Arch Capital Group Ltd.
Sustainability Accounting Standards
Board Disclosure Report 2023
For the year ended Dec. 31, 2023

Prepared in accordance with SASB

All data in this Sustainability Accounting Standards Board (SASB)
disclosure is as of, or for the year ended Dec. 31, 2023
unless otherwise noted.

SUSTAINABILITY ACCOUNTING STANDARDS BOARD DISCLOSURE
Arch Capital Group Ltd. (together with its subsidiaries, "Arch" or "the Company"), is a publicly listed Bermuda exempted
company with approximately $21.1 billion in capital at Dec. 31, 2023 and is part of the S&P 500 index. Arch provides
insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly owned subsidiaries. While we arepositioned to provide a full range of property, casualty and mortgage insurance and reinsurance lines, we focus on writing
specialty lines of insurance and reinsurance. In addition to providing comprehensive disclosure on our website regarding ourapproach to value creation, which integrates environmental, social and governance ("ESG") topics, we provide the following
disclosures, which are aligned with the Sustainability Accounting Standards Board ("SASB") framework for the insurance
industry. SASB standards are designed to identify a minimum set of sustainability issues most likely to impact the operating
performance or financial condition of the typical company in an industry, regardless of location. The inclusion of information
contained in this report should not be construed as a characterization regarding the materiality or financial impact of that
information. For a discussion of information that is material to Arch, please see our 2023 Annual Report on Form 10-K for the
fiscal year ended Dec. 31, 2023, filed with the SEC on Feb. 23, 2024 ("2023 Annual Report"). Moreover, this report may use
certain terms, including those that SASB or others may refer to as “material,” to reflect the issues or priorities of theCompany, its subsidiaries and its stakeholders. Used in this context, however, these terms are distinct from, and should not be
confused with, the terms “material” and “materiality” as defined by or construed in accordance with securities, or other, laws
or as used in the context of financial statements and reporting.
This report may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995(“PSLRA”), which reflect our current views with respect to future events, risks and uncertainties. All statements other thanstatements of historical fact included in or incorporated by reference in this report are forward-looking statements. Forwardlooking statements, for purposes of the PSLRA or otherwise, can generally be identified by the use of forward-looking
terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” and similar statementsof a future or forward-looking nature or their negative or variations or similar terminology. Actual events and results may
differ materially from those expressed or implied in these statements. Important factors that could cause actual events or
results to differ materially from those indicated in such statements include, among other things, those factors discussed in
Item 1A, pages 40-59 of our 2023 Annual Report, and our quarterly reports on Form 10-Q filed with the SEC. These forwardlooking statements speak only as of the date of this report. We undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future events or otherwise.
This report may contain links to or information from other internet sites. Such links and information are not endorsements ofany products or services in such sites, and no information in such sites has been endorsed or approved by the Company.

ARCH CAPITAL GROUP LTD.
2023 SASB REPORT2I.

SUSTAINABILITY DISCLOSURE TOPICS & ACCOUNTING METRICS
SASB TOPIC
Transparent Information
and Fair Advice
for Customers

SASB CODE
FN-IN-270a.1
FN-IN-270a.2
FN-IN-270a.3
FN-IN-270a.4

PAGE

Total amount of monetary losses as a result of legal proceedings
associated with marketing and communication of insurance productrelated information to new and returning customers
Complaints-to-claims ratio
Customer retention rate
Description of approach to informing customers about products

4
4
4
5

Incorporation ofEnvironmental, Social andGovernanceFactors in Investment
Management

FN-IN-410a.2

Description of approach to incorporation of environmental, social andgovernance factors in investment management processes andstrategies

6

Policies Designed
to Incentivize
Responsible Behavior

FN-IN-410b.1

Net premiums written related to energy efficiency and low carbon
technology

7

FN-IN-410b.2

Discussion of products and/or product features that incentivize
health, safety and/or environmentally responsible actions and/or
behaviors

7

FN-IN-410c.1

Absolute gross financed emissions, disaggregated by Scope 1, Scope 2
and Scope 3

11

FN-IN-410c.2

Gross exposure for each industry by asset class

12

FN-IN-410c.3

Percentage of gross exposure included in the financed emissions
calculation

12

FN-IN-410c.4

Description of the methodology used to calculate financed emissions

12

FN-IN-450a.1

Probable maximum loss of insured products from weather-related
naturalcatastrophes
Total amountof monetary losses attributable to insurance payouts

13

Financed Emissions

Environmental Risk Exposure

FN-IN-450a.2

FN-IN-450a.3
Systemic Risk
ManagementII.

ACCOUNTING METRIC

from (1) modeled natural catastrophes and (2) non-modeled natural
catastrophes, by type of event and geographic segment (net andgross of reinsurance)
Description of approach to incorporation of environmental risks into
(1) the underwriting process for individual contracts and (2) the
management of firm-level risks and capital adequacy

15

15

FN-IN-550a.1

Exposure to derivative instruments by category: (1) total potential
exposure to non-centrally cleared derivatives; (2) total fair value of
acceptable collateral posted with the Central Clearinghouse; and(3) total potential exposure to centrally cleared derivatives

16

FN-IN-550a.2

Total fair value of securities lending collateral assets

16

FN-IN-550a.3

Description of approach to managing capital- and liquidity-relatedrisks associated with systemic non-insurance activities

16

FN-IN-000.A

Number of policies in force, by segment

17

ACTIVITY METRIC

ARCH CAPITAL GROUP LTD.
2023 SASB REPORT

3

Transparent Information & Fair
Advice for Customers
FN-IN-270a.1
Total amount of monetary losses due to legal proceedings
associated with marketing and communication of insurance
product-related information to new and returning
customers
In compliance with the regulations set forth by the Securities
and Exchange Commission ("SEC"), Arch discloses allmaterial legal proceedings, other than ordinary routine
litigation incidental to the business, in its annual reports on
Form 10-K and quarterly reports on Form 10-Q. In 2023,
legal proceedings and/or monetary losses, if any, associatedwith marketing and communication of insurance productrelated information to new and returning customers were
not material and, accordingly, have not been disclosed in our
Form 10-K. See Item 3, page 61 of our 2023 Annual Report.

