# EDGAR Filing Document

**Accession Number:** 0000947484
**File Stem:** 0000947484-25-000066
**Filing Date:** 2025-8
**Character Count:** 455545
**Document Hash:** eca8016b04d0b94ecf77106071410606
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000947484-25-000066.hdr.sgml**: 20250805

**ACCESSION NUMBER**: 0000947484-25-000066

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 95

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20250805

**DATE AS OF CHANGE**: 20250805

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** ARCH CAPITAL GROUP LTD.
- **CENTRAL INDEX KEY:** 0000947484
- **STANDARD INDUSTRIAL CLASSIFICATION:** FIRE, MARINE & CASUALTY INSURANCE [6331]
- **ORGANIZATION NAME:** 02 Finance
- **EIN:** 980374481
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-16209
- **FILM NUMBER:** 251185688

**BUSINESS ADDRESS:**
- **STREET 1:** WATERLOO HOUSE, GROUND FLOOR
- **STREET 2:** 100 PITTS BAY ROAD
- **CITY:** PEMBROKE
- **STATE:** D0
- **ZIP:** HM 08
- **BUSINESS PHONE:** 441-278-9250

**MAIL ADDRESS:**
- **STREET 1:** WATERLOO HOUSE, GROUND FLOOR
- **STREET 2:** 100 PITTS BAY ROAD
- **CITY:** PEMBROKE
- **STATE:** D0
- **ZIP:** HM 08

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** ARCH CAPITAL GROUP LTD
- **DATE OF NAME CHANGE:** 20000508

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** RISK CAPITAL HOLDINGS INC
- **DATE OF NAME CHANGE:** 19950816

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** RISK CAPITAL RE INC
- **DATE OF NAME CHANGE:** 19950703

?xml version='1.0' encoding='ASCII'? acgl-20250630

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 10-Q** 

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

---

| | |
|:---|:---|
| **For the quarterly period ended** | **June 30, 2025** |

---

---

| | |
|:---|:---|
| **Or** | **Or** |
| ☐ | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

---

**Commission file number: 001-16209**![archlogorgbsolida36.jpg](acgl-20250630_g1.jpg)

**ARCH CAPITAL GROUP LTD.** 

(Exact name of registrant as specified in its charter)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Bermuda** | **Bermuda** | **Bermuda** | **Bermuda** | **98-0374481** | **98-0374481** |
| (State or other jurisdiction of incorporation or organization) | (State or other jurisdiction of incorporation or organization) | (State or other jurisdiction of incorporation or organization) | (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | (I.R.S. Employer Identification No.) |
| **Waterloo House, Ground Floor** | **Waterloo House, Ground Floor** | **Waterloo House, Ground Floor** | **Waterloo House, Ground Floor** |  |  |
| **100 Pitts Bay Road,** | **Pembroke** | **HM 08,** | **Bermuda** | **(441)** | **278-9250** |
| (Address of principal executive offices) | (Address of principal executive offices) | (Address of principal executive offices) | (Address of principal executive offices) | (Registrant's telephone number, including area code) | (Registrant's telephone number, including area code) |

---

**Securities registered pursuant to Section 12(b) of the Exchange Act:**

---

| | | | |
|:---|:---|:---|:---|
| **Title of each class** | **Trading Symbol (s)** | **Name of each exchange on which registered** | **Name of each exchange on which registered** |
| Common shares, $0.0011 par value per share | ACGL | NASDAQ | Stock Market |
| Depositary shares, each representing a 1/1000th interest in a 5.45% Series F preferred share | ACGLO | NASDAQ | Stock Market |
| Depositary shares, each representing a 1/1000th interest in a 4.55% Series G preferred share | ACGLN | NASDAQ | Stock Market |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ &nbsp;&nbsp;&nbsp;&nbsp;No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☑ Accelerated Filer ☐ Non-accelerated Filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of August 1, 2025, there were 373,220,295 common shares, $0.0011 par value per share, of the registrant outstanding.

------

<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD.**

**INDEX TO FORM 10-Q**

---

| | | |
|:---|:---|:---|
| | | **Page No.** |
| | **PART I—<u>[Financial Information](#i8c1a838c8b384cbd8c3d99c9af25908b_10)</u>** | <u>[2](#i8c1a838c8b384cbd8c3d99c9af25908b_10)</u> |
| Item 1. | <u>[Consolidated Financial Statements](#i8c1a838c8b384cbd8c3d99c9af25908b_13)</u> | <u>[4](#i8c1a838c8b384cbd8c3d99c9af25908b_13)</u> |
| Item 2. | <u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#i8c1a838c8b384cbd8c3d99c9af25908b_124)</u> | <u>[38](#i8c1a838c8b384cbd8c3d99c9af25908b_124)</u> |
| Item 3. | <u>[Quantitative and Qualitative Disclosures About Market Risk](#i8c1a838c8b384cbd8c3d99c9af25908b_181)</u> | <u>[64](#i8c1a838c8b384cbd8c3d99c9af25908b_181)</u> |
| Item 4. | <u>[Controls and Procedures](#i8c1a838c8b384cbd8c3d99c9af25908b_184)</u> | <u>[64](#i8c1a838c8b384cbd8c3d99c9af25908b_184)</u> |
|  | **PART II—<u>[Other Information](#i8c1a838c8b384cbd8c3d99c9af25908b_187)</u>** | <u>[64](#i8c1a838c8b384cbd8c3d99c9af25908b_187)</u> |
| Item 1. | <u>[Legal Proceedings](#i8c1a838c8b384cbd8c3d99c9af25908b_190)</u> | <u>[64](#i8c1a838c8b384cbd8c3d99c9af25908b_190)</u> |
| Item 1A. | <u>[Risk Factors](#i8c1a838c8b384cbd8c3d99c9af25908b_193)</u> | <u>[64](#i8c1a838c8b384cbd8c3d99c9af25908b_193)</u> |
| Item 2. | <u>[Unregistered Sales of Equity Securities and Use of Proceeds](#i8c1a838c8b384cbd8c3d99c9af25908b_196)</u> | <u>[65](#i8c1a838c8b384cbd8c3d99c9af25908b_196)</u> |
| Item 3. | <u>[Defaults Upon Senior Securities](#i8c1a838c8b384cbd8c3d99c9af25908b_199)</u> | <u>[65](#i8c1a838c8b384cbd8c3d99c9af25908b_199)</u> |
| Item 4. | <u>[Mine Safety Disclosures](#i8c1a838c8b384cbd8c3d99c9af25908b_202)</u> | <u>[65](#i8c1a838c8b384cbd8c3d99c9af25908b_202)</u> |
| Item 5. | <u>[Other Information](#i8c1a838c8b384cbd8c3d99c9af25908b_205)</u> | <u>[65](#i8c1a838c8b384cbd8c3d99c9af25908b_205)</u> |
| Item 6. | <u>[Exhibits](#i8c1a838c8b384cbd8c3d99c9af25908b_208)</u> | <u>[66](#i8c1a838c8b384cbd8c3d99c9af25908b_208)</u> |
|  | <u>[Signatures](#i8c1a838c8b384cbd8c3d99c9af25908b_211)</u> | <u>[67](#i8c1a838c8b384cbd8c3d99c9af25908b_211)</u> |

---

ARCH CAPITAL 1 2025 SECOND QUARTER FORM 10-Q

------

<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**PART I. FINANCIAL INFORMATION**

**Cautionary Note Regarding Forward-Looking Statements** 

The Private Securities Litigation Reform Act of 1995 ("PSLRA") provides a "safe harbor" for forward-looking statements. This report or any other written or oral statements made by or on behalf of us may include forward-looking statements, which reflect our current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this report are forward-looking statements. Forward-looking 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 statements of a future or forward-looking nature or their negative or variations or similar terminology.

Forward-looking statements involve our current assessment of risks and uncertainties. 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 are discussed below and elsewhere in this report and in our periodic reports filed with the Securities and Exchange Commission ("SEC"), and include:

• our ability to successfully implement our business strategy during "soft" as well as "hard" markets;

• acceptance of our business strategy, security and financial condition by rating agencies and regulators, as well as by brokers and our insureds and reinsureds;

• our ability to consummate acquisitions and integrate the business we have acquired or may acquire into our existing operations;

• our ability to maintain or improve our ratings, which may be affected by our ability to raise additional equity or debt financings, by ratings agencies' existing or new policies and practices, as well as other factors described herein;

• general economic and market conditions (including inflation, interest rates, unemployment, housing prices, foreign currency exchange rates, prevailing credit terms, tariffs and the depth and duration of a recession) and conditions specific to the reinsurance and insurance markets in which we operate;

• competition, including increased competition, on the basis of pricing, capacity (including alternative sources of capital), coverage terms, or other factors;

• developments in the world's financial and capital markets and our access to such markets;

• our ability to successfully enhance, integrate and maintain operating procedures (including information technology) to effectively support our current and new business;

• the loss and addition of key personnel;

• material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements;

• accuracy of those estimates and judgments utilized in the preparation of our financial statements, including those related to revenue recognition, insurance and other reserves, reinsurance recoverables, investment valuations, intangible assets, bad debts, income taxes, deferred income tax assets, contingencies and litigation, and any determination to use the deposit method of accounting;

• greater than expected loss ratios on business written by us and adverse development on claim and/or claim expense liabilities related to business written by our insurance, reinsurance and mortgage subsidiaries;

• the adequacy of the Company's loss reserves;

• severity and/or frequency of losses;

• greater frequency or severity of unpredictable natural and man-made catastrophic events;

• claims for natural or man-made catastrophic events or severe economic events in our insurance, reinsurance and mortgage businesses could cause large losses and substantial volatility in our results of operations;

• availability to us of reinsurance to manage our net exposure and the cost of such reinsurance;

• the failure of reinsurers, managing general agents, third party administrators or others to meet their obligations to us;

ARCH CAPITAL 2 2025 SECOND QUARTER FORM 10-Q

------

<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

• the timing of loss payments being faster or the receipt of reinsurance recoverables being slower than anticipated by us;

• our investment performance, including legislative or regulatory developments that may adversely affect the fair value of our investments;

• changes in general economic conditions, including sovereign debt concerns or downgrades of U.S. securities by credit rating agencies, which could affect our business, financial condition and results of operations;

• an incident, disruption in operations or other cyber event caused by a cyber attack, inadvertent error, the use of artificial intelligence technologies or other technology on our systems or those of our business partners and service providers, which could negatively impact our business and/or expose us to litigation;

• the effect of climate change on our business;

• the effect of contagious diseases on our business;

• acts of terrorism, political unrest and other hostilities or other unforecasted and unpredictable events;

• the volatility of our shareholders' equity from foreign currency fluctuations, which could increase due to us not matching portions of our projected liabilities in foreign currencies with investments in the same currencies;

• changes in accounting principles or policies or in our application of such accounting principles or policies;

• changes in the political environment of certain countries in which we operate or underwrite business;

• statutory or regulatory developments, including as to tax matters and insurance and other regulatory matters such as the adoption of legislation that affects Bermuda-headquartered companies and/or Bermuda-based insurers or reinsurers and/or changes in regulations or tax laws applicable to us, our subsidiaries, brokers or customers, including the implementation of the Organization for Economic Cooperation and Development ("OECD") Pillar I and Pillar II initiatives and the enactment of Bermuda corporate income tax; and

• the other matters set forth under Item 1A "Risk Factors," Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other sections of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 27, 2025 and of the Company's latest Quarterly Reports on Form 10-Q, as well as the other factors set forth in the Company's other documents on file with the SEC, and management's response to any of the aforementioned factors.

All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein or elsewhere. The Company's forward-looking statements speak only as of the date of this report or as of the date they are made, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

ARCH CAPITAL 3 2025 SECOND QUARTER FORM 10-Q

------

<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
| | **Page No.** |
| <u>[Consolidated Balance Sheets](#i8c1a838c8b384cbd8c3d99c9af25908b_19)</u> |  |
| &nbsp;&nbsp;&nbsp;June 30, 2025 and December 31, 2024 (unaudited) | <u>[5](#i8c1a838c8b384cbd8c3d99c9af25908b_19)</u> |
| <u>[Consolidated Statements of Income](#i8c1a838c8b384cbd8c3d99c9af25908b_22)</u> |  |
| &nbsp;&nbsp;&nbsp;For the three and six month periods ended June 30, 2025 and 2024 (unaudited) | <u>[6](#i8c1a838c8b384cbd8c3d99c9af25908b_22)</u> |
| <u>[Consolidated Statements of Comprehensive Income](#i8c1a838c8b384cbd8c3d99c9af25908b_25)</u> |  |
| &nbsp;&nbsp;&nbsp;For the three and six month periods ended June 30, 2025 and 2024 (unaudited) | <u>[7](#i8c1a838c8b384cbd8c3d99c9af25908b_25)</u> |
| <u>[Consolidated Statements of Changes in Shareholders' Equity](#i8c1a838c8b384cbd8c3d99c9af25908b_28)</u> |  |
| &nbsp;&nbsp;&nbsp;For the three and six month periods ended June 30, 2025 and 2024 (unaudited) | <u>[8](#i8c1a838c8b384cbd8c3d99c9af25908b_28)</u> |
| <u>[Consolidated Statements of Cash Flows](#i8c1a838c8b384cbd8c3d99c9af25908b_31)</u> |  |
| &nbsp;&nbsp;For the six month periods ended June 30, 2025 and 2024 (unaudited) | <u>[9](#i8c1a838c8b384cbd8c3d99c9af25908b_31)</u> |
| Notes to Consolidated Financial Statements (unaudited) |  |
| &nbsp;&nbsp;<u>[Note 1 - Basis of Presentation and Recent Accounting Pronouncements](#i8c1a838c8b384cbd8c3d99c9af25908b_37)</u> | <u>[10](#i8c1a838c8b384cbd8c3d99c9af25908b_37)</u> |
| &nbsp;&nbsp;<u>[Note 2 - Acquisitions](#i8c1a838c8b384cbd8c3d99c9af25908b_43)</u> | <u>[10](#i8c1a838c8b384cbd8c3d99c9af25908b_43)</u> |
| &nbsp;&nbsp;<u>[Note 3 - Share Transactions](#i8c1a838c8b384cbd8c3d99c9af25908b_49)</u> | <u>[11](#i8c1a838c8b384cbd8c3d99c9af25908b_49)</u> |
| &nbsp;&nbsp;<u>[Note 4 - Earnings Per Common Share](#i8c1a838c8b384cbd8c3d99c9af25908b_55)</u> | <u>[12](#i8c1a838c8b384cbd8c3d99c9af25908b_55)</u> |
| &nbsp;&nbsp;<u>[Note 5 - Segment Information](#i8c1a838c8b384cbd8c3d99c9af25908b_61)</u> | <u>[13](#i8c1a838c8b384cbd8c3d99c9af25908b_61)</u> |
| &nbsp;&nbsp;<u>[Note 6 - Reserve for Losses and Loss Adjustment Expenses](#i8c1a838c8b384cbd8c3d99c9af25908b_67)</u> | <u>[18](#i8c1a838c8b384cbd8c3d99c9af25908b_67)</u> |
| &nbsp;&nbsp;<u>[Note 7 - Allowance for Expected Credit Losses](#i8c1a838c8b384cbd8c3d99c9af25908b_73)</u> | <u>[20](#i8c1a838c8b384cbd8c3d99c9af25908b_73)</u> |
| &nbsp;&nbsp;<u>[Note 8 - Investment Information](#i8c1a838c8b384cbd8c3d99c9af25908b_79)</u> | <u>[22](#i8c1a838c8b384cbd8c3d99c9af25908b_79)</u> |
| &nbsp;&nbsp;<u>[Note 9 - Fair Value](#i8c1a838c8b384cbd8c3d99c9af25908b_85)</u> | <u>[28](#i8c1a838c8b384cbd8c3d99c9af25908b_85)</u> |
| &nbsp;&nbsp;<u>[Note 10 - Derivative Instruments](#i8c1a838c8b384cbd8c3d99c9af25908b_88)</u> | <u>[34](#i8c1a838c8b384cbd8c3d99c9af25908b_88)</u> |
| &nbsp;&nbsp;<u>[Note 11 - Commitments and Contingencies](#i8c1a838c8b384cbd8c3d99c9af25908b_91)</u> | <u>[35](#i8c1a838c8b384cbd8c3d99c9af25908b_91)</u> |
| &nbsp;&nbsp;<u>[Note 12 - Variable Interest Entities](#i8c1a838c8b384cbd8c3d99c9af25908b_97)</u> | <u>[35](#i8c1a838c8b384cbd8c3d99c9af25908b_97)</u> |
| &nbsp;&nbsp;<u>[Note 13 - Other Comprehensive Income (Loss)](#i8c1a838c8b384cbd8c3d99c9af25908b_103)</u> | <u>[36](#i8c1a838c8b384cbd8c3d99c9af25908b_103)</u> |
| &nbsp;&nbsp;<u>[Note 14 - Income Taxes](#i8c1a838c8b384cbd8c3d99c9af25908b_106)</u> | <u>[37](#i8c1a838c8b384cbd8c3d99c9af25908b_106)</u> |
| &nbsp;&nbsp;<u>[Note 15 - Legal Proceedings](#i8c1a838c8b384cbd8c3d99c9af25908b_112)</u> | <u>[37](#i8c1a838c8b384cbd8c3d99c9af25908b_112)</u> |
| &nbsp;&nbsp;<u>[Note 16 - Transactions with Related Parties](#i8c1a838c8b384cbd8c3d99c9af25908b_115)</u> | <u>[37](#i8c1a838c8b384cbd8c3d99c9af25908b_115)</u> |
| &nbsp;&nbsp;<u>[Note 17 - Subsequent Event](#i8c1a838c8b384cbd8c3d99c9af25908b_121)</u> | <u>[37](#i8c1a838c8b384cbd8c3d99c9af25908b_121)</u> |

---

ARCH CAPITAL 4 2025 SECOND QUARTER FORM 10-Q

------

<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

**(U.S. dollars and shares in millions**)

---

| | | |
|:---|:---|:---|
| | **(Unaudited)** | **(Unaudited)** |
| | **June 30,<br>2025** | **December 31,<br>2024** |
| **Assets** | | |
| Investments: |  |  |
| Fixed maturities available for sale, at fair value (amortized cost: $30,312 and $27,570; net of allowance for credit losses: $28 and $22) | $30332 | $27035 |
| Short-term investments available for sale, at fair value (amortized cost: $2,786 and $2,784; net of allowance for credit losses: $0 and $0) | 2788 | 2784 |
| Equity securities, at fair value | 1715 | 1675 |
| Other investments, at fair value | 2892 | 3066 |
| Investments accounted for using the equity method | 6566 | 5980 |
| &nbsp;&nbsp;&nbsp;Total investments | 44293 | 40540 |
| Cash | 983 | 979 |
| Accrued investment income | 329 | 298 |
| Investment in operating affiliates | 1356 | 1240 |
| Premiums receivable (net of allowance for credit losses: $46 and $45) | 7067 | 5634 |
| Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses (net of allowance for credit losses: $19 and $17) | 9044 | 8260 |
| Contractholder receivables (net of allowance for credit losses: $6 and $5) | 2280 | 2161 |
| Ceded unearned premiums | 3229 | 2428 |
| Deferred acquisition costs | 1814 | 1734 |
| Receivable for securities sold | 390 | 50 |
| Goodwill and intangible assets | 1319 | 1351 |
| Other assets | 6684 | 6231 |
| &nbsp;&nbsp;&nbsp;**Total assets** | $78788 | $70906 |
| **Liabilities** |  |  |
| Reserve for losses and loss adjustment expenses | $32089 | $29369 |
| Unearned premiums | 11625 | 10218 |
| Reinsurance balances payable | 2841 | 2137 |
| Contractholder payables | 2286 | 2165 |
| Collateral held for insured obligations | 225 | 249 |
| Senior notes | 2728 | 2728 |
| Payable for securities purchased | 728 | 181 |
| Other liabilities | 3225 | 3039 |
| &nbsp;&nbsp;&nbsp;**Total liabilities** | 55747 | 50086 |
| **Commitments and contingencies (refer to <u>[Note 11](#i8c1a838c8b384cbd8c3d99c9af25908b_91)</u>)** |  |  |
| **Shareholders' Equity** |  |  |
| Non-cumulative preferred shares | 830 | 830 |
| Common shares ($0.0011 par, shares issued: 599.1 and 595.6) | 1 | 1 |
| Additional paid-in capital | 2660 | 2510 |
| Retained earnings | 24477 | 22686 |
| Accumulated other comprehensive income (loss), net of deferred income tax | (48) | (720) |
| Common shares held in treasury, at cost (shares: 223.7 and 219.2) | (4879) | (4487) |
| &nbsp;&nbsp;&nbsp;**Total shareholders' equity available to Arch** | 23041 | 20820 |
| &nbsp;&nbsp;&nbsp;**Total liabilities and shareholders' equity** | $78788 | $70906 |

---

See Notes to Consolidated Financial Statements

ARCH CAPITAL 5 2025 SECOND QUARTER FORM 10-Q

------

<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF INCOME** 

**(U.S. dollars and shares in millions, except per share data)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **(Unaudited)** | **(Unaudited)** | **(Unaudited)** | **(Unaudited)** |
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| **Revenues** |  |  |  |  |
| Net premiums earned | $4337 | $3565 | 8525 | 6987 |
| Net investment income | 405 | 364 | 783 | 691 |
| Net realized gains (losses) | 229 | 122 | 232 | 189 |
| Other underwriting income | 62 | 3 | 115 | 15 |
| Equity in net income of investments accounted for using the equity method | 162 | 167 | 215 | 266 |
| Other income (loss) | 18 | 8 | 16 | 22 |
| **Total revenues** | 5213 | 4229 | 9886 | 8170 |
| **Expenses** |  |  |  |  |
| Losses and loss adjustment expenses | 2303 | 1827 | 4890 | 3555 |
| Acquisition expenses | 824 | 633 | 1588 | 1240 |
| Other operating expenses | 454 | 346 | 927 | 709 |
| Corporate expenses | 47 | 41 | 107 | 94 |
| Amortization of intangible assets | 48 | 27 | 97 | 48 |
| Interest expense | 38 | 35 | 73 | 69 |
| Net foreign exchange (gains) losses | 88 | (1) | 115 | (32) |
| **Total expenses** | 3802 | 2908 | 7797 | 5683 |
| **Income (loss) before income taxes and income (loss) from operating affiliates** | 1411 | 1321 | 2089 | 2487 |
| Income tax (expense) benefit | (214) | (97) | (335) | (198) |
| Income (loss) from operating affiliates | 40 | 45 | 57 | 100 |
| **Net income (loss) available to Arch** | 1237 | 1269 | 1811 | 2389 |
| Preferred dividends | (10) | (10) | (20) | (20) |
| **Net income (loss) available to Arch common shareholders** | $1227 | $1259 | $1791 | $2369 |
| **Net income per common share and common share equivalent** |  |  |  |  |
| Basic | $3.30 | $3.38 | $4.81 | $6.37 |
| Diluted | $3.23 | $3.30 | $4.70 | $6.22 |
| **Weighted average common shares and common share equivalents outstanding** |  |  |  |  |
| Basic | 372.2 | 372.7 | 372.6 | 371.8 |
| Diluted | 379.9 | 381.6 | 380.8 | 380.9 |

---

See Notes to Consolidated Financial Statements

ARCH CAPITAL 6 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**

**(U.S. dollars in millions)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **(Unaudited)** | **(Unaudited)** | **(Unaudited)** | **(Unaudited)** |
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| **Comprehensive Income** |  |  |  |  |
| Net income (loss) | $1237 | $1269 | $1811 | $2389 |
| Other comprehensive income (loss), net of deferred income tax |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Unrealized appreciation (decline) in value of available-for-sale investments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized holding gains (losses) arising during period | 303 | (26) | 537 | (167) |
| &nbsp;&nbsp;&nbsp;&nbsp;Reclassification of net realized (gains) losses, included in net income (loss) | (7) | 53 | 45 | 82 |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustments | 64 | (16) | 90 | (49) |
| **Comprehensive income (loss) available to Arch** | $1597 | $1280 | $2483 | $2255 |

---

See Notes to Consolidated Financial Statements

ARCH CAPITAL 7 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY**

**(U.S. dollars in millions)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **(Unaudited)** | **(Unaudited)** | **(Unaudited)** | **(Unaudited)** |
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| **Non-cumulative preferred shares** |  |  |  |  |
| Balance at beginning and end of period | $830 | $830 | $830 | $830 |
| **Common shares** |  |  |  |  |
| Balance at beginning and end of period | 1 | 1 | 1 | 1 |
| **Additional paid-in capital** |  |  |  |  |
| Balance at beginning of period | 2588 | 2401 | 2510 | 2327 |
| &nbsp;&nbsp;&nbsp;Amortization of share-based compensation | 25 | 16 | 99 | 84 |
| &nbsp;&nbsp;&nbsp;Other changes | 47 | 26 | 51 | 32 |
| Balance at end of period | 2660 | 2443 | 2660 | 2443 |
| **Retained earnings** |  |  |  |  |
| Balance at beginning of period | 23250 | 21405 | 22686 | 20295 |
| &nbsp;&nbsp;&nbsp;Net income (loss) | 1237 | 1269 | 1811 | 2389 |
| &nbsp;&nbsp;&nbsp;Preferred share dividends | (10) | (10) | (20) | (20) |
| Balance at end of period | 24477 | 22664 | 24477 | 22664 |
| **Accumulated other comprehensive income (loss), net of deferred income tax** |  |  |  |  |
| Balance at beginning of period | (408) | (821) | (720) | (676) |
| &nbsp;&nbsp;&nbsp;Unrealized appreciation (decline) in value of available-for-sale investments, net of deferred income tax: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Balance at beginning of period | (221) | (677) | (507) | (565) |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized holding gains (losses) during period, net of reclassification adjustment | 296 | 27 | 582 | (85) |
| &nbsp;&nbsp;&nbsp;&nbsp;Balance at end of period | 75 | (650) | 75 | (650) |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustments, net of deferred income tax: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Balance at beginning of period | (187) | (144) | (213) | (111) |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation adjustments | 64 | (16) | 90 | (49) |
| &nbsp;&nbsp;&nbsp;&nbsp;Balance at end of period | (123) | (160) | (123) | (160) |
| Balance at end of period | (48) | (810) | (48) | (810) |
| **Common shares held in treasury, at cost** |  |  |  |  |
| Balance at beginning of period | (4716) | (4461) | (4487) | (4424) |
| &nbsp;&nbsp;&nbsp;Shares repurchased for treasury | (163) | (2) | (392) | (39) |
| Balance at end of period | (4879) | (4463) | (4879) | (4463) |
| **Total shareholders' equity** | $23041 | $20665 | $23041 | $20665 |

---

See Notes to Consolidated Financial Statements

ARCH CAPITAL 8 2025 SECOND QUARTER FORM 10-Q

------

<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(U.S. dollars in millions)**

---

| | | |
|:---|:---|:---|
| | **(Unaudited)** | **(Unaudited)** |
| | **Six Months Ended** | **Six Months Ended** |
| | **June 30,** | **June 30,** |
| | **2025** | **2024** |
| **Operating Activities** |  |  |
| Net income (loss) | $1811 | $2389 |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Net realized (gains) losses | (231) | (196) |
| &nbsp;&nbsp;&nbsp;Equity in net (income) or loss of investments accounted for using the equity method and other income or loss | (107) | (174) |
| &nbsp;&nbsp;&nbsp;Amortization of intangible assets | 97 | 48 |
| &nbsp;&nbsp;&nbsp;Share-based compensation | 99 | 84 |
| &nbsp;&nbsp;&nbsp;Changes in: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Reserve for losses and loss adjustment expenses, net of unpaid losses and loss adjustment expenses recoverable | 1386 | 1369 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unearned premiums, net of ceded unearned premiums | 338 | 879 |
| &nbsp;&nbsp;&nbsp;&nbsp;Premiums receivable | (1294) | (1682) |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred acquisition costs | 19 | (80) |
| &nbsp;&nbsp;&nbsp;&nbsp;Reinsurance balances payable | 663 | 616 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax assets, net | 109 | 45 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other items, net | (308) | (216) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 2582 | 3082 |
| **Investing Activities** |  |  |
| Purchases of fixed maturity investments | (17568) | (14123) |
| Purchases of equity securities | (987) | (654) |
| Purchases of other investments | (1232) | (1369) |
| Proceeds from sales of fixed maturity investments | 13823 | 11220 |
| Proceeds from sales of equity securities | 1043 | 547 |
| Proceeds from sales, redemptions and maturities of other investments | 1091 | 619 |
| Proceeds from redemptions and maturities of fixed maturity investments | 1326 | 878 |
| Net settlements of derivative instruments | 240 | 12 |
| Net (purchases) sales of short-term investments | 52 | (25) |
| Purchases of fixed assets | (21) | (26) |
| Other | (3) | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used for investing activities | (2236) | (2918) |
| **Financing Activities** |  |  |
| Purchases of common shares under share repurchase program | (359) |  |
| Proceeds from common shares issued, net | 19 | (8) |
| Common dividends paid | (7) |  |
| Preferred dividends paid | (20) | (20) |
| Other | (2) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used for financing activities | (369) | (28) |
| Effects of exchange rate changes on foreign currency cash and restricted cash | 71 | (7) |
| Increase (decrease) in cash and restricted cash | 48 | 129 |
| Cash and restricted cash, beginning of year | 1760 | 1498 |
| Cash and restricted cash, end of period | $1808 | $1627 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes paid (received) | 149 | 145 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest paid | 64 | 63 |

---

See Notes to Consolidated Financial Statements

ARCH CAPITAL 9 2025 SECOND QUARTER FORM 10-Q

------

<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**1.&nbsp;&nbsp;&nbsp;&nbsp;Basis of Presentation and Recent Accounting Pronouncements**

<u>General</u>

Arch Capital Group Ltd. ("Arch Capital") is a publicly listed Bermuda exempted company which provides insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly-owned subsidiaries. As used herein, the "Company" and/or "Arch" means Arch Capital and its subsidiaries.

<u>Basis of Presentation</u>

The interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). All significant intercompany transactions and balances have been eliminated in consolidation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates and assumptions. In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of results on an interim basis. The results of any interim period are not necessarily indicative of the results for a full year or any future periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted; however, management believes that the disclosures are adequate to make the information presented not misleading. This report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Form 10-K"), including the Company's audited consolidated financial statements and related notes.

The Company has reclassified the presentation of certain prior year information to conform to the current presentation. Such reclassifications had no effect on the Company's net income, comprehensive income, shareholders' equity or cash flows. All amounts are in millions, except per share amounts, unless otherwise noted.

<u>Recent Accounting Pronouncements</u>

For information regarding additional accounting standards that the Company has not yet adopted, see note 3(t), "Significant Accounting Policies—Recent Accounting Pronouncements," of the notes to consolidated financial statements in the Company's 2024 Form 10-K.

**2.&nbsp;&nbsp;&nbsp;&nbsp;Acquisition**

On August 1, 2024, the Company completed the acquisition of the U.S MidCorp and Entertainment insurance business from Allianz ("MCE Acquisition"). This business is written by Fireman's Fund Insurance Company, an affiliate of Allianz, and its subsidiaries (collectively, the "Business Entities"), in each case, relating to relevant policies with accident years 2016 and onwards (collectively, the "Business"), as well as certain assets of Allianz and its affiliates related to the Business. In connection with the acquisition of the Business, the Company also entered into certain reinsurance agreements relating to the Business and the Business Entities and other agreements providing for administration and other services for the Business Entities by the Company for the applicable policies being reinsured following the closing. The acquisition of the Business is an important part of the Company's growth strategy, and provides a ballast to our existing insurance business. It further enhances the Company's capabilities in the U.S. middle markets and represents an attractive way to enter a new niche entertainment insurance market.

Aggregate cash consideration for the transaction was $450 million. Direct costs related to the acquisition are immaterial, and were expensed as incurred. These include one-time costs that are directly attributable to third party consulting fees and other professional and legal fees related to the acquisition. Such costs are included within 'corporate expenses' in the consolidated statement of income. The Business acquired is included within the Company's insurance segment beginning from the acquisition date.

The MCE Acquisition was accounted for as a business combination under FASB Accounting Standards Codification Topic 805, Business Combinations ("Topic 805"). Pursuant to Topic 805, the Company allocated the MCE Acquisition purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values was recorded to goodwill. During the measurement period, the Company adjusted the provisional amounts to reflect new information obtained about facts and circumstances that existed as of the Acquisition Date, which, if known, would have affected the measurement of the amounts recognized as of that date. Such adjustments impacted certain identifiable assets acquired and liabilities assumed, resulting in a decrease to net assets acquired and a corresponding increase to goodwill of $10 million. The Company completed the analysis of the fair value of the assets, liabilities assumed and the related allocation of the purchase price during the three month period ended June 30, 2025.

ARCH CAPITAL 10 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

The following table summarizes the Company's allocation of the purchase price to the acquired assets and liabilities assumed based on estimated fair values on August 1, 2024.

---

| | | |
|:---|:---|:---|
| | **Total** | **Useful Life** |
| **Purchase price** | | |
| Cash paid (a) | $450 |  |
| **Assets Acquired** |  |  |
| Cash and investments, at fair value | $2332 |  |
| Premiums receivable, net of commissions | 224 |  |
| Intangible asset -- distribution relationships | 220 | 10 years |
| Intangible asset -- value of business acquired | 165 | 1-2 years |
| Intangible asset -- other (1) | 180 | 5-7 years |
| Other assets acquired | 175 |  |
| Total assets acquired | $3296 |  |
| **Liabilities Acquired** |  |  |
| Reserves for losses and loss adjustment expenses | $2468 |  |
| Unearned premiums | 636 |  |
| Other liabilities acquired | 18 |  |
| Total liabilities acquired | 3122 |  |
| Identifiable net assets acquired (b) | $174 |  |
| Goodwill (a) - (b) | $276 |  |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Includes $130 million related to the net fair value adjustment to reserves for loss and loss adjustment expenses on August 1, 2024.

The Company recognized goodwill of $276 million that is primarily attributed to the expanded presence and long-term growth opportunities in the insurance market provided by this strategic acquisition. Approximately $565 million of the acquired goodwill and intangibles is expected to be deductible for income tax purposes. At the date of the acquisition, the Company established a net deferred tax asset of $24 million related to the estimated fair value of reserves for losses and loss adjustment expenses and unearned premiums.

Intangible assets resulting from the acquisition are amortized as part of 'amortization of intangible assets' in the Company's consolidated statements of income. The significant fair value adjustments and related future amortization are as follows:

*Value of business acquired ("VOBA")—* which represents the present value of the expected underwriting profit within the unearned premium liability, less costs to service the related policies and a risk premium. The fair value of VOBA was determined after taking into consideration certain key assumptions, including the estimated cost of capital, investment yield, loss ratio and related expenses.

*Reserves for losses and loss adjustment expenses—*to reflect a decrease related to the present value of the reserve for losses and loss adjustment expenses based on the estimated payout patterns, partially offset by an increase in losses and loss adjustment expenses related to the estimated market based risk margin. The risk margin represents the estimated costs of capital required by a market participant to assume the losses and loss adjustment expenses. The fair value of the reserve for losses and loss adjustment expenses was determined after taking into consideration certain key assumptions, including the estimated cost of capital, and investment yield.

*Distribution relationships—*the value of the distribution relationships was determined after taking into consideration certain key assumptions, including the estimated cost of capital, investment yield, retention rates, loss ratios, related expenses and effective tax rates that would impact the expected cash flows from Business policies written on a go forward basis.

The results of the acquired Business have been included in the Company's consolidated financial statements beginning as of their acquisition date. It is impracticable to provide historical supplemental pro forma financial information along with revenue and earnings subsequent to the acquisition due to a variety of factors, including access to historical information and the operations of acquirees being integrated within the Company shortly after closing and not operating as discrete operations within the Company's organizational structure.

**3.&nbsp;&nbsp;&nbsp;&nbsp;Share Transactions**

<u>Share Repurchases</u>

The Board of Directors of Arch Capital has authorized the investment in Arch Capital's common shares through a share repurchase program. Since the inception of the share repurchase program, Arch Capital has repurchased 437.9 million common shares for an aggregate purchase price of $6.3 billion. For the six months ended June 30, 2025, Arch Capital repurchased 4.1 million shares under the share repurchase program with an aggregate purchase price of $359.7 million. Arch Capital did not repurchase any shares under the share repurchase program during the six months ended June 30, 2024. At June 30, 2025, $637.1 million of share repurchases were available under the program, which may be effected from time to time in open market or privately negotiated transactions. The timing and amount of the repurchase transactions under this program will depend on a variety of factors, including market conditions and corporate and regulatory considerations.

ARCH CAPITAL 11 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**4.&nbsp;&nbsp;&nbsp;&nbsp;Earnings Per Common Share**

The following table sets forth the computation of basic and diluted earnings per common share:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| **Numerator:** |  |  |  |  |
| Net income (loss) available to Arch | $1237 | $1269 | $1811 | $2389 |
| Preferred dividends | (10) | (10) | (20) | (20) |
| &nbsp;&nbsp;&nbsp;Net income (loss) available to Arch common shareholders | $1227 | $1259 | $1791 | $2369 |
| **Denominator:** |  |  |  |  |
| Weighted average common shares and common share equivalents outstanding — basic | 372.2 | 372.7 | 372.6 | 371.8 |
| Effect of dilutive common share equivalents: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Nonvested restricted shares | 1.6 | 1.8 | 1.7 | 1.9 |
| &nbsp;&nbsp;&nbsp;Stock options (1) | 6.1 | 7.1 | 6.5 | 7.2 |
| Weighted average common shares and common share equivalents outstanding — diluted | 379.9 | 381.6 | 380.8 | 380.9 |
| Earnings per common share: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic | $3.30 | $3.38 | $4.81 | $6.37 |
| &nbsp;&nbsp;&nbsp;Diluted | $3.23 | $3.30 | $4.70 | $6.22 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Certain stock options were not included in the computation of diluted earnings per share where the exercise price of the stock options exceeded the average market price and would have been anti-dilutive or where, when applying the treasury stock method to in-the-money options, the sum of the proceeds, including unrecognized compensation, exceeded the average market price and would have been anti-dilutive. For the 2025 second quarter and 2024 second quarter, the number of stock options excluded were 2.2 million and 0.2 million, respectively. For the six months ended June 30, 2025 and 2024, the number of stock options excluded were 2.4 million and 0.4 million, respectively.

ARCH CAPITAL 12 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**5.&nbsp;&nbsp;&nbsp;&nbsp;Segment Information**

The Company's insurance, reinsurance and mortgage segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to the Company's chief operating decision makers ("CODM"). The Chief Executive Officer and the Chief Financial Officer and Treasurer are the Company's CODMs. CODMs do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis. Management measures segment performance for its three reportable segments based on underwriting income or loss. The Company does not manage its assets by segment, with the exception of goodwill and intangible assets, and accordingly, investment income is not allocated to each segment.

The Company determined its segments using the management approach described in accounting guidance regarding disclosures about segments of an enterprise and related information. The accounting policies of the segments are the same as those used for the preparation of the Company's consolidated financial statements. Intersegment business is allocated to the segment accountable for the underwriting results.

The Company's insurance segment primarily consists of commercial insurance lines of business, with a focus on specialty insurance products. These products are mainly offered in North America, Bermuda, the United Kingdom, continental Europe and Australia. Products offered in North America include: commercial automobile; commercial multi-peril; other liability—claims made, which includes financial and professional lines; other liability—occurrence, which includes admitted and excess and surplus casualty lines; property and short-tail specialty; workers compensation; and other. Products offered across the Company's International units include: property and short-tail specialty; and casualty and other.

The Company's reinsurance segment offers reinsurance products on a worldwide basis. Product lines of business include: casualty; marine and aviation; specialty; property catastrophe; property excluding property catastrophe; and other.

The Company's mortgage segment consists of U.S. primary mortgage insurance business written predominantly on loans sold to the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac"), each a government sponsored entity ("GSE") and also through non GSE approved entities (combined "Arch MI U.S."); reinsurance and underwriting services related to U.S. credit-risk transfer ("CRT") business which are predominately with the GSEs and other U.S. mortgage reinsurance transactions; and international mortgage insurance and reinsurance business covering loans primarily in Australia and Europe.

The Company's results also include net investment income, net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investments accounted for using the equity method, other income (loss), corporate expenses, transaction costs and other, amortization of intangible assets, interest expense, net foreign exchange gains or losses, income tax items, income or loss from operating affiliates and items related to the Company's non-cumulative preferred shares.

ARCH CAPITAL 13 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

The following tables summarize the Company's underwriting income or loss by segment, together with a reconciliation of underwriting income or loss to net income available to Arch common shareholders:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |
| | **June 30, 2025** | **June 30, 2025** | **June 30, 2025** | **June 30, 2025** |
| | **Insurance** | **Reinsurance** | **Mortgage** | **Total** |
| Gross premiums written (1) | $2681 | $3196 | $323 | $6196 |
| Premiums ceded (1) | (645) | (1137) | (70) | (1848) |
| Net premiums written | 2036 | 2059 | 253 | 4348 |
| Change in unearned premiums | (67) | 28 | 28 | (11) |
| Net premiums earned | 1969 | 2087 | 281 | 4337 |
| Other underwriting income (2) | 13 | 46 | 3 | 62 |
| Losses and loss adjustment expenses | (1178) | (1128) | 3 | (2303) |
| Acquisition expenses | (387) | (436) | (1) | (824) |
| Other operating expenses (3) | (288) | (118) | (48) | (454) |
| **Underwriting income (loss)** | $129 | $451 | $238 | 818 |
| Net investment income |  |  |  | 405 |
| Net realized gains (losses) |  |  |  | 229 |
| Equity in net income of investments accounted for using the equity method |  |  |  | 162 |
| Other income (loss) |  |  |  | 18 |
| Corporate expenses (4) |  |  |  | (29) |
| Transaction costs and other (4) |  |  |  | (18) |
| Amortization of intangible assets |  |  |  | (48) |
| Interest expense |  |  |  | (38) |
| Net foreign exchange gains (losses) |  |  |  | (88) |
| **Income (loss) before income taxes and income (loss) from operating affiliates** |  |  |  | 1411 |
| Income tax (expense) benefit |  |  |  | (214) |
| Income (loss) from operating affiliates |  |  |  | 40 |
| **Net income (loss) available to Arch** |  |  |  | 1237 |
| Preferred dividends |  |  |  | (10) |
| **Net income (loss) available to Arch common shareholders** |  |  |  | $1227 |
| **Underwriting Ratios** |  |  |  |  |
| Loss ratio | 59.8% | 54.1% | (1.2)% | 53.1% |
| Acquisition expense ratio | 19.6% | 20.9% | 0.4% | 19.0% |
| Other operating expense ratio (5) | 14.0% | 3.5% | 16.0% | 9.1% |
| Combined ratio | 93.4% | 78.5% | 15.2% | 81.2% |
| Goodwill and intangible assets | $875 | $105 | $339 | $1319 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Certain assumed and ceded amounts related to intersegment transactions are included in individual segment results. Accordingly, the sum of such transactions for each segment does not agree to the total due to eliminations.

