Arch Capital Reports Q4 2025 Results Amid Softening Margins, Valuation Debate

Arch Capital Group (ACGL) announced its Q4 2025 results, reporting revenues of US$4.9 billion and EPS of US$3.42. Full-year figures reached US$19.9 billion in revenue and US$11.83 in EPS. However, the company experienced a softening in its net profit margin, which declined from 24.5% to 21.9% over the past year, accompanied by an 82.8% trailing combined ratio. Trailing earnings growth also slowed significantly to 2%, a stark contrast to the five-year average of 24.7%. Despite these operational challenges, Arch Capital's P/E ratio of 8x stands below industry averages. This suggests a potential undervaluation when compared to its discounted cash flow (DCF) fair value. Investors are thus presented with a mixed outlook, balancing profitability concerns against attractive valuation metrics.