FN-IN-270a.2
Complaints-to-claims ratio
We are committed to delivering a consistent, exceptional
level of service to our insureds. We strive to offer swift andefficient responses in every interaction regarding coverageinquiries or claims. Our team of experienced claims handlers
assist with the process, addressing queries, customer
coverage questions, complaints and/or claims.
For the past three years, our insurance operations executeda global strategic initiative called "The Arch Experience." Theinitiative sets standards for behaviors and expectations for
how all colleagues interact with customers, each other andpartners, across multiple areas including customer coverage
issues, complaints and claims. One behavior, "Be Passionate
about the Voice of the Customer," was a key priority for our
claims organization leadership. In 2023, training sessions
addressed the value of actively listening to, understanding
and anticipating our customers' evolving needs. By
promoting curiosity and meaningful engagement with ourclients, we strengthen our ability to anticipate opportunities
and take proactive measures to provide optimal solutions.
We also actively obtained internal and external feedback to
identify and implement initiatives to serve our claimants
better. See also FN-IN-270a.4, "Description of Approach toInforming Customers about Products," for additional details
regarding this strategic initiative.
We provide a wide range of commercial property andcasualty insurance products primarily through our U.S.based insurance subsidiaries, which are subject to insurance
regulations in the various states and jurisdictions where theytransact business. As a multi-line insurance carrier, we aresubject to insurance regulations in all 50 states and otherjurisdictions. State insurance departments voluntarily

provide consumer complaint data to the National
Association of Insurance Commissioners ("NAIC"). The NAIC
does not calculate or report on a complaints-to-claims ratio
but instead provides a summary listing of all closed
complaints by business line for each underwriting company
in the U.S. Closed complaints, as defined by the NAIC, arecomplaints that have been investigated by the state
insurance department and given a resolution code. The NAIC
“closed complaint ratio” is calculated by dividing eachunderwriting company’s share of closed complaints in the
U.S. market by the underwriting company’s market share ofpremiums in the U.S. The NAIC does not provide one ratio
for all our underwriting companies combined. Closed
complaint ratio data calculated by the NAIC is available on
its
consumersite
https://www.naic.org/
cis_refined_results.htm. Data for the following companies isavailable: Arch Insurance Company, Arch Indemnity
Insurance Company, Arch Specialty Insurance Company andArch Property Casualty Insurance Company.
For our U.S. mortgage insurance ("MI") subsidiaries, werarely deal directly with consumers and, therefore, do notreceive many consumer complaints filed with state
insurance departments. Due to the structure of MI products,
the minimal number of complaints received is not ameaningful metric for assessing our claims-handling process.
Therefore, our U.S. MI subsidiaries do not measure claims
performance based on complaint volume.
For our U.S. reinsurance subsidiaries, we do not deal
directly with consumers and, therefore, do not receive
consumer complaints filed with state insurance
departments. In addition, our reinsurance subsidiaries do
not typically receive formal complaints from their cedingcompany clients other than regarding infrequent claims
disputes. Therefore, our reinsurance subsidiaries do nottrack or measure claims performance based on complaint
volume.

FN-IN-270a.3
Customer retention rate
Global Insurance Operations. For our insurance subsidiaries,
we routinely monitor our customer retention rates for all
measurable lines of business, excluding nonrecurringproducts (e.g., surety products, travel products,
transactional risk products and political risk coverages). We
include this measure in our internal management reporting,ensuring we account for and address any unexpectedchanges within a business unit. We look at customer
retention on both a premium-weighted and policy-countweighted basis. Each diagnostic is informative, and weanalyze customer retention at lower segmented levels
where useful. Our methodology does not adjust thecalculation for involuntarily terminated customers asprovided for by the SASB methodology.
Due to the wide diversification of business written by our
ARCH CAPITAL GROUP LTD.
2023 SASB REPORT

4

insurance subsidiaries, the expected customer retention
ratio varies significantly across our business units. Most of
our business units achieve retention ratios between 75%
and close to 100%, which have remained relatively
consistent over time.
U.S. Mortgage Insurance Operations. We do not trackcustomer retention rates for our U.S. MI subsidiaries
because we do not have direct contact with consumers.
Instead, for our MI business, the customer is a lending
institution. Based on this structure, a more meaningful
metric is the retention rate of new insurance written("NIW"), a common term in mortgage insurance that refers
to the aggregate dollar amount of newly insured mortgage
loans. In 2022 and 2023, on average, more than 86% of thelender home offices that submitted at least one loan (or unit
count) that became NIW, submitted at least one loan (orunit count) that became NIW the following quarter.
U.S. Reinsurance Operations. We do not track customer
retention at a group level for our U.S.-based reinsurance
business because we do not find it a useful metric, giventhat our customers are insurance companies, and ourstrategic focus is on adjusting capacity in different markets
based on pricing. Although the metric is irrelevant at a grouplevel, some individual departments track retention rates
when it makes sense for their part of the business.

FN-IN-270a.4
Description of approach to informing customers
about products
For the last three years, our global primary insurance
operations embarked on a comprehensive strategic
endeavor known as The Arch Experience, aimed at delivering
an exceptional customer experience. This initiative involved
an intensive program encompassing all employees within
our worldwide insurance segment. It was spearheaded byour executive leadership team and supported by peer
promoters. The program centered on promoting specificbehaviors and standards geared toward enhancing
solutions-oriented communication with our valued
customers. For instance, one of the core behaviors
emphasized was "Be Passionate about the Voice of the
Customer." In 2023, training sessions delved into actively
listening to, understanding and anticipating our customers'
evolving needs. By promoting curiosity and meaningful
engagement with our clients, we strengthen our ability toanticipate opportunities and take proactive measures toprovide optimal solutions. Our global insurance organization
now aligns with our overarching corporate values,
integrating these fundamental behavioral standards into thefabric of our operations.
For our insurance and mortgage products, customer
interactions are generally handled through a limited numberof specialized intermediaries, including professionallylicensed brokers, agents, wholesalers, coverholders,administrators and, when relevant, mortgage originators.
These experts, as applicable, are instrumental in providing
information and offering advisory support to existing andprospective customers. These intermediaries also participate
in the post-purchase phase by reviewing policies andoverseeing the ongoing insurance relationship. Policyholders
are also encouraged to review policy content carefully and,should inquiries arise, to seek clarification from theseintermediaries.
Our underwriters, sales employees and coverholders
maintain regular contact with the intermediaries to ensure
they have a clear and comprehensive understanding of our
product offerings. The applicable underwriting business unit,
communications group and legal department are involved in
preparing and reviewing communications distributed tocurrent or prospective customers. Our communications are
tailored to meet the customer's specific needs and varydepending on the specific product type and segment. The
information we provide may include, among other things,
the specific product and policy scope (including limits anddeductibles as relevant), underwriting terms and conditions,pricing information, industry and exposure-relatedmaterials, risk management support and other general
information about the company issuing the underlying
policy, our brand and/or our financial strength andinformation regarding how to make a claim and claims
procedures, as applicable.
In our mortgage business, we work closely with lenders andindustry associations to identify areas of opportunity to
educate the public on our solutions and address common
misconceptions about down payment requirements and thehome-buying process. We understand owning a home canbe financially challenging, so we see immense value inparticipating in inclusive opportunities for the public toengage with experts at Arch and across the industry.
On an ongoing basis, we provide educational materials on
the role this part of our business plays in society. We
support the efforts of the U.S. Department of Housing and
Urban Development ("HUD") to identify approved housing
counseling agencies across states on its website. These
programs advise people on the home-buying process,default prevention and credit management. By providing
this consumer education, we facilitate consumer awarenessof products and services, and provide them with theknowledge and skills to improve their ability to manage risk.
We help borrowers prepare for the challenges andresponsibilities of homeownership through our Government
Sponsored Enterprise-approved homebuyer education
courses at https://www.archmi.com/hbe. We believe
prospective homebuyers can also benefit from homebuyer
education programs sponsored by community, nonprofit
and governmental agencies. We are proud to partner withBALANCE©, a nonprofit financial counseling organization
ARCH CAPITAL GROUP LTD.
2023 SASB REPORT