(2)&nbsp;&nbsp;&nbsp;&nbsp;'Other underwriting income' includes revenue earned from underwriting-related activities covered under existing service contracts.

(3)&nbsp;&nbsp;&nbsp;&nbsp;'Other operating expenses' primarily include expenses that are related to compensation and employee benefits, information technology and professional fees.

(4)&nbsp;&nbsp;&nbsp;&nbsp;Certain expenses have been excluded from 'Corporate expenses' and reflected in 'Transaction costs and other.'

(5)&nbsp;&nbsp;&nbsp;&nbsp;The 'Other operating expense ratio' for the 2025 period includes 'Other underwriting income.'

ARCH CAPITAL 14 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |
| | **June 30, 2024** | **June 30, 2024** | **June 30, 2024** | **June 30, 2024** |
| | **Insurance** | **Reinsurance** | **Mortgage** | **Total** |
| Gross premiums written (1) | $2102 | $2941 | $340 | $5382 |
| Premiums ceded (1) | (544) | (994) | (64) | (1601) |
| Net premiums written | 1558 | 1947 | 276 | 3781 |
| Change in unearned premiums | (80) | (167) | 31 | (216) |
| Net premiums earned | 1478 | 1780 | 307 | 3565 |
| Other underwriting income |  | 1 | 2 | 3 |
| Losses and loss adjustment expenses | (848) | (1006) | 27 | (1827) |
| Acquisition expenses | (288) | (345) |  | (633) |
| Other operating expenses (2) | (233) | (64) | (49) | (346) |
| **Underwriting income (loss)** | $109 | $366 | $287 | 762 |
| Net investment income |  |  |  | 364 |
| Net realized gains (losses) |  |  |  | 122 |
| Equity in net income of investments accounted for using the equity method |  |  |  | 167 |
| Other income (loss) |  |  |  | 8 |
| Corporate expenses (3) |  |  |  | (23) |
| Transaction costs and other (3) |  |  |  | (18) |
| Amortization of intangible assets |  |  |  | (27) |
| Interest expense |  |  |  | (35) |
| Net foreign exchange gains (losses) |  |  |  | 1 |
| **Income (loss) before income taxes and income (loss) from operating affiliates** |  |  |  | 1321 |
| Income tax (expense) benefit |  |  |  | (97) |
| Income (loss) from operating affiliates |  |  |  | 45 |
| **Net income (loss) available to Arch** |  |  |  | 1269 |
| Preferred dividends |  |  |  | (10) |
| **Net income (loss) available to Arch common shareholders** |  |  |  | $1259 |
| **Underwriting Ratios** |  |  |  |  |
| Loss ratio | 57.3% | 56.5% | (8.6)% | 51.2% |
| Acquisition expense ratio | 19.5% | 19.4% | 0.1% | 17.8% |
| Other operating expense ratio | 15.8% | 3.6% | 15.9% | 9.7% |
| Combined ratio | 92.6% | 79.5% | 7.4% | 78.7% |
| Goodwill and intangible assets | $255 | $114 | $356 | $725 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Certain assumed and ceded amounts related to intersegment transactions are included in individual segment results. Accordingly, the sum of such transactions for each segment does not agree to the total due to eliminations.

(2)&nbsp;&nbsp;&nbsp;&nbsp;'Other operating expenses' primarily include expenses that are related to compensation and employee benefits, information technology and professional fees.

(3)&nbsp;&nbsp;&nbsp;&nbsp;Certain expenses have been excluded from 'Corporate expenses' and reflected in 'Transaction costs and other.'

ARCH CAPITAL 15 2025 SECOND QUARTER FORM 10-Q

------

<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Six Months Ended** | **Six Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 30, 2025** | **June 30, 2025** | **June 30, 2025** | **June 30, 2025** |
| | **Insurance** | **Reinsurance** | **Mortgage** | **Total** |
| Gross premiums written (1) | $5326 | $6690 | $649 | $12659 |
| Premiums ceded (1) | (1357) | (2315) | (130) | (3796) |
| Net premiums written | 3969 | 4375 | 519 | 8863 |
| Change in unearned premiums | (140) | (260) | 62 | (338) |
| Net premiums earned | 3829 | 4115 | 581 | 8525 |
| Other underwriting income (2) | 16 | 85 | 14 | 115 |
| Losses and loss adjustment expenses | (2406) | (2484) |  | (4890) |
| Acquisition expenses | (730) | (853) | (5) | (1588) |
| Other operating expenses (3) | (582) | (245) | (100) | (927) |
| **Underwriting income (loss)** | $127 | $618 | $490 | 1235 |
| Net investment income |  |  |  | 783 |
| Net realized gains (losses) |  |  |  | 232 |
| Equity in net income of investments accounted for using the equity method |  |  |  | 215 |
| Other income (loss) |  |  |  | 16 |
| Corporate expenses (4) |  |  |  | (79) |
| Transaction costs and other (4) |  |  |  | (28) |
| Amortization of intangible assets |  |  |  | (97) |
| Interest expense |  |  |  | (73) |
| Net foreign exchange gains (losses) |  |  |  | (115) |
| **Income (loss) before income taxes and income (loss) from operating affiliates** |  |  |  | 2089 |
| Income tax (expense) benefit |  |  |  | (335) |
| Income (loss) from operating affiliates |  |  |  | 57 |
| **Net income (loss) available to Arch** |  |  |  | 1811 |
| Preferred dividends |  |  |  | (20) |
| **Net income (loss) available to Arch common shareholders** |  |  |  | $1791 |
| **Underwriting Ratios** |  |  |  |  |
| Loss ratio | 62.8% | 60.4% | —% | 57.4% |
| Acquisition expense ratio | 19.1% | 20.7% | 0.9% | 18.6% |
| Other operating expense ratio (5) | 14.8% | 3.9% | 14.9% | 9.5% |
| Combined ratio | 96.7% | 85.0% | 15.8% | 85.5% |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Certain assumed and ceded amounts related to intersegment transactions are included in individual segment results. Accordingly, the sum of such transactions for each segment does not agree to the total due to eliminations.

(2)&nbsp;&nbsp;&nbsp;&nbsp;'Other underwriting income' includes revenue earned from underwriting-related activities covered under existing service contracts.

(3)&nbsp;&nbsp;&nbsp;&nbsp;'Other operating expenses' primarily include expenses that are related to compensation and employee benefits, information technology and professional fees.

(4)&nbsp;&nbsp;&nbsp;&nbsp;Certain expenses have been excluded from 'Corporate expenses' and reflected in 'Transaction costs and other.'

(5)&nbsp;&nbsp;&nbsp;&nbsp;The 'Other operating expense ratio' for the 2025 period includes 'Other underwriting income.'

ARCH CAPITAL 16 2025 SECOND QUARTER FORM 10-Q

------

<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Six Months Ended** | **Six Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 30, 2024** | **June 30, 2024** | **June 30, 2024** | **June 30, 2024** |
| | **Insurance** | **Reinsurance** | **Mortgage** | **Total** |
| Gross premiums written (1) | $4228 | $6408 | $681 | $11315 |
| Premiums ceded (1) | (1128) | (2195) | (128) | (3449) |
| Net premiums written | 3100 | 4213 | 553 | 7866 |
| Change in unearned premiums | (171) | (767) | 59 | (879) |
| Net premiums earned | 2929 | 3446 | 612 | 6987 |
| Other underwriting income |  | 3 | 12 | 15 |
| Losses and loss adjustment expenses | (1702) | (1889) | 36 | (3555) |
| Acquisition expenses | (564) | (676) |  | (1240) |
| Other operating expenses (2) | (468) | (139) | (102) | (709) |
| **Underwriting income (loss)** | $195 | $745 | $558 | 1498 |
| Net investment income |  |  |  | 691 |
| Net realized gains (losses) |  |  |  | 189 |
| Equity in net income of investments accounted for using the equity method |  |  |  | 266 |
| Other income (loss) |  |  |  | 22 |
| Corporate expenses (3) |  |  |  | (69) |
| Transaction costs and other (3) |  |  |  | (25) |
| Amortization of intangible assets |  |  |  | (48) |
| Interest expense |  |  |  | (69) |
| Net foreign exchange gains (losses) |  |  |  | 32 |
| **Income (loss) before income taxes and income (loss) from operating affiliates** |  |  |  | 2487 |
| Income tax (expense) benefit |  |  |  | (198) |
| Income (loss) from operating affiliates |  |  |  | 100 |
| **Net income (loss) available to Arch** |  |  |  | 2389 |
| Preferred dividends |  |  |  | (20) |
| **Net income (loss) available to Arch common shareholders** |  |  |  | $2369 |
| **Underwriting Ratios** |  |  |  |  |
| Loss ratio | 58.1% | 54.8% | (5.8)% | 50.9% |
| Acquisition expense ratio | 19.2% | 19.6% | 0.1% | 17.7% |
| Other operating expense ratio | 16.0% | 4.0% | 16.7% | 10.1% |
| Combined ratio | 93.3% | 78.4% | 11.0% | 78.7% |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Certain assumed and ceded amounts related to intersegment transactions are included in individual segment results. Accordingly, the sum of such transactions for each segment does not agree to the total due to eliminations.

(2)&nbsp;&nbsp;&nbsp;&nbsp;'Other operating expenses' primarily include expenses that are related to compensation and employee benefits, information technology and professional fees.

(3)&nbsp;&nbsp;&nbsp;&nbsp;Certain expenses have been excluded from 'Corporate expenses' and reflected in 'Transaction costs and other.'

ARCH CAPITAL 17 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**6.&nbsp;&nbsp;&nbsp;&nbsp;Reserve for Losses and Loss Adjustment Expenses**

The following table represents an analysis of losses and loss adjustment expenses and a reconciliation of the beginning and ending reserve for losses and loss adjustment expenses:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| &nbsp;&nbsp;Reserve for losses and loss adjustment expenses at beginning of period | $30946 | $23705 | $29369 | $22752 |
| &nbsp;&nbsp;Unpaid losses and loss adjustment expenses recoverable | 8379 | 7069 | 7821 | 6690 |
| &nbsp;&nbsp;Net reserve for losses and loss adjustment expenses at beginning of period | 22567 | 16636 | 21548 | 16062 |
| &nbsp;&nbsp;Net incurred losses and loss adjustment expenses relating to losses occurring in: |  |  |  |  |
| &nbsp;&nbsp;Current year | 2456 | 1948 | 5240 | 3800 |
| &nbsp;&nbsp;Prior years | (153) | (121) | (350) | (245) |
| &nbsp;&nbsp;&nbsp;Total net incurred losses and loss adjustment expenses | 2303 | 1827 | 4890 | 3555 |
| &nbsp;&nbsp;Net losses and loss adjustment expense reserves of acquired businesses (1) | 50 | 50 | 50 | 50 |
| &nbsp;&nbsp;Net foreign exchange (gains) losses and other | 400 | (10) | 593 | (94) |
| &nbsp;&nbsp;Net paid losses and loss adjustment expenses relating to losses occurring in: |  |  |  |  |
| &nbsp;&nbsp;Current year | (424) | (193) | (865) | (285) |
| &nbsp;&nbsp;Prior years | (1320) | (927) | (2640) | (1905) |
| &nbsp;&nbsp;&nbsp;Total net paid losses and loss adjustment expenses | (1744) | (1120) | (3505) | (2190) |
| &nbsp;&nbsp;Net reserve for losses and loss adjustment expenses at end of period | 23576 | 17383 | 23576 | 17383 |
| &nbsp;&nbsp;Unpaid losses and loss adjustment expenses recoverable | 8513 | 7083 | 8513 | 7083 |
| &nbsp;&nbsp;Reserve for losses and loss adjustment expenses at end of period | $32089 | $24466 | $32089 | $24466 |

---

(1) &nbsp;&nbsp;&nbsp;&nbsp;Activity in the 2025 periods related to the MCE Acquisition (see <u>[note 2](#i8c1a838c8b384cbd8c3d99c9af25908b_43)</u>). Activity in the 2024 periods related to the acquisition of RMIC Companies, Inc. and its wholly-owned subsidiaries that, together, comprise the run-off mortgage insurance business of Old Republic International Corporation.

Prior year development ("PYD") arises from changes in loss estimates during the current period related to events occurring in prior calendar years. Long-tailed lines include lines of business that typically take many years for claims to settle such as third-party liability; short-tailed lines are those that settle more quickly such as property. The table below summarizes (favorable) and adverse net PYD by segment and tail length:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** | **Six Months Ended** |
| **(Favorable) Adverse** | **June 30,** | **June 30,** | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
| &nbsp;&nbsp;**2025** | **Short-tailed** | **Long-tailed** | **Total** | **Short-tailed** | **Long-tailed** | **Total** |
| &nbsp;&nbsp;Insurance | $(13) | $5 | $(8) | $(28) | $3 | $(25) |
| &nbsp;&nbsp;Reinsurance | (75) | (6) | (81) | (202) | 2 | (200) |
| &nbsp;&nbsp;Mortgage | (64) |  | (64) | (125) |  | (125) |
| &nbsp;&nbsp;&nbsp;Total | $(152) | $(1) | $(153) | $(355) | $5 | $(350) |
| &nbsp;&nbsp;**2024** |  |  |  |  |  |  |
| &nbsp;&nbsp;Insurance | $(13) | $8 | $(5) | $(30) | $15 | $(15) |
| &nbsp;&nbsp;Reinsurance | (48) | 14 | (34) | (91) | 17 | (74) |
| &nbsp;&nbsp;Mortgage | (82) |  | (82) | (156) |  | (156) |
| &nbsp;&nbsp;&nbsp;Total | $(143) | $22 | $(121) | $(277) | $32 | $(245) |

---

ARCH CAPITAL 18 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

*2025 Second Quarter*

The insurance segment's short-tailed lines included $7 million of favorable development in travel and accident, primarily from the 2024 accident year (*i.e.*, the year in which a loss occurred). Long-tailed lines included $14 million of adverse development in programs business, primarily from the 2018 and 2023 accident years.

The reinsurance segment's short-tailed lines included $60 million of favorable development from property other than property catastrophe business, primarily from the 2023 and 2024 underwriting years (*i.e.*, all premiums and losses attributable to contracts having an inception or renewal date within the given 12 month period). Long-tailed lines included $6 million of favorable development, primarily from the 2022 to 2023 underwriting years.

The mortgage segment's favorable development was driven by reductions on reserves for delinquent loans associated with the U.S. first lien portfolio from the 2024 accident year, with the credit risk transfer and international businesses also contributing.

*2024 Second Quarter*

The insurance segment's short-tailed lines included $20 million of favorable development in surety business, primarily from the 2007 accident year, partially offset by $15 million of adverse development in property, energy, marine and aviation business, primarily from the 2022 accident year. Long-tailed lines included $9 million of adverse development in programs business, primarily from the 2022 and 2023 accident years.

The reinsurance segment's short-tailed lines included $30 million of favorable development related to property other than property catastrophe business, primarily from the 2022 and 2023 underwriting years. Long-tailed lines included $14 million of adverse development in casualty, primarily from the 2020 and 2021 underwriting years.

The mortgage segment's favorable development was driven by reserve releases associated with the U.S. first lien portfolio from the 2023 accident year, with the credit risk transfer and international businesses also contributing to the favorable development.

*Six Months Ended June 30, 2025*

The insurance segment's short-tailed lines included $15 million of favorable development in travel and accident, primarily from the 2023 and 2024 accident years, and $11 million of favorable development in property, energy, marine and aviation, primarily from the 2024 accident year.

The reinsurance segment's short-tailed lines included $89 million of favorable development from property other than property catastrophe business and $86 million of favorable development from property catastrophe, primarily from the 2023 and 2024 underwriting years for both lines.

The mortgage segment's favorable development was driven by reserve releases associated with the U.S. first lien portfolio from the 2024 accident year, with the credit risk transfer and international businesses also contributed to the favorable development.

*Six Months Ended June 30, 2024*

The insurance segment's short-tailed lines included $25 million of favorable development surety business, primarily from the 2007 and 2022 accident years. Long-tailed lines included $17 million of adverse development in programs business, primarily from the 2020 to 2023 accident years.

The reinsurance segment's short-tailed lines included $51 million of favorable development from property other than property catastrophe business, primarily from the 2022 and 2023 underwriting years and $37 million of favorable development from other specialty business, primarily from the 2021 and 2022 underwriting years. Long-tailed lines included $17 million of adverse development in casualty, primarily from the 2017 underwriting year.

The mortgage segment's favorable development was driven by reserve releases associated with the U.S. first lien portfolio from the 2022 to 2023 accident years, with the credit risk transfer and international businesses also contributing to the favorable development.

ARCH CAPITAL 19 2025 SECOND QUARTER FORM 10-Q

------

<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**7.&nbsp;&nbsp;&nbsp;&nbsp;Allowance for Expected Credit Losses**

<u>Premiums Receivable</u>

The following table provides a roll forward of the allowance for expected credit losses of the Company's premium receivables:

---

| | | |
|:---|:---|:---|
| | **Premium Receivables, Net of Allowance** | **Allowance for Expected Credit Losses** |
| **<u>Three Months Ended June 30, 2025</u>** | **<u>Three Months Ended June 30, 2025</u>** | |
| Balance at beginning of period | $6607 | $43 |
| Change for provision of expected credit losses (1) | Change for provision of expected credit losses (1) | 3 |
| Balance at end of period | $7067 | $46 |
| **<u>Three Months Ended June 30, 2024</u>** | **<u>Three Months Ended June 30, 2024</u>** |  |
| Balance at beginning of period | $5765 | $32 |
| Change for provision of expected credit losses (1) | Change for provision of expected credit losses (1) | 4 |
| Balance at end of period | $6268 | $36 |
| **<u>Six Months Ended June 30, 2025</u>** |  |  |
| Balance at beginning of year | $5634 | $45 |
| Change for provision of expected credit losses (1) | Change for provision of expected credit losses (1) | 1 |
| Balance at end of period | $7067 | $46 |
| **<u>Six Months Ended June 30, 2024</u>** |  |  |
| Balance at beginning of year | $4644 | $34 |
| Change for provision of expected credit losses (1) | Change for provision of expected credit losses (1) | 2 |
| Balance at end of period | $6268 | $36 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Amounts deemed uncollectible are written-off in operating expenses. For the 2025 second quarter and 2024 second quarter, amounts written off were $1 million and nil, respectively. For the six months ended June 30, 2025 and 2024 period, amounts written off were $1 million and nil, respectively.

<u>Reinsurance Recoverables</u>

The following table provides a roll forward of the allowance for expected credit losses of the Company's reinsurance recoverables:

---

| | | |
|:---|:---|:---|
| | **Reinsurance Recoverables, Net of Allowance** | **Allowance for Expected Credit Losses** |
| **<u>Three Months Ended June 30, 2025</u>** | **<u>Three Months Ended June 30, 2025</u>** | |
| Balance at beginning of period | $8969 | $17 |
| Change for provision of expected credit losses | Change for provision of expected credit losses | 2 |
| Balance at end of period | $9044 | $19 |
| **<u>Three Months Ended June 30, 2024</u>** | **<u>Three Months Ended June 30, 2024</u>** |  |
| Balance at beginning of period | $7509 | $16 |
| Change for provision of expected credit losses | Change for provision of expected credit losses | 4 |
| Balance at end of period | $7473 | $20 |
| **<u>Six Months Ended June 30, 2025</u>** |  |  |
| Balance at beginning of year | $8260 | $17 |
| Change for provision of expected credit losses | Change for provision of expected credit losses | 2 |
| Balance at end of period | $9044 | $19 |
| **<u>Six Months Ended June 30, 2024</u>** |  |  |
| Balance at beginning of year | $7064 | $21 |
| Change for provision of expected credit losses | Change for provision of expected credit losses | (1) |
| Balance at end of period | $7473 | $20 |

---

ARCH CAPITAL 20 2025 SECOND QUARTER FORM 10-Q

------

<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

The following table summarizes the Company's reinsurance recoverables on paid and unpaid losses (not including ceded unearned premiums):

---

| | | |
|:---|:---|:---|
| | **June 30,** | **December 31,** |
| | **2025** | **2024** |
| Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | $9044 | $8260 |
| % due from carriers with A.M. Best rating of "A-" or better | 62.5% | 63.8% |
| % due from all other carriers with no A.M. Best rating (1) | 37.5% | 36.2% |
| Largest balance due from any one carrier as % of total shareholders' equity | 7.9% | 7.8% |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;At June 30, 2025 and December 31, 2024 over 95% of such amount were collateralized through reinsurance trusts, funds withheld arrangements, letters of credit or other.

<u>Contractholder Receivables</u>

The following table provides a roll forward of the allowance for expected credit losses of the Company's contractholder receivables:

---

| | | |
|:---|:---|:---|
| | **Contract-holder Receivables, Net of Allowance** | **Allowance for Expected Credit Losses** |
| **<u>Three Months Ended June 30, 2025</u>** | **<u>Three Months Ended June 30, 2025</u>** | |
| Balance at beginning of period | $2212 | $6 |
| Change for provision of expected credit losses | Change for provision of expected credit losses |  |
| Balance at end of period | $2280 | $6 |
| **<u>Three Months Ended June 30, 2024</u>** | **<u>Three Months Ended June 30, 2024</u>** |  |
| Balance at beginning of period | $1907 | $3 |
| Change for provision of expected credit losses | Change for provision of expected credit losses | 1 |
| Balance at end of period | 2016 | $4 |
| **<u>Six Months Ended June 30, 2025</u>** |  |  |
| Balance at beginning of year | $2161 | $5 |
| Change for provision of expected credit losses | Change for provision of expected credit losses | 1 |
| Balance at end of period | $2280 | $6 |
| **<u>Six Months Ended June 30, 2024</u>** |  |  |
| Balance at beginning of year | $1814 | $3 |
| Change for provision of expected credit losses | Change for provision of expected credit losses | 1 |
| Balance at end of period | 2016 | $4 |

---

ARCH CAPITAL 21 2025 SECOND QUARTER FORM 10-Q

------

<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**8.&nbsp;&nbsp;&nbsp;&nbsp;Investment Information**

<u>Available For Sale Investments</u>

The following table summarizes the fair value and cost or amortized cost of the Company's securities classified as available for sale:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Estimated<br>Fair<br>Value** | **Gross<br>Unrealized<br>Gains** | **Gross<br>Unrealized<br>Losses** | **Allowance for Expected Credit Losses** | **Cost or<br>Amortized<br>Cost** |
| **<u>June 30, 2025</u>** | | | | | |
| Fixed maturities: |  |  |  |  |  |
| Corporate bonds | $14429 | $273 | $(218) | $(16) | $14390 |
| U.S. government and government agencies | 6585 | 38 | (48) |  | 6595 |
| Asset backed securities | 2770 | 18 | (20) | (10) | 2782 |
| Non-U.S. government securities | 3149 | 82 | (70) | (2) | 3139 |
| Commercial mortgage backed securities | 838 | 7 | (7) |  | 838 |
| Residential mortgage backed securities | 2386 | 24 | (24) |  | 2386 |
| Municipal bonds | 175 |  | (7) |  | 182 |
| &nbsp;&nbsp;&nbsp;Total | 30332 | 442 | (394) | (28) | 30312 |
| Short-term investments | 2788 | 3 | (1) |  | 2786 |
| &nbsp;&nbsp;&nbsp;Total | $33120 | $445 | $(395) | $(28) | $33098 |
| **<u>December 31, 2024</u>** |  |  |  |  |  |
| Fixed maturities: |  |  |  |  |  |
| Corporate bonds | $12487 | $110 | $(346) | $(12) | $12735 |
| U.S. government and government agencies | 6710 | 8 | (149) |  | 6851 |
| Asset backed securities | 2900 | 19 | (32) | (8) | 2921 |
| Non-U.S. government securities | 2538 | 30 | (107) | (1) | 2616 |
| Commercial mortgage backed securities | 1058 | 6 | (11) | (1) | 1064 |
| Residential mortgage backed securities | 1079 | 6 | (31) |  | 1104 |
| Municipal bonds | 263 |  | (16) |  | 279 |
| &nbsp;&nbsp;&nbsp;Total | 27035 | 179 | (692) | (22) | 27570 |
| Short-term investments | 2784 | 2 | (2) |  | 2784 |
| &nbsp;&nbsp;&nbsp;Total | $29819 | $181 | $(694) | $(22) | $30354 |

---

ARCH CAPITAL 22 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

The following table summarizes, for all available for sale securities in an unrealized loss position, the fair value and gross unrealized loss by length of time the security has been in a continual unrealized loss position:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Less than 12 Months** | **Less than 12 Months** | **12 Months or More** | **12 Months or More** | **Total** | **Total** |
| | **Estimated<br>Fair<br>Value** | **Gross<br>Unrealized<br>Losses** | **Estimated<br>Fair<br>Value** | **Gross<br>Unrealized<br>Losses** | **Estimated<br>Fair<br>Value** | **Gross<br>Unrealized<br>Losses** |
| **<u>June 30, 2025</u>** | | | | | | |
| Fixed maturities: |  |  |  |  |  |  |
| Corporate bonds | $1944 | $(83) | $2043 | $(135) | $3987 | $(218) |
| U.S. government and government agencies | 1727 | (29) | 308 | (19) | 2035 | (48) |
| Non-U.S. government securities | 1132 | (25) | 395 | (45) | 1527 | (70) |
| Residential mortgage backed securities | 158 | (3) | 175 | (21) | 333 | (24) |
| Asset backed securities | 497 | (4) | 348 | (16) | 845 | (20) |
| Commercial mortgage backed securities | 276 | (2) | 188 | (5) | 464 | (7) |
| Municipal bonds | 15 |  | 147 | (7) | 162 | (7) |
| &nbsp;&nbsp;&nbsp;Total | 5749 | (146) | 3604 | (248) | 9353 | (394) |
| Short-term investments | 394 | (1) |  |  | 394 | (1) |
| &nbsp;&nbsp;&nbsp;Total | $6143 | $(147) | $3604 | $(248) | $9747 | $(395) |
| **<u>December 31, 2024</u>** |  |  |  |  |  |  |
| Fixed maturities: |  |  |  |  |  |  |
| Corporate bonds | $4582 | $(114) | $2924 | $(232) | $7506 | $(346) |
| U.S. government and government agencies | 5130 | (100) | 516 | (49) | 5646 | (149) |
| Non-U.S. government securities | 1650 | (58) | 418 | (49) | 2068 | (107) |
| Residential mortgage backed securities | 571 | (6) | 186 | (25) | 757 | (31) |
| Asset backed securities | 236 | (8) | 426 | (24) | 662 | (32) |
| Commercial mortgage backed securities | 180 | (1) | 434 | (10) | 614 | (11) |
| Municipal bonds | 48 | (1) | 176 | (15) | 224 | (16) |
| &nbsp;&nbsp;&nbsp;Total | 12397 | (288) | 5080 | (404) | 17477 | (692) |
| Short-term investments | 97 | (2) |  |  | 97 | (2) |
| &nbsp;&nbsp;&nbsp;Total | $12494 | $(290) | $5080 | $(404) | $17574 | $(694) |

---

At June 30, 2025, on a lot level basis, approximately 6,560 security lots out of a total of approximately 23,600 security lots were in an unrealized loss position and the largest single unrealized loss from a single lot in the Company's fixed maturity portfolio was $4 million. At December 31, 2024, on a lot level basis, approximately 9,980 security lots out of a total of approximately 20,930 security lots were in an unrealized loss position and the largest single unrealized loss from a single lot in the Company's fixed maturity portfolio was $8 million.

The contractual maturities of the Company's fixed maturities are shown in the following table. Expected maturities, which are management's best estimates, will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
|<br>**Maturity** | **Estimated<br>Fair<br>Value** | **Amortized<br>Cost** | **Estimated<br>Fair<br>Value** | **Amortized<br>Cost** |
| Due in one year or less | $480 | $490 | $438 | $451 |
| Due after one year through five years | 17031 | 16947 | 15364 | 15590 |
| Due after five years through 10 years | 6123 | 6168 | 5811 | 6039 |
| Due after 10 years | 704 | 701 | 385 | 401 |
|  | 24338 | 24306 | 21998 | 22481 |
| Residential mortgage backed securities | 2386 | 2386 | 1079 | 1104 |
| Commercial mortgage backed securities | 838 | 838 | 1058 | 1064 |
| Asset backed securities | 2770 | 2782 | 2900 | 2921 |
| &nbsp;&nbsp;&nbsp;Total | $30332 | $30312 | $27035 | $27570 |

---

ARCH CAPITAL 23 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

<u>Equity Securities, at Fair Value</u>

At June 30, 2025, the Company held $1.7 billion of equity securities, at fair value, compared to $1.7 billion at December 31, 2024. Such holdings include publicly traded common stocks, primarily in the consumer cyclical and non-cyclical, technology, communication and financial sectors, and exchange-traded funds in fixed income, equity and other sectors.

<u>Other Investments, at Fair Value</u>

The following table summarizes the Company's other investments:

---

| | | |
|:---|:---|:---|
| | **June 30,<br>2025** | **December 31,<br>2024** |
| Other investments | $1810 | $2135 |
| Fixed maturities | 1009 | 854 |
| Short term investments | 68 | 70 |
| Equity securities | 5 | 7 |
| &nbsp;&nbsp;&nbsp;Total | $2892 | $3066 |

---

The following table summarizes the Company's other investments, as detailed in the previous table, by strategy:

---

| | | |
|:---|:---|:---|
| | **June 30,<br>2025** | **December 31,<br>2024** |
| Investment grade fixed income | $1029 | $1055 |
| Private equity | 252 | 229 |
| Lending | 238 | 303 |
| Term loan investments | 217 | 430 |
| Credit related funds | 72 | 99 |
| Energy | 2 | 19 |
| &nbsp;&nbsp;&nbsp;Total | $1810 | $2135 |

---

<u>Net Investment Income</u>

The components of net investment income were derived from the following sources:

---

| | | |
|:---|:---|:---|
| | **June 30,** | **June 30,** |
| | **2025** | **2024** |
| **<u>Three Months Ended</u>** |  |  |
| Fixed maturities | $360 | $306 |
| Short term investments | 24 | 35 |
| Equity securities | 10 | 10 |
| Other (1) | 35 | 35 |
| &nbsp;&nbsp;&nbsp;Gross investment income | 429 | 386 |
| Investment expenses | (24) | (22) |
| &nbsp;&nbsp;&nbsp;Net investment income | $405 | $364 |
| **<u>Six Months Ended</u>** |  |  |
| Fixed maturities | $702 | $586 |
| Short term investments | 50 | 64 |
| Equity securities | 21 | 18 |
| Other (1) | 63 | 68 |
| &nbsp;&nbsp;&nbsp;Gross investment income | 836 | 736 |
| Investment expenses | (53) | (45) |
| &nbsp;&nbsp;&nbsp;Net investment income | $783 | $691 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Amounts include dividends and other distributions on investment funds, term loan investments, funds held balances, cash balances and other items.

ARCH CAPITAL 24 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

<u>Net Realized Gains (Losses)</u>

Net realized gains (losses), which include changes in the allowance for credit losses on financial assets and net impairment losses recognized in earnings were as follows:

---

| | | |
|:---|:---|:---|
| | **June 30,** | **June 30,** |
| | **2025** | **2024** |
| **<u>Three Months Ended</u>** |  |  |
| Available for sale securities: |  |  |
| &nbsp;&nbsp;&nbsp;Gross gains on investment sales | $69 | $13 |
| &nbsp;&nbsp;&nbsp;Gross losses on investment sales | (56) | (77) |
| Change in fair value of assets and liabilities accounted for using the fair value option: |  |  |
| &nbsp;&nbsp;&nbsp;Fixed maturities | 20 | (4) |
| &nbsp;&nbsp;&nbsp;Other investments | (11) | (28) |
| &nbsp;&nbsp;&nbsp;Short-term investments | 3 |  |
| Equity securities, at fair value: |  |  |
| &nbsp;&nbsp;&nbsp;Net realized gains (losses) on sales during the period | 7 | 5 |
| &nbsp;&nbsp;&nbsp;Net unrealized gains (losses) on equity securities still held at reporting date | 129 | 7 |
| Allowance for credit losses: |  |  |
| &nbsp;&nbsp;&nbsp;Investments related | (8) | 4 |
| &nbsp;&nbsp;&nbsp;Underwriting related | (2) | (3) |
| Derivative instruments (1) | 163 | 1 |
| Other (2) | (85) | 204 |
| &nbsp;&nbsp;&nbsp;Net realized gains (losses) | $229 | $122 |
| **<u>Six Months Ended</u>** |  |  |
| Available for sale securities: |  |  |
| &nbsp;&nbsp;&nbsp;Gross gains on investment sales | $120 | $63 |
| &nbsp;&nbsp;&nbsp;Gross losses on investment sales | (169) | (155) |
| Change in fair value of assets and liabilities accounted for using the fair value option: |  |  |
| &nbsp;&nbsp;&nbsp;Fixed maturities | 22 | (2) |
| &nbsp;&nbsp;&nbsp;Other investments | 2 | (30) |
| &nbsp;&nbsp;&nbsp;Short-term investments | 3 |  |
| Equity securities, at fair value: |  |  |
| &nbsp;&nbsp;&nbsp;Net realized gains (losses) on sales during the period | 54 | 16 |
| &nbsp;&nbsp;&nbsp;Net unrealized gains (losses) on equity securities still held at reporting date | 34 | 89 |
| Allowance for credit losses: |  |  |
| &nbsp;&nbsp;&nbsp;Investments related | (8) | (2) |
| &nbsp;&nbsp;&nbsp;Underwriting related | (1) | (2) |
| Derivative instruments (1) | 262 | (9) |
| Other (2) | (87) | 221 |
| &nbsp;&nbsp;&nbsp;Net realized gains (losses) | $232 | $189 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;See <u>[note 10](#i8c1a838c8b384cbd8c3d99c9af25908b_88)</u> for information on the Company's derivative instruments.

(2)&nbsp;&nbsp;&nbsp;&nbsp;Amounts in the 2025 periods primarily include losses related to the anticipated sale of certain alternative investments accounted for under the equity method.

<u>Investments Accounted For Using the Equity Method</u>

The following table summarizes the Company's investments accounted for using the equity method, by strategy:

---

| | | |
|:---|:---|:---|
| | **June 30,<br>2025** | **December 31,<br>2024** |
| Private equity | $2101 | $1915 |
| Credit related funds | 1637 | 1487 |
| Lending | 850 | 616 |
| Real estate | 837 | 869 |
| Fixed income | 462 | 384 |
| Infrastructure | 417 | 425 |
| Equities | 215 | 217 |
| Energy | 47 | 67 |
| &nbsp;&nbsp;&nbsp;Total | $6566 | $5980 |

---

Certain of the Company's other investments are in investment funds for which the Company has the option to redeem at agreed upon values as described in each investment fund's subscription agreement. Depending on the terms of the various subscription agreements, investments in investment funds may be redeemed daily, monthly, quarterly or on other terms. Two common redemption restrictions that may impact the Company's ability to redeem these investment funds are gates and lockups. A gate is a suspension of redemptions that may be implemented by the general partner or investment manager of the fund in order to defer, in whole or in part, the redemption request in the event the aggregate amount of redemption requests exceeds a predetermined percentage of the investment fund's net assets and which may otherwise hinder the general partner or investment manager's ability to liquidate holdings in an orderly fashion in order to generate the cash necessary to fund extraordinarily large redemption payouts. A lockup period is the initial amount of time an investor is contractually required to hold the security before having the ability to redeem. If the investment funds are eligible to be redeemed, the time to redeem such fund can take weeks or months following the notification.

<u>Limited Partnership Interests</u>

In the normal course of its activities, the Company invests in limited partnerships as part of its overall investment strategy. Such amounts are included in 'investments accounted for using the equity method' and 'investments accounted for using the fair value option.' The Company has determined that it is not required to consolidate these investments because it is not the primary beneficiary of the funds. The Company's maximum exposure to loss with respect to these investments is limited to the investment carrying amounts reported in the Company's consolidated balance sheet and any unfunded commitment.

ARCH CAPITAL 25 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

The following table summarizes investments in limited partnership interests where the Company has a variable interest by balance sheet line item:

---

| | | |
|:---|:---|:---|
| | **June 30,<br>2025** | **December 31,<br>2024** |
| Investments accounted for using the equity method (1) | $6566 | $5980 |
| Investments accounted for using the fair value option (2) | 32 | 48 |
| &nbsp;&nbsp;&nbsp;Total | $6598 | $6028 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Aggregate unfunded commitments were $4.2 billion at June 30, 2025, compared to $4.3 billion at December 31, 2024.

(2)&nbsp;&nbsp;&nbsp;&nbsp;Aggregate unfunded commitments were $22 million at June 30, 2025, compared to $21 million at December 31, 2024.

<u>Equity in Net Income (Loss) of Investments Accounted for Using the Equity Method</u>

Income from investment funds accounted for using the equity method for the 2025 second quarter was $162 million, compared to $167 million for the 2024 second quarter and an income of $215 million for the six months ended June 30, 2025, compared to income of $266 million for the six months ended June 30, 2024. In applying the equity method, investments are initially recorded at cost and are subsequently adjusted based on the Company's proportionate share of the net income or loss of the funds (which include changes in the market value of the underlying securities in the funds). Such investments are generally recorded on a one to three month lag based on the availability of reports from the investment funds.

<u>Investments in Operating Affiliates</u>

Investments in which the Company has significant influence over the operating and financial policies are classified as 'investments in operating affiliates' on the Company's balance sheets and are accounted for under the equity method. Such investments primarily include the Company's investment in Coface SA ("Coface"), Greysbridge Holdings Ltd. ("Greysbridge"), and Premia Holdings Ltd. Investments in Coface and Premia Holdings Ltd. are generally recorded on a three month lag, while the Company's investment in Greysbridge is not recorded on a lag.

As of June 30, 2025, the Company owned approximately 29.9% of the issued shares of Coface, or 30% excluding treasury shares, with a carrying value of $654 million, compared to $592 million at December 31, 2024.

As of June 30, 2025, the Company owned 40% of Greysbridge with a carrying value of $582 million, compared to $523 million at December 31, 2024.

Income from operating affiliates for the 2025 second quarter was $40 million, compared to $45 million for the 2024 second quarter and income of $57 million for the six months ended June 30, 2025, compared to income of $100 million for six months ended June 30, 2024.

See <u>[note 16](#i8c1a838c8b384cbd8c3d99c9af25908b_115)</u> for information on Company's transactions with related parties.

ARCH CAPITAL 26 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

<u>Allowance for Expected Credit Losses</u>

The following table provides a roll forward of the allowance for expected credit losses of the Company's securities classified as available for sale:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Structured Securities (1)** | **Corporate<br>Bonds** | **Non-U.S.<br>Government<br>Securities** | **Total** |
| **<u>Three Months Ended June 30, 2025</u>** | **<u>Three Months Ended June 30, 2025</u>** | | | |
| Balance at beginning of period | $8 | $12 | $1 | $21 |
| Additions for current-period provision for expected credit losses |  | 2 |  | 2 |
| Additions (reductions) for previously recognized expected credit losses | 2 | 4 | 1 | 7 |
| Reductions due to disposals |  | (2) |  | (2) |
| Balance at end of period | $10 | $16 | $2 | $28 |
| **<u>Three Months Ended June 30, 2024</u>** | **<u>Three Months Ended June 30, 2024</u>** |  |  |  |
| Balance at beginning of period | $7 | $24 | $1 | $32 |
| Additions for current-period provision for expected credit losses |  |  |  |  |
| Additions (reductions) for previously recognized expected credit losses | 3 | (6) |  | (3) |
| Reductions due to disposals |  | (2) |  | (2) |
| Balance at end of period | $10 | $16 | $1 | $27 |
| **<u>Six Months Ended June 30, 2025</u>** | **<u>Six Months Ended June 30, 2025</u>** |  |  |  |
| Balance at beginning of year | $9 | $12 | $1 | $22 |
| Additions for current-period provision for expected credit losses | 3 | 2 |  | 5 |
| Additions (reductions) for previously recognized expected credit losses | (2) | 5 | 1 | 4 |
| Reductions due to disposals |  | (3) |  | (3) |
| Balance at end of period | $10 | $16 | $2 | $28 |
| **<u>Six Months Ended June 30, 2024</u>** | **<u>Six Months Ended June 30, 2024</u>** |  |  |  |
| Balance at beginning of year | $7 | $20 | $1 | $28 |
| Additions for current-period provision for expected credit losses |  |  |  |  |
| Additions (reductions) for previously recognized expected credit losses | 3 | (1) |  | 2 |
| Reductions due to disposals |  | (3) |  | (3) |
| Balance at end of period | $10 | $16 | $1 | $27 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Includes asset backed securities, residential mortgage backed securities and commercial mortgage backed securities.

<u>Restricted Assets</u>

The Company is required to maintain assets on deposit, which primarily consist of fixed maturities, with various regulatory authorities to support its underwriting operations. The Company's subsidiaries maintain assets in trust accounts as collateral for transactions with affiliated companies and also have investments in segregated portfolios primarily to provide collateral or guarantees for letters of credit to third parties. See note 18, "Commitments and Contingencies," of the notes to consolidated financial statements in the Company's 2024 Form 10-K.

