DB:RSK

Stock Analysis Report

Arch Capital Group

Executive Summary

Arch Capital Group Ltd., together with its subsidiaries, provides property, casualty, and mortgage insurance and reinsurance products worldwide.


Snowflake Analysis

Solid track record and fair value.


Similar Companies

Share Price & News

How has Arch Capital Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: RSK has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

3.6%

RSK

0.4%

DE Insurance

0.07%

DE Market


1 Year Return

64.6%

RSK

27.1%

DE Insurance

14.8%

DE Market

Return vs Industry: RSK exceeded the German Insurance industry which returned 29.2% over the past year.

Return vs Market: RSK exceeded the German Market which returned 17.1% over the past year.


Shareholder returns

RSKIndustryMarket
7 Day3.6%0.4%0.07%
30 Day4.6%0.3%1.4%
90 Day7.4%4.3%6.1%
1 Year64.6%64.6%32.7%27.1%18.4%14.8%
3 Year48.6%48.6%64.7%44.8%17.4%7.0%
5 Year132.0%132.0%95.1%56.2%27.9%10.4%

Price Volatility Vs. Market

How volatile is Arch Capital Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Arch Capital Group undervalued compared to its fair value and its price relative to the market?

28.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: RSK (€39.4) is trading below our estimate of fair value (€57.27)

Significantly Below Fair Value: RSK is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: RSK is poor value based on its PE Ratio (12.5x) compared to the Insurance industry average (11.9x).

PE vs Market: RSK is good value based on its PE Ratio (12.5x) compared to the German market (20.6x).


Price to Earnings Growth Ratio

PEG Ratio: RSK's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: RSK is overvalued based on its PB Ratio (1.7x) compared to the DE Insurance industry average (1.1x).


Next Steps

Future Growth

How is Arch Capital Group forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

-6.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RSK's earnings are forecast to decline over the next 3 years (-6.5% per year).

Earnings vs Market: RSK's earnings are forecast to decline over the next 3 years (-6.5% per year).

High Growth Earnings: RSK's earnings are forecast to decline over the next 3 years.

Revenue vs Market: RSK's revenue (2.4% per year) is forecast to grow slower than the German market (4.8% per year).

High Growth Revenue: RSK's revenue (2.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: RSK's Return on Equity is forecast to be low in 3 years time (10.9%).


Next Steps

Past Performance

How has Arch Capital Group performed over the past 5 years?

8.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: RSK has high quality earnings.

Growing Profit Margin: RSK's current net profit margins (21.5%) are higher than last year (14.3%).


Past Earnings Growth Analysis

Earnings Trend: RSK's earnings have grown by 8% per year over the past 5 years.

Accelerating Growth: RSK's earnings growth over the past year (77.6%) exceeds its 5-year average (8% per year).

Earnings vs Industry: RSK earnings growth over the past year (77.6%) exceeded the Insurance industry 7.8%.


Return on Equity

High ROE: RSK's Return on Equity (11.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Arch Capital Group's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: RSK has a low level of unsold assets or inventory.

Debt Coverage by Assets: RSK's debt is covered by short term assets (assets are 3.7x debt).


Financial Institutions Analysis

Asset Level: RSK's level of assets compared to its equity is low.

Allowance for Bad Loans: Insufficient data to determine if RSK has a sufficient allowance for bad loans.

Low Risk Liabilities: RSK reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if RSK has an acceptable proportion of non-loan assets held.

Low Risk Deposits: RSK has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if RSK has an appropriate level of bad loans.


Next Steps

Dividend

What is Arch Capital Group's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.5%industryaverage3.7%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate RSK's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate RSK's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if RSK's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if RSK's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of RSK's dividend in 3 years as they are not forecast to pay a notable one for the German market.


Next Steps

Management

What is the CEO of Arch Capital Group's salary, the management and board of directors tenure and is there insider trading?

2.0yrs

Average management tenure


CEO

Marc Grandisson (51yo)

1.8yrs

Tenure

US$12,884,187

Compensation

Mr. Marc Grandisson has been Chief Executive Officer and President of Arch Capital Group Ltd since March 3, 2018 and has been its Director since March 2018. Mr. Grandisson served as the Chairman and Chief  ...


CEO Compensation Analysis

Compensation vs Market: Marc's total compensation ($USD12.88M) is above average for companies of similar size in the German market ($USD4.52M).

Compensation vs Earnings: Marc's compensation has increased by more than 20% in the past year.


