Insurance can be risky, but Arch Capital (NASDAQ: ACGL) has defied the odds and analysts' predictions. This Bermuda-based specialty insurer has been outperforming earnings estimates and is expected to maintain its momentum. ACGL beat Wall Street EPS projections in the previous four quarters. Last quarter, the company’s reported EPS of $2.45 exceeded estimates by 18.9% due to higher net investment income and enhanced premiums. In the past two quarters, ACGL beat earnings estimates by more than 23%.

Its stock rose by 30.8% in 2024, outperforming the S&P 500 Index and Financial Select Sector SPDR Fund.

Who Is Arch Capital?

Based in Bermuda, Arch Capital Group Ltd. is an insurance company with a $36.5 billion market cap. It provides global specialty insurance, mortgage insurance, and reinsurance. Products and services include primary and excess casualty, workers’ compensation, employers’ liability, umbrella, and professional indemnity insurance.

The company's success is attributed to a diversified business model. ACGL offers a wide range of insurance and reinsurance products across various sectors. This diversification has allowed the company to withstand catastrophic events like the recent Dali cargo ship collision in Baltimore.

The company also makes strategic acquisitions. The recent purchase of Allianz's U.S. MidCorp and Entertainment insurance businesses positions ACGL for growth in the $100 billion middle-market property and casualty (P&C) insurance sector. ACGL has benefited from strong pricing and premium growth in its P&C and reinsurance businesses.

Are We In Buy Now Territory?

Wall Street analysts generally maintain a "Moderate Buy" rating for ACGL stock, with an average price target suggesting a 14.7% upside potential.

Despite these positive factors, it's important to note that as a P&C insurer, ACGL remains exposed to potentially catastrophic events that could impact its quarterly results. However, the company's diversification strategy and recent acquisitions are expected to drive customer base growth and market expansion.

Analysts expect profits of $2.17 per share, a rise of 13% from the previous year’s quarter. They anticipate an EPS for FY 2024 of $8.59, up 1.7%, and an EPS for FY 2025 of $9.12. Arch Capital will report its FY 2024 Q2 earnings results following the market close on July 30.

Neither Julie Stoller nor Stocks.News have positions in this company.