The following table details the value of the Company's restricted assets:

---

| | | |
|:---|:---|:---|
| | **June 30,<br>2025** | **December 31,<br>2024** |
| Assets used for collateral or guarantees: |  |  |
| &nbsp;&nbsp;&nbsp;Affiliated transactions | $5229 | $4730 |
| &nbsp;&nbsp;&nbsp;Third party agreements | 6512 | 5999 |
| Deposits with U.S. regulatory authorities | 955 | 882 |
| Other (1) | 1515 | 1437 |
| &nbsp;&nbsp;&nbsp;Total restricted assets | $14211 | $13048 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Primarily includes Funds at Lloyds, deposits with non-U.S. regulatory authorities and other restricted assets.

ARCH CAPITAL 27 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

<u>Reconciliation of Cash and Restricted Cash</u>

The following table details reconciliation of cash and restricted cash within the Consolidated Balance Sheets:

---

| | | |
|:---|:---|:---|
| | **June 30,<br>2025** | **December 31,<br>2024** |
| Cash | $983 | $979 |
| Restricted cash (included in 'other assets') | 825 | 781 |
| Cash and restricted cash | $1808 | $1760 |

---

**9.&nbsp;&nbsp;&nbsp;&nbsp;Fair Value**

Accounting guidance regarding fair value measurements addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under GAAP and provides a common definition of fair value to be used throughout GAAP. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly fashion between market participants at the measurement date. In addition, it establishes a three-level valuation hierarchy for the disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The level in the hierarchy within which a given fair value measurement falls is determined based on the lowest level input that is significant to the measurement (Level 1 being the highest priority and Level 3 being the lowest priority).

The levels in the hierarchy are defined as follows:

---

| | |
|:---|:---|
| Level 1: | Inputs to the valuation methodology are observable inputs that reflect quoted prices (unadjusted) for *identical* assets or liabilities in *active markets* |
| Level 2: | Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument |
| Level 3: | Inputs to the valuation methodology are unobservable and significant to the fair value measurement |

---

The following is a description of the valuation methodologies used for securities measured at fair value, as well as the general classification of such securities pursuant to the valuation hierarchy. The Company reviews its securities measured at fair value and discusses the proper classification of such investments with investment advisers and others.

The Company determines the existence of an active market based on its judgment as to whether transactions for the financial instrument occur in such market with sufficient frequency and volume to provide reliable pricing information. The independent pricing sources obtain market quotations and actual transaction prices for securities that have quoted prices in active markets. The Company uses quoted values and other data provided by nationally recognized independent pricing sources as inputs into its process for determining fair values of its fixed maturity investments. To validate the techniques or models used by pricing sources, the Company's review process includes, but is not limited to: (i) quantitative analysis (*e.g.,* comparing the quarterly return for each managed portfolio to its target benchmark, with significant differences identified and investigated); (ii) a review of the average number of prices obtained in the pricing process and the range of resulting fair values; (iii) initial and ongoing evaluation of methodologies used by outside parties to calculate fair value; (iv) a comparison of the fair value estimates to the Company's knowledge of the current market; (v) a comparison of the pricing services' fair values to other pricing services' fair values for the same investments; and (vi) periodic back-testing, which includes randomly selecting purchased or sold securities and comparing the executed prices to the fair value estimates from the pricing service. A price source hierarchy was maintained in order to determine which price source would be used *(i.e.*, a price obtained from a pricing service with more seniority in the hierarchy will be used over a less senior one in all cases). The hierarchy prioritizes pricing services based on availability and reliability and assigns the highest priority to index providers. Based on the above review, the Company will challenge any prices for a security or portfolio which are considered not to be representative of fair value. The Company did not adjust any of the prices obtained from the independent pricing sources at June 30, 2025.

In certain circumstances, when fair values are unavailable from these independent pricing sources, quotes are obtained directly from broker-dealers who are active in the corresponding markets. Such quotes are subject to the validation procedures noted above. Where quotes are unavailable, fair value is determined by the Investment Manager using quantitative and qualitative assessments such as internally modeled values. Of the $38.2 billion of financial assets and liabilities measured at fair value at June 30, 2025, approximately $257 million, or 0.7%, were priced using non-binding broker-dealer quotes or modeled valuations. Of the $35.0 billion of financial assets and liabilities measured at fair value at December 31, 2024, approximately $185 million, or 0.5%, were priced using non-binding broker-dealer quotes or modeled valuations.

ARCH CAPITAL 28 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

<u>Fixed maturities</u>

The Company uses the market approach valuation technique to estimate the fair value of its fixed maturity securities, when possible. The market approach includes obtaining prices from independent pricing services, such as index providers and pricing vendors, as well as to a lesser extent quotes from broker-dealers. The independent pricing sources obtain market quotations and actual transaction prices for securities that have quoted prices in active markets. Each source has its own proprietary method for determining the fair value of securities that are not actively traded. In general, these methods involve the use of "matrix pricing" in which the independent pricing source uses observable market inputs including, but not limited to, investment yields, credit risks and spreads, benchmarking of like securities, broker-dealer quotes, reported trades and sector groupings to determine a reasonable fair value.

The following describes the significant inputs generally used to determine the fair value of the Company's fixed maturity securities by asset class:

*U.S. government and government agencies –* valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The Company determined that all U.S. Treasuries would be classified as Level 1 securities due to observed levels of trading activity, the high number of strongly correlated pricing quotes received on U.S. Treasuries and other factors. The fair values of U.S. government agency securities are generally determined using the spread above the risk-free yield curve. As the yields for the risk-free yield curve and the spreads for these securities are observable market inputs, the fair values of U.S. government agency securities are classified within Level 2.

*Corporate bonds –* valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined using the spread above the risk-free yield curve. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. As the significant inputs used in the pricing process for corporate bonds are observable market inputs, the fair value of these securities are classified within Level 2. A small number of securities are included in Level 3 due to a low level of transparency on the inputs used in the pricing process.

*Municipal bonds –* valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The fair values of these securities are generally determined using spreads obtained from broker-dealers who trade in the relevant security market, trade prices and the new issue market. As the

significant inputs used in the pricing process for municipal bonds are observable market inputs, the fair value of these securities are classified within Level 2.

*Residential mortgage-backed securities –* valuations provided by independent pricing services, substantially all through pricing vendors and index providers with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models (including Option Adjusted Spread) which use spreads to determine the expected average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for mortgage-backed securities are observable market inputs, the fair value of these securities are classified within Level 2. A small number of securities are included in Level 3 due to a low level of transparency on the inputs used in the pricing process.

*Commercial mortgage-backed securities –* valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models which use spreads to determine the appropriate average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for commercial mortgage-backed securities are observable market inputs, the fair value of these securities are classified within Level 2.

*Non-U.S. government securities –* valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The fair values of these securities are generally based on international indices or valuation models which include daily observed yield curves, cross-currency basis index spreads and country credit spreads. As the significant inputs used in the pricing process for non-U.S. government securities are observable market inputs, the fair value of these securities are classified within Level 2.

*Asset-backed securities –* valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models (including Option Adjusted Spread) which use spreads to determine the appropriate average life of the securities. These spreads are generally obtained from the new issue

ARCH CAPITAL 29 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for asset-backed securities are observable market inputs, the fair value of these securities are classified within Level 2.

<u>Equity securities</u>

The Company determined that exchange-traded equity securities would be included in Level 1 as their fair values are based on quoted market prices in active markets. Certain equity securities are included in Level 2 of the valuation hierarchy as the significant inputs used in the pricing process for such securities are observable market inputs. Other equity securities are included in Level 3 due to the lack of an available independent price source for such securities. As the significant inputs used to price these securities are unobservable, the fair value of such securities are classified as Level 3.

<u>Other investments</u>

The Company's other investments include term loan investments for which fair values are estimated by using quoted prices of term loan investments with similar characteristics, pricing models or matrix pricing. Such investments are generally classified within Level 2. The fair values for certain of the Company's other investments are determined using net asset values as advised by external fund managers. The net asset value is based on the fund manager's valuation of the underlying holdings in accordance with the fund's governing documents. In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. A small number of securities are included in Level 3 due to the lack of an available independent price source for such securities.

<u>Derivative instruments</u>

The Company's futures contracts, foreign currency forward contracts, interest rate swaps and other derivatives trade in the over-the-counter derivative market. The Company uses the market approach valuation technique to estimate the fair value for these derivatives based on significant observable market inputs from third party pricing vendors, non-binding broker-dealer quotes and/or recent trading activity. As the significant inputs used in the pricing process for these derivative instruments are observable market inputs, the fair value of these securities are classified within Level 2.

<u>Short-term investments</u>

The Company determined that certain of its short-term investments held in highly liquid money market-type funds, U.S. Treasury bills and commercial paper would be included in Level 1 as their fair values are based on quoted market prices in active markets. The fair values of certain short-term investments are generally determined using the spread above the risk-free yield curve and are classified within Level 2. Other short-term investments are included in Level 3 due to the lack of an available independent price source for such securities. As the significant inputs used to price these short-term securities are unobservable, the fair value of such securities are classified as Level 3.

<u>Residential mortgage loans</u>

The Company's residential mortgage loans (included in 'other assets' in the consolidated balance sheets) include amounts related to the Company's whole mortgage loan purchase and sell program. Fair values of residential mortgage loans are generally determined based on market prices. As significant inputs used in the pricing process for these residential mortgage loans are observable market inputs, the fair value of these securities are classified within Level 2.

<u>Other liabilities</u>

The Company's other liabilities include contingent and deferred consideration liabilities related to the Company's acquisitions. Contingent consideration liabilities are remeasured at fair value at each balance sheet date with changes in fair value recognized in 'net realized gains (losses'). To determine the fair value of contingent consideration liabilities, the Company estimates the future payments using an income approach based on modeled inputs which include a weighted average cost of capital. Deferred consideration liabilities are measured at fair value on the transaction date. The Company determined that contingent and deferred consideration liabilities would be included within Level 3.

ARCH CAPITAL 30 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

The following table presents the Company's financial assets and liabilities measured at fair value by level at June 30, 2025:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Estimated Fair Value Measurements Using:** | **Estimated Fair Value Measurements Using:** | **Estimated Fair Value Measurements Using:** |
|  | <br>**Estimated <br>Fair<br>Value** | **Quoted Prices in<br>Active Markets<br>for Identical<br>Assets<br>(Level 1)** | **Significant<br>Other<br>Observable<br>Inputs<br>(Level 2)** | **Significant<br>Unobservable<br>Inputs<br>(Level 3)** |
| <u>Assets measured at fair value:</u> |  |  |  |  |
| Available for sale securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Fixed maturities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Corporate bonds | $14429 | $— | $14284 | $145 |
| &nbsp;&nbsp;&nbsp;U.S. government and government agencies | 6585 | 6585 |  |  |
| &nbsp;&nbsp;&nbsp;Asset backed securities | 2770 |  | 2753 | 17 |
| &nbsp;&nbsp;&nbsp;Non-U.S. government securities | 3149 |  | 3149 |  |
| &nbsp;&nbsp;&nbsp;Commercial mortgage backed securities | 838 |  | 838 |  |
| &nbsp;&nbsp;&nbsp;Residential mortgage backed securities | 2386 |  | 2386 |  |
| &nbsp;&nbsp;&nbsp;Municipal bonds | 175 |  | 175 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 30332 | 6585 | 23585 | 162 |
| &nbsp;&nbsp;&nbsp;Short-term investments | 2788 | 2735 | 53 |  |
| Equity securities, at fair value | 1715 | 1680 | 27 | 8 |
| Derivative instruments (2) | 271 |  | 271 |  |
| Residential mortgage loans | 27 |  | 27 |  |
| Fair value option: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Corporate bonds | 988 |  | 988 |  |
| &nbsp;&nbsp;&nbsp;Non-U.S. government securities | 15 |  | 15 |  |
| &nbsp;&nbsp;&nbsp;U.S. government and government agencies | 6 | 6 |  |  |
| &nbsp;&nbsp;&nbsp;Short-term investments | 68 | 6 | 17 | 45 |
| &nbsp;&nbsp;&nbsp;Equity securities | 5 |  |  | 5 |
| &nbsp;&nbsp;&nbsp;Other investments | 423 |  | 215 | 208 |
| &nbsp;&nbsp;&nbsp;Other investments measured at net asset value (1) | 1387 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 2892 | 12 | 1235 | 258 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets measured at fair value | $38025 | $11012 | $25198 | $428 |
| <u>Liabilities measured at fair value:</u> |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Other liabilities | $(20) | $— | $— | $(20) |
| &nbsp;&nbsp;&nbsp;Derivative instruments (2) | (159) |  | (159) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities measured at fair value | $(179) | $— | $(159) | $(20) |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.

(2)&nbsp;&nbsp;&nbsp;&nbsp;See <u>[note 10](#i8c1a838c8b384cbd8c3d99c9af25908b_88)</u>.

ARCH CAPITAL 31 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

The following table presents the Company's financial assets and liabilities measured at fair value by level at December 31, 2024:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | **Estimated Fair Value Measurements Using:** | **Estimated Fair Value Measurements Using:** | **Estimated Fair Value Measurements Using:** |
| |<br>**Estimated <br>Fair<br>Value** | **Quoted Prices in<br>Active Markets<br>for Identical<br>Assets<br>(Level 1)** | **Significant<br>Other<br>Observable<br>Inputs<br>(Level 2)** | **Significant<br>Unobservable<br>Inputs<br>(Level 3)** |
| <u>Assets measured at fair value:</u> |  |  |  |  |
| Available for sale securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Fixed maturities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Corporate bonds | $12487 | $— | $12390 | $97 |
| &nbsp;&nbsp;&nbsp;U.S. government and government agencies | 6710 | 6709 | 1 |  |
| &nbsp;&nbsp;&nbsp;Asset backed securities | 2900 |  | 2900 |  |
| &nbsp;&nbsp;&nbsp;Non-U.S. government securities | 2538 |  | 2538 |  |
| &nbsp;&nbsp;&nbsp;Commercial mortgage backed securities | 1058 |  | 1058 |  |
| &nbsp;&nbsp;&nbsp;Residential mortgage backed securities | 1079 |  | 1079 |  |
| &nbsp;&nbsp;&nbsp;Municipal bonds | 263 |  | 263 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 27035 | 6709 | 20229 | 97 |
| &nbsp;&nbsp;&nbsp;Short-term investments | 2784 | 2704 | 80 |  |
| Equity securities, at fair value | 1675 | 1640 | 28 | 7 |
| Derivative instruments (2) | 206 |  | 206 |  |
| Residential mortgage loans | 15 |  | 15 |  |
| Fair value option: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Corporate bonds | 832 |  | 832 |  |
| &nbsp;&nbsp;&nbsp;Non-U.S. government securities | 8 |  | 8 |  |
| &nbsp;&nbsp;&nbsp;Asset backed securities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. government and government agencies | 14 | 14 |  |  |
| &nbsp;&nbsp;&nbsp;Short-term investments | 70 |  | 37 | 33 |
| &nbsp;&nbsp;&nbsp;Equity securities | 6 | 2 |  | 4 |
| &nbsp;&nbsp;&nbsp;Other investments | 752 |  | 563 | 189 |
| &nbsp;&nbsp;&nbsp;Other investments measured at net asset value (1) | 1383 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 3065 | 16 | 1440 | 226 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets measured at fair value | $34780 | $11069 | $21998 | $330 |
| <u>Liabilities measured at fair value:</u> |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Other liabilities | $(73) | $— | $— | $(73) |
| &nbsp;&nbsp;&nbsp;Derivative instruments (2) | (115) |  | (115) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities measured at fair value | $(188) | $— | $(115) | $(73) |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.

(2)&nbsp;&nbsp;&nbsp;&nbsp;See <u>[note 10](#i8c1a838c8b384cbd8c3d99c9af25908b_88)</u>.

ARCH CAPITAL 32 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

The following table presents a reconciliation of the beginning and ending balances for all financial assets and liabilities measured at fair value on a recurring basis using Level 3 inputs:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | | **Assets** | **Assets** | **Assets** | **Assets** | **Assets** | **Assets** | **Liabilities** |
| **s** | **Available For Sale** | **Available For Sale** | **Available For Sale** | **Fair Value Option** | **Fair Value Option** | **Fair Value Option** | **Fair Value** | |
| | **Structured Securities (1)** | **Corporate<br>Bonds** | **Short-term<br>Investments** | **Other<br>Investments** | **Short-term<br>Investments** | **Equity<br>Securities** | **Equity<br>Securities** | **Other Liabilities** |
| **<u>Three Months Ended June 30, 2025</u>** | | | | | | | | |
| Balance at beginning of period | $— | $150 | $— | $206 | $29 | $4 | $7 | $(34) |
| &nbsp;&nbsp;&nbsp;Total gains or (losses) (realized/unrealized) |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Included in earnings (2) |  |  |  |  |  | 1 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Included in other comprehensive income |  |  |  |  |  |  |  | (2) |
| &nbsp;&nbsp;&nbsp;Purchases, issuances, sales and settlements |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases | 14 |  |  | 44 | 18 |  | 1 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuances |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Sales |  |  |  | (3) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Settlements | (2) | (5) |  | (39) | (2) |  |  | 16 |
| &nbsp;&nbsp;&nbsp;Transfers in and/or out of Level 3 | 5 |  |  |  |  |  |  |  |
| Balance at end of period | $17 | $145 | $— | $208 | $45 | $5 | $8 | $(20) |
| **<u>Three Months Ended June 30, 2024</u>** |  |  |  |  |  |  |  |  |
| Balance at beginning of period | $— | $160 | $97 | $126 | $17 | $4 | $5 | $(22) |
| &nbsp;&nbsp;&nbsp;Total gains or (losses) (realized/unrealized) |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Included in earnings (2) |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Included in other comprehensive income |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Purchases, issuances, sales and settlements |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases |  |  |  | 30 | 3 |  | 1 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuances |  |  |  |  |  |  |  | (13) |
| &nbsp;&nbsp;&nbsp;&nbsp;Sales |  |  |  | (2) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Settlements |  |  |  | (10) | (6) |  |  |  |
| &nbsp;&nbsp;&nbsp;Transfers in and/or out of Level 3 |  |  |  |  |  |  |  |  |
| Balance at end of period | $— | $160 | $97 | $144 | $14 | $4 | $6 | $(35) |
| **<u>Six Months Ended June 30, 2025</u>** |  |  |  |  |  |  |  |  |
| Balance at beginning of year | $— | $97 | $— | $189 | $33 | $4 | $7 | $(73) |
| &nbsp;&nbsp;&nbsp;Total gains or (losses) (realized/unrealized) |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Included in earnings (2) |  |  |  |  |  | 1 |  | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Included in other comprehensive income |  |  |  |  |  |  |  | (2) |
| &nbsp;&nbsp;&nbsp;Purchases, issuances, sales and settlements |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases | 14 |  |  | 96 | 24 |  | 1 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuances |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Sales |  |  |  | (3) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Settlements | (2) | (22) |  | (74) | (12) |  |  | 53 |
| &nbsp;&nbsp;&nbsp;Transfers in and/or out of Level 3 | 5 | 70 |  |  |  |  |  |  |
| Balance at end of period | $17 | $145 | $— | $208 | $45 | $5 | $8 | $(20) |
| **<u>Six Months Ended June 30, 2024</u>** |  |  |  |  |  |  |  |  |
| Balance at beginning of year | $— | $147 | $84 | $106 | $10 | $4 | $5 | $(22) |
| &nbsp;&nbsp;&nbsp;Total gains or (losses) (realized/unrealized) |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Included in earnings (2) |  |  |  | (4) |  |  |  | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;Included in other comprehensive income |  | 2 | 1 |  |  |  |  | 1 |
| &nbsp;&nbsp;&nbsp;Purchases, issuances, sales and settlements |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases |  | 98 | 12 | 60 | 10 |  | 1 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuances |  |  |  |  |  |  |  | (13) |
| &nbsp;&nbsp;&nbsp;&nbsp;Sales |  |  |  | (2) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Settlements |  | (87) |  | (16) | (6) |  |  |  |
| &nbsp;&nbsp;&nbsp;Transfers in and/or out of Level 3 |  |  |  |  |  |  |  |  |
| Balance at end of period | $— | $160 | $97 | $144 | $14 | $4 | $6 | $(35) |

---

(1) &nbsp;&nbsp;&nbsp;&nbsp;Includes asset backed securities, mortgage backed securities and commercial mortgage backed securities.

(2) &nbsp;&nbsp;&nbsp;&nbsp;Gains or losses were included in net realized gains (losses).

ARCH CAPITAL 33 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

<u>Financial Instruments Disclosed, But Not Carried, At Fair Value</u>

The Company uses various financial instruments in the normal course of its business. The carrying values of cash, accrued investment income, receivable for securities sold, certain other assets, payable for securities purchased and certain other liabilities approximated their fair values at June 30, 2025, due to their respective short maturities. As these financial instruments are not actively traded, their respective fair values are classified within Level 2.

At June 30, 2025, the Company's senior notes were carried at their cost, net of debt issuance costs, of $2.7 billion and had a fair value of $2.5 billion. At December 31, 2024, the Company's senior notes were carried at their cost, net of debt issuance costs, of $2.7 billion and had a fair value of $2.4 billion. The fair values of the senior notes were obtained from a third party pricing service and are based on observable market inputs. As such, the fair values of the senior notes are classified within Level 2.

**10.&nbsp;&nbsp;&nbsp;&nbsp;Derivative Instruments**

The Company's investment strategy allows for the use of derivative instruments. The Company's derivative instruments are recorded on its consolidated balance sheets at fair value. The Company utilizes exchange traded U.S. Treasury notes, Eurodollar and other futures contracts and commodity futures to manage portfolio duration or replicate investment positions in its portfolios and the Company routinely utilizes foreign currency forward contracts, currency options, index futures contracts and other derivatives as part of its total return objective. In addition, certain of the Company's investments are managed in portfolios which incorporate the use of foreign currency forward contracts which are intended to provide an economic hedge against foreign currency movements.

From time to time, the Company purchases to-be-announced mortgage backed securities ("TBAs") as part of its investment strategy. TBAs represent commitments to purchase a future issuance of agency mortgage backed securities. For the period between purchase of a TBA and issuance of the underlying security, the Company's position is accounted for as a derivative. The Company purchases TBAs in both long and short positions to enhance investment performance and as part of its overall investment strategy.

The following table summarizes information on the fair values and notional values of the Company's derivative instruments:

---

| | | | |
|:---|:---|:---|:---|
| | **Estimated Fair Value** | **Estimated Fair Value** | |
| | **Asset Derivatives (1)** | **Liability Derivatives (1)** |<br>**Notional<br>Value (2)** |
| **<u>June 30, 2025</u>** | | | |
| Futures contracts | $110 | $(11) | $8208 |
| Foreign currency forward contracts | 92 | (62) | 2123 |
| Other (3) | 69 | (86) | 2073 |
| &nbsp;&nbsp;&nbsp;Total | $271 | $(159) |  |
| **<u>December 31, 2024</u>** |  |  |  |
| Futures contracts | $78 | $(46) | $4781 |
| Foreign currency forward contracts | 90 | (48) | 1698 |
| Other (3) | 38 | (21) | 236 |
| &nbsp;&nbsp;&nbsp;Total | $206 | $(115) |  |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;The fair value of asset derivatives are included in 'other assets' and the fair value of liability derivatives are included in 'other liabilities.'

(2)&nbsp;&nbsp;&nbsp;&nbsp;Represents the absolute notional value of all outstanding contracts, consisting of long and short positions.

(3)&nbsp;&nbsp;&nbsp;&nbsp;Includes swaps, options and other derivatives contracts.

The Company did not hold any derivatives that were designated as hedging instruments at June 30, 2025 or December 31, 2024.

The Company's derivative instruments can be traded under master netting agreements, which establish terms that apply to all derivative transactions with a counterparty. In the event of a bankruptcy or other stipulated event of default, such agreements provide that the non-defaulting party may elect to terminate all outstanding derivative transactions, in which case all individual derivative positions (loss or gain) with a counterparty are closed out and netted and replaced with a single amount, usually referred to as the termination amount, which is expressed in a single currency. The resulting single net amount, where positive, is payable to the party "in-the-money" regardless of whether or not it is the defaulting party, unless the parties have agreed that only the non-defaulting party is entitled to receive a termination payment where the net amount is positive and is in its favor. Contractual close-out netting reduces derivative credit exposure from gross to net exposure.

At June 30, 2025, asset derivatives and liability derivatives of $271 million and $159 million, respectively, were subject to a master netting agreement, compared to $206 million and $115 million, respectively, at December 31, 2024.

ARCH CAPITAL 34 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

Realized and unrealized contract gains or losses on the Company's derivative instruments are reflected in 'net realized gains (losses)' in the consolidated statements of income, as summarized in the following table:

---

| | | |
|:---|:---|:---|
| **Derivatives not designated as** | **June 30,** | **June 30,** |
| **hedging instruments:** | **2025** | **2024** |
| **<u>Three Months Ended</u>** |  |  |
| Net realized gains (losses): |  |  |
| &nbsp;&nbsp;&nbsp;Futures contracts | $93 | $(3) |
| &nbsp;&nbsp;&nbsp;Foreign currency forward contracts | 53 | 2 |
| &nbsp;&nbsp;&nbsp;Other (1) | 17 | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $163 | $1 |
| **<u>Six Months Ended</u>** |  |  |
| Net realized gains (losses): |  |  |
| &nbsp;&nbsp;&nbsp;Futures contracts | $139 | $(17) |
| &nbsp;&nbsp;&nbsp;Foreign currency forward contracts | 83 | 1 |
| &nbsp;&nbsp;&nbsp;Other (1) | 40 | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $262 | $(9) |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Includes realized gains or losses on swaps, options and other derivatives contracts.

**11.&nbsp;&nbsp;&nbsp;&nbsp;Commitments and Contingencies**

<u>Investment Commitments</u>

The Company's investment commitments, which are primarily related to agreements entered into by the Company to invest in funds and separately managed accounts when called upon, were approximately $4.3 billion at June 30, 2025, compared to $4.4 billion at December 31, 2024.

<u>Interest Paid</u>

Interest paid on the Company's senior notes and other borrowings was $64 million for the six months ended June 30, 2025, compared to $63 million for the 2024 period.

**12.&nbsp;&nbsp;&nbsp;&nbsp;Variable Interest Entities**

<u>Bellemeade Re</u>

The Company has entered into aggregate excess of loss mortgage reinsurance agreements with various special purpose reinsurance companies domiciled in Bermuda (the "Bellemeade Agreements"). At the time the Bellemeade Agreements were entered into, the applicability of the accounting guidance that addresses VIEs was evaluated. As a result of the evaluation of the Bellemeade Agreements, the Company concluded that these entities are VIEs. However, given that the ceding insurers do not have the unilateral power to direct those activities that are significant to their economic performance, the Company does not consolidate such entities in its consolidated financial statements. The reinsurance premium paid in regard to the Bellemeade Agreements is calculated by multiplying the outstanding reinsurance coverage amount at the beginning of the period by the coupon rate, which is the SOFR plus a contractual risk margin, less the actual investment income collected during the preceding month on the assets included in the underlying reinsurance trusts. In the event the assets included in the underlying reinsurance trusts became severely impaired or worthless and the special purpose reinsurance companies were unable to meet their future obligations, the Company's mortgage insurance subsidiaries would be liable to fulfill claim payments to policyholders. The Company's maximum exposure to loss associated with these VIEs is determined as the amount of mortgage insurance claim payments on the insured policies, net of aggregate reinsurance payments previously received, up to the full aggregate excess of loss reinsurance coverage amounts.

The following table summarizes the total assets of the Bellemeade entities:

---

| | | | |
|:---|:---|:---|:---|
| | **June 30,<br>2025** | **June 30,<br>2025** | **December 31, 2024** |
|<br>**Bellemeade Entities <br>(Issue Date)** | **Total VIE Assets** | **Coverage Remaining from Reinsurers (1)** | **Total VIE <br>Assets** |
| 2021-3 Ltd. (Sep-21) | 205 | 19 | 363 |
| 2022-1 Ltd. (Jan-22) | 59 | 14 | 202 |
| 2022-2 Ltd. (Sep-22) | 53 | 100 | 180 |
| 2023-1 Ltd. (Oct-23) | 174 | 44 | 186 |
| 2024-1 Ltd. (Aug-24) | 163 | 41 | 163 |
| Total | $654 | $218 | $1094 |

---

(1) &nbsp;&nbsp;&nbsp;&nbsp;Coverage from a separate panel of reinsurers remaining at June 30, 2025.

ARCH CAPITAL 35 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**13.&nbsp;&nbsp;&nbsp;&nbsp;Other Comprehensive Income (Loss)**

The following tables present details about amounts reclassified from accumulated other comprehensive income and the tax effects allocated to each component of other comprehensive income (loss):

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **Amounts Reclassified from AOCI** | **Amounts Reclassified from AOCI** | **Amounts Reclassified from AOCI** | **Amounts Reclassified from AOCI** |
| | | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
|<br>**Details About**<br>**AOCI Components** |<br>**Consolidated Statement of Income**<br>**Line Item That Includes**<br>**Reclassification** | **2025** | **2024** | **2025** | **2024** |
| Unrealized appreciation (decline) on available-for-sale investments | Unrealized appreciation (decline) on available-for-sale investments |  |  |  |  |
|  | Net realized gains (losses) | $14 | $(64) | $(49) | $(92) |
|  | Provision for credit losses | (8) | 4 | (8) | (2) |
|  | Total before tax | 6 | (60) | (57) | (94) |
|  | Income tax (expense) benefit | 1 | 7 | 12 | 12 |
|  | Net of tax | $7 | $(53) | $(45) | $(82) |

---

---

| | | | |
|:---|:---|:---|:---|
| | **Before Tax Amount** | **Tax Expense (Benefit)** | **Net of Tax Amount** |
| **<u>Three Months Ended June 30, 2025</u>** | | | |
| Unrealized appreciation (decline) in value of investments: |  |  |  |
| &nbsp;&nbsp;&nbsp;Unrealized holding gains (losses) arising during period | $304 | $1 | $303 |
| Less reclassification of net realized gains (losses) included in net income | 6 | (1) | 7 |
| Foreign currency translation adjustments | 62 | (2) | 64 |
| Other comprehensive income (loss) | $360 | $— | $360 |
| **<u>Three Months Ended June 30, 2024</u>** |  |  |  |
| Unrealized appreciation (decline) in value of investments: |  |  |  |
| &nbsp;&nbsp;&nbsp;Unrealized holding gains (losses) arising during period | $(36) | $(10) | $(26) |
| Less reclassification of net realized gains (losses) included in net income | (60) | (7) | (53) |
| Foreign currency translation adjustments | (16) |  | (16) |
| Other comprehensive income (loss) | $8 | $(3) | $11 |
| **<u>Six Months Ended June 30, 2025</u>** |  |  |  |
| Unrealized appreciation (decline) in value of investments: |  |  |  |
| &nbsp;&nbsp;&nbsp;Unrealized holding gains (losses) arising during period | $549 | $12 | $537 |
| Less reclassification of net realized gains (losses) included in net income | (57) | (12) | (45) |
| Foreign currency translation adjustments | 88 | (2) | 90 |
| Other comprehensive income (loss) | $694 | $22 | $672 |
| **<u>Six Months Ended June 30, 2024</u>** |  |  |  |
| Unrealized appreciation (decline) in value of investments: |  |  |  |
| &nbsp;&nbsp;&nbsp;Unrealized holding gains (losses) arising during period | $(187) | $(20) | $(167) |
| Less reclassification of net realized gains (losses) included in net income | (94) | (12) | (82) |
| Foreign currency translation adjustments | (49) |  | (49) |
| Other comprehensive income (loss) | $(142) | $(8) | $(134) |

---

ARCH CAPITAL 36 2025 SECOND QUARTER FORM 10-Q

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**ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**14.&nbsp;&nbsp;&nbsp;&nbsp;Income Taxes**

The Company's income tax provision on income before income taxes, including income (loss) from operating affiliates, resulted in an effective tax rate of 15.6% for the six months ended June 30, 2025, compared to 7.7% for the six months ended June 30, 2024. The year-over-year increase is primarily attributed to the Government of Bermuda enacting the Corporate Income Tax Act 2023, which established a 15% corporate income tax effective January 1, 2025. The Company's effective tax rate, which is based upon the expected annual effective tax rate, may fluctuate from period to period based on the relative mix of income or loss reported by jurisdiction and the varying tax rates in each jurisdiction.

The Company had a net deferred tax asset of $1.5 billion at June 30, 2025, compared to a net deferred tax asset of $1.6 billion at December 31, 2024. In addition, the Company paid $149 million of income taxes for the six months ended June 30, 2025, compared to $145 million of income taxes paid for the six months ended June 30, 2024.

**15.&nbsp;&nbsp;&nbsp;&nbsp;Legal Proceedings**

The Company, in common with the insurance industry in general, is subject to litigation and arbitration in the normal course of its business. As of June 30, 2025, the Company was not a party to any litigation or arbitration which is expected by management to have a material adverse effect on the Company's results of operations and financial condition and liquidity.

**16.&nbsp;&nbsp;&nbsp;&nbsp;Transactions with Related Parties**

Premia Reinsurance Ltd. is a multi-line Bermuda reinsurance company (and its affiliates together with Premia Holdings Ltd., "Premia"). The Company has entered into certain reinsurance transactions with Premia. During the six months ended June 30, 2025 and 2024, the Company did not enter into any new reinsurance transactions with Premia. At June 30, 2025, the Company recorded a funds held asset from Premia of $127 million, compared to $137 million at December 31, 2024.

Somers Group Holdings Ltd. and its wholly owned subsidiaries (collectively, "Somers") are wholly owned by Greysbridge. For the six months ended June 30, 2025, the Company's net premiums written was reduced by $419 million, compared to $428 million for the six months ended June 30, 2024, as a result of certain reinsurance transactions with Somers. In addition, Somers paid certain acquisition costs and administrative fees to the Company. At June 30, 2025, the Company recorded a reinsurance recoverable on unpaid and paid losses from Somers of $1.8 billion and a reinsurance balance payable to Somers of $602 million, compared to $1.6 billion and $489 million, respectively, at December 31, 2024.

Under the terms of the Greysbridge equity financing, beginning January 1, 2024, the Company has a call right (but not the obligation) and Warburg and Kelso each have a put right (but not the obligation) to buy/sell a certain amount of their initial shares annually at the current year-end tangible book value per share of Greysbridge. In 2024, Warburg and Kelso both delivered a put option notice to sell a certain amount of their initial shares. This transaction, which will involve third-party purchasers of such shares, is expected to close in the 2025 calendar year, subject to any required regulatory approvals and other closing conditions. In association with the put option notice at June 30, 2025, the Company's balance sheet reflected $290 million in both other assets and other liabilities.

**17.&nbsp;&nbsp;&nbsp;&nbsp;Subsequent Event**

<u>Share Repurchases</u>

From July 1 to August 5, 2025, the Company repurchased approximately 2.8 million common shares for an aggregate purchase price of $244 million. At August 5, 2025, approximately $393 million of repurchases were available under the Company's share repurchase program.

ARCH CAPITAL 37 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**ITEM 2. &nbsp;&nbsp;&nbsp;&nbsp;MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

The following is a discussion and analysis of our financial condition and results of operations. This should be read in conjunction with our consolidated financial statements included in Item 1 of this report and also our Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Form 10-K"). In addition, readers should review "Risk Factors" set forth in Item 1A of Part I of our 2024 Form 10-K and <u>["ITEM 1A—Risk Factors"](#i8c1a838c8b384cbd8c3d99c9af25908b_193)</u> of this Form 10-Q. All amounts are in millions, except per share amounts, unless otherwise noted.

Arch Capital Group Ltd. ("Arch Capital" and, together with its subsidiaries, "Arch", "the Company", "we", "our" or "us") is a publicly listed Bermuda exempted company with approximately $25.8 billion in capital at June 30, 2025 and, through operations in Bermuda, the United States, Europe, Canada and Australia, writes insurance, reinsurance and mortgage insurance on a worldwide basis.

---

| | |
|:---|:---|
| | **Page No.** |
| &nbsp;&nbsp;&nbsp;Current Outlook | <u>[39](#i8c1a838c8b384cbd8c3d99c9af25908b_127)</u> |
| &nbsp;&nbsp;&nbsp;Financial Measures | <u>[40](#i8c1a838c8b384cbd8c3d99c9af25908b_130)</u> |
| &nbsp;&nbsp;&nbsp;Comment on Non-GAAP Financial Measures | <u>[41](#i8c1a838c8b384cbd8c3d99c9af25908b_136)</u> |
| &nbsp;&nbsp;&nbsp;Results of Operations | <u>[43](#i8c1a838c8b384cbd8c3d99c9af25908b_139)</u> |
| &nbsp;&nbsp;&nbsp;Insurance Segment | <u>[43](#i8c1a838c8b384cbd8c3d99c9af25908b_142)</u> |
| &nbsp;&nbsp;&nbsp;Reinsurance Segment | <u>[46](#i8c1a838c8b384cbd8c3d99c9af25908b_145)</u> |
| &nbsp;&nbsp;&nbsp;Mortgage Segment | <u>[48](#i8c1a838c8b384cbd8c3d99c9af25908b_148)</u> |
| &nbsp;&nbsp;&nbsp;Corporate | <u>[51](#i8c1a838c8b384cbd8c3d99c9af25908b_151)</u> |
| &nbsp;&nbsp;&nbsp;Critical Accounting Policies, Estimates and Recent Accounting Pronouncements | <u>[53](#i8c1a838c8b384cbd8c3d99c9af25908b_157)</u> |
| &nbsp;&nbsp;&nbsp;Financial Condition | <u>[53](#i8c1a838c8b384cbd8c3d99c9af25908b_160)</u> |
| &nbsp;&nbsp;&nbsp;Liquidity | <u>[58](#i8c1a838c8b384cbd8c3d99c9af25908b_166)</u> |
| &nbsp;&nbsp;&nbsp;Capital Resources | <u>[59](#i8c1a838c8b384cbd8c3d99c9af25908b_172)</u> |
| &nbsp;&nbsp;&nbsp;Catastrophic and Severe Economic Events | <u>[60](#i8c1a838c8b384cbd8c3d99c9af25908b_175)</u> |
| &nbsp;&nbsp;&nbsp;Market Sensitive Instruments and Risk Management | <u>[61](#i8c1a838c8b384cbd8c3d99c9af25908b_178)</u> |

---

ARCH CAPITAL 38 2025 SECOND QUARTER FORM 10-Q

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**CURRENT OUTLOOK**

We reported solid results for the 2025 second quarter, with an annualized net income return on average common equity and operating return on average common equity of 22.9% and 18.2%, respectively. See "<u>[Comment on Non-GAAP Financial Measures](#i8c1a838c8b384cbd8c3d99c9af25908b_136)</u>." Book value per share grew 7.3% in the 2025 the second quarter, reflecting our disciplined underwriting and capital management. We continue to execute our cycle management strategy by actively allocating capital to the segments with the best risk-adjusted returns, while retaining the flexibility to invest in our platform when we find attractive opportunities. This approach, combined with a diversified global platform and strong distribution relationships, allows us to adapt dynamically to shifting market conditions. We focus on practicing disciplined underwriting that builds a meaningful margin of safety into pricing, take a long-term view of risk and a prudent approach to reserving.

Our core objective to deliver long-term value for our shareholders remains unchanged. We will continue to execute on the key pillars of our strategy which are: to build a diversified mix of businesses; to actively manage the underwriting cycle; to remain prudent stewards of the capital entrusted to us by our shareholders; and to be dynamic managers of a data-driven enterprise with a culture that attracts best-in-class talent.

Overall, property and casualty market conditions remain largely consistent with the 2025 first quarter. Some sectors are seeing increased price competition while others continue to experience rate improvements. We believe the property and casualty market still presents meaningful opportunities for disciplined underwriters to generate attractive risk-adjusted returns on capital.

Our insurance segment reported $129 million of underwriting income for the 2025 second quarter, with net premium written surpassing $2 billion, which is an increase of 30.7% from the 2024 second quarter. Growth in net premiums written primarily resulted from the U.S MidCorp and Entertainment Insurance businesses acquired from Allianz on August 1, 2024 ("MCE Acquisition"). The integration of the MCE Acquisition is progressing well, and we remain excited about the increased capabilities this team brings to our insurance platform. Organic growth outside of the MCE Acquisition was modest, and growing our presence in middle market remains central to our strategy in North America. We saw selective growth in casualty lines, particularly in alternative market, E&S casualty and large account casualty, where pricing continued to outpace loss trends. However, competitive pressure persists in E&S property, excess D&O and cyber. While pricing in excess D&O and cyber appears to be stabilizing, we are maintaining a cautious stance, and prioritizing margin over volume in

these lines. Internationally, our Lloyd's and London market businesses are experiencing increased, but rational, competition. Our long-term investment in establishing a leadership position at Lloyd's continues to yield strong results reflected in favorable signings and our ability to attract top-tier underwriting talent.

Our reinsurance segment contributed $451 million of underwriting income in the 2025 second quarter, with over $2 billion of net premiums written. We are growing selectively and focusing on areas where margins are attractive. We anticipate continued selective growth in quota share arrangements in casualty lines and are willing to lean in—partnering with underwriting teams with strong expertise in complex liability risks. We also expanded our property catastrophe writings, primarily in Florida, where we saw attractive risk-adjusted returns and increased demand from clients for additional limits. Specialty lines remained a strategic focus, and our teams found several new opportunities this quarter. That said, our property other than property catastrophe excess of loss portfolio contracted, as cedants retained more risk and margins on certain portions of the portfolio fell below our target. We were generally pleased with the state of the mid-year catastrophe excess of loss renewals. While pricing was slightly down, margins remain attractive with primary insurers maintaining high retentions.

Our mortgage segment continued to deliver a steady level of earnings for our shareholders, generating $238 million of underwriting income in the 2025 second quarter, due to the strength of our in-force portfolio. While new originations were tempered by relatively high mortgage interest rates, underlying fundamentals remained strong and our U.S. market share was stable as industry pricing discipline held. The persistency of our in force U.S. primary mortgage insurance portfolio remained a healthy 81.9% and our delinquency rate remained low. While economic uncertainty could create headwinds, we still expect the mortgage segment to continue generating attractive underwriting income given the high credit quality and embedded equity of our in-force portfolio.