5

that makes homebuyer education accessible to a broader
audience. In 2023, more than 3,600 potential homebuyers
completed the homebuyer education course.
In the unfortunate cases where our policyholders experiencea covered loss, we are committed to providing timely client
service when paying claims. We offer a customer-focused
approach to claims management and endeavor to quickly
and efficiently resolve claimant needs. Our policies are clear
about the scope of coverage and the claims process. We
communicate with our customers through various channels,
including our intermediaries, website, email, advertising,promotional materials, social media and at events andconferences.
Our reinsurance group generally markets its reinsurance
products through professionally licensed intermediaries,
except for our property facultative reinsurance group, which
also deals directly with the ceding companies. Per theapplicable reinsurance contracts, all communications withceding companies are directed through theseintermediaries, including claims communications. The
reinsurance group does not market to, contract with orcommunicate directly with individual insureds.

Incorporation of Environmental,
Social, and Governance Factors in
Investment Management
FN-IN-410a.2
Description of approach to incorporation ofenvironmental, social and governance factors ininvestment management processes and strategies
Insurance companies are subject to regulatory investment
requirements that limit our investment flexibility regarding
the types of investments we may hold and theconcentrations of credit and equity risk we may amass.
These requirements are designed to ensure that insurers
have sufficient liquidity to pay claims as they are presented.
As disclosed in our 2023 Annual Report, a significant
majority of our funds available for investment are deployed
in a widely diversified portfolio of U.S. government,
corporate and other high-quality, liquid assets. A significant
portion of our portfolio comprises securities issued by the
U.S. government and government agencies and AAA, AA and
A-rated securities.

As a long-term asset manager and owner, we integrate ESG
factors into our investment analysis and decision-making.
Through our fundamental analysis, we incorporate investee
companies' ESG risk ratings, including corporate governance,
climate risk exposure, carbon reduction and workforce
policies. When investing, we aim to deliver a total return forArch while potentially realizing added benefits wheninvesting to create a positive benefit for society.
Our Responsible Investing ("RI") Policy, adopted in early
2022, provides a framework for governance, investment
strategy, engagement, reporting and communications. In
developing the RI Policy, we considered the six principles set
forth by the United Nations Principles of Responsible
Investment ("UN PRI"). The RI Policy reflects our approach tosustainable value creation by considering ESG factors,
including climate change, in the investment process for all
asset classes under our management. See page 32 of our2023 Sustainability Report for details regarding our RI Policy.
Arch’s investment team employs qualitative andquantitative analysis to identify company- or managerspecific risks and opportunities. Our investment team uses
various resources to stay informed of developments in ESG
ratings and evaluation methodologies to understand thepotential implications of emerging ESG factors. For ourinternally managed assets, we consider ESG factors andratings when assessing new investment opportunities,
where reliable data is available.
Our RI strategy involves engaging on an ongoing basis with
our external managers regarding ESG integration into theirinvestment decisions. We also discuss ESG risks andencourage the adoption of strong RI practices. Additionally,
we request external managers provide annual ESG reports
and metrics on their organization's performance.
Our ESG risk management process involves pre-investment
due diligence — managed by our investment teams andapproved by our Investment Committee — for externallymanaged assets. The Investment Committee comprises
senior members of our investment team, our Chief Executive
Officer and our Chief Financial Officer. Active engagementwith external managers, post-investment is another central
tenet of our approach. For internally managed assets,
carbon metrics and other ESG factors are included in ourinvestment decisions and reporting, where available. We
review the portfolio for issuers with poor or weaker trending
ESG ratings and seek to emphasize those with morefavorable ESG risk profiles, where attractive investment
opportunities and ratings are available.

ARCH CAPITAL GROUP LTD.
2023 SASB REPORT

6

Policies Designed to Incentivize
Responsible Behavior
FN-IN-410b.1
Net premiums written related to energy efficiency
and low-carbon technology
At Arch, we track premium data based on the line ofbusiness and by state (as applicable), as required byinsurance regulators. Premium information by segment andline of business is discussed within our Dec. 31, 2023,
Financial Supplement here.
In recognition of a heightened market emphasis on theenergy transition and regulatory efforts to quantify
associated premiums, in 2023, our global insurance
underwriters collaborated with Arch’s Chief ESG Officer toprepare a principles-based approach to tagging energy
efficient and sustainable energy accounts. This initiativealigned with our recognition of the increasing importance ofevaluating the impact of Arch’s global insurance
underwriting on climate change mitigation, adaptation andother sustainable energy initiatives.
The process begins by determining whether an accountinvolves renewable energy technology, making it eligible fortagging. The process also aims to identify certain energy
efficient or low-carbon technologies and practices, including
non-thermal (hydro, geo, bio) power generation, battery
storage, biofuels, clean fuels production/blending, hydrogenand emissions reduction technology. For this first year,
through the tagging process, we quantified premiums fromseveral lines of business from our U.S. and U.K. insurance
operations, including U.S. Executive Assurance, Retail
Energy, Surety and E&S Casualty, and U.K. Energy Property.
Based on this effort, we quantified approximately $44
million of net written premium (net of broker commissions
and gross of reinsurance) related to renewable energy or
low-carbon technology accounts. Moving forward, we willcontinue to report on our progress while aiming to expand
the process to include our contributions to sustainableenergy in additional business lines and geographies.

