Arch Capital Group Ltd. (ACGL, Financial) is a specialty insurance company based in Bermuda. While the property & casualty insurance segments are improving, economic-related headwinds in the mortgage business caused the shares to detract. Lender forbearance and rising unemployment are causing higher mortgage delinquencies, which pressured earnings due to Arch’s provision for credit losses even if these delinquencies don’t ultimately result in cash losses. However, we continue to own the stock due to Arch’s strong management team and underwriting discipline.
From Ron Baron (Trades, Portfolio)'s Baron Growth Fund second-quarter 2020 shareholder letter.