ARCH CAPITAL 39 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

**FINANCIAL MEASURES**

Management uses the following three key financial indicators in evaluating our performance and measuring the overall growth in value generated for Arch Capital's common shareholders:

**Book Value per Share**

Book value per share represents total common shareholders' equity available to Arch divided by the number of common shares outstanding. Management uses growth in book value per share as a key measure of the value generated for our common shareholders each period and believes that book value per share is the key driver of Arch Capital's share price over time. Book value per share is impacted by, among other factors, our underwriting results, investment returns and share repurchase activity, which has an accretive or dilutive impact on book value per share depending on the purchase price. Book value per share was $59.17 at June 30, 2025, compared to $55.15 at March 31, 2025, and $52.75 at June 30, 2024. The 7.3% increase in book value per share for the 2025 second quarter primarily reflected strong underwriting and investment returns.

**Operating Return on Average Common Equity**

Operating return on average common equity ("Operating ROAE") represents annualized after-tax operating income available to Arch common shareholders divided by the average of beginning and ending common shareholders' equity available to Arch during the period. After-tax operating income available to Arch common shareholders, a non-GAAP financial measure as defined in Regulation G, represents net income available to Arch common shareholders, excluding net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses, transaction costs and other and income taxes. Management uses Operating ROAE as a key measure of the return generated to common shareholders. See <u>["Comment on Non-GAAP Financial Measures."](#i8c1a838c8b384cbd8c3d99c9af25908b_136)</u>

Our annualized net income return on average common equity was 22.9% for the 2025 second quarter, compared to 26.3% for the 2024 second quarter, and 17.0% for the six months ended June 30, 2025, compared to 25.4% for the 2024 period. Our Operating ROAE was 18.2% for the 2025 second quarter, compared to 20.5% for the 2024 second quarter and 14.8% for the six months ended June 30, 2025, compared to 20.5% for the 2024 period. Returns for 2025 reflected strong underwriting and investment returns.

**Total Return on Investments**

Total return on investments, a non-GAAP financial measure as defined in Regulation G, includes investment income, equity in net income or loss of investments accounted for using the equity method, net realized gains or losses attributable to the investment portfolio and the change in unrealized gains or losses generated by Arch's investment portfolio. Total return is calculated on a pre-tax basis and before investment expenses and reflects the effect of financial market conditions along with foreign currency fluctuations. In addition, total return incorporates the timing of investment returns during the periods. The following table summarizes our total return compared to the benchmark return against which we measured our portfolio during the periods. See <u>["Comment on Non-GAAP Financial Measures."](#i8c1a838c8b384cbd8c3d99c9af25908b_136)</u>

---

| | | |
|:---|:---|:---|
| | **Arch<br>Portfolio** | **Benchmark<br>Return** |
| Pre-tax total return (before investment expenses): | Pre-tax total return (before investment expenses): | Pre-tax total return (before investment expenses): |
| &nbsp;&nbsp;&nbsp;2025 Second Quarter | 3.09% | 3.26% |
| &nbsp;&nbsp;&nbsp;2024 Second Quarter | 1.33% | 1.22% |
| &nbsp;&nbsp;&nbsp;Six Months Ended June 30, 2025 | 5.17% | 5.37% |
| &nbsp;&nbsp;&nbsp;Six Months Ended June 30, 2024 | 2.14% | 2.07% |

---

Total return for the 2025 periods reflected the effects of lower yields on U.S. Government bonds and slightly underperformed their benchmark returns, primarily due to the anticipated sale of certain alternative investments accounted for using the equity method. We continue to maintain a relatively short duration on our fixed income portfolio of 3.48 years at June 30, 2025, compared to 3.31 years at December 31, 2024.

The benchmark return index is a customized combination of indices intended to approximate a target portfolio by asset mix and average credit quality with a fixed income component matching the approximate estimated duration and currency mix of our insurance and reinsurance liabilities. It is recalibrated annually. Although the estimated fixed income duration and average credit quality of this index will move as the duration and rating of its constituent securities change, generally we do not adjust the composition of the benchmark return index during the year except to incorporate changes to the mix of liability currencies and

ARCH CAPITAL 40 2025 SECOND QUARTER FORM 10-Q

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durations noted above. The benchmark return index should not be interpreted as expressing a preference for or aversion to any particular sector or sector weight. At June 30, 2025, the fixed income portion of the benchmark had an average credit quality of "A1" by Moody's and an estimated fixed income duration of 3.24 years.

The benchmark return index included weightings to the following indices:

---

| | |
|:---|:---|
| | **%** |
| ICE BofA 1-10 Year U.S. Corporate Index | 26.70 |
| Yield on 3-5 Year U.S. Treasury Index plus 6% | 17.00 |
| ICE BofA 1-10 Year U.S. Treasury Index | 15.00 |
| ICE BofA 0-3 Month U.S. Treasury Index | 3.00 |
| JPM CLOIE Investment Grade | 6.00 |
| ICE BofA 1-5 Year U.K. Gilt Index | 5.25 |
| ICE BofA U.S. High Yield Constrained Index | 5.00 |
| ICE BofA U.S. ABS & CMBS Index | 4.70 |
| S&P 500 Total Return Index | 4.50 |
| ICE BofA U.S. Mortgage Backed Securities Index | 3.50 |
| ICE BofA German Government 1-5 Year Index | 3.25 |
| ICE BofA German Government 5-7 Year Index | 0.60 |
| ICE BofA 1-5 Year Canada Government Index | 2.60 |
| ICE BofA 15+ Year Canada Government Index | 0.30 |
| ICE BofA 1-5 Year Australia Government Index | 1.90 |
| ICE BofA 5-10 Year Australia Government Index | 0.45 |
| ICE BofA 1-5 Year Japan Government Index | 0.25 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 100.00% |

---

**COMMENT ON NON-GAAP FINANCIAL MEASURES**

Throughout this filing, we present our operations in the way we believe will be the most meaningful and useful to investors, analysts, rating agencies and others who use our financial information in evaluating the performance of our company. This presentation includes the use of after-tax operating income available to Arch common shareholders, which is defined as net income available to Arch common shareholders, excluding net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses, transaction costs and other, income taxes, and the use of annualized operating return on average common equity. The presentation of after-tax operating income available to Arch common shareholders and annualized operating return on average common equity are non-GAAP financial measures as defined in Regulation G. The reconciliation of such measures

to net income available to Arch common shareholders and annualized net income return on average common equity (the most directly comparable GAAP financial measures) in accordance with Regulation G is included under "Results of Operations" below.

We believe that net realized gains or losses, equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other in any particular period are not indicative of the performance of, or trends in, our business. Although net realized gains or losses, equity in net income or loss of investments accounted for using the equity method and net foreign exchange gains or losses are an integral part of our operations, the decision to realize these items, are independent of the insurance underwriting process and result, in large part, from general economic and financial market conditions. Furthermore, certain users of our financial information believe that, for many companies, the timing of the realization of investment gains or losses is largely opportunistic. In addition, changes in the allowance for credit losses and net impairment losses recognized in earnings on our investments represent other-than-temporary declines in expected recovery values on securities without actual realization. Furthermore, we exclude net realized gains or losses from the acquisition or disposition of subsidiaries, due to their non-recurring nature, such items are not indicative of the performance of, or trends in, our business performance.

The use of the equity method on certain of our investments funds that invest in fixed maturity securities is driven by the ownership structure of such funds (either limited partnerships or limited liability companies). In applying the equity method, these investments are initially recorded at cost and are subsequently adjusted based on our proportionate share of the net income or loss of the funds (which include changes in the market value of the underlying securities in the funds). This method of accounting is different from the way in which we account for our other investments; and, the timing of the recognition of equity in net income or loss of investments accounted for using the equity method may differ from gains or losses in the future upon sale or maturity of such investments.

Transaction costs and other include integration, advisory, financing, legal, severance, incentive compensation and all other transaction costs directly related to acquisitions. We believe that transaction costs and other, due to their nonrecurring nature, are not indicative of the performance of, or trends in, our business performance.

We believe that showing net income available to Arch common shareholders exclusive of the items referred to above reflects the underlying fundamentals of our business since we evaluate the performance of and manage our business to produce an underwriting profit. In addition to

ARCH CAPITAL 41 2025 SECOND QUARTER FORM 10-Q

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presenting the net income available to Arch common shareholders, we believe that this presentation enables investors and other users of our financial information to analyze our performance in a manner similar to how management analyzes performance. We also believe that this measure follows industry practice and, therefore, allows the users of financial information to compare our performance with our industry peer group. We believe that the equity analysts and certain rating agencies that follow us and the insurance industry as a whole generally exclude these items from their analyses for the same reasons.

Our segment information includes the presentation of consolidated underwriting income or loss. Such measures represent the pre-tax profitability of our underwriting operations and include net premiums earned plus other underwriting income, less losses and loss adjustment expenses, acquisition expenses and other operating expenses. Other operating expenses include those operating expenses that are incremental and/or directly attributable to our individual underwriting operations. Underwriting income or loss does not incorporate certain income and expense items which are included in corporate. While these measures are presented in <u>[note 5, "Segment Information,"](#i8c1a838c8b384cbd8c3d99c9af25908b_61)</u> to our consolidated financial statements, they are considered non-GAAP financial measures when presented elsewhere on a consolidated basis. The reconciliations of underwriting income or loss to income before income taxes (the most directly comparable GAAP financial measure) on a consolidated basis, in accordance with Regulation G, is shown in <u>[note 5, "Segment Information"](#i8c1a838c8b384cbd8c3d99c9af25908b_61)</u> to our consolidated financial statements.

We measure segment performance for our three underwriting segments based on underwriting income or loss. We do not manage our assets by underwriting segment, with the exception of goodwill and intangible assets, and, accordingly, investment income, income from operating affiliates and other non-underwriting related items are not allocated to each underwriting segment.

Our presentation of segment information includes the use of a current year loss ratio which excludes favorable or adverse development in prior year loss reserves. This ratio is a non-GAAP financial measure as defined in Regulation G. The reconciliation of such measure to the loss ratio (the most directly comparable GAAP financial measure) in accordance with Regulation G is shown on the individual segment pages. Management utilizes the current year loss ratio in its analysis of the underwriting performance of each of our underwriting segments. Effective in the 2025 first quarter, the 'Other operating expense ratio' includes 'Other underwriting income.'

Total return on investments includes investment income, equity in net income or loss of investments accounted for using the equity method, net realized gains or losses (excluding changes in the allowance for credit losses on non-investment related financial assets) and the change in unrealized gains or losses generated by Arch's investment portfolio. Total return is calculated on a pre-tax basis and before investment expenses, and reflects the effect of financial market conditions along with foreign currency fluctuations. In addition, total return incorporates the timing of investment returns during the periods. There is no directly comparable GAAP financial measure for total return. Management uses total return on investments as a key measure of the return generated to Arch common shareholders on the capital held in the business, and compares the return generated by our investment portfolio against benchmark returns which we measured our portfolio against during the periods.

ARCH CAPITAL 42 2025 SECOND QUARTER FORM 10-Q

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**RESULTS OF OPERATIONS**

The following table summarizes our consolidated financial data, including a reconciliation of net income or loss available to Arch common shareholders to after-tax operating income or loss available to Arch common shareholders. See <u>["Comment on Non-GAAP Financial Measures."](#i8c1a838c8b384cbd8c3d99c9af25908b_136)</u>

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| Net income available to Arch common shareholders | $1227 | $1259 | $1791 | $2369 |
| Net realized (gains) losses (1) | (229) | (122) | (232) | (189) |
| Equity in net (income) loss of investments accounted for using the equity method | (162) | (167) | (215) | (266) |
| Net foreign exchange (gains) losses | 88 | (1) | 115 | (32) |
| Transaction costs and other | 18 | 18 | 28 | 25 |
| Income tax expense (benefit) (2) | 37 | (6) | 79 | 7 |
| After-tax operating income available to Arch common shareholders | $979 | $981 | $1566 | $1914 |
| Beginning common shareholders' equity | $20715 | $18525 | $19990 | $17523 |
| Ending common shareholders' equity | 22211 | 19835 | 22211 | 19835 |
| Average common shareholders' equity | $21463 | $19180 | $21101 | $18679 |
| Annualized net income return on average common equity % | 22.9 | 26.3 | 17.0 | 25.4 |
| Annualized operating return on average common equity % | 18.2 | 20.5 | 14.8 | 20.5 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Net realized gains or losses include realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries.

(2)&nbsp;&nbsp;&nbsp;&nbsp;Income tax expense on net realized gains or losses, equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other reflects the relative mix reported by jurisdiction and the varying tax rates in each jurisdiction.

**Segment Information**

We classify our businesses into three underwriting segments: insurance, reinsurance and mortgage. Our insurance, reinsurance and mortgage segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to our chief operating decision makers. The Chief Executive Officer and the Chief Financial Officer and Treasurer are the Company's chief operating decision makers. They do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis. Management measures segment performance for our three underwriting segments based on underwriting income or loss. We do not manage our assets by underwriting segment, with the exception of goodwill and intangible assets, and accordingly, investment income is not allocated to each underwriting segment.

We determined our reportable segments using the management approach described in accounting guidance regarding disclosures about segments of an enterprise and related information. The accounting policies of the segments are the same as those used for the preparation of our consolidated financial statements. Intersegment business is allocated to the segment accountable for the underwriting results.

**<u>Insurance Segment</u>**

The Company's insurance segment primarily consists of commercial insurance lines of business, with a focus on specialty insurance products. These products are mainly offered in North America, Bermuda, the United Kingdom, continental Europe and Australia. Products offered in North America include: commercial automobile; commercial multi-peril; other liability-claims made, which includes financial and professional lines; other liability-occurrence, which includes admitted and excess and surplus casualty lines; property and short-tail specialty; workers compensation; and other. Products offered across the Company's International units include: property and short-tail specialty; and casualty and other.

ARCH CAPITAL 43 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

The following tables set forth our insurance segment's underwriting results:

---

| | | | |
|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** |
| | **2025** | **2024** | **% Change** |
| Gross premiums written | $2681 | $2102 | 27.5 |
| Premiums ceded | (645) | (544) |  |
| Net premiums written | 2036 | 1558 | 30.7 |
| Change in unearned premiums | (67) | (80) |  |
| Net premiums earned | 1969 | 1478 | 33.2 |
| Other underwriting income (1) | 13 |  |  |
| Losses and loss adjustment expenses | (1178) | (848) |  |
| Acquisition expenses | (387) | (288) |  |
| Other operating expenses | (288) | (233) |  |
| Underwriting income (loss) | $129 | $109 | 18.3 |
| **Underwriting Ratios** |  |  | **% Point<br>Change** |
| Loss ratio | 59.8% | 57.3% | 2.5 |
| Acquisition expense ratio | 19.6% | 19.5% | 0.1 |
| Other operating expense ratio (2) | 14.0% | 15.8% | (1.8) |
| Combined ratio | 93.4% | 92.6% | 0.8 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;'Other underwriting income' includes revenue earned from underwriting-related activities covered under existing service contracts.

(2)&nbsp;&nbsp;&nbsp;&nbsp;The 'Other operating expense ratio' for the 2025 period includes 'Other underwriting income.' See 'Comments on Non-GAAP Financial Measures' for further details.

---

| | | | |
|:---|:---|:---|:---|
| | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2024** | **% Change** |
| Gross premiums written | $5326 | $4228 | 26.0 |
| Premiums ceded | (1357) | (1128) |  |
| Net premiums written | 3969 | 3100 | 28.0 |
| Change in unearned premiums | (140) | (171) |  |
| Net premiums earned | 3829 | 2929 | 30.7 |
| Other underwriting income (1) | 16 |  |  |
| Losses and loss adjustment expenses | (2406) | (1702) |  |
| Acquisition expenses | (730) | (564) |  |
| Other operating expenses | (582) | (468) |  |
| Underwriting income (loss) | $127 | $195 | (34.9) |
| **Underwriting Ratios** |  |  | **% Point<br>Change** |
| Loss ratio | 62.8% | 58.1% | 4.7 |
| Acquisition expense ratio | 19.1% | 19.2% | (0.1) |
| Other operating expense ratio (2) | 14.8% | 16.0% | (1.2) |
| Combined ratio | 96.7% | 93.3% | 3.4 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;'Other underwriting income' includes revenue earned from underwriting-related activities covered under existing service contracts.

(2)&nbsp;&nbsp;&nbsp;&nbsp;The 'Other operating expense ratio' for the 2025 period includes 'Other underwriting income.' See 'Comments on Non-GAAP Financial Measures' for further details.

*Premiums Written*.

The following tables set forth our insurance segment's net premiums written by major line of business:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** |
| | **2025** | **2025** | **2024** | **2024** |
| | **Amount** | **%** | **Amount** | **%** |
| **North America** |  |  |  |  |
| Property and short-tail specialty | $369 | 18.1 | $276 | 17.7 |
| Other liability - occurrence | 366 | 18.0 | 224 | 14.4 |
| Other liability - claims made | 206 | 10.1 | 215 | 13.8 |
| Commercial multi-peril | 205 | 10.1 | 62 | 4.0 |
| Commercial automobile | 165 | 8.1 | 123 | 7.9 |
| Workers compensation | 130 | 6.4 | 112 | 7.2 |
| Other | 89 | 4.4 | 75 | 4.8 |
| Total North America | 1530 | 75.1 | 1087 | 69.8 |
| **International** |  |  |  |  |
| Property and short-tail specialty | $278 | 13.7 | $260 | 16.7 |
| Casualty and other | 228 | 11.2 | 211 | 13.5 |
| Total International | 506 | 24.9 | 471 | 30.2 |
| &nbsp;&nbsp;Total | $2036 | 100.0 | $1558 | 100.0 |

---

*2025 Second Quarter versus 2024 Period.* Gross premiums written by the insurance segment in the 2025 second quarter were 27.5% higher than in the 2024 second quarter (3.6% excluding the MCE Acquisition), while net premiums written were 30.7% higher than in the 2024 second quarter (1.7% excluding the MCE Acquisition).

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2025** | **2024** | **2024** |
| | **Amount** | **%** | **Amount** | **%** |
| **North America** |  |  |  |  |
| Property and short-tail specialty | $717 | 18.1 | $560 | 18.1 |
| Other liability - occurrence | 696 | 17.5 | 407 | 13.1 |
| Other liability - claims made | 355 | 8.9 | 415 | 13.4 |
| Commercial multi-peril | 403 | 10.2 | 103 | 3.3 |
| Commercial automobile | 326 | 8.2 | 235 | 7.6 |
| Workers compensation | 283 | 7.1 | 255 | 8.2 |
| Other | 165 | 4.2 | 144 | 4.6 |
| Total North America | 2945 | 74.2 | 2119 | 68.4 |
| **International** |  |  |  |  |
| Property and short-tail specialty | $545 | 13.7 | $528 | 17.0 |
| Casualty and other | 479 | 12.1 | 453 | 14.6 |
| Total International | 1024 | 25.8 | 981 | 31.6 |
| &nbsp;&nbsp;Total | $3969 | 100.0 | $3100 | 100.0 |

---

*Six Months Ended June 30, 2025 versus 2024 period*. Gross premiums written by the insurance segment for the six months ended June 30, 2025 were 26.0% higher than in the 2024 period, while net premiums written were 28.0% higher than in the 2024 period (1.5% excluding the MCE Acquisition).

ARCH CAPITAL 44 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

*Net Premiums Earned*.

The following tables set forth our insurance segment's net premiums earned by major line of business:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** |
| | **2025** | **2025** | **2024** | **2024** |
| | **Amount** | **%** | **Amount** | **%** |
| **North America** |  |  |  |  |
| Property and short-tail specialty | $363 | 18.4 | $264 | 17.9 |
| Other liability - occurrence | 338 | 17.2 | 175 | 11.8 |
| Other liability - claims made | 186 | 9.4 | 208 | 14.1 |
| Commercial multi-peril | 203 | 10.3 | 57 | 3.9 |
| Commercial automobile | 147 | 7.5 | 106 | 7.2 |
| Workers compensation | 147 | 7.5 | 132 | 8.9 |
| Other | 71 | 3.6 | 75 | 5.1 |
| Total North America | 1455 | 73.9 | 1017 | 68.8 |
| **International** |  |  |  |  |
| Property and short-tail specialty | $272 | 13.8 | $248 | 16.8 |
| Casualty and other | 242 | 12.3 | 213 | 14.4 |
| Total International | 514 | 26.1 | 461 | 31.2 |
| &nbsp;&nbsp;Total | $1969 | 100.0 | $1478 | 100.0 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2025** | **2024** | **2024** |
| | **Amount** | **%** | **Amount** | **%** |
| **North America** |  |  |  |  |
| Property and short-tail specialty | $696 | 18.2 | 527 | 18.0 |
| Other liability - occurrence | 667 | 17.4 | 350 | 11.9 |
| Other liability - claims made | 378 | 9.9 | 420 | 14.3 |
| Commercial multi-peril | 404 | 10.6 | 100 | 3.4 |
| Commercial automobile | 292 | 7.6 | 207 | 7.1 |
| Workers compensation | 278 | 7.3 | 259 | 8.8 |
| Other | 143 | 3.7 | 156 | 5.3 |
| Total North America | 2858 | 74.6 | 2019 | 68.9 |
| **International** |  |  |  |  |
| Property and short-tail specialty | $508 | 13.3 | 486 | 16.6 |
| Casualty and other | 463 | 12.1 | 424 | 14.5 |
| Total International | 971 | 25.4 | 910 | 31.1 |
| &nbsp;&nbsp;Total | $3829 | 100.0 | $2929 | 100.0 |

---

Net premiums written are primarily earned on a pro rata basis over the terms of the policies for all products, usually 12 months. Net premiums earned reflect changes in net premiums written over the previous five quarters. Net premiums earned for the 2025 second quarter were 33.2% higher than in the 2024 second quarter (6.8% excluding the MCE Acquisition) while net premiums earned for the six months ended June 30, 2025 were 30.7% higher than in the 2024 period (4.3% excluding the MCE Acquisition).

*Other Underwriting Income*.

Other underwriting income, which includes revenue earned from underwriting-related activities covered under existing service contracts, was $13 million for the 2025 second quarter, compared to nil for the 2024 second quarter, and $16 million for the six months ended June 30, 2025, compared to nil for the 2024 period.

*Losses and Loss Adjustment Expenses*.

The table below shows the components of the insurance segment's loss ratio:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| Current year | 60.2% | 57.6% | 63.4% | 58.6% |
| Prior period reserve development | (0.4)% | (0.3)% | (0.6)% | (0.5)% |
| &nbsp;&nbsp;&nbsp;Loss ratio | 59.8% | 57.3% | 62.8% | 58.1% |

---

*<u>Current Year Loss Ratio</u>*.

*2025 Second Quarter versus 2024 Period.* The insurance segment's current year loss ratio in the 2025 second quarter was 2.6 points higher than in the 2024 second quarter. The 2025 second quarter loss ratio reflected 2.9 points of current year catastrophic activity, compared to 2.0 points of current year catastrophic activity in the 2024 second quarter. The current year loss ratio for the 2025 second quarter also reflected the impact of the MCE Acquisition and changes in mix of business.

*Six Months Ended June 30, 2025 versus 2024 Period.* The insurance segment's current year loss ratio for the six months ended June 30, 2025 was 4.8 points higher than in the 2024 period and reflected 6.1 points of current year catastrophic activity, primarily related to the California wildfires, compared to 1.9 points in the 2024 period. The current year loss ratio for the 2025 period also reflected the impact of the MCE Acquisition and changes in mix of business.

ARCH CAPITAL 45 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

*<u>Prior Period Reserve Development</u>*.

The insurance segment's net favorable development was $8 million, or 0.4 points, for the 2025 second quarter, compared to $5 million, or 0.3 points, for the 2024 second quarter, and $25 million, or 0.6 points, for the six months ended June 30, 2025, compared to $15 million, or 0.5 points, for the 2024 period. See <u>[note 6, "Reserve for Losses and Loss Adjustment Expenses,"](#i8c1a838c8b384cbd8c3d99c9af25908b_67)</u> to our consolidated financial statements for information about the insurance segment's prior year reserve development.

*Underwriting Expenses*.

*2025 Second Quarter versus 2024 Period.* The insurance segment's underwriting expense ratio was 33.6% in the 2025 second quarter, compared to 35.3% in the 2024 second quarter, with the decrease reflecting growth in net premiums earned. The impact of the MCE Acquisition lowered the current year underwriting expense ratio by approximately 0.6 points, due to efficiencies of scale in operating expenses and, to a lesser extent, to the effects of the fair value estimation of the assets acquired at closing, including the non-recognition of deferred acquisition costs.

*Six Months Ended June 30, 2025 versus 2024 period*. The insurance segment's underwriting expense ratio was 33.9% for the six months ended June 30, 2025, compared to 35.2% for the 2024 period, with the decrease reflecting growth in net premiums earned. The impact of the MCE Acquisition lowered the current year underwriting expense ratio by approximately 1.1 points.

**<u>Reinsurance Segment</u>** 

The Company's reinsurance segment offers reinsurance products on a worldwide basis. Lines of business include: casualty; marine and aviation; specialty; property catastrophe; property excluding property catastrophe; and other.

The following tables set forth our reinsurance segment's underwriting results:

---

| | | | |
|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** |
| | **2025** | **2024** | **% Change** |
| Gross premiums written | $3196 | $2941 | 8.7 |
| Premiums ceded | (1137) | (994) |  |
| Net premiums written | 2059 | 1947 | 5.8 |
| Change in unearned premiums | 28 | (167) |  |
| Net premiums earned | 2087 | 1780 | 17.2 |
| Other underwriting income (1) | 46 | 1 |  |
| Losses and loss adjustment expenses | (1128) | (1006) |  |
| Acquisition expenses | (436) | (345) |  |
| Other operating expenses | (118) | (64) |  |
| Underwriting income | $451 | $366 | 23.2 |
| **Underwriting Ratios** |  |  | **% Point<br>Change** |
| Loss ratio | 54.1% | 56.5% | (2.4) |
| Acquisition expense ratio | 20.9% | 19.4% | 1.5 |
| Other operating expense ratio (2) | 3.5% | 3.6% | (0.1) |
| Combined ratio | 78.5% | 79.5% | (1.0) |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;'Other underwriting income' includes revenue earned from underwriting-related activities covered under existing service contracts.

(2)&nbsp;&nbsp;&nbsp;&nbsp;The 'Other operating expense ratio' for the 2025 period includes 'Other underwriting income.' See 'Comments on Non-GAAP Financial Measures' for further details.

ARCH CAPITAL 46 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

---

| | | | |
|:---|:---|:---|:---|
| | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2024** | **% Change** |
| Gross premiums written | $6690 | $6408 | 4.4 |
| Premiums ceded | (2315) | (2195) |  |
| Net premiums written | 4375 | 4213 | 3.8 |
| Change in unearned premiums | (260) | (767) |  |
| Net premiums earned | 4115 | 3446 | 19.4 |
| Other underwriting income (1) | 85 | 3 |  |
| Losses and loss adjustment expenses | (2484) | (1889) |  |
| Acquisition expenses | (853) | (676) |  |
| Other operating expenses | (245) | (139) |  |
| Underwriting income (loss) | $618 | $745 | (17.0) |
| **Underwriting Ratios** |  |  | **% Point<br>Change** |
| Loss ratio | 60.4% | 54.8% | 5.6 |
| Acquisition expense ratio | 20.7% | 19.6% | 1.1 |
| Other operating expense ratio (2) | 3.9% | 4.0% | (0.1) |
| Combined ratio | 85.0% | 78.4% | 6.6 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;'Other underwriting income' includes revenue earned from underwriting-related activities covered under existing service contracts.

(2)&nbsp;&nbsp;&nbsp;&nbsp;The 'Other operating expense ratio' for the 2025 period includes 'Other underwriting income.' See 'Comments on Non-GAAP Financial Measures' for further details.

*Premiums Written*.

The following tables set forth our reinsurance segment's net premiums written by major line of business:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** |
| | **2025** | **2025** | **2024** | **2024** |
| | **Amount** | **%** | **Amount** | **%** |
| Specialty | $729 | 35.4 | $539 | 27.7 |
| Property catastrophe | 484 | 23.5 | 472 | 24.2 |
| Property excluding property catastrophe | 430 | 20.9 | 585 | 30.0 |
| Casualty | 308 | 15.0 | 261 | 13.4 |
| Marine and aviation | 68 | 3.3 | 59 | 3.0 |
| Other | 40 | 1.9 | 31 | 1.6 |
| Total | $2059 | 100.0 | $1947 | 100.0 |

---

*2025 Second Quarter versus 2024 Period.* Gross premiums written by the reinsurance segment in the 2025 second quarter were 8.7% higher than in the 2024 second quarter, while net premiums written were 5.8% higher than in the 2024 second quarter. The growth in net premiums written primarily reflected increases in most lines of business, due in part to rate increases, new business opportunities and growth in existing accounts.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2025** | **2024** | **2024** |
| | **Amount** | **%** | **Amount** | **%** |
| Specialty | $1323 | 30.2 | $1379 | 32.7 |
| Property catastrophe | 961 | 22.0 | 822 | 19.5 |
| Property excluding property catastrophe | 1011 | 23.1 | 1152 | 27.3 |
| Casualty | 807 | 18.4 | 604 | 14.3 |
| Marine and aviation | 189 | 4.3 | 188 | 4.5 |
| Other | 84 | 1.9 | 68 | 1.6 |
| Total | $4375 | 100.0 | $4213 | 100.0 |

---

*Six Months Ended June 30, 2025 versus 2024 period*. Gross premiums written by the reinsurance segment for the six months ended June 30, 2025 were 4.4% higher than in the 2024 period, while net premiums written were 3.8% higher than in the 2024 period. The growth in net premiums written reflected increases in most lines of business, due in part to rate increases, new business opportunities and growth in existing accounts.

*Net Premiums Earned*.

The following tables set forth our reinsurance segment's net premiums earned by major line of business:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** |
| | **2025** | **2025** | **2024** | **2024** |
| | **Amount** | **%** | **Amount** | **%** |
| Specialty | $760 | 36.4 | $659 | 37.0 |
| Property catastrophe | 260 | 12.5 | 246 | 13.8 |
| Property excluding property catastrophe | 587 | 28.1 | 520 | 29.2 |
| Casualty | 355 | 17.0 | 269 | 15.1 |
| Marine and aviation | 82 | 3.9 | 60 | 3.4 |
| Other | 43 | 2.1 | 26 | 1.5 |
| Total | $2087 | 100.0 | $1780 | 100.0 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2025** | **2024** | **2024** |
| | **Amount** | **%** | **Amount** | **%** |
| Specialty | $1487 | 36.1 | $1246 | 36.2 |
| Property catastrophe | 566 | 13.8 | 480 | 13.9 |
| Property excluding property catastrophe | 1135 | 27.6 | 1006 | 29.2 |
| Casualty | 680 | 16.5 | 516 | 15.0 |
| Marine and aviation | 162 | 3.9 | 134 | 3.9 |
| Other | 85 | 2.1 | 64 | 1.9 |
| Total | $4115 | 100.0 | $3446 | 100.0 |

---

Net premiums written, irrespective of the class of business, are generally earned on a pro rata basis over the terms of the underlying policies or reinsurance contracts. Net premiums earned reflect changes in net premiums written over the previous five quarters. Net premiums earned for the 2025 second quarter were 17.2% higher than in the 2024 second quarter, while net premiums earned for the six months ended June 30, 2025 were 19.4% higher than in the 2024 period.

ARCH CAPITAL 47 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

*Other Underwriting Income*.

Other underwriting income, which includes revenue earned from underwriting-related activities covered under existing service contracts, was $46 million for the 2025 second quarter, compared to $1 million for the 2024 second quarter, and $85 million for the six months ended June 30, 2025, compared to $3 million for the 2024 period.

*Losses and Loss Adjustment Expenses*.

The table below shows the components of the reinsurance segment's loss ratio:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| Current year | 58.0% | 58.4% | 65.3% | 57.0% |
| Prior period reserve development | (3.9)% | (1.9)% | (4.9)% | (2.2)% |
| &nbsp;&nbsp;&nbsp;Loss ratio | 54.1% | 56.5% | 60.4% | 54.8% |

---

*<u>Current Year Loss Ratio</u>*.

*2025 Second Quarter versus 2024 Period.* The reinsurance segment's current year loss ratio in the 2025 second quarter was 0.4 points lower than in the 2024 second quarter. The 2025 second quarter loss ratio reflected 5.5 points of current year catastrophic activity, compared to 10.0 points of current year catastrophic activity in the 2024 second quarter. The current year loss ratio for the 2025 second quarter also reflected a higher level of attritional losses and changes in the mix of business.

*Six Months Ended June 30, 2025 versus 2024 Period.* The reinsurance segment's current year loss ratio for the six months ended June 30, 2025 was 8.3 points higher than in the 2024 period and reflected 13.5 points of current year catastrophic activity primarily related to the California wildfires, compared to 6.1 points in the 2024 period. The current year loss ratio for the 2025 period and also reflected the impact of rate increases and changes in mix of business.

*<u>Prior Period Reserve Development</u>*.

The reinsurance segment's net favorable development was $81 million, or 3.9 points, for the 2025 second quarter, compared to $34 million, or 1.9 points, for the 2024 second quarter, and $200 million, or 4.9 points, for the six months ended June 30, 2025, compared to $74 million, or 2.2 points, for the 2024 period. See<u>[note 6, "Reserve for Losses and Loss Adjustment Expenses,"](#i8c1a838c8b384cbd8c3d99c9af25908b_67)</u> to our consolidated financial statements for information about the reinsurance segment's prior year reserve development.

*Underwriting Expenses*.

*2025 Second Quarter versus 2024 Period.* The underwriting expense ratio for the reinsurance segment was 24.4% in the 2025 second quarter, compared to 23.0% in the 2024 second quarter, with the increase primarily reflecting lower profit and sliding scale commissions on ceded business in the 2025 second quarter.

*Six Months Ended June 30, 2025 versus 2024 period*. The underwriting expense ratio for the reinsurance segment was 24.6% for the six months ended June 30, 2025, compared to 23.6% for the 2024 period. The increase in the 2025 period primarily reflected lower profit and sliding scale commissions on ceded business.

**<u>Mortgage Segment</u>** 

The Company's mortgage segment consists of U.S. primary mortgage insurance business written predominantly on loans sold to the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac"), each a government sponsored entity ("GSE") and also through non GSE approved entities (combined "Arch MI U.S."); reinsurance and underwriting services related to U.S. credit-risk transfer ("CRT") business which are predominately with the GSEs and other U.S. mortgage reinsurance transactions; and international mortgage insurance and reinsurance business covering loans primarily in Australia and Europe.

The following tables set forth our mortgage segment's underwriting results:

---

| | | | |
|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** |
| | **2025** | **2024** | **% Change** |
| Gross premiums written | $323 | $340 | (5.0) |
| Premiums ceded | (70) | (64) |  |
| Net premiums written | 253 | 276 | (8.3) |
| Change in unearned premiums | 28 | 31 |  |
| Net premiums earned | 281 | 307 | (8.5) |
| Other underwriting income (1) | 3 | 2 |  |
| Losses and loss adjustment expenses | 3 | 27 |  |
| Acquisition expenses | (1) |  |  |
| Other operating expenses | (48) | (49) |  |
| Underwriting income | $238 | $287 | (17.1) |
| **Underwriting Ratios** |  |  | **% Point<br>Change** |
| Loss ratio | (1.2)% | (8.6)% | 7.4 |
| Acquisition expense ratio | 0.4% | 0.1% | 0.3 |
| Other operating expense ratio (2) | 16.0% | 15.9% | 0.1 |
| Combined ratio | 15.2% | 7.4% | 7.8 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;'Other underwriting income' includes revenue earned from underwriting-related activities covered under existing service contracts.

(2)&nbsp;&nbsp;&nbsp;&nbsp;The 'Other operating expense ratio' for the 2025 period includes 'Other underwriting income.' See 'Comments on Non-GAAP Financial Measures' for further details.

ARCH CAPITAL 48 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

---

| | | | |
|:---|:---|:---|:---|
| | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2024** | **% Change** |
| Gross premiums written | $649 | $681 | (4.7) |
| Premiums ceded | (130) | (128) |  |
| Net premiums written | 519 | 553 | (6.1) |
| Change in unearned premiums | 62 | 59 |  |
| Net premiums earned | 581 | 612 | (5.1) |
| Other underwriting income (1) | 14 | 12 |  |
| Losses and loss adjustment expenses |  | 36 |  |
| Acquisition expenses | (5) |  |  |
| Other operating expenses | (100) | (102) |  |
| Underwriting income | $490 | $558 | (12.2) |
| **Underwriting Ratios** |  |  | **% Point<br>Change** |
| Loss ratio | —% | (5.8)% | 5.8 |
| Acquisition expense ratio | 0.9% | 0.1% | 0.8 |
| Other operating expense ratio (2) | 14.9% | 16.7% | (1.8) |
| Combined ratio | 15.8% | 11.0% | 4.8 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;'Other underwriting income' includes revenue earned from underwriting-related activities covered under existing service contracts.

(2)&nbsp;&nbsp;&nbsp;&nbsp;The 'Other operating expense ratio' for the 2025 period includes 'Other underwriting income.' See 'Comments on Non-GAAP Financial Measures' for further details.

*Premiums Written*.

The following tables set forth our mortgage segment's net premiums written by major line of business:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** |
| | **2025** | **2025** | **2024** | **2024** |
| | **Amount** | **%** | **Amount** | **%** |
| U.S. primary mortgage insurance | $184 | 72.7 | $201 | 72.8 |
| U.S. credit risk transfer (CRT) and other | 51 | 20.2 | 51 | 18.5 |
| International mortgage insurance/<br>reinsurance | 18 | 7.1 | 24 | 8.7 |
| Total | $253 | 100.0 | $276 | 100.0 |

---

*2025 Second Quarter versus 2024 Period.* Gross premiums written by the mortgage segment in the 2025 second quarter were 5.0% lower than in the 2024 second quarter, while net premiums written were 8.3% lower than in the 2024 second quarter. The reduction in net premiums written in the 2025 second quarter primarily reflected a one-time $15 million expense related to the tender offer of certain Bellemeade Re mortgage insurance linked notes and to a lesser extent a lower level of mortgage originations, mostly in our international businesses.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2025** | **2024** | **2024** |
| | **Amount** | **%** | **Amount** | **%** |
| U.S. primary mortgage insurance | $387 | 74.6 | $403 | 72.9 |
| U.S. credit risk transfer (CRT) and other | 101 | 19.5 | 107 | 19.3 |
| International mortgage insurance/<br>reinsurance | 31 | 6.0 | 43 | 7.8 |
| Total | $519 | 100.0 | $553 | 100.0 |

---

*Six Months Ended June 30, 2025 versus 2024 Period*. Gross premiums written by the mortgage segment for the six months ended June 30, 2025 were 4.7% lower than in the 2024 period, while net premiums written for the six months ended June 30, 2025 were 6.1% lower than in the 2024 period. The reduction in net premiums written in the 2025 period primarily reflected a lower level of mortgage originations, mostly in our international businesses and a one-time $15 million expense related to the tender offer of certain Bellemeade Re mortgage insurance linked notes.

The persistency rate was 81.9% for the Arch MI U.S. portfolio of primary mortgage insurance policies at June 30, 2025, compared to 83.3% at June 30, 2024. The persistency rate represents the percentage of mortgage insurance in force at the beginning of a 12 month period that remains in force at the end of such period.

The following tables provide details on the new insurance written ("NIW") generated by Arch MI U.S. NIW represents the original principal balance of all loans that received coverage during the period.

ARCH CAPITAL 49 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** |
| | **2025** | **2025** | **2024** | **2024** |
| | **Amount** | **%** | **Amount** | **%** |
| Total new insurance written (NIW) | $12254 |  | $13799 |  |
| <u>Credit quality (FICO):</u> |  |  |  |  |
| >=740 | $9411 | 76.8 | $9726 | 70.5 |
| 680-739 | 2527 | 20.6 | 3641 | 26.4 |
| 620-679 | 313 | 2.6 | 430 | 3.1 |
| <620 | 3 | 0.0 | 2 | 0.0 |
| Total | $12254 | 100.0 | $13799 | 100.0 |
| <u>Loan-to-value (LTV):</u> |  |  |  |  |
| 95.01% and above | $814 | 6.6 | $1014 | 7.3 |
| 90.01% to 95.00% | 5632 | 46.0 | 7234 | 52.4 |
| 85.01% to 90.00% | 3945 | 32.2 | 4047 | 29.3 |
| 85.00% and below | 1863 | 15.2 | 1504 | 10.9 |
| Total | $12254 | 100.0 | $13799 | 100.0 |
| <u>Monthly vs. single:</u> |  |  |  |  |
| Monthly | $11779 | 96.1 | $12764 | 92.5 |
| Single | 475 | 3.9 | 1035 | 7.5 |
| Total | $12254 | 100.0 | $13799 | 100.0 |
| <u>Purchase vs. refinance:</u> |  |  |  |  |
| Purchase | $11633 | 94.9 | $13588 | 98.5 |
| Refinance | 621 | 5.1 | 211 | 1.5 |
| Total | $12254 | 100.0 | $13799 | 100.0 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2025** | **2024** | **2024** |
| | **Amount** | **%** | **Amount** | **%** |
| Total new insurance written (NIW) | $21444 |  | $23135 |  |
| <u>Credit quality (FICO):</u> |  |  |  |  |
| >=740 | $16246 | 75.8 | $16090 | 69.5 |
| 680-739 | 4630 | 21.6 | 6301 | 27.2 |
| 620-679 | 562 | 2.6 | 741 | 3.2 |
| <620 | 6 | 0.0 | 3 | 0.0 |
| Total | $21444 | 100.0 | $23135 | 100.0 |
| <u>Loan-to-value (LTV):</u> |  |  |  |  |
| 95.01% and above | $1570 | 7.3 | $1556 | 6.7 |
| 90.01% to 95.00% | 10006 | 46.7 | 12474 | 53.9 |
| 85.01% to 90.00% | 6865 | 32.0 | 6671 | 28.8 |
| 85.01% and below | 3003 | 14.0 | 2434 | 10.5 |
| Total | $21444 | 100.0 | $23135 | 100.0 |
| <u>Monthly vs. single:</u> |  |  |  |  |
| Monthly | $20276 | 94.6 | $21680 | 93.7 |
| Single | 1168 | 5.4 | 1455 | 6.3 |
| Total | $21444 | 100.0 | $23135 | 100.0 |
| <u>Purchase vs. refinance:</u> |  |  |  |  |
| Purchase | $20428 | 95.3 | $22755 | 98.4 |
| Refinance | 1016 | 4.7 | 380 | 1.6 |
| Total | $21444 | 100.0 | $23135 | 100.0 |

---

*Net Premiums Earned*.