FN-IN-410b.2
Discussion of products and/or product featuresthat
incentivize
health,safetyand/orenvironmentally responsible actions and/or
behaviors
Our U.S. casualty insurance business units (construction,national accounts, casualty, retail energy, alternative
markets, defense base act, foreign casualty for overseas
military/governmental bases and high excess workers'
compensation) offer primary and excess casualty coverages
to middle market and large accounts across a variety ofindustry segments. Our large account underwriting
segments specialize in loss-sensitive insurance programs,
such as large deductible, self-insured retention andretrospectively rated programs. Insureds can better manage
their premium costs through individual account ratings andpricing reflecting their loss experience. Further, insureds are
incentivized to implement and adhere to strong risk
management, safety and loss prevention programs. With
this program structure, the risk is shared between theinsurer and the insured, allowing us to extend our risk
control service offerings to improve customer results. For
our middle market and smaller commercial accounts, suchas private equity firms, real estate and hospitality, financial
institutions, professional services and healthcare, we also
extend our risk control service offerings to help thesebusinesses with their overall risk management practices.

Health & Safety
1. Our Risk Control Services Platform. Through our risk
control services platform, Arch Risk Control, we offer healthand safety support for our U.S.-based casualty insurance
customers, including construction, national accounts, retailenergy, high excess workers' compensation, alternative
markets, property/casualty programs and excess and surplus
casualty. We provide businesses with access tocomprehensive services including training resources,
technical information and consulting solutions, to help ourcustomers safeguard their employees.
Our risk control staff has helped our customers better
understand and manage their health, safety andenvironmental risks and exposures to loss. In 2023, we
continued to increase our risk control staff, supporting our
U.S.-based casualty insurance customers by hiring
professionals with diverse skill sets to broaden ourcapabilities and increase our interactions with policyholders.
We engage directly with our customers on an ongoing basis
to provide best practices and support. We assess
prospective and currently bound accounts to identify gaps inexisting programs and opportunities to improve results.
These assessments help establish service action plans toimprove safety and overall risk management practices. This
support includes:
ARCH CAPITAL GROUP LTD.
2023 SASB REPORT

7

■

■

Consulting on Work Site Safety and Employee
Onboarding Programs. We understand that a new
employee's first few months on the job involve thegreatest potential for injury. This is a critical timefor employers to properly train and orient
employees to be aware of hazards and how tocontrol them. Through our consulting services, wehelp our customers develop and implement
consistent workplace safety orientation andtraining programs and encourage them to holdtheir supervisors accountable for these criticalactivities. Examples of critical work site employee
safety training topics include effective daily
briefings and task hazard analysis, fall protection,
electrical safety, struck-by, confined space entry,
excavations, lockout/tagout, driver safety andheavy equipment operations. Beyond the new
employee focus, our consulting efforts emphasize
client management systems and processes toencourage employee safety practices to be carriedout and consistently maintained and audited
throughout the employment life cycle.
Post Injury Management. When workplace injuries
occur, having an effective post-injury management
program is a cornerstone of occupational healthand safety. Such programs are designed to enable
employees’ safe return to work following aworkplace injury and play a critical role insafeguarding the health of employees and the
productivity of the workplace.
Arch Risk Control developed a Post Injury
Management Guide ("Guide") that includes
resources for employers to develop and implement
a formal and successful program. The Guide
includes:policyholder at-fault accidents impacting thetraveling public; (2) assistance with slip/fall
exposures in retail environments; and (3) improved
safety and management of temporary highway
work zones to facilitate safe passage for publicvehicles and pedestrians.
■

Safe Driving. Driving creates a significant risk to ourcustomers and the public. Our risk-control staff
works with our customers to help them properly
screen and manage employee drivers of all types ofvehicles to improve their on-the-road safety
performance. At the policyholder level, we sample
and review customer motor vehicle records toensure appropriate driver screenings andmanagement programs are in place. We also
promote safe driving and provide our customers
with driver training and management resources
through several third-party alliances. These
resources are designed to combat distracted driving
and reinforce defensive driving skills. We offer ourcustomers, through a third-party vendor, access tocontinuous employee driver record monitoring so
our customers can better assess their drivers' risk
profiles in real time and take corrective actions
before a driver moves to an unacceptable level.

■

Additional Resources to Support Our Insureds. In
2023, we added several new business alliances toprovide additional resources for our policyholders.
These new and existing alliances focus on
preferential pricing and Arch contributory funding
arrangements for targeted safety and loss
prevention tools, such as:▪

▪

■

Sample policies and procedures covering theinitial injury assessment, rehabilitation
strategy, workplace adaptations to promote a
safe and supportive work environment anddefinedstakeholders
withindividual
responsibilities.
▪ Regular evaluations and adjustments to theprogram to adapt to the individual’s progress.
▪ Informational materials and training to assist
stakeholders.
Consulting to Protect the Public. Many of ourpolicyholders interact with, or are exposed to, thepublic through the communities and customers
they serve. Some of their scopes of work may
create potential injury exposure to the public. Arch
Risk Control focuses on these public exposures andhelps our clients develop plans and best practices
to eliminate or minimize exposure to injuries. This
includes (1) driver improvement to prevent

▪
▪
▪
▪
▪
▪
▪
▪

Crisis counseling and mental health consulting
including post-traumatic event counseling (i.e.,
supporting companies in building resilient
workplaces in the face of disaster, disruption
and everyday behavioral health challenges).
Active shooter preparedness, training andfacility security assessments.
Mobile device blocking apps to address
distracted driving.
Vehicle camera and telematics systems fordriver monitoring and improvement.
Cloud-based safety management system
software.
Online safety and health training.
Accident reporting application to facilitate
prompt and efficient documentation.
ESG advisory services for our retail energy
accounts.
Motor vehicle records monitoring to ensure
safety and security.

ARCH CAPITAL GROUP LTD.
2023 SASB REPORT8■New for 2023. Arch Risk Control launched andimplemented a new software application tofacilitate and enhance our ability to track andmanage account interactions and services for new
and current insureds. This system enables our risk
control specialists to monitor recommendations for
improvement, track the status and ultimately
closure of program gaps identified in our businessevaluations. This application is designed to ensure
we provide proper customer support and continued
operational improvement to reduce losses.

