We own Arch Capital Group Ltd. (NASDAQ:ACGL), a specialty insurance and reinsurance company run by an experienced management team with a successful track record across several insurance cycles. Arch excels at underwriting specialized property & casualty policies and can shift its business mix to target the most profitable areas. The company has a unique compensation system for its underwriters that rewards long-term profitability rather than short-term premium growth. Management has demonstrated excellent underwriting discipline and has returned excess capital to shareholders during soft pricing cycles, allowing Arch to maintain industry-leading returns on equity. Its stock has doubled in the last five years.
From Baron Funds' May 2016 Baron Insight: Investing in Financials.