Management Age and Tenure

2.0yrs

Average Tenure

53.5yo

Average Age

Experienced Management: RSK's management team is considered experienced (2 years average tenure).


Board Age and Tenure

5.5yrs

Average Tenure

59.5yo

Average Age

Experienced Board: RSK's board of directors are considered experienced (5.5 years average tenure).


Insider Trading

Insider Buying: RSK insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Sell€944,07627 Nov 19
Maamoun Rajeh
EntityIndividual
Role
Unit Chairman
Chairman & CEO of Arch Worldwide Reinsurance Group
Shares25,000
Max Price€37.76
Sell€366,26020 Nov 19
John Vollaro
EntityIndividual
Shares9,900
Max Price€37.00
Sell€3,77006 Nov 19
John Vollaro
EntityIndividual
Shares100
Max Price€37.70
Sell€704,60028 Aug 19
Maamoun Rajeh
EntityIndividual
Role
Unit Chairman
Chairman & CEO of Arch Worldwide Reinsurance Group
Shares20,000
Max Price€35.23
Sell€2,826,73521 Aug 19
Marc Grandisson
EntityIndividual
Role
Chief Executive Officer
President
Shares78,300
Max Price€36.10
Sell€360,77421 Aug 19
John Vollaro
EntityIndividual
Shares10,000
Max Price€36.08
Sell€881,65415 Aug 19
William Hutchings
EntityIndividual
Role
Chief Investment Officer
Senior VP & Chief Investment Officer
Shares25,000
Max Price€35.27
Sell€280,81109 Aug 19
François Morin
EntityIndividual
Role
Chief Financial Officer
Executive VP
Shares8,000
Max Price€35.10
Sell€9,156,27331 May 19
John Pasquesi
EntityIndividual
Role
Chairman of the Board
Chairman of the Board & Lead Independent Director
Shares299,741
Max Price€30.59
Sell€534,92717 May 19
Maamoun Rajeh
EntityIndividual
Role
Unit Chairman
Chairman & CEO of Arch Worldwide Reinsurance Group
Shares17,712
Max Price€30.20
Sell€201,61417 May 19
Louis Petrillo
EntityIndividual
Shares6,643
Max Price€30.35
Sell€2,269,75015 May 19
Marc Grandisson
EntityIndividual
Role
Chief Executive Officer
President
Shares75,000
Max Price€30.26
Sell€450,01614 May 19
Maamoun Rajeh
EntityIndividual
Role
Unit Chairman
Chairman & CEO of Arch Worldwide Reinsurance Group
Shares15,000
Max Price€30.00
Sell€350,88306 May 19
John Vollaro
EntityIndividual
Shares11,500
Max Price€30.51
Sell€1,080,13815 Mar 19
William Hutchings
EntityIndividual
Role
Chief Investment Officer
Senior VP & Chief Investment Officer
Shares37,500
Max Price€28.80
Sell€72,12012 Mar 19
William Hutchings
EntityIndividual
Role
Chief Investment Officer
Senior VP & Chief Investment Officer
Shares2,500
Max Price€28.85
Sell€56,83728 Feb 19
Yiorgos Lillikas
EntityIndividual
Shares2,000
Max Price€28.42

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Carl Sullo (70yo)

    Chief Human Resources Officer of Real Estate & Administrative Services

    • William Hutchings (63yo)

      Senior VP & Chief Investment Officer

      • Tenure: 14.5yrs
      • Compensation: US$1.95m
    • Marc Grandisson (51yo)

      President

      • Tenure: 1.8yrs
      • Compensation: US$12.88m
    • Nicolas Alain Papadopoulo (56yo)

      Chairman & CEO of Arch Worldwide and Chief Underwriting Officer of Property & Casualty Operations

      • Compensation: US$4.08m
    • Maamoun Rajeh (48yo)

      Chairman & CEO of Arch Worldwide Reinsurance Group

      • Tenure: 5.5yrs
      • Compensation: US$3.79m
    • Pat Nails

      Senior VP & General Counsel of Arch Insurance Group Inc

      • Donald Watson

        Executive Vice President at Financial Services of Arch Capital Services Inc.