2. Safety Training for First Responders. Through ourprograms for emergency responders and firefighters, weoffer a suite of safety and training aids to help promote
safety and reduce the potential for on-the-job error or
injury. Our services educate and inform first responders on
industry safety and compliance best practices. These
services are offered to thousands of ambulance andemergency workers and volunteers. In addition, we offer an
e-learning and training management system with more than
570 courses available. While e-learning is not meant toreplace quality face-to-face and hands-on training, we
realize tremendous time requirements are placed on
individuals in today’s fast-paced environment, making it
difficult for everyone to attend scheduled training. Our elearning courses allow first responders to supplement
scheduled hands-on training and are available 24/7.
Our training courses are designed to help our insureds staysafe and supported while serving their communities. In
2023, we conducted 32 webinars, watched by over 4,000
live viewers and extended participation in these webinars to
non-clients throughout the U.S. The following are some of
the topics covered during the training:▪

▪

▪

Emergency Vehicle Driver Training. We offer
comprehensive driver education covering the skills
and knowledge required to operate emergency
vehicles. These classroom and hands-on courses areoffered to prepare drivers better to cope with theextra demands when working in emergencies.
Fit for Duty. We offer training to fire-service
department leaders on how best to monitor theirmembers and recognize situations when members
may not be fit for duty. Ensuring first responders
are mentally, emotionally and physically fit for theirjobs decreases risk and keeps members safe.
Emergency Services Insurance Program Essential
Series. We offer a suite of online instruction andtraining briefs tailored for training officers. Our
program is designed to augment hands-on training
by covering essential firefighter skills. These online
sessions provide first responders with a foundation
to ensure they possess the fundamental skills
needed for effective emergency response.

▪

Sexual Harassment and Workplace ViolencePrevention. This training delves into the mosteffective practices to foster a safe and inclusive
environment within our agencies. This course
adopts a proactive "bystander assistance"
approach, equipping participants with theknowledge and skills to actively contribute topreventing harassment. By understanding how to
support and protect one another, we aim to create
workplaces where everyone feels secure andrespected.
▪
FarMedic. This course unites firefightersnationwide, comprehensively exploring theinherent risks associated with responding toincidents in farming environments. Over two days,
participants engage in a dynamic blend ofclassroom instruction and hands-on training
sessions. The intensive curriculum encompasses a
range of critical topics, including strategies foraddressing barn fires, responding to grain-bin
entrapments, managing incidents involving animals
and understanding the protocols when confronted
with toxic gas exposures.
▪
Safe Handling of Fire Gear. We provide education
on safely cleaning and storing protective fire gearthat often contains combustion by-products.
Because some firefighters, especially volunteer
firefighters, frequently take their gear home withthem, we provide education about the secondary
exposure risks to their families and how to prevent
exposure.
▪
Lithium-Ion Battery Exposures. With the increasein fires caused by lithium-ion batteries, we offer
training sessions focused on techniques firefighters
can use to help mitigate risk when fighting theseunique fires.
3. Marine Cargo Underwriting. Through our agency with theLondon Lloyd’s Market, we participate in cargo insurance
initiatives to help relieve various global humanitarian crises:▪

▪

▪

To help alleviate hunger and the effects of severe
poverty in developing nations, we participate in a
Ukraine-based facility covering the secure shipmentof food commodities such as wheat and corn from
Ukrainian ports.
We provide cargo insurance to global organizations
such as UNICEF and UNHCR to support thetransportation of essential health and social aid
within humanitarian programs.
Throughout the COVID-19 pandemic, we played apivotal role in insuring the transport and delivery of
COVID-19 vaccines worldwide. Our efforts
contributed to effective vaccine distribution andhelped save lives.

ARCH CAPITAL GROUP LTD.
2023 SASB REPORT

9

Environmental Responsibility■

One of our core commitments is identifying business
opportunities associated with environmentally friendly
practices. We develop products and features that address
our customers’ evolving needs and incentivize responsible
environmental behavior, while being priced to meet ourlong-term financial objectives.
■■■

Renewable Energy Practice. Through our proprietary
general liability practice, our products extend coverage
to power generation and renewable energy customers
active in solar and wind technology. Our products,
services and expertise help these industries keep theiremployees safe and protect their physical assets,balance sheet and, ultimately, their long-term success.
Our coverage provides insurance solutions for all
aspects of a renewable energy business, from researchand development to operations. As U.S. domestic andinternational renewable energy industries continue toexpand, our renewable energy practice analyzes
industry trends, market data and loss trends to develop
insurance products tailored to the specific needs ofrenewable energy businesses.
Surety Bonds for Renewable Energy. We support
projects that accelerate the climate transition throughour surety business by focusing on the renewableenergy sector. The demand for renewable energy,
including solar energy, is increasing, leading to more
solar development projects. We have a dedicated teamof Surety underwriters specializing in the renewableenergy industry. The team focuses on solar, wind,battery/energy
storage,biomassandhydroopportunities for financial assurance requirements. Arch
Surety provides myriad bonds to the renewable energy
sector, including performance bonds guaranteeing theconstruction of solar plants (both light commercial andgrid scale), interconnection bonds guaranteeing
renewable energy sources are designed and constructed
to tie into the grid correctly, and performance bondsthat guarantee grid-scale battery storage systems arebuilt and installed to specifications.
Green Building Coverages. Traditional property policies
are designed to provide coverage to rebuild a structure
as it existed before a loss, with materials of like kind andquality. If an insured, further to a covered peril, elects to
replace its damaged traditional building withsustainable materials, our "Arch Gateway" policy form
covers the additional costs to achieve at least theminimum requirements, including the cost ofsustainable materials, certified professionals, thecertification application and transporting debris torecycling facilities.

■

■

■

Premium Credits Offered in Connection with
Commercial Property Coverage. Arch encourages
environmentally responsible behaviors by offering
premium credits. Through our risk selection process,insureds can qualify if they:▪ Have or install early fire detection and suppression
systems. Such systems are designed to reduce thefrequency and severity of fires, resulting in reduced
carbon emissions.
▪ Meet"substantial"building
construction
standards. Commercial properties built towithstand wind or earthquakes may have reduced
debris disposal at landfills in the event of a loss.
▪ Adhere to proper property and equipment
maintenance. The benefits include avoiding fires,floods, mechanical breakdowns or water intrusion
leading to mold or contamination, and reduced
debris from obsolete equipment.
E&S Casualty Business Unit. We have over 15 years ofexperience in delivering solutions for renewable energy
clients and brokers within the energy segment. Throughour careful risk assessment processes, we tailor
coverage to the specific needs of our renewable energy
clients in all casualty lines, including primary generalliability, auto liability, excess and umbrella. We provide
coverage for all sizes and phases of independent power
producers including development, owners' interest
construction, construction, operational, idle andmaintenance contractors. Our industry appetite
includes wind farms, solar farms, renewable energy
contractors, ethanol plants, biodiesel plants, waste-toenergy facilities, geothermal production and morealternative energy companies. We support the
expansion of the renewable energy industry byproviding a safety net for independent power producers
in an ever-changing environment.
Onshore Energy Business Unit. Our onshore energy
group is focused on growing our portfolio in energyefficient and low-carbon technology markets including
renewable power generation, nuclear power
generation, hydro, biofuel or geothermal power
generation, biofuel production, solar and wind.
Retail Energy Business Unit. Our proprietary generalliability and umbrella policy forms and endorsements
extend coverage to a wide variety of energy-relatedrisks, CO2 sequestration risks, and many types ofrenewable energy risks as well as productmanufacturers, suppliers and other businesses that
support the energy industry. These product updates
provide additional coverage for pollution-related losses,
including certain losses resulting from carbon dioxidesequestration operations and saline substances, andalso reduce or exclude coverage for power generation
using coal, or for the mining, processing, handling,

