insurance covering one-to-four family residential mortgages; mortgage insurance to cover previously originated residential loans; quota share reinsurance; and risk-sharing products. This segment sells its products directly as well as through brokers to its bank and credit union customers.

Bottom Line

Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in Arch Capital Group ten years ago, you're likely feeling pretty good about your investment today.

A $1000 investment made in January 2013 would be worth $4,250.86, or a gain of 325.09%, as of January 11, 2023, according to our calculations. This return excludes dividends but includes price appreciation.

Compare this to the S&P 500's rally of 166.23% and gold's return of 8.49% over the same time frame.

Going forward, analysts are expecting more upside for ACGL.

Arch Capital boasts a strong product portfolio and has been maintaining an exemplary track record of premium growth. Premiums should benefit from new business opportunities; rate increases, growth in existing accounts and growth in Australian single premium mortgage insurance. This apart, it has been diversifying its Mortgage Insurance business via strategic acquisitions that also complement the strength in the specialty insurance and reinsurance businesses. Solid capital position shields it from market volatility. A solid inorganic growth story offers diversification. Shares have outperformed the industry in the past year. We expect 2022 operating EPS to increase 11.1% on 15.7% higher operatung revenues. However, exposure to cat loss induces earnings volatility. High costs concerns. Low investment rate should keep investment yields under pressure.

Over the past four weeks, shares have rallied 5.29%, and there have been 1 higher earnings estimate revisions in the past two months for fiscal 2022 compared to none lower. The consensus estimate has moved up as well.

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