        • Janice Englesbe

          Senior VP & Chief Risk Officer

          • Tenure: 0.9yrs
        • François Morin (51yo)

          Executive VP

          • Tenure: 1.7yrs
          • Compensation: US$3.90m
        • Chris Hovey

          Chief Operating Officer


          Board Members

          • Jack Bunce (60yo)

            Independent Director

            • Tenure: 18.2yrs
            • Compensation: US$273.01k
          • Eric Doppstadt (60yo)

            Independent Director

            • Tenure: 9.2yrs
            • Compensation: US$265.51k
          • Brian Posner (58yo)

            Independent Director

            • Tenure: 9.2yrs
            • Compensation: US$349.51k
          • John Pasquesi (59yo)

            Chairman of the Board & Lead Independent Director

            • Tenure: 0.3yrs
            • Compensation: US$329.01k
          • Marc Grandisson (51yo)

            President

            • Tenure: 1.8yrs
            • Compensation: US$12.88m
          • Nicolas Alain Papadopoulo (56yo)

            Chairman & CEO of Arch Worldwide and Chief Underwriting Officer of Property & Casualty Operations

            • Compensation: US$4.08m
          • Gene Sunshine (69yo)

            Independent Director

            • Tenure: 5.5yrs
            • Compensation: US$317.83k
          • Dennis Brand (67yo)

            Chairman of Worldwide Services

            • Maamoun Rajeh (48yo)

              Chairman & CEO of Arch Worldwide Reinsurance Group

              • Tenure: 5.5yrs
              • Compensation: US$3.79m
            • Gerry Wolfe (70yo)

              Chairman of Arch Insurance Canada

              • Tenure: 4.9yrs

            Company Information

            Arch Capital Group Ltd.'s company bio, employee growth, exchange listings and data sources


            Key Information

            • Name: Arch Capital Group Ltd.
            • Ticker: RSK
            • Exchange: DB
            • Founded: 1995
            • Industry: Property and Casualty Insurance
            • Sector: Insurance
            • Market Cap: US$18.235b
            • Listing Market Cap: US$16.439b
            • Shares outstanding: 403.69m
            • Website: https://www.archcapgroup.com

            Number of Employees


            Location

            • Arch Capital Group Ltd.
            • Waterloo House
            • Ground Floor
            • Pembroke
            • HM 08
            • Bermuda

            Listings

            TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
            ACGLNasdaqGS (Nasdaq Global Select)YesCommon SharesUSUSDSep 1995
            RSKDB (Deutsche Boerse AG)YesCommon SharesDEEURSep 1995
            ARH PRACLNYSE (New York Stock Exchange)PFD SER AUSUSDApr 2006
            ARH PRBCLNYSE (New York Stock Exchange)PFD SER BUSUSDMay 2006
            ACGL.PNasdaqGS (Nasdaq Global Select)DSHS 1/1000 EUSUSDSep 2016
            ACGL.ONasdaqGS (Nasdaq Global Select)5.45% PFD SER FUSUSDAug 2017

            Biography

            Arch Capital Group Ltd., together with its subsidiaries, provides property, casualty, and mortgage insurance and reinsurance products worldwide. The company’s Insurance segment offers primary and excess casualty coverages; loss sensitive primary casualty insurance programs; collateral protection, debt cancellation, and service contract reimbursement products; directors’ and officers’ liability, errors and omissions liability, employment practices and fiduciary liability, crime, professional indemnity, and other financial related coverages; medical professional and general liability insurance coverages; and workers’ compensation and umbrella liability, as well as commercial automobile and inland marine products. It also provides property, energy, marine, and aviation insurance; travel insurance; accident, disability, and medical plan insurance coverages; captive insurance programs; employers’ liability insurance coverages; and contract and commercial surety coverages. This segment markets its products through a group of licensed independent retail and wholesale brokers. Its Reinsurance segment provides reinsurance for third party liability and workers’ compensation exposures; marine and aviation reinsurance; surety, accident and health, workers’ compensation catastrophe, agriculture, trade credit, and political risk products; reinsurance protection for catastrophic losses and commercial property risks; life reinsurance; casualty clash; and risk management solutions. This segment markets its reinsurance products through brokers, and directly to ceding companies. The company’s Mortgage segment offers 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 through direct basis and through brokers to mortgage originators. The company was founded in 1995 and is based in Pembroke, Bermuda. 


            Company Analysis and Financial Data Status

            All financial data provided by Standard & Poor's Capital IQ.
            DataLast Updated (UTC time)
            Company Analysis2020/01/19 20:58
            End of Day Share Price2020/01/17 00:00
            Earnings2019/09/30
            Annual Earnings2018/12/31


            Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.