Arch Capital’s ACGLN combines a 6.95% discounted preferred yield with AA- balance-sheet protection and meaningful upside toward par as underwriting discipline compounds capital.
Overview
Arch Capital Group is a Bermuda-headquartered S&P 500 specialty insurer and reinsurer founded in 1995, with a diversified model across specialty insurance, reinsurance, and private mortgage insurance. The preferred security ACGLN represents a 1/1,000th interest in a 4.550% Series G preferred share with a $25.00 liquidation preference and $1.1375 annualized dividend. **The central attraction is a 6.95% annualized yield at a $16.37 price, backed by a $23.2 billion common-equity cushion and only 18.1% debt-plus-preferred leverage.** In FQ2 2026, after-tax operating income was $893 million, or $2.56 per share, beating consensus by $0.08, while GAAP revenue declined 10.5% to $4.668 billion because management intentionally reduced premium retention. The mortgage segment generated $220 million of underwriting income at a 22.8% combined ratio, offsetting weaker insurance trends. ACGLN’s five-year weighted target is $20.78 including dividends, while the common stock’s weighted target is $161.26. Near-term catalysts include rate cuts, disciplined E&S casualty execution, stable mortgage delinquencies, and potential redemption at par.