The following tables set forth our mortgage segment's net premiums earned by major line of business:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** |
| | **2025** | **2025** | **2024** | **2024** |
| | **Amount** | **%** | **Amount** | **%** |
| U.S. primary mortgage insurance | $188 | 66.9 | $209 | 68.1 |
| U.S. credit risk transfer (CRT) and other | 51 | 18.1 | 51 | 16.6 |
| International mortgage insurance/<br>reinsurance | 42 | 14.9 | 47 | 15.3 |
| Total | $281 | 100.0 | $307 | 100.0 |

---

*2025 Second Quarter versus 2024 Period.* Net premiums earned for the 2025 second quarter were 8.5% lower than in the 2024 second quarter, reflecting changes in net premiums written over the previous five quarters. The decrease in net premiums earned in the 2025 period primarily reflected a one-time $15 million expense related to the tender offer of certain Bellemeade Re mortgage insurance linked notes and a lower level of mortgage originations, mostly in our international businesses.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025** | **2025** | **2024** | **2024** |
| | **Amount** | **%** | **Amount** | **%** |
| U.S. primary mortgage insurance | $397 | 68.3 | $415 | 67.8 |
| U.S. credit risk transfer (CRT) and other | 101 | 17.4 | 107 | 17.5 |
| International mortgage insurance/<br>reinsurance | 83 | 14.3 | 90 | 14.7 |
| Total | $581 | 100.0 | $612 | 100.0 |

---

*Six Months Ended June 30, 2025 versus 2024 Period*. For the six months ended June 30, 2025, net premiums earned were 5.1% lower than in the 2024 period. The decrease in net premiums earned in the 2025 period primarily reflected a one-time $15 million expense related to the tender offer of certain Bellemeade Re mortgage insurance linked notes and a lower level of mortgage originations, mostly in our international businesses.

*Other Underwriting Income*.

Other underwriting income, which is primarily related to GSE credit risk-sharing transactions, was $3 million for the 2025 second quarter, compared to $2 million for the 2024 second quarter, and $14 million for the six months ended June 30, 2025, compared to $12 million for the 2024 period.

ARCH CAPITAL 50 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

*Losses and Loss Adjustment Expenses*.

The table below shows the components of the mortgage segment's loss ratio:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| Current year | 21.6% | 18.3% | 21.6% | 19.8% |
| Prior period reserve development | (22.8)% | (26.9)% | (21.6)% | (25.6)% |
| &nbsp;&nbsp;&nbsp;Loss ratio | (1.2)% | (8.6)% | —% | (5.8)% |

---

*<u>Current Year Loss Ratio</u>*.

*2025 Second Quarter versus 2024 Period.* The mortgage segment's current year loss ratio was 3.3 points higher in the 2025 second quarter than in the 2024 second quarter. The higher current year loss ratio for the 2025 second quarter reflected slightly higher new delinquencies and the impact of the Bellemeade Re tender offers noted above.

*Six Months Ended June 30, 2025 versus 2024 Period*. The mortgage segment's current year loss ratio was 1.8 points higher for the six months ended June 30, 2025 than for the 2024 period. The higher current year loss ratio for the 2025 period reflected slightly higher new delinquencies and the impact of the Bellemeade Re tender offers noted above.

*<u>Prior Period Reserve Development</u>*.

The mortgage segment's net favorable development was $64 million, or 22.8 points, for the 2025 second quarter, compared to $82 million, or 26.9 points, for the 2024 second quarter, and $125 million, or 21.6 points, for the six months ended June 30, 2025, compared to $156 million, or 25.6 points, for the 2024 period. See <u>[note 6, "Reserve for Losses and Loss Adjustment Expenses,"](#i8c1a838c8b384cbd8c3d99c9af25908b_67)</u> to our consolidated financial statements for information about the mortgage segment's prior year reserve development.

*Underwriting Expenses*.

*2025 Second Quarter versus 2024 Period.* The underwriting expense ratio for the mortgage segment was 16.4% in the 2025 second quarter, compared to 16.0% in the 2024 second quarter.

*Six Months Ended June 30, 2025 versus 2024 period*. The underwriting expense ratio for the mortgage segment was 15.8% for the six months ended June 30, 2025, compared to 16.8% for the 2024 period.

**<u>Corporate</u>**

The Company's corporate results include net investment income, net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investments accounted for using the equity method, other income or loss, corporate expenses, transaction costs and other, amortization of intangible assets, interest expense, net foreign exchange gains or losses, income taxes, income from operating affiliates and items related to our non-cumulative preferred shares.

*Net Investment Income.*

The components of net investment income were derived from the following sources:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| Fixed maturities | $360 | $306 | $702 | $586 |
| Short-term investments | 24 | 35 | 50 | 64 |
| Equity securities | 10 | 10 | 21 | 18 |
| Other (1) | 35 | 35 | 63 | 68 |
| &nbsp;&nbsp;&nbsp;Gross investment income | 429 | 386 | 836 | 736 |
| Investment expenses (2) | (24) | (22) | (53) | (45) |
| &nbsp;&nbsp;&nbsp;Net investment income | $405 | $364 | $783 | 691 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Amounts include dividends and other distributions on investment funds, term loan investments, funds held balances, cash balances and other items.

(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment expenses were approximately 0.25% of average invested assets for the 2025 second quarter, compared to 0.26% for the 2024 second quarter, and 0.28% for the six months ended June 30, 2025, compared to 0.27% for the 2024 period.

The higher level of net investment income for the 2025 periods primarily reflected growth in average invested assets, due in part to strong operating cash flows. Net cash flow from operating activities contributed $2.6 billion for the six months ended June 30, 2025. The pre-tax investment income yield, calculated based on amortized cost and on an annualized basis, was 4.25% for the 2025 second quarter, compared to 4.39% for the 2024 second quarter, and 4.19% for the six months ended June 30, 2025, compared to 4.36% for the 2024 period.

ARCH CAPITAL 51 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

*Corporate Expenses.*

Corporate expenses were $29 million for the 2025 second quarter, compared to $23 million for the 2024 second quarter, and $79 million for the six months ended June 30, 2025, compared to $69 million for the 2024 period. Such amounts primarily represent certain holding company costs necessary to support our worldwide operations and costs associated with operating as a publicly traded company. The increase in corporate expenses was primarily due to higher incentive compensation costs.

*Transaction Costs and Other.*

Transaction costs and other for the 2025 second quarter was $18 million, consistent with $18 million for the 2024 second quarter, and $28 million for the six months ended June 30, 2025, compared to $25 million for the 2024 period. Amounts in both periods primarily includes direct costs related to the MCE Acquisition.

*Other Income or Losses.*

Other income for the 2025 second quarter was $18 million, compared to an income of $8 million for the 2024 second quarter, and income of $16 million for the six months ended June 30, 2025, compared to $22 million for the 2024 period. Amounts in both periods primarily reflect changes in the cash surrender value of our investment in corporate-owned life insurance.

*Amortization of Intangible Assets.*

Amortization of intangible assets for the 2025 second quarter was $48 million, compared to $27 million for the 2024 second quarter, and $97 million for the six months ended June 30, 2025, compared to $48 million for the 2024 period. The increase in the 2025 periods was primarily related to the MCE Acquisition.

*Interest Expense.*

Interest expense was $38 million for the 2025 second quarter, compared to $35 million for the 2024 second quarter, and $73 million for the six months ended June 30, 2025, compared to $69 million for the 2024 period. Interest expense primarily reflects amounts related to our outstanding senior notes.

*Net Realized Gains or Losses.*

Net realized gains for the 2025 second quarter were $229 million, compared to net realized gains of $122 million for the 2024 second quarter. Net realized gains were $232 million for the six months ended June 30, 2025, compared to net realized gains of $189 million for the 2024 period. Amounts in both periods reflected sales of investments as well as the impact of financial market movements on the Company's equity securities and investments accounted for under the fair value option method. Currently, our portfolio is actively managed to maximize total return within certain guidelines. Amounts in the 2025 periods also include losses related to the anticipated sale of certain alternative investments accounted for under the equity method. The effect of financial market movements on the investment portfolio will directly impact net realized gains or losses as the portfolio is adjusted and rebalanced. Net realized gains or losses from the sale of fixed maturities primarily results from our decisions to reduce credit exposure, to change duration targets, to rebalance our portfolios or due to relative value determinations.

Net realized gains or losses also include realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries See <u>[note 8, "Investment Information—Net Realized Gains (Losses)"](#i8c1a838c8b384cbd8c3d99c9af25908b_79)</u> and <u>[note 8, "Investment Information—Allowance for Expected Credit Losses,"](#i8c1a838c8b384cbd8c3d99c9af25908b_79)</u> to our consolidated financial statements for additional information.

*Equity in Net Income or Losses of Investments Accounted for Using the Equity Method.*

Equity in net income of investments accounted for using the equity method was $162 million in the 2025 second quarter, compared to $167 million for the 2024 second quarter, and $215 million for the six months ended June 30, 2025, compared to $266 million for the 2024 period. Such investments are generally recorded on a one to three month lag based on the availability of reports from the investment funds. Investment funds accounted for using the equity method totaled $6.6 billion at June 30, 2025, compared to $6.0 billion at December 31, 2024. See <u>[note 8, "Investment Information—Investments Accounted For Using the Equity Method,"](#i8c1a838c8b384cbd8c3d99c9af25908b_79)</u> to our consolidated financial statements for additional information.

ARCH CAPITAL 52 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

*Net Foreign Exchange Gains or Losses.*

Net foreign exchange losses for the 2025 second quarter were $88 million, compared to gains of $1 million for the 2024 second quarter. Net foreign exchange losses for the six months ended June 30, 2025 were $115 million, compared to gains of $32 million for the 2024 period. Amounts in both periods were primarily unrealized and resulted from the effects of revaluing our net insurance liabilities required to be settled in foreign currencies at each balance sheet date.

*Income Tax Expense.*

Our income tax provision on income or loss before income taxes, including income or loss from operating affiliates, resulted in an expense of 14.7% for the 2025 second quarter, compared to an expense of 7.1% for the 2024 second quarter, and an expense of 15.6% for the six months ended June 30, 2025, compared to an expense of 7.7% for the 2024 period. The year-over-year increase is primarily attributed to the Government of Bermuda enacting the Corporate Income Tax Act 2023, which established a 15% corporate income tax effective January 1, 2025. See <u>[note 14, "Income Taxes"](#i8c1a838c8b384cbd8c3d99c9af25908b_106)</u> to our consolidated financial statements for additional information.

*Income or Losses from Operating Affiliates.*

Income from operating affiliates for the 2025 second quarter was $40 million, compared to income of $45 million for the 2024 second quarter, and income of $57 million for the six months ended June 30, 2025, compared to income of $100 million for the 2024 period. Such amounts primarily related to the Company's investment in Somers Group Holdings Ltd. ("Somers") and Coface SA. The decrease in income from operating affiliates in the 2025 second quarter was primarily driven by lower level of affiliated income from Somers, partly due to the impact of California wildfires. See <u>[note 8, "Investment Information—Investments in Operating Affiliates,"](#i8c1a838c8b384cbd8c3d99c9af25908b_79)</u> to our consolidated financial statements for additional information.

**CRITICAL ACCOUNTING POLICIES,** 

**ESTIMATES AND RECENT ACCOUNTING PRONOUNCEMENTS**

Critical accounting policies, estimates and recent accounting pronouncements are discussed in Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our 2024 Form 10-K, updated where applicable in the notes accompanying our consolidated financial statements, including <u>[note 1, "Basis of Presentation and Recent Accounting Pronouncements."](#i8c1a838c8b384cbd8c3d99c9af25908b_37)</u>

**FINANCIAL CONDITION**

**<u>Investable Assets Held by Arch</u>** 

At June 30, 2025, approximately $28.0 billion, or 62%, of total investable assets held by Arch were internally managed, compared to $25.6 billion, or 62%, at December 31, 2024. See <u>[note 8, "Investment Information"](#i8c1a838c8b384cbd8c3d99c9af25908b_79)</u> to our consolidated financial statements for additional information.

The following table summarizes the duration and average credit quality of fixed income assets held by Arch:

---

| | | |
|:---|:---|:---|
| | **June 30,**<br>**2025** | **December 31, 2024** |
| Average effective fixed maturities duration (in years) | 3.48 | 3.31 |
| Average S&P/Moody's credit ratings (1) | AA-/Aa3 | AA-/Aa3 |

---

(1)Average credit ratings on our investment portfolio on securities with ratings assigned by S&P and Moody's.

The following table provides the credit quality distribution of our fixed maturities. For individual fixed maturities, S&P ratings are used. In the absence of an S&P rating, ratings from Moody's are used, followed by ratings from Fitch Ratings.

---

| | | |
|:---|:---|:---|
| | **Estimated Fair Value** | **% of<br>Total** |
| **<u>June 30, 2025</u>** | | |
| U.S. government and gov't agencies (1) | $8355 | 26.7 |
| AAA | 4745 | 15.1 |
| AA | 2491 | 7.9 |
| A | 6645 | 21.2 |
| BBB | 6673 | 21.3 |
| BB | 1110 | 3.5 |
| B | 657 | 2.1 |
| Lower than B | 30 | 0.1 |
| Not rated | 635 | 2.0 |
| &nbsp;&nbsp;&nbsp;Total | $31341 | 100.0 |
| **<u>December 31, 2024</u>** |  |  |
| U.S. government and gov't agencies (1) | $7498 | 26.9 |
| AAA | 4330 | 15.5 |
| AA | 2285 | 8.2 |
| A | 5138 | 18.4 |
| BBB | 6467 | 23.2 |
| BB | 978 | 3.5 |
| B | 458 | 1.6 |
| Lower than B | 28 | 0.1 |
| Not rated | 707 | 2.5 |
| &nbsp;&nbsp;&nbsp;Total | $27889 | 100.0 |

---

(1)Includes U.S. government-sponsored agency residential mortgage-backed securities and agency commercial mortgage-backed securities.

ARCH CAPITAL 53 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

The following table provides information on the severity of the unrealized loss position as a percentage of amortized cost for all fixed maturities which were in an unrealized loss position:

---

| | | | |
|:---|:---|:---|:---|
| **Severity of gross unrealized losses:** | **Estimated Fair Value** | **Gross<br>Unrealized<br>Losses** | **% of<br>Total Gross<br>Unrealized<br>Losses** |
| **<u>June 30, 2025</u>** | | | |
| 0-10% | $8282 | $(237) | 60.2 |
| 10-20% | 1052 | (150) | 38.1 |
| 20-30% | 18 | (6) | 1.5 |
| Greater than 30% | 1 | (1) | 0.3 |
| &nbsp;&nbsp;&nbsp;Total | $9353 | $(394) | 100.0 |
| **<u>December 31, 2024</u>** |  |  |  |
| 0-10% | $16044 | $(453) | 65.5 |
| 10-20% | 1357 | (216) | 31.2 |
| 20-30% | 70 | (20) | 2.9 |
| Greater than 30% | 6 | (3) | 0.4 |
| &nbsp;&nbsp;&nbsp;Total | $17477 | $(692) | 100.0 |

---

The following table summarizes our top ten exposures to fixed income corporate issuers by fair value at June 30, 2025, excluding guaranteed amounts and covered bonds:

---

| | | |
|:---|:---|:---|
| | **Estimated Fair Value** | **Credit<br>Rating (1)** |
| JPMorgan Chase & Co. | $417 | A/A1 |
| Morgan Stanley | 367 | A/A1 |
| Bank of America Corporation | 357 | A-/A1 |
| The Goldman Sachs Group, Inc. | 263 | A-/A2 |
| Wells Fargo & Company | 261 | BBB+/A1 |
| Citigroup Inc. | 214 | A-/A2 |
| Philip Morris International Inc. | 206 | A-/A2 |
| The Toronto-Dominion Bank | 181 | A-/A2 |
| Blue Owl Capital Inc. | 176 | BBB-/Baa3 |
| Deutsche Telekom AG | 149 | BBB/Baa2 |
| Total | $2591 |  |

---

(1)Average credit ratings as assigned by S&P and Moody's, respectively.

The following table provides information on our structured securities, which includes residential mortgage-backed securities ("RMBS"), commercial mortgage-backed securities ("CMBS") and asset-backed securities ("ABS"):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Agencies** | **Investment Grade** | **Below Investment Grade** | **Total** |
| **<u>June 30, 2025</u>** | **<u>June 30, 2025</u>** | | | |
| RMBS | $1759 | $627 | $— | $2386 |
| CMBS | 6 | 764 | 68 | 838 |
| ABS |  | 2593 | 177 | 2770 |
| &nbsp;&nbsp;&nbsp;Total | $1765 | $3984 | $245 | $5994 |
| **<u>December 31, 2024</u>** |  |  |  |  |
| RMBS | $769 | $310 | $— | $1079 |
| CMBS | 7 | 959 | 92 | 1058 |
| ABS |  | 2667 | 233 | 2900 |
| &nbsp;&nbsp;&nbsp;Total | $776 | $3936 | $325 | $5037 |

---

The following table summarizes our equity securities, which include investments in exchange traded funds:

---

| | | |
|:---|:---|:---|
| | **June 30,<br>2025** | **December 31,<br>2024** |
| Equities (1) | $1180 | $1041 |
| Exchange traded funds |  |  |
| &nbsp;&nbsp;&nbsp;Fixed income (2) | 310 | 428 |
| &nbsp;&nbsp;&nbsp;Equity and other (3) | 230 | 213 |
| Total | $1720 | $1682 |

---

(1)Primarily in technology, communications, consumer non-cyclical, financial and industrial sectors at June 30, 2025.

(2)Primarily in structured and corporate exposures at June 30, 2025.

(3)Primarily in technology, financials, consumer cyclical, communications and healthcare sectors at June 30, 2025.

For details on our other investments and other investable assets, see <u>[note 8, "Investment Information—Other Investments"](#i8c1a838c8b384cbd8c3d99c9af25908b_79)</u> to our consolidated financial statements.

For details on our investments accounted for using the equity method, see <u>[note 8, "Investment Information—Investments Accounted For Using the Equity Method,"](#i8c1a838c8b384cbd8c3d99c9af25908b_79)</u> to our consolidated financial statements.

Our investment strategy allows for the use of derivative instruments. We utilize 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 other ways. See <u>[note 10, "Derivative Instruments,"](#i8c1a838c8b384cbd8c3d99c9af25908b_88)</u> to our consolidated financial statements for additional disclosures related to derivatives.

ARCH CAPITAL 54 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

Accounting guidance regarding fair value measurements addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under GAAP and provides a common definition of fair value to be used throughout GAAP. See <u>[note 9, "Fair Value,"](#i8c1a838c8b384cbd8c3d99c9af25908b_85)</u> to our consolidated financial statements for a summary of our financial assets and liabilities measured at fair value, segregated by level in the fair value hierarchy.

**Reinsurance**

The effects of reinsurance on written and earned premiums and losses and loss adjustment expenses ("LAE") with unaffiliated reinsurers were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
| | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| **Premiums written:** |  |  |  |  |
| Direct | $2581 | $2521 | $5173 | $5007 |
| Assumed | 3615 | 2861 | 7486 | 6308 |
| Ceded | (1848) | (1601) | (3796) | (3449) |
| &nbsp;&nbsp;&nbsp;Net | $4348 | $3781 | $8863 | $7866 |
| **Premiums earned:** |  |  |  |  |
| Direct | $2560 | $2417 | $5020 | $4758 |
| Assumed | 3332 | 2483 | 6559 | 4858 |
| Ceded | (1555) | (1335) | (3054) | (2629) |
| &nbsp;&nbsp;&nbsp;Net | $4337 | $3565 | $8525 | $6987 |
| **Losses and LAE:** |  |  |  |  |
| Direct | $1464 | $1200 | $2741 | $2599 |
| Assumed | 1624 | 1196 | 4195 | 2460 |
| Ceded | (785) | (569) | (2046) | (1504) |
| &nbsp;&nbsp;&nbsp;Net | $2303 | $1827 | $4890 | $3555 |

---

See <u>[note 7, "Allowance for Expected Credit Losses,"](#i8c1a838c8b384cbd8c3d99c9af25908b_73)</u> to our consolidated financial statements for information about our reinsurance recoverables and related allowance for credit losses.

<u>Bellemeade Re</u>

We have entered into aggregate excess of loss mortgage reinsurance agreements with various special purpose reinsurance companies domiciled in Bermuda (the "Bellemeade Agreements"). For the respective coverage periods, we will retain the first layer of the respective aggregate losses and the special purpose reinsurance companies will provide second layer coverage up to the outstanding coverage amount. We will then retain losses in excess of the outstanding coverage limit. The aggregate excess of loss reinsurance coverage generally decreases over a ten-year period as the underlying covered mortgages amortize, unless provisional call options embedded within certain of the Bellemeade Agreements are executed or if pre-defined delinquency triggering events occur.

The following table summarizes the respective coverages and retentions at June 30, 2025:

---

| | | | |
|:---|:---|:---|:---|
| **Bellemeade Entities<br>(Issue Date)** | **Initial Coverage at Issuance** | **Current Coverage** | **Remaining Retention, Net** |
| 2021-3 Ltd. (1) | 639 | 224 | 131 |
| 2022-1 Ltd. (2) | 317 | 73 | 138 |
| 2022-2 Ltd. (3) | 327 | 153 | 194 |
| 2023-1 Ltd. (4) | 233 | 218 | 171 |
| 2024-1 Ltd. (5) | 204 | 204 | 167 |
| &nbsp;&nbsp;&nbsp;Total | $1720 | $872 | $801 |

---

(1) Issued in September 2021, covering in-force policies issued between April 1, 2021 and June 30, 2021. $508 million was directly funded by Bellemeade Re 2021-3 Ltd. via insurance-linked notes, with an additional $131 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

(2)&nbsp;&nbsp;&nbsp;&nbsp;Issued in January 2022, covering in-force policies issued between July 1, 2021 and November 30, 2021. $284 million was directly funded by Bellemeade Re 2022-1 Ltd. via insurance-linked notes, with an additional $33 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

(3) Issued in September 2022, covering in-force policies issued between November 1, 2021 and June 30, 2022. $201 million was directly funded by Bellemeade Re 2022-2 Ltd. via insurance-linked notes, with an additional $126 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

(4) Issued in October 2023, covering in-force policies issued between January 1, 2023 and September 30, 2023. $186 million was directly funded by Bellemeade Re 2023-1 Ltd. via insurance-linked notes, with an additional $47 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

(5)&nbsp;&nbsp;&nbsp;&nbsp;Issued in August 2024, covering in-force policies issued between September 1, 2023 and July 31, 2024. $163 million was directly funded by Bellemeade Re 2024-1 Ltd. via insurance-linked notes, with an additional $41 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

**Reserve for Losses and Loss Adjustment Expenses** 

We establish reserve for losses and loss adjustment expenses ("Loss Reserves") which represent estimates involving actuarial and statistical projections, at a given point in time, of our expectations of the ultimate settlement and administration costs of losses incurred. Estimating Loss Reserves is inherently difficult. We utilize actuarial models as well as available historical insurance industry loss ratio experience and loss development patterns to assist in the establishment of Loss Reserves. Actual losses and loss adjustment expenses paid will deviate, perhaps substantially, from the reserve estimates reflected in our financial statements.

ARCH CAPITAL 55 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

At June 30, 2025 and December 31, 2024, our Loss Reserves, net of unpaid losses and loss adjustment expenses recoverable, by type and by operating segment were as follows:

---

| | | |
|:---|:---|:---|
| | **June 30,<br>2025** | **December 31,<br>2024** |
| **Insurance segment:** | | |
| Case reserves | $3641 | $3730 |
| IBNR reserves | 8870 | 8238 |
| &nbsp;&nbsp;&nbsp;Total net reserves | 12511 | 11968 |
| **Reinsurance segment:** |  |  |
| Case reserves | 2787 | 2721 |
| Additional case reserves | 1021 | 806 |
| IBNR reserves | 6795 | 5580 |
| &nbsp;&nbsp;&nbsp;Total net reserves | 10603 | 9107 |
| **Mortgage segment:** |  |  |
| Case reserves | 324 | 331 |
| IBNR reserves | 138 | 142 |
| &nbsp;&nbsp;&nbsp;Total net reserves | 462 | 473 |
| **Total:** |  |  |
| Case reserves | 6752 | 6782 |
| Additional case reserves | 1021 | 806 |
| IBNR reserves | 15803 | 13960 |
| &nbsp;&nbsp;&nbsp;Total net reserves | $23576 | $21548 |

---

At June 30, 2025 and December 31, 2024, the insurance segment's Loss Reserves by major line of business, net of unpaid losses and loss adjustment expenses recoverable, were as follows:

---

| | | |
|:---|:---|:---|
| | **June 30,<br>2025** | **December 31,<br>2024** |
| **Insurance segment:** | | |
| Multi-line and other specialty | $4399 | $4105 |
| Third party occurrence business | 4369 | 4104 |
| Third party claims-made business | 2810 | 2630 |
| Property, energy, marine and aviation | 933 | 1129 |
| &nbsp;&nbsp;&nbsp;Total net reserves | $12511 | $11968 |

---

At June 30, 2025 and December 31, 2024, the reinsurance segment's Loss Reserves by major line of business, net of unpaid losses and loss adjustment expenses recoverable, were as follows:

---

| | | |
|:---|:---|:---|
| | **June 30,<br>2025** | **December 31,<br>2024** |
| **Reinsurance segment:** | | |
| Casualty | $3463 | $3089 |
| Specialty | 3416 | 2791 |
| Property excluding property catastrophe | 2033 | 1778 |
| Property catastrophe | 985 | 845 |
| Marine and aviation | 552 | 461 |
| Other | 154 | 143 |
| &nbsp;&nbsp;&nbsp;Total net reserves | $10603 | $9107 |

---

At June 30, 2025 and December 31, 2024, the mortgage segment's Loss Reserves by major line of business, net of unpaid losses and loss adjustment expenses recoverable, were as follows:

---

| | | |
|:---|:---|:---|
| | **June 30,<br>2025** | **December 31,<br>2024** |
| **Mortgage segment:** | | |
| U.S. primary mortgage insurance (1) | $324 | $333 |
| U.S. credit risk transfer (CRT) and other | 77 | 85 |
| International mortgage insurance/<br>reinsurance | 61 | 55 |
| &nbsp;&nbsp;&nbsp;Total net reserves | $462 | $473 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;At June 30, 2025, 30.3% of total net reserves represents policy years 2015 and prior and the remainder from later policy years. At December 31, 2024, 36.1% of total net reserves represent policy years 2015 and prior and the remainder from later policy years.

**Mortgage Operations Supplemental Information**

The mortgage segment's insurance in force ("IIF") and risk in force ("RIF") were as follows at June 30, 2025 and December 31, 2024:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| | **Amount** | **%** | **Amount** | **%** |
| **Insurance In Force (IIF) (1):** | **Insurance In Force (IIF) (1):** | | | |
| U.S. primary mortgage insurance | $286410 | 57.7 | $290435 | 58.0 |
| U.S. credit risk transfer (CRT) and other | 145883 | 29.4 | 145892 | 29.1 |
| International mortgage insurance/reinsurance | 64374 | 13.0 | 64822 | 12.9 |
| &nbsp;&nbsp;&nbsp;Total | $496667 | 100.0 | $501149 | 100.0 |
| **Risk In Force (RIF) (2):** |  |  |  |  |
| U.S. primary mortgage insurance | $74948 | 85.1 | $76034 | 85.3 |
| U.S. credit risk transfer (CRT) and other | 5892 | 6.7 | 5876 | 6.6 |
| International mortgage insurance/reinsurance | 7221 | 8.2 | 7215 | 8.1 |
| &nbsp;&nbsp;&nbsp;Total | $88061 | 100.0 | $89125 | 100.0 |

---

(1)Represents the aggregate dollar amount of each insured mortgage loan's current principal balance. Such amounts are shown before external reinsurance.

(2)The aggregate dollar amount of each insured mortgage loan's current principal balance multiplied by the insurance coverage percentage specified in the policy for insurance policies issued and after contract limits and/or loss ratio caps for risk-sharing or reinsurance. Such amounts are shown before external reinsurance.

ARCH CAPITAL 56 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

The IIF and RIF for our U.S. primary mortgage insurance business by policy year were as follows at June 30, 2025:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **IIF** | **IIF** | **RIF** | **RIF** | |
| | **Amount** | **%** | **Amount** | **%** | **Delinquency**<br>**Rate (1)** |
| <u>Policy year:</u> |  |  |  |  |  |
| 2015 and prior | $17041 | 5.9 | $4340 | 5.8 | 5.32% |
| 2016 | 3809 | 1.3 | 959 | 1.3 | 3.38% |
| 2017 | 4862 | 1.7 | 1298 | 1.7 | 3.29% |
| 2018 | 6407 | 2.2 | 1668 | 2.2 | 3.91% |
| 2019 | 11687 | 4.1 | 3066 | 4.1 | 2.71% |
| 2020 | 35321 | 12.3 | 9636 | 12.9 | 1.48% |
| 2021 | 55848 | 19.5 | 15137 | 20.2 | 1.50% |
| 2022 | 53320 | 18.6 | 14173 | 18.9 | 1.55% |
| 2023 | 34418 | 12.0 | 8867 | 11.8 | 1.27% |
| 2024 | 42851 | 15.0 | 10700 | 14.3 | 0.59% |
| 2025 | 20846 | 7.3 | 5104 | 6.8 | 0.05% |
| &nbsp;&nbsp;&nbsp;Total | $286410 | 100.0 | $74948 | 100.0 | 1.93% |

---

(1)Represents the ending percentage of loans in default.

The IIF and RIF for our U.S. primary mortgage insurance business by policy year were as follows at December 31, 2024:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **IIF** | **IIF** | **RIF** | **RIF** | |
| | **Amount** | **%** | **Amount** | **%** | **Delinquency**<br>**Rate (1)** |
| <u>Policy year:</u> |  |  |  |  |  |
| 2015 and prior | $18329 | 6.3 | $4670 | 6.1 | 5.85% |
| 2016 | 5240 | 1.8 | 1371 | 1.8 | 3.23% |
| 2017 | 5554 | 1.9 | 1489 | 2.0 | 3.52% |
| 2018 | 7081 | 2.4 | 1843 | 2.4 | 4.31% |
| 2019 | 12919 | 4.4 | 3386 | 4.5 | 2.85% |
| 2020 | 39426 | 13.6 | 10718 | 14.1 | 1.52% |
| 2021 | 62382 | 21.5 | 16620 | 21.9 | 1.52% |
| 2022 | 57175 | 19.7 | 15113 | 19.9 | 1.51% |
| 2023 | 36827 | 12.7 | 9479 | 12.5 | 1.12% |
| 2024 | 45502 | 15.7 | 11345 | 14.9 | 0.30% |
| &nbsp;&nbsp;&nbsp;Total | $290435 | 100.0 | $76034 | 100.0 | 2.09% |

---

(1)Represents the ending percentage of loans in default.

The following tables provide supplemental disclosures on risk in force for our U.S. primary mortgage insurance business at June 30, 2025 and December 31, 2024:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| | **Amount** | **%** | **Amount** | **%** |
| <u>Credit quality (FICO):</u> |  |  |  |  |
| >=740 | $47261 | 63.1 | $47360 | 62.3 |
| 680-739 | 23880 | 31.9 | 24688 | 32.5 |
| 620-679 | 3479 | 4.6 | 3638 | 4.8 |
| <620 | 328 | 0.4 | 348 | 0.5 |
| &nbsp;&nbsp;&nbsp;Total | $74948 | 100.0 | $76034 | 100.0 |
| Weighted average FICO score | 749 |  | 748 |  |
| <u>Loan-to-value (LTV):</u> |  |  |  |  |
| 95.01% and above | $7361 | 9.8 | $7420 | 9.8 |
| 90.01% to 95.00% | 44711 | 59.7 | 45311 | 59.6 |
| 85.01% to 90.00% | 20293 | 27.1 | 20637 | 27.1 |
| 85.00% and below | 2583 | 3.4 | 2666 | 3.5 |
| &nbsp;&nbsp;&nbsp;Total | $74948 | 100.0 | $76034 | 100.0 |
| Weighted average LTV | 93.2% |  | 93.2% |  |
| Total RIF, net of external reinsurance | $60436 |  | $60085 |  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| | **Amount** | **%** | **Amount** | **%** |
| <u>Total RIF by State:</u> |  |  |  |  |
| California | $5894 | 7.9 | $5989 | 7.9 |
| Texas | 5432 | 7.2 | 5613 | 7.4 |
| North Carolina | 3347 | 4.5 | 3355 | 4.4 |
| Minnesota | 3147 | 4.2 | 3108 | 4.1 |
| Georgia | 3063 | 4.1 | 3143 | 4.1 |
| Illinois | 3033 | 4.0 | 3056 | 4.0 |
| Massachusetts | 2841 | 3.8 | 2885 | 3.8 |
| Michigan | 2816 | 3.8 | 2855 | 3.8 |
| Florida | 2714 | 3.6 | 2824 | 3.7 |
| Ohio | 2702 | 3.6 | 2716 | 3.6 |
| Other | 39959 | 53.3 | 40490 | 53.3 |
| &nbsp;&nbsp;&nbsp;Total | $74948 | 100.0 | $76034 | 100.0 |

---

ARCH CAPITAL 57 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

The following table provides supplemental disclosures for our U.S. primary mortgage insurance business related to insured loans and loss metrics:

---

| | | |
|:---|:---|:---|
| (U.S. Dollars in thousands, except policy, loan and claim count) | **Six Months Ended** | **Six Months Ended** |
| (U.S. Dollars in thousands, except policy, loan and claim count) | **June 30,** | **June 30,** |
| (U.S. Dollars in thousands, except policy, loan and claim count) | **2025** | **2024** |
| <u>Roll-forward of insured loans in default:</u> |  |  |
| Beginning delinquent number of loans | 22982 | 19457 |
| &nbsp;&nbsp;New notices | 22385 | 20434 |
| &nbsp;&nbsp;Cures | (24005) | (21423) |
| &nbsp;&nbsp;Paid claims | (600) | (571) |
| &nbsp;&nbsp;Acquired delinquent loans (1) |  | 2525 |
| Ending delinquent number of loans (2) | 20762 | 20422 |
| Ending number of policies in force (2) | 1073477 | 1123698 |
| Delinquency rate (2) | 1.93% | 1.82% |
| <u>Losses:</u> |  |  |
| Number of claims paid | 600 | 571 |
| Total paid claims | $24653 | $18342 |
| Average per claim | $41.1 | $32.1 |
| Severity (3) | 76.0% | 67.8% |
| Average case reserve per default (2) | $16.8 | $17.1 |

---

(1)Represents delinquent loans related to the acquisition of RMIC Companies, Inc.

(2)Includes first lien primary and pool policies.

(3)Represents total paid claims divided by RIF of loans for which claims were paid.

The risk to capital ratio, which represents total current (non-delinquent) risk in force, net of reinsurance, divided by total statutory capital, for Arch MI U.S. was approximately 8.3 to 1 at June 30, 2025, compared to 7.8 to 1 at December 31, 2024.

**Shareholders' Equity and Book Value per Share**

The following table presents the calculation of book value per share:

---

| | | |
|:---|:---|:---|
| | **June 30,<br>2025** | **December 31,<br>2024** |
| Total shareholders' equity available to Arch | $23041 | $20820 |
| Less preferred shareholders' equity | 830 | 830 |
| Common shareholders' equity available to Arch | $22211 | $19990 |
| Common shares and common share equivalents outstanding, net of treasury shares (1) | 375.4 | 376.4 |
| &nbsp;&nbsp;&nbsp;Book value per share | $59.17 | $53.11 |

---

(1)Excludes the effects of 10.7 million and 12.4 million stock options and 0.3 million and 0.3 million restricted and performance share units outstanding at June 30, 2025 and December 31, 2024, respectively.

**LIQUIDITY**

Liquidity is a measure of our ability to access sufficient cash flows to meet the short-term and long-term cash requirements of our business operations.

Arch Capital is a holding company whose assets primarily consist of the shares in its subsidiaries. Generally, Arch Capital depends on its available cash resources, liquid investments and dividends or other distributions from its subsidiaries to make payments, including the payment of debt service obligations and operating expenses it may incur and any dividends or liquidation amounts with respect to our preferred and common shares.

For the six months ended June 30, 2025, Arch Capital received dividends of $435 million from Arch Reinsurance Ltd. ("Arch Re Bermuda"), our Bermuda based reinsurer and insurer, which can pay approximately $4.7 billion to Arch Capital during the remainder of 2025 without providing an affidavit to the Bermuda Monetary Authority.

We expect that our liquidity needs, including our anticipated (re)insurance obligations and operating and capital expenditure needs, for the next 12 months and for the foreseeable future thereafter, will be met by funds generated from underwriting activities and investment income, as well as by our balance of cash, short-term investments, proceeds on the sale or maturity of our investments, and our credit facilities.

**Cash Flows**

The following table summarizes our cash flows from operating, investing and financing activities:

---

| | | |
|:---|:---|:---|
| | **Six Months Ended** | **Six Months Ended** |
| | **June 30,** | **June 30,** |
| | **2025** | **2024** |
| **Total cash provided by (used for):** |  |  |
| Operating activities | $2582 | $3082 |
| Investing activities | (2236) | (2918) |
| Financing activities | (369) | (28) |
| Effects of exchange rate changes on foreign currency cash and restricted cash | 71 | (7) |
| &nbsp;&nbsp;&nbsp;Increase (decrease) in cash and restricted cash | $48 | $129 |

---

*Cash provided by operating activities* for the six months ended June 30, 2025 was lower than in the 2024 period. Activity for the six months ended June 30, 2025 primarily reflected a higher level of losses paid than in the 2024 period.

*Cash used for investing activities* for the six months ended June 30, 2025 was lower than in the 2024 period. Activity for the six months ended June 30, 2025 reflected lower net purchases of investments than in the 2024 period, due in part to a higher level of repurchases under our share repurchase program and a higher level of losses paid than in the 2024 period.

ARCH CAPITAL 58 2025 SECOND QUARTER FORM 10-Q

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<u>[**Table of Contents**](#i8c1a838c8b384cbd8c3d99c9af25908b_7)</u>

*Cash used for financing activities* for the six months ended June 30, 2025 was higher than in the 2024 period, primarily due to the higher level of repurchases under our share repurchase program. We repurchased $359 million of our common shares in the 2025 period, compared to nil in the 2024 period.

**CAPITAL RESOURCES**

The following table provides an analysis of our capital structure:

---

| | | |
|:---|:---|:---|
| | **June 30,<br>2025** | **December 31,<br>2024** |
| **Senior notes** | $2728 | $2728 |
| **Shareholders' equity available to Arch:** |  |  |
| Series F non-cumulative preferred shares | $330 | $330 |
| Series G non-cumulative preferred shares | 500 | 500 |
| Common shareholders' equity | 22211 | 19990 |
| &nbsp;&nbsp;&nbsp;Total | $23041 | $20820 |
| &nbsp;&nbsp;&nbsp;Total capital available to Arch | $25769 | $23548 |
| Debt to total capital (%) | 10.6 | 11.6 |
| Preferred to total capital (%) | 3.2 | 3.5 |
| Debt and preferred to total capital (%) | 13.8 | 15.1 |

---

Arch MI U.S. is required to maintain compliance with the GSEs requirements, known as the Private Mortgage Insurer Eligibility Requirements or "PMIERs." The financial requirements require an eligible mortgage insurer's available assets, which generally include only the most liquid assets of an insurer, to meet or exceed "minimum required assets" as of each quarter end. Minimum required assets are calculated from PMIERs tables with several risk dimensions (including origination year, original loan-to-value and original credit score of performing loans, and the delinquency status of non-performing loans) and are subject to a minimum amount. Arch MI U.S. satisfied the PMIERs' financial requirements with an estimated PMIER sufficiency ratio of 168% at June 30, 2025, compared to 186% at December 31, 2024. On August 21, 2024, Fannie Mae and Freddie Mac each updated their PMIERs to incorporate new deductions to available assets for investment risk. This update became effective on March 31, 2025, but the impact will be phased in through September 30, 2026. If the GSEs had fully implemented this update to PMIERs as of June 30, 2025, the changes would have reduced the available assets by 17% and resulted in a pro-forma PMIERs sufficiency ratio of 147%.

Arch Capital, through its subsidiaries, provides financial support to certain of its insurance subsidiaries and affiliates, through certain reinsurance arrangements beneficial to the ratings of such subsidiaries. Historically, our insurance, reinsurance and mortgage insurance subsidiaries have entered into separate reinsurance arrangements with Arch Re Bermuda covering individual lines of business.

**GUARANTOR INFORMATION**

The below table provides a description of our senior notes payable at June 30, 2025:

---

| | | | |
|:---|:---|:---|:---|
|<br>**Issuer/Due** | **Interest**<br>**(Fixed)** | **Principal**<br>**Amount** | **Carrying**<br>**Amount** |
| Arch Capital: |  |  |  |
| &nbsp;&nbsp;May 1, 2034 | 7.350% | $300 | $298 |
| &nbsp;&nbsp;June 30, 2050 | 3.635% | 1000 | 990 |
| Arch-U.S.: |  |  |  |
| &nbsp;&nbsp;Nov. 1, 2043 (1) | 5.144% | 500 | 495 |
| Arch Finance: |  |  |  |
| &nbsp;&nbsp;Dec. 15, 2026 (1) | 4.011% | 500 | 499 |
| &nbsp;&nbsp;Dec. 15, 2046 (1) | 5.031% | 450 | 446 |
| Total |  | $2750 | $2728 |

---

(1)Fully and unconditionally guaranteed by Arch Capital.

