Arch Capital Group Ltd. (ACGL, Financial) is a specialty insurance and reinsurance company based in Bermuda. During the quarter, Arch reported good financial results, notably a 15% growth in book value per share. Despite a soft pricing environment in the insurance industry, underwriting profitability remains strong, catastrophe losses remain benign, and earnings continue to benefit from favorable reserve development. The company’s share price also has recently benefited from greater merger and acquisition activity in the insurance industry, and the presumed premium that Arch might fetch in the event of a takeover. We continue to own the stock because of the company’s strong management team and disciplined underwriting culture. In addition, we believe that Arch should also benefit from the ramp-up of its mortgage insurance business over the next several years.
From Baron Funds' second quarter commentary.