ARCH CAPITAL GROUP LTD.
2023 SASB REPORT

10■

storage or transportation of coal. In the ever-changing
energy industry, we offer expertise and products toaddress our clients' unique risks. Our underwriting andrisk control professionals are focused on our customers,
and we seek to provide the products, services andexpertise needed to help manage risk, avoid accidents
and offer support and resources to help customers
recover in the event of a loss. In addition, our retailenergy unit has focused on encouraging ESG integrationand disclosures of new and existing customers.
▪ Pollution Spills. Safely operating high-risk energy
activities is critical to acting as responsible stewardsof the environment. Under our CornerstoneSM
products, we offer many of our energy customers
protection against pollution events, including
coverage for pollution clean-up costs, pollutionrelated bodily injury and property damage, andspecified crisis management expenses. For othercustomers, including our renewable energy
customers, we offer coverage for emergency
pollution mitigation costs, pollution-related bodily
injury and property damage, and specified crisis
management expenses. Because we recognize thepotential for harmful environmental impact
resulting from unintended pollution events, we
provide specific coverage enhancements into ourCornerstoneSM policy for many types of pollution
events to allow our customers to more rapidly
address the effects of a pollution incident to help
minimize the severity of environmental impact.
▪ Well Control Events. To address potentiallysignificant impacts on our customers, theiremployees and the environment, we havepartnered with a third-party vendor to offer ourcustomers best practice oil and gas well-control
training, emergency response plans and incident
response. For applicable customers, we also offer
access to a telephone hotline that connects themwith a well-control professional as a situation
develops who can provide steps to manage wellpressure to avoid a well blowout.
▪ ESG Advisory Services. Through an alliance with athird-party vendor, we offer our public and privateenergy customers access to an ESG consulting teamthat provides actionable insight to companies
navigating the ESG disclosure landscape.
Environmentally Focused Risk Control Services. The Arch
Risk Control platform also provides support and training to
our insureds, including hot work (welding and/or, flame
cutting), fire impairment protocols, and best practices. In
addition, we provide support for emergency response
planning, flood emergency response plan development,
hurricane preparedness and safe solar panel installation.

Financed Emissions
FN-IN-410c.1
Absolute gross financed emissions, disaggregatedby Scope 1, Scope 2 and Scope 3
We are committed to continually improving our datacollection, management and calculation processes, and weare working to develop methodologies for calculating anddisclosing financed emissions. We will continue to report on
our progress.

FN-IN-410c.2
Gross exposure for each industry by asset class
We believe integrating ESG factors into investment analysis
may contribute to improved returns and reduced risks overthe long term and aligns with our stakeholders' bestinterests. As careful stewards of the capital entrusted to us,
we manage our investment portfolio with an understandingthat the portfolio is designed to ensure an ongoing ability to
pay claims when due. As a long-term asset manager andowner, we integrate ESG factors into investment analysis
and decision-making. Through our fundamental analysis, weincorporate investee companies' ESG risk ratings, including
corporate governance, climate risk exposure, carbon
reduction and workforce policies.
We aim to deliver total return for Arch while potentiallyrealizing added benefits when investing to create a positive
societal benefit. For a discussion of our investment portfolio,
see Item 7, pages 64-95, "Management's Discussion andAnalysis of Financial Condition and Results of Operations—
Financial Condition—Investable Assets, Liquidity, and Capital
Resources" in our 2023 Annual Report. As of Dec. 31, 2023,
approximately 79% of our total investable assets were
invested in fixed maturity, short-term investments and cash.
The portfolio is diversified across sectors, with investmentgrade corporates and U.S. government securities
representing the two largest sectors. The portfolio's average
S&P/Moody's credit rating was AA-/Aa3.

ARCH CAPITAL GROUP LTD.
2023 SASB REPORT11

INVESTMENTS BY TYPE

FN-IN-410c.3
Percentage of gross exposure included in thefinanced emissions calculation
We are committed to continually improving our datacollection, management and calculation processes and areworking to develop methodologies for calculating anddisclosing financed emissions. We will continue to report on
our progress.

FN-IN-410c.4
Description of the methodology used to calculate
financed emissions

Fixed Maturities by Rating

We are working to develop methodologies for calculating
financed emissions as guided by the Partnership for Carbon
Accounting Financials ("PCAF") Standard A (Financed
Emissions) and other available standards. We will continue
to report on our progress.

1

CMBS = Commercial mortgage-backed securities.
MBS = Mortgage-backed securities.
3
Includes U.S. government-sponsored agency MBS and agency CMBS.
2

ARCH CAPITAL GROUP LTD.
2023 SASB REPORT

12

Environmental Risk Exposure
FN-IN-450a.1
Probable maximum loss of insured products fromweather-related natural catastrophes
We operate leading specialty property and casualty andmortgage insurance businesses across a range of
geographical locations and product offerings, providing
meaningful diversification and earnings stability. In all, 92%of our total net premiums written in 2023 were from ourproperty and casualty business, while 8% originated fromour mortgage insurance business. For a detailed allocation of
our net written premiums, refer to the accompanying graphbelow.

LINE OF BUSINESSWe have large aggregate exposures to natural catastrophic
events, including hurricanes, floods, wildfires, tsunamis,
windstorms, earthquakes, hailstorms, tornadoes, explosions,severe winter weather, fires, droughts and other natural
disasters. We monitor our exposure to catastrophic events,
including earthquake and wind and periodically reevaluate
the estimated probable maximum pre-tax loss for such
exposures. Our estimated probable maximum pre-tax loss isdetermined through the use of modeling techniques, butsuch an estimate does not represent our total potential loss
for such exposures. Our models employ proprietary andvendor-based models to inform risk assumption andreinsurance purchasing decisions designed to manage our
exposure to catastrophic events. We actively monitor andevaluate the impact of changes in the vendor-based systems
and adjust our risk evaluation as necessary. As new
information and techniques emerge, we update ourproprietary models, which are integral to our enterprise risk
management process and support our long-term financial
strategies and objectives.
For our natural catastrophe-exposed business, we seek tolimit the amount of exposure we assume from any single
insured. We seek to limit the probable maximum pre-tax
loss to a specific level for severe catastrophic events.
Currently, we seek to limit our 1-in-250-year return period
net probable maximum loss ("PML") from a severe
catastrophic event in any geographic zone to approximately
25% of tangible shareholders’ equity available to Arch (total
shareholders' equity available to Arch less goodwill andintangible assets). We reserve the right to change thisthreshold at any time.