Our senior notes were issued by Arch Capital, Arch Capital Group (U.S.) Inc. ("Arch-U.S.") and Arch Capital Finance LLC ("Arch Finance"). Arch-U.S. is a wholly-owned subsidiary of Arch Capital and Arch Finance is a wholly-owned finance subsidiary of Arch-U.S. Our 2034 senior notes and 2050 senior notes issued by Arch Capital are unsecured and unsubordinated obligations of Arch Capital and ranked equally with all of its existing and future unsecured and unsubordinated indebtedness. The 2043 senior notes issued by Arch-U.S. are unsecured and unsubordinated obligations of Arch-U.S. and Arch Capital and rank equally and ratably with the other unsecured and unsubordinated indebtedness of Arch-U.S. and Arch Capital. The 2026 senior notes and 2046 senior notes issued by Arch Finance are unsecured and unsubordinated obligations of Arch Finance and Arch Capital and rank equally and ratably with the other unsecured and unsubordinated indebtedness of Arch Finance and Arch Capital.

ARCH CAPITAL 59 2025 SECOND QUARTER FORM 10-Q

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Arch-U.S. and Arch Finance depend on their available cash resources, liquid investments and dividends or other distributions from their subsidiaries or affiliates to make payments, including the payment of debt service obligations and operating expenses they may incur.

The following tables present condensed financial information for Arch Capital (parent guarantor) and Arch-U.S. (subsidiary issuer):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
| | **Arch Capital** | **Arch-U.S.** | **Arch Capital** | **Arch-U.S.** |
| **Assets** | | | | |
| Total investments | $34 | $767 | $43 | $549 |
| Cash | 11 | 5 | 13 | 5 |
| Investment in operating affiliates | 3 |  | 3 |  |
| Due from subsidiaries and affiliates | 8 | 9 | 6 | 10 |
| Other assets | 120 | 239 | 66 | 101 |
| &nbsp;&nbsp;Total assets | $176 | $1020 | $131 | $665 |
| **Liabilities** |  |  |  |  |
| Senior notes | 1288 | 495 | 1287 | 495 |
| Due to subsidiaries and affiliates | 6 | 1008 | 11 | 994 |
| Other liabilities | 37 | 195 | 48 | 50 |
| &nbsp;&nbsp;Total liabilities | $1331 | $1698 | $1346 | $1539 |
| **Non-cumulative preferred shares** | $830 |  | $830 |  |

---

---

| | | |
|:---|:---|:---|
| | **Six Months Ended** | **Six Months Ended** |
| | **June 30, 2025** | **June 30, 2025** |
| | **Arch Capital** | **Arch-U.S.** |
| **Revenues** | | |
| Net investment income | $2 | $13 |
| Net realized gains (losses) |  | (1) |
| &nbsp;&nbsp;Total revenues | 2 | 12 |
| **Expenses** |  |  |
| Corporate expenses | 77 | 4 |
| Interest expense | 29 | 13 |
| Interest expense (intercompany) |  | 29 |
| &nbsp;&nbsp;Total expenses | 106 | 46 |
| **Income (loss) before income taxes and income (loss) from operating affiliates** | (104) | (34) |
| Income tax (expense) benefit | 48 | 5 |
| **Net income available to Arch** | (56) | (29) |
| Preferred dividends | (20) |  |
| **Net income (loss) available to Arch common shareholders** | $(76) | $(29) |

---

**CATASTROPHIC AND SEVERE ECONOMIC EVENTS**

We have large aggregate exposures to natural and man-made catastrophic events, pandemic events and severe economic events. Natural catastrophes can be caused by various events, including hurricanes, floods, windstorms, earthquakes, hailstorms, tornadoes, explosions, severe winter weather, fires, droughts and other natural disasters. Man-made catastrophic events may include acts of war, acts of terrorism and political instability. Catastrophes can also cause losses in non-property business such as mortgage insurance, workers' compensation or general liability. In addition to the nature of property business, we believe that economic and geographic trends affecting insured property, including inflation, property value appreciation and geographic concentration, tend to generally increase the size of losses from catastrophic events over time.

Our models employ both proprietary and vendor-based systems and include cross-line correlations for property, marine, offshore energy, aviation, workers compensation and personal accident. 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 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 and intangible assets). We reserve the right to change this threshold at any time.

Based on in-force exposure estimated as of July 1, 2025, our modeled peak zone catastrophe exposure was a windstorm affecting the Florida Tri-County regions, with a net probable maximum pre-tax loss of $1.9 billion, or 8.6% of tangible shareholders' equity available to Arch, followed by windstorms affecting the Northeastern U.S. and the Gulf of Mexico regions with net probable maximum pre-tax losses of $1.8 billion and $1.5 billion, respectively. Our exposures to other perils, such as U.S. earthquake and international events, were less than the exposures arising from U.S. windstorms and hurricanes. As of July 1, 2025, our modeled peak zone earthquake exposure (San Francisco earthquake) represented approximately 60% of our peak zone catastrophe exposure, and our modeled peak zone international exposure (Germany windstorm) was substantially less than both our peak zone windstorm and earthquake exposures.

We also have significant exposure to losses due to mortgage defaults resulting from severe economic events in the future. For our U.S. mortgage insurance business, we have developed a proprietary risk model ("Realistic Disaster Scenario" or "RDS") that simulates the maximum loss resulting from a severe economic downturn impacting the housing market. The RDS models the collective impact of

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adverse conditions for key economic indicators, the most significant of which is a decline in home prices. The RDS model projects paths of future home prices, unemployment rates, income levels and interest rates and assumes correlation across states and geographic regions. The resulting future performance of our in-force portfolio is then estimated under the economic stress scenario, reflecting loan and borrower information.

Currently, we seek to limit our modeled RDS loss from a severe economic event to approximately 25% of tangible shareholders' equity available to Arch. We reserve the right to change this threshold at any time. Based on in-force exposure estimated as of July 1, 2025, our modeled RDS loss was approximately $1.2 billion, or 5.5% of tangible shareholders' equity available to Arch.

Net probable maximum loss estimates are net of expected reinsurance recoveries, before income tax and before excess reinsurance reinstatement premiums. RDS loss estimates are net of expected reinsurance recoveries and before income tax. Catastrophe loss estimates are reflective of 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. Our catastrophe loss estimates and RDS loss estimates do not represent our maximum exposures and it is highly likely that our actual incurred losses would vary materially from the modeled estimates. There can be no assurances that we will not suffer pre-tax losses greater than 25% of our tangible shareholders' equity from one or more catastrophic events or severe economic events due to several factors. These factors include the inherent uncertainties in estimating the frequency and severity of such events and the margin of error in making such determinations resulting from potential inaccuracies and inadequacies in the data provided by clients and brokers, the modeling techniques and the application of such techniques or as a result of a decision to change the percentage of shareholders' equity exposed to a single catastrophic event or severe economic event. In addition, actual losses may increase if our reinsurers fail to meet their obligations to us or the reinsurance protections purchased by us are exhausted or are otherwise unavailable. See "Risk Factors—Risks Relating to Our Industry" and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Catastrophic Events and Severe Economic Events" in our 2024 Form 10-K.

**MARKET SENSITIVE INSTRUMENTS AND RISK MANAGEMENT**

In accordance with the SEC's Financial Reporting Release No. 48, we performed a sensitivity analysis to determine the effects that market risk exposures could have on the future earnings, fair values or cash flows of our financial instruments as of June 30, 2025. Market risk represents the risk of changes in the fair value of a financial instrument and is comprised of several components, including liquidity, basis and price risks.

An analysis of material changes in market risk exposures at June 30, 2025 that affect the quantitative and qualitative disclosures presented in our 2024 Form 10-K (see section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Sensitive Instruments and Risk Management") were as follows:

**Investment Market Risk**

*Fixed Income Securities.* We invest in interest rate sensitive securities, which are primarily debt securities. We consider the effect of interest rate movements on the fair value of our fixed maturities, short-term investments and certain of our other investments, equity securities and investments accounted for using the equity method which invest in fixed income securities (collectively, "Fixed Income Securities") and the corresponding change in unrealized appreciation. As interest rates rise, the fair value of our Fixed Income Securities falls, and the converse is also true. Based on historical observations, there is a low probability that all interest rate yield curves would shift in the same direction at the same time. Furthermore, at times interest rate movements in certain credit sectors exhibit a much lower correlation to changes in U.S. Treasury yields. Accordingly, the actual effect of interest rate movements may differ materially from the amounts set forth in the following tables.

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The following table summarizes the effect that an immediate, parallel shift in the interest rate yield curve would have had on our Fixed Income Securities:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| (U.S. dollars in <br>billions) | **Interest Rate Shift in Basis Points** | **Interest Rate Shift in Basis Points** | **Interest Rate Shift in Basis Points** | **Interest Rate Shift in Basis Points** | **Interest Rate Shift in Basis Points** |
| (U.S. dollars in <br>billions) | **-100** | **-50** | **—** | **+50** | **+100** |
| **<u>June 30, 2025</u>** | **<u>June 30, 2025</u>** |  |  |  |  |
| Total fair value | $43.6 | $43.0 | $42.3 | $41.7 | $41.1 |
| Change from base | 2.9% | 1.5% |  | (1.5)% | (2.9)% |
| Change in unrealized value | $1.2 | $0.6 |  | $(0.6) | $(1.2) |
| **<u>December 31, 2024</u>** | **<u>December 31, 2024</u>** |  |  |  |  |
| Total fair value | $40.0 | $39.5 | $38.9 | $38.4 | $37.9 |
| Change from base | 2.8% | 1.4% |  | (1.4)% | (2.7)% |
| Change in unrealized value | $1.1 | $0.5 |  | $(0.5) | $(1.1) |

---

In addition, we consider the effect of credit spread movements on the market value of our Fixed Income Securities and the corresponding change in unrealized value. As credit spreads widen, the fair value of our Fixed Income Securities falls, and the converse is also true. In periods where the spreads on our Fixed Income Securities are much higher than their historical average due to short-term market dislocations, a parallel shift in credit spread levels would result in a much more pronounced change in unrealized value.

The following table summarizes the effect that an immediate, parallel shift in credit spreads in a static interest rate environment would have had on our Fixed Income Securities:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| (U.S. dollars in <br>billions) | **Credit Spread Shift in Percentage Points** | **Credit Spread Shift in Percentage Points** | **Credit Spread Shift in Percentage Points** | **Credit Spread Shift in Percentage Points** | **Credit Spread Shift in Percentage Points** |
| (U.S. dollars in <br>billions) | **-100** | **-50** | **—** | **+50** | **+100** |
| **<u>June 30, 2025</u>** | **<u>June 30, 2025</u>** |  |  |  |  |
| Total fair value | $43.6 | $43.0 | $42.3 | $41.7 | $41.1 |
| Change from base | 3.0% | 1.5% |  | (1.5)% | (3.0)% |
| Change in unrealized value | $1.3 | $0.6 |  | $(0.6) | $(1.3) |
| **<u>December 31, 2024</u>** | **<u>December 31, 2024</u>** |  |  |  |  |
| Total fair value | $40.0 | $39.5 | $38.9 | $38.4 | $37.8 |
| Change from base | 2.8% | 1.4% |  | (1.4)% | (2.8)% |
| Change in unrealized value | $1.1 | $0.5 |  | $(0.5) | $(1.1) |

---

Another method that attempts to measure portfolio risk is Value-at-Risk ("VaR"). VaR measures the worst expected loss under normal market conditions over a specific time interval at a given confidence level. The 1-year 95th percentile parametric VaR reported herein estimates that 95% of the time, the portfolio loss in a one-year horizon would be less than or equal to the calculated number, stated as a percentage of the measured portfolio's initial value. The VaR is a variance-covariance based estimate, based on linear sensitivities of a portfolio to a broad set of systematic market risk factors and idiosyncratic risk factors mapped to the portfolio exposures. The relationships between the risk

factors are estimated using historical data, and the most recent data points are generally given more weight. As of June 30, 2025, our portfolio's 95th percentile VaR was estimated to be 6.5%, compared to an estimated 5.6% at December 31, 2024. In periods where the volatility of the risk factors mapped to our portfolio's exposures is higher due to market conditions, the resulting VaR is higher than in other periods.

*Equity Securities.* At June 30, 2025 and December 31, 2024, the fair value of our investments in equity securities and certain investments accounted for using the equity method with underlying equity strategies totaled $1.6 billion and $1.5 billion, respectively. These investments are exposed to price risk, which is the potential loss arising from decreases in fair value. An immediate hypothetical 10% decline in the value of each position would reduce the fair value of such investments by approximately $163 million and $149 million at June 30, 2025 and December 31, 2024, respectively, and would have decreased book value per share by approximately $0.43 and $0.40, respectively. An immediate hypothetical 10% increase in the value of each position would increase the fair value of such investments by approximately $163 million and $149 million at June 30, 2025 and December 31, 2024, respectively, and would have increased book value per share by approximately $0.43 and $0.40, respectively.

*Investment-Related Derivatives.* At June 30, 2025, the notional value of all derivative instruments (excluding foreign currency forward contracts which are included in the foreign currency exchange risk analysis below) was $10.2 billion, compared to $5.0 billion at December 31, 2024. If the underlying exposure of each investment-related derivative held at June 30, 2025 depreciated by 100 basis points, it would have resulted in a reduction in net income of approximately $102 million, and a decrease in book value per share of approximately $0.27 per share, compared to $50 million and $0.13 per share, respectively, on investment-related derivatives held at December 31, 2024. If the underlying exposure of each investment-related derivative held at June 30, 2025 appreciated by 100 basis points, it would have resulted in an increase in net income of approximately $102 million, and an increase in book value per share of approximately $0.27 per share, compared to $50 million and $0.13 per share, respectively, on investment-related derivatives held at December 31, 2024. See <u>[note 10, "Derivative Instruments,"](#i8c1a838c8b384cbd8c3d99c9af25908b_88)</u> to our consolidated financial statements for additional disclosures concerning derivatives.

For further discussion on investment activity, please refer to "Financial Condition—Investable Assets."

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**Foreign Currency Exchange Risk** 

Foreign currency rate risk is the potential change in value, income and cash flow arising from adverse changes in foreign currency exchange rates. Through our subsidiaries and branches located in various foreign countries, we conduct our insurance and reinsurance operations in a variety of local currencies other than the U.S. Dollar. We generally hold investments in foreign currencies which are intended to mitigate our exposure to foreign currency fluctuations in our net insurance liabilities. We may also utilize foreign currency forward contracts and currency options as part of our investment strategy. See <u>[note 10, "Derivative Instruments,"](#i8c1a838c8b384cbd8c3d99c9af25908b_88)</u> to our consolidated financial statements for additional information.

The following table provides a summary of our net foreign currency exchange exposures, as well as foreign currency derivatives in place to manage these exposures:

---

| | | |
|:---|:---|:---|
| | **June 30,<br>2025** | **December 31,<br>2024** |
| Net assets (liabilities), denominated in foreign currencies, excluding shareholders' equity and derivatives | $(464) | $(815) |
| Shareholders' equity denominated in foreign currencies (1) | 1200 | 1120 |
| Net foreign currency forward contracts outstanding (2) | 279 | 453 |
| &nbsp;&nbsp;&nbsp;Net exposures denominated in foreign currencies | $1015 | $758 |
| Pre-tax impact of a hypothetical 10% appreciation of the U.S. Dollar against foreign currencies: |  |  |
| &nbsp;&nbsp;&nbsp;Shareholders' equity | $(102) | $(76) |
| &nbsp;&nbsp;&nbsp;Book value per share | $(0.27) | $(0.20) |
| Pre-tax impact of a hypothetical 10% decline of the U.S. Dollar against foreign currencies: |  |  |
| &nbsp;&nbsp;&nbsp;Shareholders' equity | $102 | $76 |
| &nbsp;&nbsp;&nbsp;Book value per share | $0.27 | $0.20 |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Represents capital contributions held in the foreign currencies of our operating units.

(2)&nbsp;&nbsp;&nbsp;&nbsp;Represents the net notional value of outstanding foreign currency forward contracts.

Although we generally attempt to match the currency of our projected liabilities with investments in the same currencies, from time to time we may elect to over or underweight one or more currencies, which could increase our exposure to foreign currency fluctuations and increase the volatility of our shareholders' equity. Historical observations indicate a low probability that all foreign currency exchange rates would shift against the U.S. Dollar in the same direction and at the same time and, accordingly, the actual effect of foreign currency rate movements may differ materially from the amounts set forth above. For further discussion on foreign exchange activity, please refer to "Results of Operations."

**Effects of Inflation**

General economic inflation has increased in recent quarters and may continue to remain at elevated levels for an extended period of time. The potential also exists, after a catastrophe loss or pandemic events, for the development of inflationary pressures in a local economy. This risk may be heightened from time to time by geopolitical tensions, global supply chain disruptions, tariffs, and other contributing factors. This may have a material effect on the adequacy of our reserves for losses and loss adjustment expenses, especially in longer-tailed lines of business, and on the market value of our investment portfolio through rising interest rates. The anticipated effects of inflation are considered in our pricing models, reserving processes and exposure management, across all lines of business and types of loss including natural catastrophe events. The actual effects of inflation on our results cannot be accurately known until claims are ultimately settled and will vary by the specific type of inflation affecting each line of business.

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**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

Reference is made to the information appearing above under the subheading "Market Sensitive Instruments and Risk Management" under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations," which information is hereby incorporated by reference.

**ITEM 4. CONTROLS AND PROCEDURES**

**Evaluation of Disclosure Controls and Procedures**

In connection with the filing of this Form 10-Q, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the Company's disclosure controls and procedures, as of the end of the period covered by this report, for the purposes set forth in the applicable rules under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on that evaluation and subject to the below, our Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report. Disclosure controls and procedures are the controls and other procedures designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

On August 1, 2024, we completed the MCE Acquisition, and we are currently integrating the MCE Acquisition into our internal control system. Consistent with guidance issued by the SEC, we are excluding the internal control over financial reporting of MCE Acquisition from our evaluation of the effectiveness of our disclosure controls and procedures described above as of June 30, 2025. The MCE Acquisition represents 1.4% of total assets, and 7.8% of total revenues as of June 30, 2025.

**Changes in Internal Control Over Financial Reporting**

Other than the item noted above, there have been no changes in internal control over financial reporting that occurred during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

**PART II. OTHER INFORMATION**

**ITEM 1. LEGAL PROCEEDINGS**

We, in common with the insurance industry in general, are subject to litigation and arbitration in the normal course of our business. As of June 30, 2025, we were not a party to any litigation or arbitration which is expected by management to have a material adverse effect on our results of operations and financial condition and liquidity.

**ITEM 1A. RISK FACTORS**

There were no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

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**ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

**Issuer's Repurchases of Equity Securities**

The following table summarizes our purchases of common shares for the 2025 second quarter:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Period** | **Total Number of Shares<br>Purchased (1)** | **Average Price Paid per Share** | **Total Number of Shares Purchased as Part of<br>Publicly Announced<br>Plans or Programs** | **Approximate Dollar<br>Value of Shares that<br> May Yet be Purchased<br>Under the Plan or<br>Programs ($000's) (2)** |
| 4/1/2025-4/30/2025 | 1152118 | $86.80 | 1152038 | $700394 |
| 5/1/2025-5/31/2025 | 84298 | $89.91 | 84298 | $692816 |
| 6/1/2025-6/30/2025 | 619815 | $89.84 | 619815 | $637143 |
| &nbsp;&nbsp;&nbsp;Total | 1856231 | $87.96 | 1856151 |  |

---

(1)This column represents (in whole shares) open market share repurchases, including an aggregate of 80 shares, nil shares and nil shares repurchased by Arch Capital during April, May and June, respectively, other than through publicly announced plans or programs. We repurchased these shares from employees in order to facilitate the payment of withholding taxes on restricted and performance shares granted and the exercise of stock appreciation rights, in each case at their fair value as determined by reference to the closing price of our common shares on the day the restricted shares vested or the stock appreciation rights were exercised.

(2)This column represents the remaining approximate dollar amount available at the end of each applicable period under Arch Capital's $1.0 billion share repurchase authorization, authorized by the Company's Board of Directors on December 20, 2024, and having no expiration date. Repurchases may be effected from time to time in open market or privately negotiated transactions.

**ITEM 3. DEFAULTS UPON SENIOR SECURITIES**

None.

**ITEM 4. MINE SAFETY DISCLOSURES**

Not applicable.

**ITEM 5. OTHER INFORMATION** 

During the three months ended June 30, 2025, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).

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**ITEM 6. EXHIBITS**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** | |
|<br>**Exhibit Number** |<br>**Exhibit Description** | **Form** | **Original Number** | **Date Filed** |<br>**Filed Herewith** |
| 31.1 | <u>[Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ex31163025.htm)</u> |  |  |  | X |
| 31.2 | <u>[Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ex31263025.htm)</u> |  |  |  | X |
| 32.1 | <u>[Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ex32163025.htm)</u> |  |  |  | X |
| 32.2 | <u>[Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ex32263025.htm)</u> |  |  |  | X |
| 10.1 | <u>[Form of Restricted Share Agreement between ACGL and each of the Non-Employee Directors of ACGL†](ex101rsaagreement.htm)</u> |  |  |  | X |
| 10.2 | <u>[ACGL Amended and Restated 2018 Long Term Incentive and Share Award Plan†](ex102acglar2018ltipeffecti.htm)</u> |  |  |  | X |
| 10.3 | <u>[ACGL Amended and Restated 2022 Long Term Incentive and Share Award Plan†](ex103acglar2022ltipeffecti.htm)</u> |  |  |  | X |
| 10.4 | <u>[Second Amended and Restated ACGL 2007 Employee Share Purchase Plan†](ex104secondaracglesppeffec.htm)</u> |  |  |  | X |
| 101.INS | XBRL Instance Document |  |  |  |  |
| 101.SCH | XBRL Taxonomy Extension Schema Document |  |  |  |  |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |  |  |  |  |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |  |  |  |  |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document |  |  |  |  |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |  |  |  |  |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |  |  |  |  |
| † | Management contract or compensatory plan or arrangement |  |  |  |  |

---

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | |
|:---|:---|
| | **ARCH CAPITAL GROUP LTD.** |
| | **(REGISTRANT)**<br>/s/ Nicolas Papadopoulo |
| Date: August 5, 2025 | Nicolas Papadopoulo |
|  | Chief Executive Officer (Principal Executive Officer) |
|  | /s/ François Morin |
| Date: August 5, 2025 | François Morin |
|  | Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) and Treasurer |

---

ARCH CAPITAL 67 2025 SECOND QUARTER FORM 10-Q

## Exhibit 10.1

**Exhibit 10.1**

**ARCH CAPITAL GROUP LTD.<br>Restricted Share Agreement**

THIS AGREEMENT, dated as of [**insert date**], between Arch Capital Group Ltd. (the "Company"), a Bermuda company, and [**insert name**] (the "Director").

WHEREAS, the following terms reflect the Company's 2022 Long Term Incentive and Share Award Plan (the "Plan");

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto agree as follows.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Award of Shares</u>. Pursuant to the provisions of the Plan, the terms of which are incorporated herein by reference, the Director is hereby awarded [**insert shares**] Restricted Shares (the "Award"), subject to the terms and conditions herein set forth. Capitalized terms used herein and not defined shall have the meanings set forth in the Plan. In the event of any conflict between this Agreement and the Plan, the Plan shall control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Terms and Conditions</u>. It is understood and agreed that the Award of Restricted Shares evidenced hereby is subject to the following terms and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Vesting of Award</u>. Subject to Section 2(b) below and the other terms and conditions of this Agreement, this Award shall become vested on the date that is the earlier of 1) one year following the grant date or 2) the Company's next Annual General Meeting of Shareholders (provided that such Annual General Meeting of Shareholders is at least fifty (50) weeks following the immediately preceding year's Annual General Meeting of Shareholders). Unless otherwise provided by the Company, all dividends and other amounts receivable in connection with any adjustments to the Shares under Section 4(c) of the Plan shall be subject to the vesting schedule in this Section 2(a). Notwithstanding the foregoing, if a Change in Control occurs and the Director ceases to be a director of the Company for any reason, then the Restricted Shares shall become immediately vested in full upon such termination of service.

"Change in Control" shall mean:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;&nbsp;&nbsp;&nbsp;any person (within the meaning of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), other than a Permitted Person, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or<br>

&nbsp;&nbsp;&nbsp;&nbsp;

![image_0.jpg](image_0.jpg)

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;&nbsp;&nbsp;&nbsp;the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the "Board") together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)&nbsp;&nbsp;&nbsp;&nbsp;the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph.

"Permitted Persons" means (A) the Company; (B) any Related Party; or (C) any group (as defined in Rule 13b-3 under the Exchange Act) comprised of any or all of the foregoing.

"Related Party" means (A) a majority-owned subsidiary of the Company; (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any majority-owned subsidiary of the Company; or (C) any entity, 50% or more of the voting power of which is owned directly or indirectly by the shareholders of the Company in substantially the same proportion as their ownership of Voting Securities immediately prior to the transaction.

"Voting Security" means any security of the Company which carries the right to vote generally in the election of directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Termination of Service; Forfeiture of Unvested Shares</u>. Except as otherwise set forth in Section 2(a) above, in the event the Director ceases to be a director of the Company prior to the date the Restricted Shares otherwise become vested due to his or her death or Permanent Disability (as defined in the Company's Incentive

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Compensation Plan), the Restricted Shares shall become immediately vested in full upon such termination of service. If the Director ceases to be a director of the Company for any other reason prior to the date the Restricted Shares become vested, the Award shall be forfeited by the Director and become the property of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;<u>Certificates</u>. Each certificate issued in respect of Restricted Shares awarded hereunder shall be issued in book entry format with the Company's transfer agent and shall bear a legend disclosing the restrictions on transferability imposed on such Restricted Shares by this Agreement (the "Restrictive Legend"). Upon the vesting of Restricted Shares pursuant to Section 2(a) hereof and the satisfaction of any withholding tax liability pursuant to Section 5 hereof, such vested Shares, not bearing the Restrictive Legend, shall be delivered to the Director.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;<u>Rights of a Stockholder</u>. Prior to the time a Restricted Share is fully vested hereunder, the Director shall have no right to transfer, pledge, hypothecate or otherwise encumber such Restricted Shares. During such period, the Director shall have all other rights of a stockholder, including, but not limited to, the right to vote and to receive dividends (subject to Section 2(a) hereof) at the time paid on such Restricted Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;<u>No Right to Continued Services</u>. This Award shall not confer upon the Director any right with respect to continuance of services with the Company nor shall this Award interfere with the right of the Company to terminate the Director's services at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Transfer of Shares</u>. The Shares delivered hereunder, or any interest therein, may be sold, assigned, pledged, hypothecated, encumbered, or transferred or disposed of in any other manner, in whole or in part, only in compliance with the terms, conditions and restrictions as set forth in the governing instruments of the Company, applicable United States federal and state securities laws or any other applicable laws or regulations and the terms and conditions hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>Expenses of Issuance of Shares</u>. The issuance of stock certificates hereunder shall be without charge to the Director. The Company shall pay, and indemnify the Director from and against any issuance, stamp or documentary taxes (other than transfer taxes) or charges imposed by any governmental body, agency or official (other than income taxes) or by reason of the issuance of Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.<u>Withholding</u>. No later than the date of vesting of (or the date of an election by the Director under Section 83(b) of the Code with respect to) the Award granted hereunder, the Director shall make arrangements satisfactory to the Committee regarding payment of any federal, state or local taxes of any kind required by law to be withheld at such time with respect to such Award and the Company shall, to the extent permitted or required by law, have the right to deduct from any payment of any kind otherwise due to the Director, federal, state and local taxes of any kind required by law to be withheld at such time.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.<u>References</u>. References herein to rights and obligations of the Director shall apply, where appropriate, to the Director's legal representative or estate without regard to whether specific reference to such legal representative or estate is contained in a particular provision of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.<u>Notices</u>. Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given when delivered personally or by courier, or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the party concerned at the address indicated below or to such changed address as such party may subsequently by similar process give notice of:

If to the Company:

Arch Capital Group Ltd.<br>Waterloo House

100 Pitts Bay Road<br>Pembroke HM 08, Bermuda <br>Attn.: Secretary

If to the Director:

To the last address delivered to the Company by the <br>Director in the manner set forth herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.<u>Governing Law</u>. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to principles of conflict of laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.<u>Entire Agreement</u>. This Agreement and the Plan constitute the entire agreement among the parties relating to the subject matter hereof, and any previous agreement or understanding among the parties with respect thereto is superseded by this Agreement and the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.<u>Counterparts</u>. This Agreement may be executed in two counterparts, each of which shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

ARCH CAPITAL GROUP LTD.

By:&nbsp;&nbsp;&nbsp;&nbsp;________________________________

&nbsp;&nbsp;&nbsp;&nbsp;Name:

&nbsp;&nbsp;&nbsp;&nbsp;Title:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;________________________________

&nbsp;&nbsp;&nbsp;&nbsp;Name:

&nbsp;&nbsp;&nbsp;&nbsp;

## Exhibit 10.2

*Final as of May 7, 2025*

**Exhibit 10.2**

**ARCH CAPITAL GROUP LTD.**

**AMENDED AND RESTATED 2018 LONG TERM INCENTIVE AND SHARE AWARD PLAN**

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ARCH CAPITAL GROUP LTD.

AMENDED AND RESTATED 2018 LONG TERM INCENTIVE AND SHARE AWARD PLAN

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Purposes</u>. The purposes of the Amended and Restated 2018 Long Term Incentive and Share Award Plan are to advance the interests of Arch Capital Group Ltd. and its shareholders by providing a means to attract, retain, and motivate employees and directors of the Company its subsidiaries and affiliates, to provide for competitive compensation opportunities, to encourage long-term service, to recognize individual contributions and reward achievement of performance goals, and to promote the creation of long-term value for shareholders by aligning the interests of such persons with those of shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Definitions</u>. For purposes of the Plan, the following terms shall be defined as set forth below:

&nbsp;&nbsp;&nbsp;&nbsp;"Affiliate" means any entity other than the Company and its Subsidiaries that is designated by the Board or the Committee as a participating employer under the Plan, provided that the Company directly or indirectly owns at least 20% of the combined voting power of all classes of stock of such entity or at least 20% of the ownership interests in such entity.

&nbsp;&nbsp;&nbsp;&nbsp;"Award" means any Option, SAR, Restricted Share, Restricted Share Unit, Performance Share, Performance Unit, Dividend Equivalent or Other Share-Based Award granted to an Eligible Person under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;"Award Agreement" means any written agreement, contract, or other instrument or document evidencing an Award.

&nbsp;&nbsp;&nbsp;&nbsp;"Beneficiary" means the person, persons, trust or trusts which have been designated by an Eligible Person in his or her most recent written beneficiary designation filed with the Company to receive the benefits specified under this Plan upon the death of the Eligible Person, or, if there is no designated Beneficiary or surviving designated Beneficiary, then the person, persons, trust or trusts entitled by will or the laws of descent and distribution to receive such benefits.

&nbsp;&nbsp;&nbsp;&nbsp;"Board" means the Board of Directors of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;"Cause" means, with respect to an Eligible Person, (a) theft or embezzlement by the Eligible Person with respect to the Company, its Subsidiaries or Affiliates; (b) malfeasance or negligence in the performance of the Eligible Person's duties; (c) the commission by the Eligible Person of any felony or any crime involving moral turpitude; (d) willful or prolonged absence from work by the Eligible Person (other than by reason of disability due to physical or mental illness); (e) failure, neglect or refusal by the Eligible Person to adequately perform his or her duties and responsibilities as determined by the Company; (f) continued and habitual use of alcohol by the Eligible Person to an extent which materially impairs the Eligible Person's performance of his or her duties without the same being corrected within ten (10) days after being given written notice thereof; or (g) the Eligible Person's use of illegal drugs without the same being corrected within ten days after being given written notice thereof. Notwithstanding the foregoing, in the event that an Eligible Person is party to an employment or similar agreement with the Company or any of its Subsidiaries or Affiliates and such agreement contains a definition of "Cause," the definition of "Cause" set forth above shall be deemed replaced and superseded, with respect to such Eligible Person, by the definition of "Cause" used in such employment or similar agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;"Change in Control", unless otherwise defined in an applicable Award Agreement, shall mean:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.any person (within the meaning of the Exchange Act), other than a Permitted Person, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.the individuals who, as of the date hereof, constitute the Board together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this definition.

Notwithstanding the foregoing, to the extent necessary to comply with Section 409A of the Code with respect to the payment of "nonqualified deferred compensation" (as defined for purposes of Section 409A of the Code), "Change in Control" shall be limited to a "change in control event" as defined under Section 409A of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;"Code" means the Internal Revenue Code of 1986, as amended from time to time. References to any provision of the Code shall be deemed to include successor provisions thereto and regulations thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;"Committee" means the Compensation Committee of the Board, or such other Board committee or subcommittee (or the entire Board) as may be designated by the Board to administer the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;"Company" means Arch Capital Group Ltd., a corporation organized under the laws of Bermuda, or any successor corporation.

&nbsp;&nbsp;&nbsp;&nbsp;"Director" means a member of the Board who is not an employee of the Company, a Subsidiary or an Affiliate.

&nbsp;&nbsp;&nbsp;&nbsp;"Dividend Equivalent" means a right, granted under the Plan, to receive cash, Shares, or other property equal in value to dividends paid with respect to a specified number of Shares. Dividend Equivalents may be awarded on a freestanding basis or in connection with another Award, and may be paid currently or on a deferred basis.

&nbsp;&nbsp;&nbsp;&nbsp;"Eligible Person" means (i) an employee of the Company, a Subsidiary or an Affiliate, including any director who is an employee, and (ii) any Director. Notwithstanding any provisions of this Plan to the contrary, an Award may be granted to an employee, in connection with his or her hiring or retention prior to the date the employee first performs services for the Company, a Subsidiary or an Affiliate; <u>provided</u>, <u>however</u>, that any such Award

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shall not become vested or exercisable prior to the date the employee first performs such services.

&nbsp;&nbsp;&nbsp;&nbsp;"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time. References to any provision of the Exchange Act shall be deemed to include successor provisions thereto and regulations thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;"Fair Market Value" means, with respect to Shares or other property, the fair market value of such Shares or other property determined by such methods or procedures as shall be established from time to time by the Committee. Unless otherwise determined by the Committee in good faith, the Fair Market Value of Shares shall mean the closing price per Share on the date (or, if the Shares were not traded on that day, the next preceding day that the Shares were traded) on the principal exchange or market system on which the Shares are traded, as such prices are officially quoted thereon.

&nbsp;&nbsp;&nbsp;&nbsp;"ISO" means any Option intended to be and designated as an incentive stock option within the meaning of Section 422 of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;"NQSO" means any Option that is not an ISO.

&nbsp;&nbsp;&nbsp;&nbsp;"Option" means a right, granted under Section 5(b), to purchase Shares. "Other Share-Based Award" means a right, granted under Section 5(h), that relates to or is valued by reference to Shares.

&nbsp;&nbsp;&nbsp;&nbsp;"Participant" means an Eligible Person who has been granted an Award under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;"Performance Share" means a performance share granted under Section 5(f).

&nbsp;&nbsp;&nbsp;&nbsp;"Performance Unit" means a performance unit granted under Section 5(f).

&nbsp;&nbsp;&nbsp;&nbsp;"Permitted Persons" means (A) the Company; (B) any Related Party; or (C) any group (as defined in Rule 13b-3 under the Exchange Act) comprised of any or all of the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;"Plan" means this Amended and Restated 2018 Long Term Incentive and Share Award Plan.

&nbsp;&nbsp;&nbsp;&nbsp;"Related Party" means (A) a majority-owned subsidiary of the Company; (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any majority-owned subsidiary of the Company; or (C) any entity, 50% or more of the voting power of which is owned directly or indirectly by the shareholders of the Company in substantially the same proportion as their ownership of Voting Securities immediately prior to the transaction.

&nbsp;&nbsp;&nbsp;&nbsp;"Restricted Shares" means an Award of Shares under Section 5(d) that may be subject to certain restrictions and to a risk of forfeiture.

&nbsp;&nbsp;&nbsp;&nbsp;"Restricted Share Unit" means a right, granted under Section 5(e), to receive Shares or cash at the end of a specified deferral period.

&nbsp;&nbsp;&nbsp;&nbsp;"Rule 16b-3" means Rule 16b-3, as from time to time in effect and applicable to the Plan and Participants, promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act.

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&nbsp;&nbsp;&nbsp;&nbsp;"SAR" or "Share Appreciation Right" means the right, granted under Section 5(c), to be paid an amount measured by the difference between the exercise price of the right and the Fair Market Value of Shares on the date of exercise of the right, with payment to be made in cash, Shares, or property as specified in the Award or determined by the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;"Shares" means common shares, $.0033 par value per share, of the Company, and such other securities as may be substituted for Shares pursuant to Section 4(c) hereof.

&nbsp;&nbsp;&nbsp;&nbsp;"Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations (other than the last corporation in the unbroken chain) owns shares possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.

