Ashleigh Rogers
Long/short equity, growth at reasonable price, value, banks

Insurance Company Arch Capital Is Going Outside Its Wheelhouse

One of the best compliments that one can give an insurance company is that it's boring. In the world of insurance, boring and staid are good, and exciting is bad. Boring implies that a company is sticking to what works: writing policies covering predictable risks and getting paid a reasonable premium in exchange. Excitement implies big losses, actuaries who get too fancy with their models, and excessive risk-taking. It is precisely this rationale that makes me cautious about formerly boring Arch Capital Group (NASDAQ:ACGL).

Bermuda-based Arch Capital used to be boring. The company had a fairly straight forward 60-40 insurance/reinsurance split and it offered shareholders the opportunity to invest in company with a history of being a sound...

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