1

Includes casualty, professional liability, executive assurance, cyber insurance,
healthcare, contract binding and excess motor.
2
Includes reinsurance for proportional motor, cyber, trade credit and surety, accident
and health, workers’ compensation catastrophe, agriculture, political risk and other.
3

Includes insurance for warranty and lenders solutions, alternative markets and otherinsurance and reinsurance.

Based on in-force exposure estimated as of Jan. 1, 2024, ourmodeled peak zone catastrophe exposure is a windstorm
affecting the Florida Tri-County, with a net probablemaximum pre-tax loss of $1.6 billion, followed bywindstorms affecting the Northeast U.S. and the Gulf of
Mexico with net probable maximum pre-tax losses of $1.4
billion and $1.3 billion, respectively. As of Jan. 1, 2024, ourmodeled peak zone earthquake exposure (San Francisco,California, area earthquake) represented approximately 54%
of our peak zone catastrophe exposure, and our modeledpeak zone international exposure (German windstorm) was
substantially less than our peak zone windstorm andearthquake exposures. Refer to the chart on the next pageof our peak zone PML for additional context regarding ourestimates of changing exposure to natural catastrophes inour portfolio over time.
Net PML estimates are net of expected reinsurance
recoveries before income tax and before excess reinsurance
reinstatement premiums. Catastrophe loss estimates reflect
the zone indicated and not the entire portfolio. Since
hurricanes and windstorms can affect more than one zone
and make multiple landfalls, our catastrophe loss estimates
include clash estimates from other zones.

ARCH CAPITAL GROUP LTD.
2023 SASB REPORT13

ACGL PEAK ZONE 1:250 PML ($M)
$2,00030.0%$1,62719.4%$1,457 $1,468

17.0%

20.0%

14.4%

$1,000
$881

$867

$801

9.1%
$544

8.1%

$860

6.6%

$489

5.8%

$492

$496

4.2%

$612

$374

5.7%

6.9%

$970

$1,069

$748
5.9%

8.0%

8.1%

10.5% 10.1%

10.0%
9.2%

$—

—%
01/01/12 01/01/13 01/01/14 01/01/15 01/01/16 01/01/17 01/01/18 01/01/19 01/01/20 01/01/21 01/01/22 01/01/23 04/01/23 07/01/23 10/01/23 01/01/24

1:250 PML

1:250 as a % of Tangible Shareholder's Equity Available to Arch*(U.S. Dollars in Millions)

2011

2012

2013

2014

2015

December 31,
2016
2017

2018

2019

2020

2021

2022

Mar-23Jun-23

Sep-23

Dec-23

Total shareholders' equity available to Arch

4,563

5,134

5,609

6,092

6,167

8,254

9,197

9,440

11,497

13,106

13,546

12,91013,988

14,641

15,23918,353

22

38

27

110

98

775

646

628

731

682

942

802

783

773

738

730

4,541

5,096

5,582

5,982

6,069

7,479

8,551

8,812

10,766

12,424

12,604

12,108

13,205

13,86814,501

17,623

Less: goodwill and intangible assets
Tangible shareholders' equity available to Arch

ARCH CAPITAL GROUP LTD.
2023 SASB REPORT

14

FN-IN-450a.2
Total amount of monetary losses attributable toinsurance payouts from (1) modeled natural
catastrophes and (2) non-modeled natural
catastrophes, by type of event and geographic
segment (net and gross of reinsurance)
The table displays the estimated net losses incurred fromcurrent accident year natural catastrophe events for our
insurance and reinsurance segments for the last three years,
after considering ceded reinsurance and reinstatement
premiums. Note these are estimates as of Dec. 31 of eachyear for events occurring in that year, corresponding to thecatastrophe figures reported in our Financial Supplements,
which are available on the Investors page of our website.
See also the chart in Section FN-IN-450a.1 of our peak zone
PML for additional context regarding our estimates ofchanging exposure to natural catastrophes in our portfolio
over time.
($M)
Segment
Insurance
Reinsurance
Total

Accident Year
2023
$
124
368
$
492

2022
201
470
$
671
$

2021
205
437
$
642
$

Arch does not distinguish between modeled/non-modeled
losses and does not find that to be a meaningful distinction.

FN-IN-450a.3
Description of approach to incorporation ofenvironmental risks into (1) the underwriting
process for individual contracts and (2) the
management of firm-level risks and capital
adequacy
The Nominating and Governance Committee of our Board of
Directors ("Board") oversees ESG matters. Executive
Management and our ESG team are responsible for the
management and coordination of Arch’s ESG efforts,
including the integration of climate change in our corporate
strategy. Climate-related risks are evaluated and monitored
regularly in our underwriting and risk management
processes. See also pages 11-12 of our 2023 Sustainability
Report for more information on our risk oversight.

Climate change could impact the frequency or severity of
weather events such as hurricanes, tornado activity,
windstorms, floods and wildfires. Any increase in thefrequency or severity of natural disasters may adversely
affect our financial condition and results. We use various
modeling methods, some proprietary and some using thirdparty computer models, to inform our underwriting andreinsurance decisions and manage our aggregate exposure
to climate risk and catastrophic events. The exposures
include those from natural catastrophes such as hurricanes,
earthquakes, typhoons, floods and wildfires. The output of
our modeling keeps our management informed of peakhigh-risk zones and insurance policies with exposure to a riskof a substantial loss from a catastrophic event.
The underwriting process is tailored by its nature to reflect
the unique characteristics of the underlying risk. In addition
to natural catastrophe exposures, we may factor otherrelated environmental risk characteristics into ourunderwriting process. As underlying drivers of risk change,such as those from environmental causes, we reflect thechanged riskiness in our pricing and overall risk appetite. We
may limit risk through contract endorsements and/or
exclusions in certain circumstances.
One key risk metric we incorporate in our underwriting
decisions is a target return on capital. Riskier contracts
require a higher return on capital and consequently higher
prices. This enables us to manage risk across our portfolio toan acceptable level and allocate capital efficiently. Our
target returns on capital are based on an overall view of thegroup's required risk capital and capital adequacy. We
monitor capital adequacy against required capital on an
ongoing basis and report the results quarterly to our
Board. In addition, we perform an annual ORSA process
focused specifically on risk governance, firm-wide risks andcapital adequacy. The resulting ORSA report is provided to
our Board and regulators.
Additional details about our services, products and productfeatures that address our customers’ evolving needs andincentivize responsible environmental behaviors can befound in FN-IN-410b.2.