&nbsp;&nbsp;&nbsp;&nbsp;"Voting Security" means any security of the Company which carries the right to vote generally in the election of directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Administration</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Authority of the Committee</u>. The Plan shall be administered by the Committee, and the Committee shall have full and final authority to take the following actions, in each case subject to and consistent with the provisions of the Plan:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.to select Eligible Persons to whom Awards may be granted;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.to designate Affiliates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.to determine the type or types of Awards to be granted to each Eligible Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv.to determine the type and number of Awards to be granted, the number of Shares to which an Award may relate, the terms and conditions of any Award granted under the Plan (including, but not limited to, any exercise price, grant price, or purchase price, any restriction or condition, any schedule for lapse of restrictions or conditions relating to transferability or forfeiture, exercisability, or settlement of an Award, and waivers of performance or vesting conditions relating to an Award, based in each case on such considerations as the Committee shall determine), and all other matters to be determined in connection with an Award;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v.to determine whether, to what extent, and under what circumstances an Award may be settled, or the exercise price of an Award may be paid, in cash, Shares, other Awards, or other property, or an Award may be cancelled, forfeited, exchanged, or surrendered;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vi.to determine whether, to what extent, and under what circumstances cash, Shares, other Awards, or other property payable with respect to an Award will be deferred either automatically, at the election of the Committee, or at the election of the Eligible Person; <u>provided</u> that such deferral shall be structured with the intent to be in compliance with Section 409A of the Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vii.to prescribe the form of each Award Agreement, which need not be identical for each Eligible Person;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;viii.to adopt, amend, suspend, waive, and rescind such rules and regulations and appoint such agents as the Committee may deem necessary or advisable to administer the Plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ix.to correct any defect or supply any omission or reconcile any inconsistency in the Plan and to construe and interpret the Plan and any Award, rules and regulations, Award Agreement, or other instrument hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;x.to extend the period during which an Award is exercisable; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xi.to make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Manner of Exercise of Committee Authority</u>. The Committee shall have sole discretion in exercising its authority under the Plan. Any action of the Committee with respect to the Plan shall be final, conclusive, and binding on all persons, including the Company, Subsidiaries, Affiliates, Eligible Persons, any person claiming any rights under the Plan from or through any Eligible Person, and shareholders. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may delegate to officers or managers of the Company or any Subsidiary or Affiliate the authority, subject to such terms as the Committee shall determine, to perform administrative functions and, with respect to Awards granted to persons not subject to Section 16 of the Exchange Act, to perform such other functions as the Committee may determine, to the extent permitted under Rule 16b-3 (if applicable) and applicable law. Notwithstanding any provision of this Plan to the contrary, the Committee may grant Awards which are subject to the approval of the Board; <u>provided</u> that an Award shall be subject to Board approval only if the Committee expressly so states.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.<u>Limitation of Liability</u>. Each member of the Committee shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or other employee of the Company or any Subsidiary or Affiliate, the Company's independent certified public accountants, or other professional retained by the Company to assist in the administration of the Plan. No member of the Committee, and no officer or employee of the Company acting on behalf of the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Committee and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action, determination, or interpretation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.<u>No Option or SAR Repricing Without Shareholder Approval</u>. Except as provided in the first sentence of Section 4(c) hereof relating to certain anti-dilution adjustments, unless the approval of shareholders of the Company is obtained, (i) Options and SARs issued under the Plan shall not be amended to lower their exercise price, (ii) Options and SARs issued under the Plan will not be exchanged for other Options or SARs with lower exercise prices, (iii) Options and SARs issued under the Plan with an exercise price in excess of the Fair Market Value of the underlying Shares will not be exchanged for cash or other property, and (iv) no other action shall be taken with respect to

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Options or SARs that would be treated as a repricing under the rules of the principal stock exchange or market system on which the Shares are listed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.<u>Limitation on Committee's Authority Under 409A</u>. Anything in this Plan to the contrary notwithstanding, the Committee's authority to modify outstanding Awards shall be limited to the extent necessary so that the existence of such authority does not (i) cause an Award that is not otherwise deferred compensation subject to Section 409A of the Code to become deferred compensation subject to Section 409A of the Code or (ii) cause an Award that is otherwise deferred compensation subject to Section 409A of the Code to fail to meet the requirements prescribed by Section 409A of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.<u>Award Vesting Limitations</u>. Notwithstanding any provision of the Plan to the contrary, the Awards will be granted with vesting periods of not less than one year following the date the applicable Award is granted (other than in the case of death or disability); <u>provided</u>, <u>however</u>, that, notwithstanding the foregoing, Awards that result in the issuance of an aggregate of up to 5% of the Shares reserved for issuance under Section 4(a) may be granted to Eligible Persons without regard to such minimum vesting provisions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>Shares Subject to the Plan.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Subject to adjustment as provided in Section 4(c) hereof, the total number of Shares reserved for issuance under the Plan shall be 11,500,000; <u>provided</u>, <u>however</u>, that (I) any Shares issued under Options or SARs shall be counted against this limit on a one-for-one basis, and any Shares issued as or under Awards other than Options or SARs shall be counted against this limit as 3.6 Shares for every one (1) Share subject to such Award, and (II) subject to adjustment as provided in Section 4(c) hereof, no more than 2,000,000 Shares may be issued as ISOs. No Award may be granted if the number of Shares to which such Award relates, when added to the number of Shares previously issued under the Plan, exceeds the number of Shares reserved under the applicable provisions of the preceding sentence. If any Awards are forfeited, cancelled, terminated, exchanged or surrendered or such Award is settled in cash or otherwise terminates without a distribution of Shares to the Participant, any Shares counted against the number of Shares reserved and available under the applicable provisions of the Plan with respect to such Award shall, to the extent of any such forfeiture, settlement, termination, cancellation, exchange or surrender, again be available for Awards under the Plan, and any Shares that again become available for grant pursuant to this Section 4(a) shall be added back as one (1) Share if such Shares were subject to Options or SARs and as 3.6 Shares if such Shares were subject to Awards other than Options or SARs; <u>provided, however</u>, that Shares subject to an Award under the Plan may not again be made available for issuance under the Plan if such Shares are (x) Shares that were subject to an Option or a stock-settled SAR and were not issued upon the net settlement or net exercise of such Option or SAR, or (y) Shares delivered to or withheld by the Company to pay the exercise price or the withholding taxes under Options, SARs or other Awards. Upon the exercise of any Award granted in tandem with any other Awards, such related Awards shall be cancelled to the extent of the number of Shares as to which the Award is exercised.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or treasury Shares including Shares acquired by purchase in the open market or in private transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.In the event that the Committee shall determine that any dividend in Shares, recapitalization, Share split, reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange, extraordinary distribution or other similar corporate transaction or event, affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Eligible Persons under the Plan, then the Committee shall make such equitable changes or adjustments as it deems appropriate and, in such manner as it may deem equitable, (i) adjust any or all of (w) the number and kind of shares which may thereafter be issued under the Plan, (x) the number and kind of shares, other securities or other consideration issued or issuable in respect of outstanding Awards, and (y) the exercise price, grant price, or purchase price relating to any Award, and (z) the performance criteria and objectives, if any, included in any Award or (ii) provide for a distribution of cash or property in respect of any Award; <u>provided</u>, <u>however</u>, in each case that, with respect to ISOs, such adjustment shall be made in accordance with Section 424(a) of the Code, unless the Committee determines otherwise; <u>provided</u> <u>further</u>*,* <u>however</u>, that no adjustment shall be made pursuant to this Section 4(c) that causes any Award that is not otherwise deferred compensation subject to Section 409A of the Code to be treated as deferred compensation pursuant to Section 409A of the Code. In addition, without limiting and other than as mandated above, the Committee is authorized to make adjustments in the terms and conditions of, and the performance criteria and objectives, if any, included in, Awards in recognition of unusual or non-recurring events affecting the Company or any Subsidiary or Affiliate or the financial statements of the Company or any Subsidiary or Affiliate, or in response to changes in applicable laws, regulations, or accounting principles, or otherwise to revise any performance criteria or objectives included in Awards, if there shall occur any significant events, as determined by the Committee, which the Committee expects to have a substantial effect on the performance criteria or objectives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.<u>Specific Terms of Awards</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>General</u>. Awards may be granted on the terms and conditions set forth in this Section 5. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 8(d)), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms regarding forfeiture of Awards or continued exercisability of Awards in the event of termination of service by the Eligible Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Options</u>. The Committee is authorized to grant Options, which may be NQSOs or ISOs, to Eligible Persons on the following terms and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.<u>Exercise Price</u>. The exercise price per Share purchasable under an Option shall be determined by the Committee; <u>provided</u>, <u>however</u>, that the exercise price per Share of an Option shall not be less than the Fair Market Value of a Share on the date of grant of the Option. The Committee may, without limitation, set an exercise price that is based upon achievement of performance criteria if deemed appropriate by the Committee.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.<u>Option Term</u>. The term of each Option shall be determined by the Committee, but such term shall not exceed ten years from the date of grant of the Option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.<u>Time and Method of Exercise</u>. The Committee shall determine the time or times at which an Option may be exercised in whole or in part (including, without limitation, upon achievement of performance criteria if deemed appropriate by the Committee), the methods by which such exercise price may be paid or deemed to be paid (including, without limitation, broker-assisted exercise arrangements), the form of such payment (including, without limitation, cash, Shares or other property), and the methods by which Shares will be delivered or deemed to be delivered to Eligible Persons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv.<u>ISOs</u>. The terms of any ISO granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code, including but not limited to the requirement that no ISO shall be granted more than ten years after the earlier of the date of adoption or shareholder approval of the Plan. ISOs may only be granted to employees of the Company or a Subsidiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.<u>SARs</u>. The Committee is authorized to grant SARs (Share Appreciation Rights) to Eligible Persons on the following terms and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.<u>Right to Payment</u>. A SAR shall confer on the Eligible Person to whom it is granted a right to receive with respect to each Share subject thereto, upon exercise thereof, the excess of (1) the Fair Market Value of one Share on the date of exercise over (2) the exercise price per Share of the SAR as determined by the Committee as of the date of grant of the SAR (which shall not be less than the Fair Market Value per Share on the date of grant of the SAR and, in the case of a SAR granted in tandem with an Option, shall be equal to the exercise price of the underlying Option).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.<u>Other Terms</u>. The Committee shall determine the time or times at which a SAR may be exercised in whole or in part (which shall not be more than ten years after the date of grant of the SAR), the method of exercise, method of settlement, form of consideration payable in settlement, method by which Shares will be delivered or deemed to be delivered to Eligible Persons, whether or not a SAR shall be in tandem with any other Award, and any other terms and conditions of any SAR. Unless the Committee determines otherwise, a SAR (1) granted in tandem with a NQSO may be granted at the time of grant of the related NQSO or at any time thereafter or (2) granted in tandem with an ISO may only be granted at the time of grant of the related ISO.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.<u>Restricted Shares</u>. The Committee is authorized to grant Restricted Shares to Eligible Persons on the following terms and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.<u>Issuance and Restrictions</u>. Restricted Shares shall be subject to such restrictions on transferability and other restrictions as the Committee may impose, which restrictions may lapse separately or in combination at such times, under such circumstances (including, without limitation, upon achievement of performance criteria if deemed appropriate by the Committee), in such installments or otherwise, as the Committee may determine. Except to the extent restricted under the Award Agreement

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relating to the Restricted Shares, an Eligible Person granted Restricted Shares shall have all of the rights of a shareholder including, without limitation, the right to vote Restricted Shares and the right to receive dividends thereon.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.<u>Forfeiture</u>. Except as otherwise determined by the Committee, upon termination of service during any applicable restriction period, Restricted Shares and any accrued but unpaid dividends or Dividend Equivalents that are at that time subject to restrictions shall be forfeited; <u>provided</u>, <u>however</u>, that the Committee may determine that restrictions or forfeiture conditions relating to Restricted Shares will be waived in whole or in part in the event of terminations resulting from specified causes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.<u>Certificates for Shares</u>. Restricted Shares granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Shares are registered in the name of the Eligible Person, such certificates shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Shares, and, unless otherwise determined by the Committee, the Company shall retain physical possession of the certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv.<u>Dividends</u>. Dividends paid on Restricted Shares shall be either paid at the dividend payment date, or deferred for payment to such date, and subject to such conditions, as determined by the Committee, in cash or in restricted or unrestricted Shares having a Fair Market Value equal to the amount of such dividends. Unless otherwise determined by the Committee, Shares distributed in connection with a Share split or dividend in Shares, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Shares with respect to which such Shares or other property has been distributed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.<u>Restricted Share Units</u>. The Committee is authorized to grant Restricted Share Units to Eligible Persons, subject to the following terms and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.<u>Award and Restrictions</u>. Delivery of Shares or cash, as the case may be, will occur upon expiration of the deferral period specified for Restricted Share Units by the Committee (or, if permitted by the Committee, as elected by the Eligible Person). In addition, Restricted Share Units shall be subject to such restrictions as the Committee may impose (including, without limitation, the achievement of performance criteria if deemed appropriate by the Committee), which restrictions may lapse at the expiration of the deferral period or at earlier or later specified times, separately or in combination, in installments or otherwise, as the Committee may determine.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.<u>Forfeiture</u>. Except as otherwise determined by the Committee, upon termination of service (as determined under criteria established by the Committee) during the applicable deferral period or portion thereof to which forfeiture conditions apply (as provided in the Award Agreement evidencing the Restricted Share Units), or upon failure to satisfy any other conditions precedent to the delivery of Shares or cash to which such Restricted Share Units relate, all Restricted Share Units that are at that time subject to deferral or restriction shall be forfeited; <u>provided</u>, <u>however</u>, that the Committee may

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determine that restrictions or forfeiture conditions relating to Restricted Share Units will be waived in whole or in part in the event of termination resulting from specified causes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.Dividend Equivalents. Unless otherwise determined by the Committee at the date of grant, Dividend Equivalents on the specified number of Shares covered by a Restricted Share Unit shall be either (A) paid with respect to such Restricted Share Unit at the dividend payment date in cash or in restricted or unrestricted Shares having a Fair Market Value equal to the amount of such dividends, or (B) deferred with respect to such Restricted Share Unit and the amount or value thereof automatically deemed reinvested in additional Restricted Share Units or other Awards, as the Committee shall determine.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.<u>Performance Shares and Performance Units</u>. The Committee is authorized to grant Performance Shares or Performance Units or both to Eligible Persons on the following terms and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.<u>Performance Period</u>. The Committee shall determine a performance period (the "Performance Period") of one or more years or other periods and shall determine the performance objectives for grants of Performance Shares and Performance Units. Performance objectives may vary from Eligible Person to Eligible Person and shall be based upon the performance criteria as the Committee may deem appropriate. The performance objectives may be determined by reference to the performance of the Company, or of a Subsidiary or Affiliate, or of a division or unit of any of the foregoing. Performance Periods may overlap and Eligible Persons may participate simultaneously with respect to Awards for which different Performance Periods are prescribed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.<u>Award Value</u>. The Committee shall determine for each Eligible Person or group of Eligible Persons with respect to that Performance Period the range of number of Shares, if any, in the case of Performance Shares, and the range of dollar values, if any, in the case of Performance Units, which may be fixed or may vary in accordance with such performance or other criteria specified by the Committee, which shall be paid to an Eligible Person as an Award if the relevant measure of Company performance for the Performance Period is met.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.<u>Forfeiture</u>. Except as otherwise determined by the Committee, upon termination of service during the applicable Performance Period, Performance Shares and Performance Units for which the Performance Period was prescribed shall be forfeited; <u>provided</u>, <u>however</u>, that the Committee may determine that restrictions or forfeiture conditions relating to Performance Shares and Performance Units will be waived in whole or in part in the event of terminations resulting from specified causes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv.<u>Payment</u>. Each Performance Share or Performance Unit may be paid in whole Shares, or cash, or a combination of Shares and cash either as a lump sum payment or in installments, all as the Committee shall determine, at the time of grant of the Performance Share or Performance Unit or otherwise, commencing at the time determined by the Committee.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g.<u>Dividend Equivalents</u>. The Committee is authorized to grant Dividend Equivalents to Eligible Persons. The Committee may provide, at the date of grant or thereafter, that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional Shares, or other investment vehicles as the Committee may specify, provided that unless otherwise determined by the Committee, Dividend Equivalents (other than freestanding Dividend Equivalents) shall be subject to all conditions and restrictions of any underlying Awards to which they relate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h.<u>Other Share-Based Awards</u>. The Committee is authorized, subject to limitations under applicable law, to grant to Eligible Persons such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares, as deemed by the Committee to be consistent with the purposes of the Plan, including, without limitation, other rights convertible or exchangeable into Shares, purchase rights for Shares, Awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee, and Awards valued by reference to the performance of specified Subsidiaries or Affiliates. The Committee shall determine the terms and conditions of such Awards consistent with the provisions of this Plan. Shares delivered pursuant to an Award in the nature of a purchase right granted under this Section 5(h) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Shares or other property, as the Committee shall determine. Cash awards, as an element of or supplement to any other Award under the Plan, shall also be authorized pursuant to this Section 5(h).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.<u>Certain Provisions Applicable to Awards</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Stand-Alone, Additional, Tandem and Substitute Awards</u>. Awards granted under the Plan may, in the discretion of the Committee, be granted to Eligible Persons either alone or in addition to, in tandem with, or in exchange or substitution for, any other Award granted under the Plan or any award granted under any other plan or agreement of the Company, any Subsidiary or Affiliate, or any business entity to be acquired by the Company or a Subsidiary or Affiliate, or any other right of an Eligible Person to receive payment from the Company or any Subsidiary or Affiliate. Awards may be granted in addition to or in tandem with such other Awards or awards, and may be granted either as of the same time as or a different time from the grant of such other Awards or awards. Subject to the provisions of Section 3(d) hereof prohibiting Option and SAR repricing without shareholder approval, the per Share exercise price of any Option, grant price of any SAR, or purchase price of any other Award conferring a right to purchase Shares which is granted, in connection with the substitution of awards granted under any other plan or agreement of the Company or any Subsidiary or Affiliate, or any business entity to be acquired by the Company or any Subsidiary or Affiliate, shall be determined by the Committee, in its discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Term of Awards</u>. The term of each Award granted to an Eligible Person shall be for such period as may be determined by the Committee; <u>provided</u>, <u>however</u>, that in no event shall the term of any Option or SAR exceed a period of ten years from the date of its grant (or, in the case of an ISO, such shorter period as may be applicable under Section 422 of the Code).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.<u>Form of Payment Under Awards</u>. Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by the Company or a Subsidiary or Affiliate upon the grant, maturation, or exercise of an Award may be made in such forms as the Committee shall determine at the date of grant or thereafter, including, without limitation, cash, Shares, or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis; <u>provided</u> that any such deferral shall be intended to be in compliance with Section 409A of the Code. The Committee may make rules relating to installment or deferred payments with respect to Awards, including the rate of interest to be credited with respect to such payments, and the Committee may require deferral of payment under an Award if, in the sole judgment of the Committee, it may be necessary in order to avoid nondeductibility of the payment under Section 162(m) of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.<u>Nontransferability</u>. Except as set forth below and except for vested Shares, Awards shall not be transferable by an Eligible Person except by will or the laws of descent and distribution (except pursuant to a Beneficiary designation) and shall be exercisable during the lifetime of an Eligible Person only by such Eligible Person or his guardian or legal representative. Notwithstanding the foregoing, if the Committee expressly so provides in the applicable Award agreement (at the time of grant or at any time thereafter), an Award (other than an ISO) granted hereunder may be transferred by a Participant to members of his or her "immediate family", to a trust established for the exclusive benefit of solely one or more members of the Participant's "immediate family", or to a partnership, limited liability company or other entity under which the only partners, members or equity holders are one or more members of the Participant's "immediate family." Any Award held by the transferee will continue to be subject to the same terms and conditions that were applicable to the Award immediately prior to the transfer, except that the Award will be transferable by the transferee only by will or the laws of descent and distribution. For purposes hereof, "immediate family" means the Participant's children, stepchildren, grandchildren, parents, stepparents, grandparents, spouse, siblings (including half brothers and sisters), in-laws, and relationships arising because of legal adoption. An Eligible Person's rights under the Plan may not be pledged, mortgaged, hypothecated, or otherwise encumbered, and shall not be subject to claims of the Eligible Person's creditors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.<u>Restrictive Covenants</u>. The Committee may, by way of the Award Agreements or otherwise, establish such other terms, conditions, restrictions and/or limitations, if any, of any Award, provided they are not inconsistent with the Plan, including, without limitation, the requirement that the Participant not engage in competition with, solicit customers or employees of, or disclose or use confidential information of, the Company or its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.<u>No Dividends or Dividend Equivalents on Unvested Awards</u>. Notwithstanding any provision of this Plan to the contrary, dividends and Dividend Equivalents shall not be paid with respect to unvested Awards prior to the time of vesting of the underlying Award, or portion thereof, with respect to which the dividend or Dividend Equivalent is accrued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.<u>Change in Control Provisions</u>. Unless otherwise provided in the applicable Award Agreement, notwithstanding any other provision of this Plan to the contrary, upon a Change in Control:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Awards Assumed or Substituted by Surviving Entity</u>. With respect to Awards assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change in Control: if within two years after the effective date of the Change in Control, a Participant's employment is terminated without Cause or the Participant resigns for Good Reason, then (i) all of that Participant's outstanding Options, SARs and other Awards in the nature of rights that may be exercised shall become fully vested and exercisable, (ii) all time-based vesting restrictions on his or her outstanding Awards shall lapse, and (iii) the payout level under all of that Participant's performance-based Awards that were outstanding immediately prior to effective time of the Change in Control shall be determined and deemed to have been earned as of the date of termination based upon the greater of: (A) an assumed achievement of all relevant performance goals at the "target" level pro-rated based upon the number of days within the performance period that have elapsed prior to the termination of employment date, or (B) the actual level of achievement of all relevant performance goals (measured as of the latest date immediately preceding the date of termination for which performance can, as a practical matter, may be determined), and, in either such case, there shall be a payout to such Participant within sixty (60) days following the termination of employment date (unless a later date is required by Section 8(l) hereof). With regard to each Award, a Participant shall not be considered to have resigned for Good Reason unless either (i) the Award Agreement includes such provision (and Good Reason shall be as defined therein), or (ii) the Participant is party to an employment, severance or similar agreement with the Company or an Affiliate that includes provisions in which the Participant is permitted to resign for Good Reason (and Good Reason shall be as defined therein). Any Awards shall thereafter continue or lapse in accordance with the other provisions of the Plan and the Award Agreement. To the extent that this provision causes ISOs to exceed the dollar limitation set forth in Code Section 422(d), the excess Options shall be deemed to be NQSOs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Awards not Assumed or Substituted by Surviving Entity</u>. Upon the occurrence of a Change in Control, and except with respect to any Awards assumed by the surviving entity or otherwise equitably converted or substituted in connection with the Change in Control in a manner approved by the Committee or the Board: (i) outstanding Options, SARs, and other Awards in the nature of rights that may be exercised shall become fully vested and exercisable, (ii) time-based vesting restrictions on outstanding Awards shall immediately lapse and such Awards shall become vested in full, and (iii) the target payout opportunities attainable under outstanding performance-based Awards shall be deemed to have been fully earned as of the effective date of the Change in Control based upon the greater of: (A) an assumed achievement of all relevant performance goals at the "target" level pro-rated based upon the number of days within the performance period that have elapsed prior to the Change in Control, or (B) the actual level of achievement of all relevant performance goals (measured as of the latest date immediately preceding the Change in Control for which performance can, as a practical matter, be determined), and, in either such case, there shall be a payout to Participants within sixty (60) days following the Change in Control (unless a later date is required by Section 8(l) hereof). Any Awards shall thereafter continue or lapse in accordance with the other provisions of the Plan and the Award agreement. To the extent that this provision causes ISOs to exceed the dollar limitation set forth in Code Section 422(d), the excess Options shall be deemed to be NQSOs.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.<u>General Provisions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Compliance with Legal and Trading Requirements</u>. The Plan, the granting and exercising of Awards thereunder, and the other obligations of the Company under the Plan and any Award Agreement, shall be subject to all applicable federal, state and foreign laws, rules and regulations, and to such approvals by any stock exchange, regulatory or governmental agency as may be required. The Company, in its discretion, may postpone the issuance or delivery of Shares under any Award until completion of such stock exchange or market system listing or registration or qualification of such Shares or any required action under any state, federal or foreign law, rule or regulation as the Company may consider appropriate, and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Shares in compliance with applicable laws, rules and regulations. No provisions of the Plan shall be interpreted or construed to obligate the Company to register any Shares under federal, state or foreign law. The Shares issued under this Plan may be subject to such other restrictions on transfer as determined by the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>No Right to Continued Employment or Service</u>. Neither the Plan nor any action taken thereunder shall be construed as giving any employee or director the right to be retained in the employ or service of the Company or any of its Subsidiaries or Affiliates, nor shall it interfere in any way with the right of the Company or any of its Subsidiaries or Affiliates to terminate any employee's or director's employment or service at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.<u>Taxes</u>. The Company or any Subsidiary or Affiliate is authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a distribution of Shares, or any payroll or other payment to an Eligible Person, amounts of withholding and other taxes due in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company and Eligible Persons to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Shares or other property and to make cash payments in respect thereof in satisfaction of an Eligible Person's tax obligations; <u>provided</u>, <u>however</u>, that the amount of tax withholding to be satisfied by withholding Shares shall be limited to the minimum amount of taxes, including employment taxes, required to be withheld under applicable Federal, state and local law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.<u>Changes to the Plan and Awards</u>. The Board may amend, alter, suspend, discontinue, or terminate the Plan or the Committee's authority to grant Awards under the Plan without the consent of shareholders of the Company or Participants, except that any such amendment, alteration, suspension, discontinuation, or termination shall be subject to the approval of the Company's shareholders (i) to the extent such shareholder approval is required under the rules of any stock exchange or automated quotation system on which the Shares may then be listed or quoted, or (ii) as it applies to ISOs, to the extent such shareholder approval is required under Section 422 of the Code; <u>provided</u>, <u>however</u>, that, without the consent of an affected Participant, no amendment, alteration, suspension, discontinuation, or termination of the Plan may materially and adversely affect the rights of such Participant under any Award theretofore granted to him or her. The Committee may waive any conditions or rights

15

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under, amend any terms of, or amend, alter, suspend, discontinue or terminate, any Award theretofore granted, prospectively or retrospectively; <u>provided</u>, <u>however</u>, that, without the consent of a Participant, no amendment, alteration, suspension, discontinuation or termination of any Award may materially and adversely affect the rights of such Participant under any Award theretofore granted to him or her. Except as provided in the first sentence of Section 4(c) hereof relating to certain anti-dilution adjustments, unless the approval of shareholders of the Company is obtained, (i) Options and SARs issued under the Plan shall not be amended to lower their exercise price, (ii) Options and SARs issued under the Plan will not be exchanged for other Options or SARs with lower exercise prices, (iii) Options and SARs issued under the Plan with an exercise price in excess of the Fair Market Value of the underlying Shares will not be exchanged for cash or other property, and (iv) no other action shall be taken with respect to Options or SARs that would be treated as a repricing under the rules of the principal stock exchange or market system on which the Shares are listed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.<u>No Rights to Awards; No Shareholder Rights</u>. No Eligible Person or employee shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Persons and employees. No Award shall confer on any Eligible Person any of the rights of a shareholder of the Company unless and until Shares are duly issued or transferred to the Eligible Person in accordance with the terms of the Award.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.<u>Unfunded Status of Awards</u>. The Plan is intended to constitute an "unfunded" plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company; <u>provided</u>, <u>however</u>, that the Committee may authorize the creation of trusts or make other arrangements to meet the Company's obligations under the Plan to deliver cash, Shares, other Awards, or other property pursuant to any Award, which trusts or other arrangements shall be consistent with the "unfunded" status of the Plan unless the Committee otherwise determines with the consent of each affected Participant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g.<u>Nonexclusivity of the Plan</u>. Neither the adoption of the Plan by the Board nor its submission to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of options and other awards otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h.<u>Not Compensation for Benefit Plans</u>. No Award payable under this Plan shall be deemed salary or compensation for the purpose of computing benefits under any benefit plan or other arrangement of the Company for the benefit of its employees or directors unless the Company shall determine otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.<u>No Fractional Shares</u>. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. In the case of Awards to Eligible Persons, the Committee shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j.<u>Governing Law</u>. The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan, and any Award Agreement shall be determined in accordance with the laws of New York without giving effect to principles of conflict of laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k.<u>Effective Date; Plan Termination</u>. The 2018 Long Term Incentive and Share Award Plan was originally established and became effective as of May 9, 2018, following the approval by the shareholders of the Company. This amendment and restatement of the 2018 Long Term Incentive and Share Award Plan is effective as of May 7, 2025. The Plan shall terminate as to future awards on February 28, 2028.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l.<u>Section 409A</u>. Awards granted under the Plan are intended to comply with, or be exempt from, the applicable requirements of Section 409A and Section 457A of the Code and shall be limited, construed and interpreted in accordance with such intent. Although the Company does not guarantee any particular tax treatment, to the extent that any Award is subject to Section 409A of the Code, it shall be paid in a manner that is intended to comply with Section 409A of the Code, including regulations and any other guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect thereto. No payment that constitutes deferred compensation under Section 409A of the Code that would otherwise be made under the Plan or an Award Agreement upon a termination of service will be made or provided unless and until such termination is also a "separation from service," as determined in accordance with Section 409A of the Code. Notwithstanding the foregoing or anything elsewhere in the Plan or an Award Agreement to the contrary, if a Participant is a "specified employee" as defined in Section 409A of the Code at the time of "separation from service" with respect to an Award, then with regard to any payment or benefit that is considered deferred compensation under Section 409A payable on account of a "separation from service" that is required to be delayed pursuant to Section 409A(a)(2)(B) of the Code (after taking into account any applicable exceptions to such requirement), the commencement of any payments or benefits under the Award shall be deferred until the expiration of the six (6) month period measured from the date of the Participant's "separation from service," or, if earlier, the Participant's death (or such other period as required to comply with Section 409A). In no event whatsoever shall the Company be liable for any additional tax, interest or penalties that may be imposed on a Participant by Sections 409A or 457A of the Code or any damages for failing to comply with Sections 409A or 457A of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m.<u>Titles and Headings</u>. The titles and headings of the sections in the Plan are for convenience of reference only. In the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

17

## Exhibit 10.3

*Final as of May 7, 2025*

**Exhibit 10.3**

**ARCH CAPITAL GROUP LTD.**

**AMENDED AND RESTATED 2022 LONG TERM INCENTIVE AND SHARE AWARD PLAN**

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ARCH CAPITAL GROUP LTD.

AMENDED AND RESTATED 2022 LONG TERM INCENTIVE AND SHARE AWARD PLAN

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Purposes</u>. The purposes of the Amended and Restated 2022 Long-Term Incentive and Share Award Plan are to advance the interests of Arch Capital Group Ltd. and its shareholders by providing a means to attract, retain, and motivate employees and directors of the Company its subsidiaries and affiliates, to provide for competitive compensation opportunities, to encourage long-term service, to recognize individual contributions and reward achievement of performance goals, and to promote the creation of long-term value for shareholders by aligning the interests of such persons with those of shareholders. In consideration for the Participant's continuous service to the Company, any Shares that are issued under the Plan shall be issued fully paid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Definitions</u>. For purposes of the Plan, the following terms shall be defined as set forth below:

&nbsp;&nbsp;&nbsp;&nbsp;"Affiliate" means any entity other than the Company and its Subsidiaries that is designated by the Board or the Committee as a participating employer under the Plan, provided that the Company directly or indirectly owns at least 20% of the combined voting power of all classes of stock of such entity or at least 20% of the ownership interests in such entity.

&nbsp;&nbsp;&nbsp;&nbsp;"Award" means any Option, SAR, Restricted Share, Restricted Share Unit, Performance Share, Performance Unit, Dividend Equivalent or Other Share-Based Award granted to an Eligible Person under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;"Award Agreement" means any written agreement, contract, or other instrument or document evidencing an Award.

&nbsp;&nbsp;&nbsp;&nbsp;"Beneficiary" means the person, persons, trust or trusts which have been designated by an Eligible Person in his or her most recent written beneficiary designation filed with the Company to receive the benefits specified under this Plan upon the death of the Eligible Person, or, if there is no designated Beneficiary or surviving designated Beneficiary, then the person, persons, trust or trusts entitled by will or the laws of descent and distribution to receive such benefits.

&nbsp;&nbsp;&nbsp;&nbsp;"Board" means the Board of Directors of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;"Cause" means, with respect to an Eligible Person, (a) theft or embezzlement by the Eligible Person with respect to the Company, its Subsidiaries or Affiliates; (b) malfeasance or negligence in the performance of the Eligible Person's duties; (c) the commission by the Eligible Person of any felony or any crime involving moral turpitude; (d) willful or prolonged absence from work by the Eligible Person (other than by reason of disability due to physical or mental illness); (e) failure, neglect or refusal by the Eligible Person to adequately perform his or her duties and responsibilities as determined by the Company; (f) continued and habitual use of alcohol by the Eligible Person to an extent which materially impairs the Eligible Person's performance of his or her duties without the same being corrected within ten (10) days after being given written notice thereof; or (g) the Eligible Person's use of illegal drugs without the same being corrected within ten (10) days after being given written notice thereof. Notwithstanding the foregoing, in the event that an Eligible Person is party to an employment or similar agreement with the Company or any of its Subsidiaries or Affiliates and such agreement contains a definition of "Cause," the definition of "Cause" set forth above shall be deemed replaced and superseded, with respect to such Eligible Person, by the definition of "Cause" used in such employment or similar agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;"Change in Control", unless otherwise defined in an applicable Award Agreement, shall mean:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.any person (within the meaning of the Exchange Act), other than a Permitted Person, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.the individuals who, as of the date hereof, constitute the Board together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this definition.

Notwithstanding the foregoing, to the extent necessary to comply with Section 409A of the Code with respect to the payment of "non-qualified deferred compensation" (as defined for purposes of Section 409A of the Code), "Change in Control" shall be limited to a "change in control event" as defined under Section 409A of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;"Code" means the Internal Revenue Code of 1986, as amended from time to time. References to any provision of the Code shall be deemed to include successor provisions thereto and regulations thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;"Committee" means the Compensation Committee of the Board, or such other Board committee or subcommittee (or the entire Board) as may be designated by the Board to administer the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;"Company" means Arch Capital Group Ltd., a company organized under the laws of Bermuda, or any successor company.

&nbsp;&nbsp;&nbsp;&nbsp;"Director" means a member of the Board who is not an employee of the Company, a Subsidiary or an Affiliate.

&nbsp;&nbsp;&nbsp;&nbsp;"Dividend Equivalent" means a right, granted under the Plan, to receive cash, Shares, or other property equal in value to dividends paid with respect to a specified number of Shares. Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award, and may be paid currently or on a deferred basis.

&nbsp;&nbsp;&nbsp;&nbsp;"Eligible Person" means (i) an employee of the Company, a Subsidiary or an Affiliate, including any director who is an employee, and (ii) any Director. Notwithstanding any provisions of this Plan to the contrary, an Award may be granted to an employee, in connection with his or her hiring or retention prior to the date the employee first performs services for the Company, a Subsidiary or an Affiliate; provided, however, that any such Award shall not become vested or exercisable prior to the date the employee first performs such services.

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&nbsp;&nbsp;&nbsp;&nbsp;"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time. References to any provision of the Exchange Act shall be deemed to include successor provisions thereto and regulations thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;"Fair Market Value" means, with respect to Shares or other property, the fair market value of such Shares or other property determined by such methods or procedures as shall be established from time to time by the Committee. Unless otherwise determined by the Committee in good faith, the Fair Market Value of Shares shall mean the closing price per Share on the date (or, if the Shares were not traded on that day, the next preceding day that the Shares were traded) on the principal exchange or market system on which the Shares are traded, as such prices are officially quoted thereon.

&nbsp;&nbsp;&nbsp;&nbsp;"ISO" means any Option intended to be and designated as an incentive stock option within the meaning of Section 422 of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;"NQSO" means any Option that is not an ISO.

&nbsp;&nbsp;&nbsp;&nbsp;"Option" means a right, granted under Section 5(b), to purchase Shares.

&nbsp;&nbsp;&nbsp;&nbsp;"Other Share-Based Award" means a right, granted under Section 5(h), that relates to or is valued by reference to Shares.

&nbsp;&nbsp;&nbsp;&nbsp;"Participant" means an Eligible Person who has been granted an Award under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;"Performance Share" means a performance share granted under Section 5(f).

&nbsp;&nbsp;&nbsp;&nbsp;"Performance Unit" means a performance unit granted under Section 5(f).

&nbsp;&nbsp;&nbsp;&nbsp;"Permitted Persons" means (A) the Company; (B) any Related Party; or (C) any group (as defined in Rule 13b-3 under the Exchange Act) comprised of any or all of the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;"Plan" means this Amended and Restated 2022 Long-Term Incentive and Share Award Plan.

&nbsp;&nbsp;&nbsp;&nbsp;"Related Party" means (A) a majority-owned subsidiary of the Company; (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any majority-owned subsidiary of the Company; or (C) any entity, 50% or more of the voting power of which is owned directly or indirectly by the shareholders of the Company in substantially the same proportion as their ownership of Voting Securities immediately prior to the transaction.

&nbsp;&nbsp;&nbsp;&nbsp;"Restricted Shares" means an Award of Shares under Section 5(d) that may be subject to certain restrictions and to a risk of forfeiture or reacquisition for no further consideration.

&nbsp;&nbsp;&nbsp;&nbsp;"Restricted Share Unit" means a right, granted under Section 5(e), to receive Shares or cash at the end of a specified deferral period.

&nbsp;&nbsp;&nbsp;&nbsp;"Rule 16b-3" means Rule 16b-3, as from time to time in effect and applicable to the Plan and Participants, promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;"SAR" or "Share Appreciation Right" means the right, granted under Section 5(c), to be paid an amount measured by the difference between the exercise price of the right and the

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Fair Market Value of Shares on the date of exercise of the right, with payment to be made in cash, Shares, or property as specified in the Award or determined by the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;"Shares" means common shares, $.0011 par value per share, of the Company, and such other securities as may be substituted for Shares pursuant to Section 4(c) hereof.

&nbsp;&nbsp;&nbsp;&nbsp;"Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations (other than the last corporation in the unbroken chain) owns shares possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.

&nbsp;&nbsp;&nbsp;&nbsp;"Voting Security" means any security of the Company which carries the right to vote generally in the election of directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Administration</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Authority of the Committee. The Plan shall be administered by the Committee, and the Committee shall have full and final authority to take the following actions, in each case subject to and consistent with the provisions of the Plan:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.to select Eligible Persons to whom Awards may be granted;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.to designate Affiliates; to determine the type or types of Awards to be granted to each Eligible Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.to determine the type and number of Awards to be granted, the number of Shares to which an Award may relate, the terms and conditions of any Award granted under the Plan (including, but not limited to, any exercise price, grant price, or purchase price, any restriction or condition, any schedule for lapse of restrictions or conditions relating to transferability or forfeiture, reacquisition, exercisability, or settlement of an Award, and waivers of performance or vesting conditions relating to an Award, based in each case on such considerations as the Committee shall determine), and all other matters to be determined in connection with an Award;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv.to determine whether, to what extent, and under what circumstances an Award may be settled, or the exercise price of an Award may be paid, in cash, Shares, other Awards, or other property, or an Award may be cancelled, forfeited, reacquired, exchanged, or surrendered;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v.to determine whether, to what extent, and under what circumstances cash, Shares, other Awards, or other property payable with respect to an Award will be deferred either automatically, at the election of the Committee, or at the election of the Eligible Person; <u>provided</u> that such deferral shall be structured with the intent to be in compliance with Section 409A of the Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vi.to prescribe the form of each Award Agreement, which need not be identical for each Eligible Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vii.to adopt, amend, suspend, waive, and rescind such rules and regulations and appoint such agents as the Committee may deem necessary or advisable to administer the Plan;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;viii.to correct any defect or supply any omission or reconcile any inconsistency in the Plan and to construe and interpret the Plan and any Award, rules and regulations, Award Agreement, or other instrument hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ix.to extend the period during which an Award is exercisable; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;x.to make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Manner of Exercise of Committee Authority. The Committee shall have sole discretion in exercising its authority under the Plan. Any action of the Committee with respect to the Plan shall be final, conclusive, and binding on all persons, including the Company, Subsidiaries, Affiliates, Eligible Persons, any person claiming any rights under the Plan from or through any Eligible Person, and shareholders. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may delegate to officers or managers of the Company or any Subsidiary or Affiliate the authority, subject to such terms as the Committee shall determine, to perform administrative functions and, with respect to Awards granted to persons not subject to Section 16 of the Exchange Act, to perform such other functions as the Committee may determine, to the extent permitted under Rule 16b-3 (if applicable) and applicable law. Notwithstanding any provision of this Plan to the contrary, the Committee may grant Awards which are subject to the approval of the Board; provided that an Award shall be subject to Board approval only if the Committee expressly so states.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Limitation of Liability. Each member of the Committee shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or other employee of the Company or any Subsidiary or Affiliate, the Company's independent certified public accountants, or other professional retained by the Company to assist in the administration of the Plan. No member of the Committee, and no officer or employee of the Company acting on behalf of the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Committee and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action, determination, or interpretation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.No Option or SAR Repricing Without Shareholder Approval. Except as provided in the first sentence of Section 4(c) hereof relating to certain anti-dilution adjustments, unless the approval of shareholders of the Company is obtained, (i) Options and SARs issued under the Plan shall not be amended to lower their exercise price, (ii) Options and SARs issued under the Plan will not be exchanged for other Options or SARs with lower exercise prices, (iii) Options and SARs issued under the Plan with an exercise price in excess of the Fair Market Value of the underlying Shares will not be exchanged for cash or other property, and (iv) no other action shall be taken with respect to Options or SARs that would be treated as a repricing under the rules of the principal stock exchange or market system on which the Shares are listed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.Limitation on Committee's Authority Under 409A. Anything in this Plan to the contrary notwithstanding, the Committee's authority to modify outstanding Awards shall be limited to the extent necessary so that the existence of such authority does not (i) cause an Award that is not otherwise deferred compensation subject to Section 409A of the Code to become deferred compensation subject to Section 409A of the Code or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) cause an Award that is otherwise deferred compensation subject to Section 409A of the Code to fail to meet the requirements prescribed by Section 409A of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.Award Vesting Limitations. Notwithstanding any provision of the Plan to the contrary, the Awards will be granted with vesting periods of not less than one year following the date the applicable Award is granted (other than in the case of death or disability); provided, however, that, notwithstanding the foregoing, Awards that result in the issuance of an aggregate of up to 5% of the Shares reserved for issuance under Section 4(a) may be granted to Eligible Persons without regard to such minimum vesting provisions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>Shares Subject to the Plan</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Subject to adjustment as provided in Section 4(c) hereof, the total number of Shares reserved for issuance under the Plan shall be 9,000,000; provided, however, that, subject to adjustment as provided in Section 4(c) hereof, no more than 6,000,000 Shares may be issued as ISOs. No Award may be granted if the number of Shares to which such Award relates, when added to the number of Shares previously issued under the Plan, exceeds the number of Shares reserved under the applicable provisions of the preceding sentence. If any Awards are forfeited, reacquired, cancelled, terminated, exchanged or surrendered or such Award is settled in cash or otherwise terminates without a distribution of Shares to the Participant, any Shares counted against the number of Shares reserved and available under the applicable provisions of the Plan with respect to such Award shall, to the extent of any such forfeiture, reacquisition, settlement, termination, cancellation, exchange or surrender, again be available for Awards under the Plan; provided, however, that Shares subject to an Award under the Plan may not again be made available for issuance under the Plan if such Shares are (x) Shares that were subject to an Option or a stock-settled SAR and were not issued upon the net settlement or net exercise of such Option or SAR, or (y) Shares delivered to or withheld by the Company to pay the exercise price or the withholding taxes under Options or SARs. For the avoidance of doubt, Shares delivered to or withheld by the Company to pay the withholding taxes under Awards (other than Options or SARs) shall again be available for Awards under the Plan. Upon the exercise of any Award granted in tandem with any other Awards, such related Awards shall be cancelled to the extent of the number of Shares as to which the Award is exercised.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or treasury Shares including Shares acquired by purchase in the open market or in private transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.In the event that the Committee shall determine that any dividend in Shares, recapitalization, Share split, reverse split, reorganization, merger, amalgamation, consolidation, spin-off, combination, repurchase, share exchange, extraordinary distribution or other similar corporate transaction or event, affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Eligible Persons under the Plan, then the Committee shall make such equitable changes or adjustments as it deems appropriate and, in such manner as it may deem equitable, (i) adjust any or all of (w) the number and kind of shares which may thereafter be issued under the Plan, (x) the number and kind of shares, other securities or other consideration issued or issuable in respect of outstanding Awards, and (y) the exercise price, grant price, or purchase price relating to any Award, and (z) the performance criteria and objectives, if any, included in any Award, or (ii) provide for a distribution of cash or property in respect of any Award; <u>provided</u>, <u>however</u>, in each case that, with respect to ISOs, such adjustment shall be made in accordance with Section 424(a) of the Code, unless the Committee determines otherwise;

