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Arch Cap Gp Ltd has a market cap of $5.3 billion; its shares were traded at around $39.24 with a P/E ratio of 13.2 and P/S ratio of 1.7. Arch Cap Gp Ltd had an annual average earning growth of 16.5% over the past 10 years.
Highlight of Business Operations:Net Impairment Losses Recognized in Earnings. On a quarterly basis, we perform reviews of our available for sale investments to determine whether declines in fair value below the cost basis are considered other-than-temporary in accordance with applicable accounting guidance regarding the recognition and presentation of other-than-temporary impairments. The process of determining whether a security is other-than-temporarily impaired requires judgment and involves analyzing many factors. These factors include (i) an analysis of the liquidity, business prospects and overall financial condition of the issuer, (ii) the time period in which there was a significant decline in value, (iii) the significance of the decline, and (iv) the analysis of specific credit events. We evaluate the unrealized losses of our equity securities by issuer and determine if we can forecast a reasonable period of time by which the fair value of the securities would increase and we would recover our cost. If we are unable to forecast a reasonable period of time in which to recover the cost of our equity securities, we record a net impairment loss in earnings equivalent to the entire unrealized loss. For the 2012 first quarter, we recorded $1.0 million of credit related impairments in earnings, compared to $2.7 million for the 2011 first quarter. The OTTI recorded in the 2012 first quarter primarily resulted from reductions in estimated recovery values on certain mortgage backed securities following the review of such securities. See note 6, “Investment Information—Other-Than-Temporary Impairments,” of the notes accompanying our consolidated financial statements for additional information.
· Cash provided by investing activities for the 2012 first quarter was higher than the cash used for investing activities in the 2011 period. The 2012 first quarter included a higher level of purchases and sales of fixed maturity investments than in the 2011 first quarter, an increase in funding for other investments (funding of existing and new investments) and a static level of securities on loan through our securities lending program, compared to an investing outflow for securities lending in the 2011 first quarter. In addition, during the 2012 first quarter, we sold four individual TALF investments and the related TALF borrowings were extinguished accordingly.
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