We consider climate risk (physical, liability and transitionrisk) alongside all other relevant risks (e.g., underwriting,investment and operational) and perils in our evaluation
process. We look at the impact of climate factors in the nearand long term. Risks tied to climate change are articulated
and addressed in our Task Force for Climate-related
Financial Disclosures Report, our entity-wide risk registerand our annual Own Risk and Solvency Assessment("ORSA").

ARCH CAPITAL GROUP LTD.
2023 SASB REPORT

15

Systemic Risk Management
FN-IN-550a.1
Exposure to derivative instruments by category:(1) total potential exposure to non-centrally
cleared derivatives; (2) total fair value of
acceptable collateral posted with the Central
Clearinghouse; and (3) total potential exposure tocentrally cleared derivatives
At Dec. 31, 2023, the total investable assets held by Archwere $34.6 billion. Our current investment guidelines andour investment approach stress the preservation of capital,
market liquidity and diversification of risk. The portfolio
consists primarily of high-quality fixed-income securities,
with fixed maturities, short-term investments and cash
representing 79%, an average effective duration of 2.91
years and average S&P/Moody's credit rating of AA-/Aa3.
Additional details about the investment portfolio can befound in the "Investable Assets Held by Arch" section of"Financial Condition" in Item 7, pages 83-85 in our 2023
Annual Report.
The Company’s investment strategy allows for derivative
instruments, which are recorded on consolidated balance
sheets at fair value. Arch uses various derivative instruments
such as futures contracts to enhance investment
performance, replicate investment positions or manage
market exposures and duration risk that would be allowed
under our investment guidelines if implemented in otherways.
Certain of the Company's investments are managed in
portfolios that incorporate the use of foreign currency
forward contracts, which are intended to provide an
economic hedge against foreign currency movements. The
Company also purchases to-be-announced mortgage-backed
securities ("TBAs") as part of its investment strategy. TBAs
represent commitments to purchase a future issuance ofagency mortgage-backed securities. For the period between
the purchase of a TBA and the issuance of the underlying
security, the Company's position is accounted for as a
derivative. The Company purchases TBAs in long and shortpositions to enhance investment performance and its overall
investment strategy. See note 11, "Derivative Instruments,"
to our consolidated financial statements in Item 8, pages
150-151, of our 2023 Annual Report for additional
disclosures concerning derivatives.

The estimated fair value and notional values of theCompany's derivative instruments at Dec. 31, 2023, aresummarized in the chart:($M)

Estimated Fair Value
Asset
Liability
Derivatives 1 Derivatives 1

Futures contracts3
Foreign currency forward
contracts4
Other4
Total

$

139

$

(61) $

3,746

27

(32)

1,224

31

(26)

512

197

$

Notional
Value 2

$

(119)

1

The fair value of asset derivatives is included in 'other assets' and the fair value of
liability derivatives is included in 'other liabilities.'

2

Represents the absolute notional value of all outstanding contracts, consisting of longand short positions.

3

Represents centrally cleared derivatives.

4

Represents non-centrally cleared derivatives.

FN-IN-550a.2
Total fair value of securities lending collateral assets
In 2021, the Company terminated its securities lending programand no longer enters into securities lending agreements withfinancial institutions to enhance investment income.

FN-IN-550a.3
Description of approach to managing capital- andliquidity-related risks associated with systemic
non-insurance activities
Arch’s Enterprise Risk Management ("ERM") frameworkencompasses all entities across the group. We have anumber of non-insurance company entities performing
various functions and/or services, primarily for our
underwriting units. They are not considered material
sources of risk to the enterprise and are covered by ourgroup risk policy. Included in these non-insurance entities
are: (1) the ultimate parent holding company and theintermediate holding companies; (2) the servicing
companies for the group’s operational activities; (3)providers of insurance-related services; (4) managing
general agents for certain of our insurance entities; and (5)investment holding companies. Additionally, an entity
purchases residential mortgage loans for sale orsecuritization.
As a large property and casualty and mortgage insurance
enterprise, we are exposed to risks from many sources.
There are certain risks we seek for return, while other risks
we accept as a by-product of being in business. Because
certain risks can be correlated with other risks, the impact ofan event or a series of events can aggregate across multiple
areas simultaneously and have a material effect on ouroperations, financial position and/or liquidity. These
exposures require an enterprise-wide view of risk
concerning the potential impact on all aspects of our
ARCH CAPITAL GROUP LTD.
2023 SASB REPORT

16

operations. To create and preserve value for all
stakeholders, we manage our risk-taking within our statedrisk appetites.

management of our operations. Our Chief Risk Officer is
responsible for risk management in support of executive
management. Our risk management framework is reviewed
and approved at least annually to align with our risk profile.

ERM activities involve identifying and assessing a broad
range of risks, monitoring those risks and executing
strategies to manage those risks. Effective ERM also includes
determining our capital requirements to support the risks
from economic, financial and regulatory perspectives.

We expect our liquidity needs, including anticipatedinsurance obligations, operating and capital expenditureneeds, will be met by cash flow available from underwriting
activities and investment income, cash and proceeds fromliquid investments.

Our Board oversees and monitors enterprise risk to support
our long-term financial strategies and objectives. Executive
management has day-to-day responsibility for the risk

Activity Metric
FN-IN-000.A
Number of policies in force, by segment
Insurance and Reinsurance. The number of policies in force
is not an activity metric we use for the insurance orreinsurance coverages we sell to businesses. This measure is
not a meaningful metric for coverages sold and managed onan account or customer relationship basis.

U.S. Mortgage Insurance. We report policies-in-force data
quarterly for our U.S. primary mortgage insurance
operations. Information regarding our policies in force for2022 and 2023 is disclosed in the table below:

Mortgage Insurance

1Q 2022

2Q 2022

3Q 2022

4Q 2022

1Q 2023

2Q 2023

3Q 2023

4Q 2023

Ending number of policies in force *1,159,020

1,168,147

1,168,735

1,160,219

1,147,081

1,138,681

1,129,351

1,117,480

Change from prior year quarter (%)(4.5)%(2.6)%(1.7)%(1.0)%(1.0)%(3.4)%(3.7)%

Change from prior quarter (%)(1.1)%

0.8 %

0.1 %

(0.7)%(1.1)%(0.8)%(1.1)%

0(2.5)% !
0(0.7)% !

* Includes first-lien primary and pool policies.

ARCH CAPITAL GROUP LTD.
2023 SASB REPORT

17