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<u>provided further</u>, <u>however</u>, that no adjustment shall be made pursuant to this Section 4(c) that causes any Award that is not otherwise deferred compensation subject to Section 409A of the Code to be treated as deferred compensation pursuant to Section 409A of the Code. In addition, without limiting and other than as mandated above, the Committee is authorized to make adjustments in the terms and conditions of, and the performance criteria and objectives, if any, included in, Awards in recognition of unusual or non-recurring events affecting the Company or any Subsidiary or Affiliate or the financial statements of the Company or any Subsidiary or Affiliate, or in response to changes in applicable laws, regulations, or accounting principles, or otherwise to revise any performance criteria or objectives included in Awards, if there shall occur any significant events, as determined by the Committee, which the Committee expects to have a substantial effect on the performance criteria or objectives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.<u>Specific Terms of Awards</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>General</u>. Awards may be granted on the terms and conditions set forth in this Section 5. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 8(d)), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms regarding forfeiture of Awards or continued exercisability of Awards in the event of termination of service by the Eligible Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Options</u>. The Committee is authorized to grant Options, which may be NQSOs or ISOs, to Eligible Persons on the following terms and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.<u>Exercise Price</u>. The exercise price per Share purchasable under an Option shall be determined by the Committee; provided, however, that the exercise price per Share of an Option shall not be less than the Fair Market Value of a Share on the date of grant of the Option. The Committee may, without limitation, set an exercise price that is based upon achievement of performance criteria if deemed appropriate by the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.<u>Option Term</u>. The term of each Option shall be determined by the Committee, but such term shall not exceed ten years from the date of grant of the Option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.<u>Time and Method of Exercise</u>. The Committee shall determine the time or times at which an Option may be exercised in whole or in part (including, without limitation, upon achievement of performance criteria if deemed appropriate by the Committee), the methods by which such exercise price may be paid or deemed to be paid (including, without limitation, broker-assisted exercise arrangements), the form of such payment (including, without limitation, cash, Shares or other property), and the methods by which Shares will be delivered or deemed to be delivered to Eligible Persons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv.<u>ISOs</u>. The terms of any ISO granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code, including but not limited to the requirement that no ISO shall be granted more than ten years after the earlier of the date of adoption or shareholder approval of the Plan. ISOs may only be granted to employees of the Company or a Subsidiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.<u>SARs</u>. The Committee is authorized to grant SARs (Share Appreciation Rights) to Eligible Persons on the following terms and conditions:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.<u>Right to Payment</u>. A SAR shall confer on the Eligible Person to whom it is granted a right to receive with respect to each Share subject thereto, upon exercise thereof, the excess of (1) the Fair Market Value of one Share on the date of exercise over (2) the exercise price per Share of the SAR as determined by the Committee as of the date of grant of the SAR (which shall not be less than the Fair Market Value per Share on the date of grant of the SAR and, in the case of a SAR granted in tandem with an Option, shall be equal to the exercise price of the underlying Option).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.<u>Other Terms</u>. The Committee shall determine the time or times at which a SAR may be exercised in whole or in part (which shall not be more than ten years after the date of grant of the SAR), the method of exercise, method of settlement, form of consideration payable in settlement, method by which Shares will be delivered or deemed to be delivered to Eligible Persons, whether or not a SAR shall be in tandem with any other Award, and any other terms and conditions of any SAR. Unless the Committee determines otherwise, a SAR (1) granted in tandem with a NQSO may be granted at the time of grant of the related NQSO or at any time thereafter or (2) granted in tandem with an ISO may only be granted at the time of grant of the related ISO.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.<u>Restricted Shares</u>. The Committee is authorized to grant Restricted Shares to Eligible Persons on the following terms and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.<u>Issuance and Restrictions</u>. Restricted Shares shall be subject to such restrictions on transferability and other restrictions as the Committee may impose, which restrictions may lapse separately or in combination at such times, under such circumstances (including, without limitation, upon achievement of performance criteria if deemed appropriate by the Committee), in such installments or otherwise, as the Committee may determine. Except to the extent restricted under the Award Agreement relating to the Restricted Shares, an Eligible Person granted Restricted Shares shall have all of the rights of a shareholder including, without limitation, the right to vote Restricted Shares and the right to receive dividends thereon.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.<u>Forfeiture</u>. Except as otherwise determined by the Committee, upon termination of service during any applicable restriction period, Restricted Shares and any accrued but unpaid dividends or Dividend Equivalents that are at that time subject to restrictions shall be forfeited and reacquired by the Company; <u>provided</u>, <u>however</u>, that the Committee may determine that restrictions or forfeiture conditions relating to Restricted Shares will be waived in whole or in part in the event of terminations resulting from specified causes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.<u>Certificates for Shares</u>. Restricted Shares granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Shares are registered in the name of the Eligible Person, such certificates shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Shares, and, unless otherwise determined by the Committee, the Company shall retain physical possession of the certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv.<u>Dividends</u>. Dividends paid on Restricted Shares shall be either paid at the dividend payment date, or deferred for payment to such date, and subject to such conditions, as determined by the Committee, in cash or in restricted or

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unrestricted Shares having a Fair Market Value equal to the amount of such dividends. Unless otherwise determined by the Committee, Shares distributed in connection with a Share split or dividend in Shares, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture and reacquisition to the same extent as the Restricted Shares with respect to which such Shares or other property has been distributed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.<u>Restricted Share Units</u>. The Committee is authorized to grant Restricted Share Units to Eligible Persons, subject to the following terms and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.<u>Award and Restrictions</u>. Delivery of Shares or cash, as the case may be, will occur upon expiration of the deferral period specified for Restricted Share Units by the Committee (or, if permitted by the Committee, as elected by the Eligible Person). In addition, Restricted Share Units shall be subject to such restrictions as the Committee may impose (including, without limitation, the achievement of performance criteria if deemed appropriate by the Committee), which restrictions may lapse at the expiration of the deferral period or at earlier or later specified times, separately or in combination, in installments or otherwise, as the Committee may determine.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.<u>Forfeiture</u>. Except as otherwise determined by the Committee, upon termination of service (as determined under criteria established by the Committee) during the applicable deferral period or portion thereof to which forfeiture conditions apply (as provided in the Award Agreement evidencing the Restricted Share Units), or upon failure to satisfy any other conditions precedent to the delivery of Shares or cash to which such Restricted Share Units relate, all Restricted Share Units that are at that time subject to deferral or restriction shall be forfeited; <u>provided</u>, <u>however</u>, that the Committee may determine that restrictions or forfeiture conditions relating to Restricted Share Units will be waived in whole or in part in the event of termination resulting from specified causes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.<u>Dividend Equivalents</u>. Unless otherwise determined by the Committee at the date of grant, Dividend Equivalents on the specified number of Shares covered by a Restricted Share Unit shall be either (A) paid with respect to such Restricted Share Unit at the dividend payment date in cash or in restricted or unrestricted Shares having a Fair Market Value equal to the amount of such dividends, or (B) deferred with respect to such Restricted Share Unit and the amount or value thereof automatically deemed reinvested in additional Restricted Share Units or other Awards, as the Committee shall determine.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.<u>Performance Shares and Performance Units</u>. The Committee is authorized to grant Performance Shares or Performance Units or both to Eligible Persons on the following terms and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.<u>Performance Period</u>. The Committee shall determine a performance period (the "Performance Period") of one or more years or other periods and shall determine the performance objectives for grants of Performance Shares and Performance Units. Performance objectives may vary from Eligible Person to Eligible Person and shall be based upon the performance criteria as the Committee may deem appropriate. The performance objectives may be determined by reference to the performance of the Company, or of a Subsidiary or Affiliate, or of a division or unit of any of the foregoing. Performance Periods may overlap and Eligible Persons may participate simultaneously with respect to Awards for which different Performance Periods are prescribed.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.<u>Award Value</u>. The Committee shall determine for each Eligible Person or group of Eligible Persons with respect to that Performance Period the range of number of Shares, if any, in the case of Performance Shares, and the range of dollar values, if any, in the case of Performance Units, which may be fixed or may vary in accordance with such performance or other criteria specified by the Committee, which shall be paid to an Eligible Person as an Award if the relevant measure of Company performance for the Performance Period is met.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.<u>Forfeiture</u>. Except as otherwise determined by the Committee, upon termination of service during the applicable Performance Period, Performance Shares and Performance Units for which the Performance Period was prescribed shall be forfeited; <u>provided</u>, <u>however</u>, that the Committee may determine that restrictions or forfeiture conditions relating to Performance Shares and Performance Units will be waived in whole or in part in the event of terminations resulting from specified causes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv.<u>Payment</u>. Each Performance Share or Performance Unit may be paid in whole Shares, or cash, or a combination of Shares and cash either as a lump sum payment or in installments, all as the Committee shall determine, at the time of grant of the Performance Share or Performance Unit or otherwise, commencing at the time determined by the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g.<u>Dividend Equivalents</u>. The Committee is authorized to grant Dividend Equivalents to Eligible Persons. The Committee may provide, at the date of grant or thereafter, that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional Shares, or other investment vehicles as the Committee may specify, provided that unless otherwise determined by the Committee, Dividend Equivalents (other than freestanding Dividend Equivalents) shall be subject to all conditions and restrictions of any underlying Awards to which they relate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h.<u>Other Share-Based Awards</u>. The Committee is authorized, subject to limitations under applicable law, to grant to Eligible Persons such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares, as deemed by the Committee to be consistent with the purposes of the Plan, including, without limitation, other rights convertible or exchangeable into Shares, purchase rights for Shares, Awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee, and Awards valued by reference to the performance of specified Subsidiaries or Affiliates. The Committee shall determine the terms and conditions of such Awards consistent with the provisions of this Plan. Shares delivered pursuant to an Award in the nature of a purchase right granted under this Section 5(h) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Shares or other property, as the Committee shall determine. Cash awards, as an element of or supplement to any other Award under the Plan, shall also be authorized pursuant to this Section 5(h).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.<u>Certain Provisions Applicable to Awards</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Stand-Alone, Additional, Tandem and Substitute Awards</u>. Awards granted under the Plan may, in the discretion of the Committee, be granted to Eligible Persons either alone or in addition to, in tandem with, or in exchange or substitution for, any other Award granted under the Plan or any award granted under any other plan or agreement of the Company, any Subsidiary or Affiliate, or any business entity to be

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acquired by the Company or a Subsidiary or Affiliate, or any other right of an Eligible Person to receive payment from the Company or any Subsidiary or Affiliate. Awards may be granted in addition to or in tandem with such other Awards or awards, and may be granted either as of the same time as or a different time from the grant of such other Awards or awards. Subject to the provisions of Section 3(d) hereof prohibiting Option and SAR repricing without shareholder approval, the per Share exercise price of any Option, grant price of any SAR, or purchase price of any other Award conferring a right to purchase Shares which is granted, in connection with the substitution of awards granted under any other plan or agreement of the Company or any Subsidiary or Affiliate, or any business entity to be acquired by the Company or any Subsidiary or Affiliate, shall be determined by the Committee, in its discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Term of Awards</u>. The term of each Award granted to an Eligible Person shall be for such period as may be determined by the Committee; <u>provided</u>, <u>however</u>, that in no event shall the term of any Option or SAR exceed a period of ten years from the date of its grant (or, in the case of an ISO, such shorter period as may be applicable under Section 422 of the Code).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.<u>Form of Payment Under Awards</u>. Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by the Company or a Subsidiary or Affiliate upon the grant, maturation, or exercise of an Award may be made in such forms as the Committee shall determine at the date of grant or thereafter, including, without limitation, cash, Shares, or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis; <u>provided</u> that any such deferral shall be intended to be in compliance with Section 409A of the Code. The Committee may make rules relating to installment or deferred payments with respect to Awards, including the rate of interest to be credited with respect to such payments, and the Committee may require deferral of payment under an Award if, in the sole judgment of the Committee, it may be necessary in order to avoid nondeductibility of the payment under Section 162(m) of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.<u>Nontransferability</u>. Except as set forth below and except for vested Shares, Awards shall not be transferable by an Eligible Person except by will or the laws of descent and distribution (except pursuant to a Beneficiary designation) and shall be exercisable during the lifetime of an Eligible Person only by such Eligible Person or his guardian or legal representative. Notwithstanding the foregoing, if the Committee expressly so provides in the applicable Award Agreement (at the time of grant or at any time thereafter), an Award (other than an ISO) granted hereunder may be transferred by a Participant to members of his or her "immediate family", to a trust established for the exclusive benefit of solely one or more members of the Participant's "immediate family", or to a partnership, limited liability company or other entity under which the only partners, members or equity holders are one or more members of the Participant's "immediate family." Any Award held by the transferee will continue to be subject to the same terms and conditions that were applicable to the Award immediately prior to the transfer, except that the Award will be transferable by the transferee only by will or the laws of descent and distribution. For purposes hereof, "immediate family" means the Participant's children, stepchildren, grandchildren, parents, stepparents, grandparents, spouse, siblings (including half brothers and sisters), in-laws, and relationships arising because of legal adoption. An Eligible Person's rights under the Plan may not be pledged, mortgaged, hypothecated, or otherwise encumbered, and shall not be subject to claims of the Eligible Person's creditors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.<u>Restrictive Covenants</u>. The Committee may, by way of the Award Agreements or otherwise, establish such other terms, conditions, restrictions and/or limitations, if

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any, of any Award, provided they are not inconsistent with the Plan, including, without limitation, the requirement that the Participant not engage in competition with, solicit customers or employees of, or disclose or use confidential information of, the Company or its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.<u>No Dividends or Dividend Equivalents on Unvested Awards</u>. Notwithstanding any provision of this Plan to the contrary, dividends and Dividend Equivalents shall not be paid with respect to unvested Awards prior to the time of vesting of the underlying Award, or portion thereof, with respect to which the dividend or Dividend Equivalent is accrued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.<u>Change in Control Provisions</u>. Unless otherwise provided in the applicable Award Agreement, notwithstanding any other provision of this Plan to the contrary, upon a Change in Control:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Awards Assumed or Substituted by Surviving Entity</u>. With respect to Awards assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change in Control: if within two years after the effective date of the Change in Control, a Participant's employment is terminated without Cause or the Participant resigns for Good Reason, then (i) all of that Participant's outstanding Options, SARs and other Awards in the nature of rights that may be exercised shall become fully vested and exercisable, (ii) all time-based vesting restrictions on his or her outstanding Awards shall lapse, and (iii) the payout level under all of that Participant's performance-based Awards that were outstanding immediately prior to effective time of the Change in Control shall be determined and deemed to have been earned as of the date of termination based upon the greater of: (A) an assumed achievement of all relevant performance goals at the "target" level pro-rated based upon the number of days within the performance period that have elapsed prior to the termination of employment date, or (B) the actual level of achievement of all relevant performance goals (measured as of the latest date immediately preceding the date of termination for which performance can, as a practical matter, may be determined), and, in either such case, there shall be a payout to such Participant within sixty (60) days following the termination of employment date (unless a later date is required by Section 8(l) hereof). With regard to each Award, a Participant shall not be considered to have resigned for Good Reason unless either (i) the Award Agreement includes such provision (and Good Reason shall be as defined therein), or (ii) the Participant is party to an employment, severance or similar agreement with the Company or an Affiliate that includes provisions in which the Participant is permitted to resign for Good Reason (and Good Reason shall be as defined therein). Any Awards shall thereafter continue or lapse in accordance with the other provisions of the Plan and the Award Agreement. To the extent that this provision causes ISOs to exceed the dollar limitation set forth in Code Section 422(d), the excess Options shall be deemed to be NQSOs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Awards not Assumed or Substituted by Surviving Entity</u>. Upon the occurrence of a Change in Control, and except with respect to any Awards assumed by the surviving entity or otherwise equitably converted or substituted in connection with the Change in Control in a manner approved by the Committee or the Board: (i) outstanding Options, SARs, and other Awards in the nature of rights that may be exercised shall become fully vested and exercisable, (ii) time-based vesting restrictions on outstanding Awards shall immediately lapse and such Awards shall become vested in full, and (iii) the target payout opportunities attainable under outstanding performance-based Awards shall be deemed to have been fully earned as of the effective date of the Change in Control based upon the greater of: (A) an assumed achievement of all relevant performance goals at the "target" level pro-rated based upon the number of days within the performance period that have elapsed prior to

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the Change in Control, or (B) the actual level of achievement of all relevant performance goals (measured as of the latest date immediately preceding the Change in Control for which performance can, as a practical matter, be determined), and, in either such case, there shall be a payout to Participants within sixty(60) days following the Change in Control (unless a later date is required by Section 8(l) hereof). Any Awards shall thereafter continue or lapse in accordance with the other provisions of the Plan and the Award agreement. To the extent that this provision causes ISOs to exceed the dollar limitation set forth in Code Section 422(d), the excess Options shall be deemed to be NQSOs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.<u>General Provisions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Compliance with Legal and Trading Requirements</u>. The Plan, the granting and exercising of Awards thereunder, and the other obligations of the Company under the Plan and any Award Agreement, shall be subject to all applicable federal, state and foreign laws, rules and regulations, and to such approvals by any stock exchange, regulatory or governmental agency as may be required. The Company, in its discretion, may postpone the issuance or delivery of Shares under any Award until completion of such stock exchange or market system listing or registration or qualification of such Shares or any required action under any state, federal or foreign law, rule or regulation as the Company may consider appropriate, and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Shares in compliance with applicable laws, rules and regulations. No provisions of the Plan shall be interpreted or construed to obligate the Company to register any Shares under federal, state or foreign law. The Shares issued under this Plan may be subject to such other restrictions on transfer as determined by the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>No Right to Continued Employment or Service</u>. Neither the Plan nor any action taken thereunder shall be construed as giving any employee or director the right to be retained in the employ or service of the Company or any of its Subsidiaries or Affiliates, nor shall it interfere in any way with the right of the Company or any of its Subsidiaries or Affiliates to terminate any employee's or director's employment or service at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.<u>Taxes</u>. The Company or any Subsidiary or Affiliate is authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a distribution of Shares, or any payroll or other payment to an Eligible Person, amounts of withholding and other taxes due in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company and Eligible Persons to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority, in the discretion of the Committee, to withhold or receive Shares or other property and to make cash payments in respect thereof in satisfaction of an Eligible Person's tax obligations; <u>provided</u>, <u>however</u>, that the amount of tax withholding to be satisfied by withholding Shares may not exceed the maximum individual tax rate applicable in the relevant jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.<u>Changes to the Plan and Awards</u>. The Board may amend, alter, suspend, discontinue, or terminate the Plan or the Committee's authority to grant Awards under the Plan without the consent of shareholders of the Company or Participants, except that any such amendment, alteration, suspension, discontinuation, or termination shall be subject to the approval of the Company's shareholders (i) to the extent such shareholder approval is required under the rules of any stock exchange or automated quotation system on which the Shares may then be listed or quoted, or (ii) as it applies

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to ISOs, to the extent such shareholder approval is required under Section 422 of the Code; <u>provided</u>, <u>however</u>, that, without the consent of an affected Participant, no amendment, alteration, suspension, discontinuation, or termination of the Plan may materially and adversely affect the rights of such Participant under any Award theretofore granted to him or her. The Committee may waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue or terminate, any Award theretofore granted, prospectively or retrospectively; <u>provided</u>, <u>however</u>, that, without the consent of a Participant, no amendment, alteration, suspension, discontinuation or termination of any Award may materially and adversely affect the rights of such Participant under any Award theretofore granted to him or her.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.<u>No Rights to Awards; No Shareholder Rights</u>. No Eligible Person or employee shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Persons and employees. No Award shall confer on any Eligible Person any of the rights of a shareholder of the Company unless and until Shares are duly issued or transferred to the Eligible Person in accordance with the terms of the Award.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.<u>Unfunded Status of Awards</u>. The Plan is intended to constitute an "unfunded" plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company; <u>provided</u>, <u>however</u>, that the Committee may authorize the creation of trusts or make other arrangements to meet the Company's obligations under the Plan to deliver cash, Shares, other Awards, or other property pursuant to any Award, which trusts or other arrangements shall be consistent with the "unfunded" status of the Plan unless the Committee otherwise determines with the consent of each affected Participant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g.<u>Nonexclusivity of the Plan</u>. Neither the adoption of the Plan by the Board nor its submission to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of options and other awards otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h.<u>Not Compensation for Benefit Plans</u>. No Award payable under this Plan shall be deemed salary or compensation for the purpose of computing benefits under any benefit plan or other arrangement of the Company for the benefit of its employees or directors unless the Company shall determine otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.<u>No Fractional Shares</u>. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. In the case of Awards to Eligible Persons, the Committee shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j.<u>Governing Law</u>. The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan, and any Award Agreement shall be determined in accordance with the laws of New York without giving effect to principles of conflict of laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k.<u>Effective Date; Plan Termination</u>. The 2022 Long-Term Incentive and Share Award Plan was originally established and became effective as of May 4, 2022, following the approval by the shareholders of the Company. This amendment and restatement of

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the 2022 Long Term Incentive and Share Award Plan is effective as of May 7, 2025. The Plan shall terminate as to future awards on February 25, 2032.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l.<u>Section 409A</u>. Awards granted under the Plan are intended to comply with, or be exempt from, the applicable requirements of Section 409A and Section 457A of the Code and shall be limited, construed and interpreted in accordance with such intent. Although the Company does not guarantee any particular tax treatment, to the extent that any Award is subject to Section 409A of the Code, it shall be paid in a manner that is intended to comply with Section 409A of the Code, including regulations and any other guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect thereto. No payment that constitutes deferred compensation under Section 409A of the Code that would otherwise be made under the Plan or an Award Agreement upon a termination of service will be made or provided unless and until such termination is also a "separation from service," as determined in accordance with Section 409A of the Code. Notwithstanding the foregoing or anything elsewhere in the Plan or an Award Agreement to the contrary, if a Participant is a "specified employee" as defined in Section 409A of the Code at the time of "separation from service" with respect to an Award, then with regard to any payment or benefit that is considered deferred compensation under Section 409A payable on account of a "separation from service" that is required to be delayed pursuant to Section 409A(a)(2)(B) of the Code (after taking into account any applicable exceptions to such requirement), the commencement of any payments or benefits under the Award shall be deferred until the expiration of the six (6) month period measured from the date of the Participant's "separation from service," or, if earlier, the Participant's death (or such other period as required to comply with Section 409A). In no event whatsoever shall the Company be liable for any additional tax, interest or penalties that may be imposed on a Participant by Sections 409A or 457A of the Code or any damages for failing to comply with Sections 409A or 457A of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m.<u>Titles and Headings</u>. The titles and headings of the sections in the Plan are for convenience of reference only. In the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

## Exhibit 10.4

*Final as of May 7, 2025*

**Exhibit 10.4**

**SECOND AMENDED AND RESTATED ARCH CAPITAL GROUP LTD.**

**2007 EMPLOYEE SHARE PURCHASE PLAN**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.*Purpose*.

The purpose of this Plan is to provide an opportunity for Employees of Arch Capital Group Ltd. (the "Company") and its Participating Subsidiaries, to purchase common stock of the Company and thereby to have an additional incentive to contribute to the prosperity of the Company. It is the intention of the Company that the Plan qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"), although the Company makes no undertaking nor representation to maintain such qualification.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.*Definitions*.

The following terms, when used in the Plan, shall have the following meanings:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "Board" or "Board of Directors" means the Board of Directors of the Company, as constituted from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "Code" means the Internal Revenue Code of 1986, as amended from time to time. References to a particular section of the Code include any successor provisions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "Committee" means the committee appointed by the Board of Directors to administer the Plan pursuant to the provisions of Section 3(a) below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "Common Stock" means the common shares, par value $0.0011 per share, of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) "Company" means Arch Capital Group Ltd., a Bermuda company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "Fair Market Value" on a particular date means the mean between the highest and lowest sales prices of a share of Common Stock on the principal stock exchange or stock market on which the Common Stock may be listed or admitted to trading. If there were no sales on such date, the respective prices on the most recent prior day on which sales were reported shall be used. If the foregoing method of determining fair market value should be inconsistent with Section 423 of the Code, "Fair Market Value" shall be determined by the Committee in a manner consistent with Section 423 of the Code and shall mean the value as so determined.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) "Offering" means a period, designated by the Committee in accordance with the provisions of Section 6 of the Plan, on the first day of which options will be granted to eligible employees pursuant to Section 8(a) of the Plan and on the last day of which such options will be deemed exercised or will expire, as applicable, in accordance with Section 8(b) of the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) "Participant" or "Participating Employee" means an employee of the Company or a Participating Subsidiary who is eligible to participate in an Offering under the Plan pursuant to Section 5 below and who elects to participate in such Offering in accordance with Section 6 below.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) "Participating Subsidiary" means, with respect to an Offering under the Plan, a Subsidiary the employees of which are authorized by the Committee as provided in Section 5 below to participate in such Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) "Plan" means the Second Amended and Restated Arch Capital Group Ltd. 2007 Employee Share Purchase Plan set forth herein, as amended from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) "Parent" means a parent corporation as defined in Section 424(e) of the Code, including a corporation which becomes such a parent in the future.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) "Subsidiary" means a subsidiary corporation as defined in Section 424(f) of the Code, including a corporation which becomes such a subsidiary in the future.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) "Total Compensation" means, unless otherwise determined by the Committee, with respect to any Offering, the cash compensation received by a Participating Employee from the Company or a Participating Subsidiary for services, including overtime, premium pay, commissions and annual bonus, in each case prior to reduction for pre-tax contributions made to a plan or salary reduction contributions to a plan excludable from income under Sections 125 or 402(g) of the Code. Notwithstanding the foregoing, "Total Compensation" shall not include severance pay, stay-on bonuses, retirement income, welfare benefits or income derived from share options, share appreciation rights or other equity-based compensation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.*Administration*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Plan shall be administered by a committee of the Board consisting of two or more directors appointed from time to time by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Subject to the provisions of the Plan, the powers of the Committee shall include having the authority, in its discretion, to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) define, prescribe, amend and rescind rules, regulations, procedures, terms and conditions relating to the Plan; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) interpret, administer and construe the Plan and make all other determinations necessary or advisable for the administration of the Plan, including but not limited to correcting defects, reconciling inconsistencies and resolving ambiguities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The interpretation by the Committee of the terms and conditions of the Plan, and its administration of the Plan, and all action taken by the Committee, shall be final, binding and conclusive on the Company, its stockholders, Subsidiaries, all Participants and employees, and upon their respective successors and assigns, and upon all other persons claiming under or through any of them.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Members of the Board, members of the Committee and persons to whom authority is delegated under Section 3(e) below acting under this Plan shall be fully protected in relying in good faith upon the advice of counsel and shall incur no liability except for gross or willful misconduct in the performance of their duties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Committee may delegate its authority to administer the Plan to any individuals as the Committee may determine and such individuals shall serve solely at the pleasure of the Committee. Any

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individuals who are authorized by the Committee to administer the Plan shall have the full power to act on behalf of the Committee, but shall at all times be subordinate to the Committee and the Committee shall retain ultimate authority for the administration of the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.*Stock Subject to the Plan*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to paragraph (c) below, the aggregate number of shares of Common Stock which may be sold under the Plan is 12,750,000 shares of Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the number of shares of Common Stock that Participating Employees become entitled to purchase is greater than the number of shares of Common Stock that are offered in a particular Offering or that remain available under the Plan, the available shares of Common Stock shall be allocated by the Committee among such Participating Employees in such manner as it deems fair and equitable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event of any change in the Common Stock, through recapitalization, merger, consolidation, stock dividend or split, combination or exchange of shares, spinoff or otherwise, the Committee shall, proportionately adjust the Plan and the then outstanding Offerings as it deems necessary, appropriate and equitable, including, but not limited to, changing the number of shares of Common Stock reserved under the Plan, the maximum number of shares of Common Stock that may be purchased by a Participant in any Offering, and the purchase price of shares in the current Offering; provided that any such adjustments shall be consistent with Sections 423 and 424 of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Shares of Common Stock which are to be delivered under the Plan may be obtained by the Company from its treasury, by purchasing such shares on the open market or from private sources, or by issuing authorized but unissued shares of its Common Stock. Shares of authorized but unissued Common Stock may not be delivered under the Plan if the purchase price thereof is less than the par value (if any) of the Common Stock at the time. The Committee may (but need not) provide at any time or from time to time (including without limitation upon or in contemplation of a change in control) for a number of shares of Common Stock equal in number to the number of shares then subject to options under this Plan to be issued or transferred to, or acquired by, a trust (including but not limited to a grantor trust) for the purpose of satisfying the Company's obligations under such options, and, unless prohibited by applicable law, such shares held in trust shall be considered authorized and issued shares with full dividend and voting rights, notwithstanding that the options to which such shares relate might not be exercisable at the time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.*Eligibility*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All employees of the Company and any Participating Subsidiaries designated by the Committee from time to time will be eligible to participate in the Plan, in accordance with and subject to such rules and regulations as the Committee may prescribe; provided, however, that (a) such rules shall comply with the requirements of the Code (including but not limited to Section 423(b)(3), (4) and (8) thereof), (b) the Committee may (but need not) in its discretion exclude employees who have been employed by the Company or a Participating Subsidiary less than two years, whose customary employment is 20 hours or less per week, whose customary employment is for not more than five months in any calendar year, or who are highly compensated employees within the meaning of Section 414(q) of the Code from being eligible to participate in the Plan or any Offering, (c) no employee

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may be granted an option under the Plan if such employee, immediately after the option is granted, owns stock possessing 5% or more of the total combined voting power or value of all classes of stock of his employer corporation or any Parent or Subsidiary (with the rules of Section 424(d) of the Code applicable in determining the stock ownership of an employee, and stock which the employee may purchase under outstanding options, whether or not such options qualify for the special tax treatment afforded by Section 421 (a) of the Code, shall be treated as stock owned by the employee), and (d) all Participating Employees shall have the same rights and privileges under an Offering except for differences which may be mandated by local law and which are consistent with Section 423(b)(5) of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.*Offerings; Participation*.

The Company may make Offerings of up to 27 months' duration each, to eligible employees to purchase shares of Common Stock under the Plan, until all shares authorized to be delivered under the Plan have been exhausted or until the Plan is sooner terminated by the Board. Subject to the preceding sentence, the number, commencement date and duration of any Offerings shall be determined by the Committee in its sole discretion; provided that, unless the Committee determines otherwise, Offerings shall commence on June 1<sup>st</sup> and shall terminate on November 30<sup>th</sup> and they shall commence on December 1<sup>st</sup> and terminate on May 31<sup>st</sup>. The duration of any Offering need not be the same as the duration of any other Offering, and more than one Offering may commence or terminate on the same date if the Committee so provides. Subject to such rules and procedures as the Committee may prescribe, an eligible employee may elect to participate in an Offering at such time(s) as the Committee may permit by authorizing a payroll deduction (to the extent permitted by applicable local law) for such purpose in one percent increments of up to a maximum of twenty percent of his or her Total Compensation with respect to such Offering or such lesser amount as the Committee may prescribe. Participant elections may be made in any manner deemed appropriate by the Committee from time to time, including by voice response or through the internet. The Committee may (but need not) permit employee contributions to be made by means other than payroll deductions, provided that in no event shall an employee's contributions (excluding interest, if any, credited pursuant to Section 7(a) below) from all sources in any Offering exceed twenty percent of his or her Total Compensation with respect to such Offering or such lesser amount as the Committee may prescribe. The Committee may at any time suspend or accelerate the completion of an Offering if required by law or deemed by the Committee to be in the best interests of the Company, including in the event of a change in ownership or control of the Company or any Subsidiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.*Payroll Deductions*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company will maintain payroll deduction accounts on its books for all Participating Employees, and may (but need not, unless required by applicable law) credit such accounts with interest if (and only if) the Committee so directs at such rate (if any) as the Committee may prescribe. All employee contributions and any interest thereon which the Committee may authorize in accordance with the preceding sentence shall be credited to such accounts. Employee contributions and any interest credited to the payroll deduction accounts of Participating Employees need not, unless required by applicable law, be segregated from other corporate funds and, to the extent permitted by applicable law, may be used for any corporate purpose.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) At such times as the Committee may permit and subject to such rules and procedures as the Committee may prescribe, a Participating Employee may suspend his or her payroll deduction during an Offering, or may withdraw the balance of his or her payroll deduction account and thereby withdraw from participation in an Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any balance remaining in an employee's payroll deduction account after shares have been purchased in an Offering pursuant to Section 8(b) below will be refunded to the Participating Employee, except that, unless otherwise determined by the Committee, any such remaining balance in an amount representing a fractional share shall be carried forward and applied, subject to the Participating Employee's withdrawal right, toward the purchase of additional stock by the Participating Employee in the subsequent Offering. Upon termination of the Plan, all amounts in the accounts of Participating Employees shall be carried forward into their payroll deduction accounts under a successor plan, if any, or refunded to them, as the Committee may decide.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In the event of the termination of a Participating Employee's employment for any reason, his or her participation in any Offering under the Plan shall cease, no further amounts shall be deducted pursuant to the Plan and the balance in the employee's account shall be paid as soon as practicable following such termination of employment to the employee, or, in the event of the employee's death, to the employee's beneficiary designated under this Plan or, in the absence of such a beneficiary designation, to the employee's estate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.*Purchase; Limitations*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to Section 5 above and within the limitations of Section 8(d) below, each person who is an eligible employee of the Company or a Participating Subsidiary on the first day of an Offering under the Plan is hereby granted an option, on the first day of such Offering, to purchase a number of whole and/or partial shares of Common Stock at the end of such Offering determined by dividing twenty percent (or such lesser percentage as may be specified by the Committee as the maximum employee contribution percentage in such Offering) of such employee's Total Compensation with respect to such Offering, plus such interest (if any) as the Committee may authorize to be credited during such Offering in accordance with Section 7(a) above, by 85 percent of the Fair Market Value of a share of Common Stock on the first date of such Offering, provided that in no event shall the number of shares of Common Stock that may be purchased under any such option exceed 3,000 shares (as adjusted in accordance with Section 4(c) above) or such higher or lower number of whole or partial shares as the Committee may have specified in advance of such Offering as the maximum amount of stock which may be purchased by an employee in such Offering. The purchase price of such shares under such options shall be determined in accordance with Section 8(c) below. The Company's obligation to sell and deliver Common Stock in any Offering or pursuant to any such option shall be subject to the approval of any governmental authority whose approval the Committee determines it is necessary or advisable to obtain in connection with the authorization, issuance, offer or sale of such Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) As of the last day of the Offering, the payroll deduction account of each Participating Employee shall be totaled. Subject to the provisions of Section 7(b) above and 8(d) below, if such account contains sufficient funds as of that date to purchase one or more whole or partial shares of Common Stock at the price determined under Section 8(c) below, the Participating Employee shall be conclusively deemed to

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have exercised the option granted pursuant to Section 8(a) above for as many whole or partial shares of Common Stock as the amount of his or her payroll deduction account (including any contributions made by means other than payroll deductions and including any interest credited to the account) at the end of the Offering can purchase (but in no event for more than the total number of shares that are subject to the option); such employee's account will be charged for the amount of the purchase and for all purposes under the Plan the employee will be deemed to have acquired the shares on that date; and either a stock certificate representing such shares will be issued to him or her, or the Company's record keeper will make an entry on its books and records evidencing that such shares have been duly issued or transferred as of that date, as the Committee may direct. Notwithstanding any provision of the Plan to the contrary, unless otherwise determined by the Committee, fractional shares may not be purchased under the Plan. Any option granted pursuant to Section 8(a) above which is not deemed exercised as of the last day of the Offering in accordance with the foregoing provisions of this Section 8(b) shall expire on that date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Unless the Committee determines before the first day of an Offering that a different price that complies with Section 423 of the Code shall apply, the price at which shares of Common Stock may be purchased under each option granted pursuant to Section 8(a) above shall be an amount equal to 85 percent of the Fair Market Value of the Common Stock at the beginning of the Offering Period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In addition to any other limitations set forth in the Plan, no employee may be granted an option under the Plan which permits his or her rights to purchase stock under the Plan, and any other stock purchase plan of his or her employer corporation and its Parent and Subsidiary that is qualified under Section 423 of the Code, to accrue at a rate which exceeds US$25,000 of the Fair Market Value of such stock (determined at the time such option is granted) for each calendar year in which the option is outstanding at any time. The Committee may further limit the amount of Common Stock which may be purchased by any employee during an Offering in accordance with Section 423(b)(5) of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.*No Transfer*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) No option, right or benefit under the Plan may be transferred by any employee, whether by will, the laws of descent and distribution, or otherwise, and all options, rights and benefits under the Plan may be exercised during an employee's lifetime only by such employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Book entry accounts and certificates for shares of Common Stock purchased under the Plan may be maintained or registered, as the case may be, only in the name of the Participating Employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.*Committee Rules For Foreign Jurisdictions*.

With respect to employees of the Company or any Subsidiary who reside or work outside the United States, the Committee may, in its sole discretion, adopt rules or procedures relating to the operation and administration of the Plan to accommodate the specific requirements of local laws and procedures. Without limiting the generality of the foregoing, the Committee is specifically authorized to adopt rules and procedures regarding handling of payroll deductions, payment of interest, conversion of local currency, payroll tax, withholding procedures and handling of stock certificates which vary with local requirements; provided, however, if such varying provisions are not in accordance with the provisions of Section 423(b) of the Code, including but not limited to the requirement of Section 423(b)(5) of the Code

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that all options granted under the Plan shall have the same rights and privileges unless otherwise provided under the Code and the regulations promulgated thereunder, then the individuals affected by such varying provisions shall be deemed to be participating under a sub-plan and not in the Plan. The Committee may also adopt sub-plans applicable to particular Subsidiaries or locations, which sub-plans may be designed to be outside the scope of Section 423 and shall be deemed to be outside the scope of Section 423 unless the terms of the sub-plan provide to the contrary. The rules of such sub-plans may take precedence over other provisions of this Plan, with the exception of Section 4, but unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan shall govern the operation of such sub-plan. The Committee shall not be required to obtain the approval of stockholders prior to the adoption, amendment or termination of any sub- plan unless required by the laws of the foreign jurisdiction in which eligible employees participating in the sub-plan are located.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.*Effective Date and Duration of Plan*.

The Amended and Restated Arch Capital Group Ltd. 2007 Employee Share Purchase Plan shall become effective when adopted by the Board, provided that the stockholders of the Company approve it within 12 months thereafter. If not so approved by shareholders, the Amended and Restated Arch Capital Group Ltd. 2007 Employee Share Purchase Plan shall be null, void and of no force or effect. If so approved, the Amended and Restated Arch Capital Group Ltd. 2007 Employee Share Purchase Plan shall remain in effect until all shares authorized to be issued or transferred hereunder have been exhausted or until the Plan is sooner terminated by the Board of Directors, and may continue in effect thereafter with respect to any options outstanding at the time of such termination if the Board of Directors so provides. This second amendment and restatement of the Arch Capital Group Ltd. 2007 Employee Share Purchase Plan is effective as of May 7, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.*Amendment and Termination of the Plan*.

The Plan may be amended by the Board of Directors, without shareholder approval, at any time and in any respect, unless shareholder approval of the amendment in question is required under Section 423 of the Code. The Plan may also be terminated at any time by the Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.*General Provisions*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Nothing contained in this Plan shall be deemed to confer upon any person any right to continue as an employee of or to be associated in any other way with the Company for any period of time or at any particular rate of compensation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No person shall have any rights as a stockholder of the Company with respect to any shares optioned under the Plan until such shares are issued or transferred to him or her.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) All expenses of adopting and administering the Plan shall be borne by the Company, and none of such expenses shall be charged to any employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Plan shall be governed by and construed under the laws of the State of New York, without giving effect to the principles of conflict of laws of that State.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Company shall not be under any obligation to issue Common Stock upon the exercise of any option unless and until the Company has determined that: (i) it and the Participant have taken all actions

------

required to register the Common Stock under the Securities Act of 1933, or to perfect an exemption from the registration requirements thereof; (ii) any applicable listing requirement of any stock exchange on which the Common Stock is listed has been satisfied; and (iii) all other applicable provisions of state, federal and applicable foreign law have been satisfied.

## Exhibit 31.1

**Exhibit 31.1**

**Certification**

**of Chief Executive Officer**

**Pursuant to Section 302 of the**

**Sarbanes-Oxley Act of 2002**

I, Nicolas Papadopoulo, certify that:

1.&nbsp;&nbsp;&nbsp;&nbsp;I have reviewed this quarterly report on Form 10-Q of Arch Capital Group Ltd.;

2.&nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.&nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in the report;

4.&nbsp;&nbsp;&nbsp;&nbsp;The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;&nbsp;&nbsp;&nbsp;Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;&nbsp;&nbsp;&nbsp;Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.&nbsp;&nbsp;&nbsp;&nbsp;Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.&nbsp;&nbsp;&nbsp;&nbsp;Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.&nbsp;&nbsp;&nbsp;&nbsp;The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;&nbsp;&nbsp;&nbsp;All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;&nbsp;&nbsp;&nbsp;Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: | August 5, 2025 |
| By: | /s/ Nicolas Papadopoulo |
| Name: | Nicolas Papadopoulo |
| Title: | Chief Executive Officer |

---

## Exhibit 31.2

**Exhibit 31.2**

**Certification**

**of Chief Financial Officer**

**Pursuant to Section 302 of the**

**Sarbanes-Oxley Act of 2002**

I, François Morin, certify that:

1. &nbsp;&nbsp;&nbsp;&nbsp;I have reviewed this quarterly report on Form 10-Q of Arch Capital Group Ltd.;

2. &nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. &nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in the report;

4. &nbsp;&nbsp;&nbsp;&nbsp;The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. &nbsp;&nbsp;&nbsp;&nbsp;Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. &nbsp;&nbsp;&nbsp;&nbsp;Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. &nbsp;&nbsp;&nbsp;&nbsp;Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. &nbsp;&nbsp;&nbsp;&nbsp;Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. &nbsp;&nbsp;&nbsp;&nbsp;The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. &nbsp;&nbsp;&nbsp;&nbsp;All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. &nbsp;&nbsp;&nbsp;&nbsp;Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: | August 5, 2025 |
| By: | /s/ François Morin |
| Name: | François Morin |
| Title: | Executive Vice President, Chief Financial Officer and Treasurer |

---

## Exhibit 32.1

**Exhibit 32.1**

**Certification Pursuant to Chapter 63, Title 18 United States Code §1350**

**As Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Quarterly Report of Arch Capital Group Ltd. (the "Company") on Form 10-Q for the period ending June 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Nicolas Papadopoulo, as Chief Executive Officer of the Company, certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;the Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| Date: | August 5, 2025 |
| By: | /s/ Nicolas Papadopoulo |
| Name: | Nicolas Papadopoulo |
| Title: | Chief Executive Officer |

---

A signed original of this written statement required by Section 906 or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Arch Capital Group Ltd. and will be retained by Arch Capital Group Ltd. and furnished to the Securities and Exchange Commission or its staff upon request.

## Exhibit 32.2

**Exhibit 32.2**

**Certification Pursuant to Chapter 63, Title 18 United States Code §1350**

**As Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Quarterly Report of Arch Capital Group Ltd. (the "Company") on Form 10-Q for the period ending June 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), François Morin, as Executive Vice President, Chief Financial Officer and Treasurer of the Company, certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;the Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| Date: | August 5, 2025 |
| By: | /s/ François Morin |
| Name: | François Morin |
| Title: | Executive Vice President, Chief Financial Officer and Treasurer |

---

A signed original of this written statement required by Section 906 or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Arch Capital Group Ltd. and will be retained by Arch Capital Group Ltd. and furnished to the Securities and Exchange Commission or its staff upon request.

<br>