Arch Capital : 2020 Arch Sustainability Report

2020

Arch Sustainability Report

TABLE OF CONTENTS

A Message from Our CEO...............................................	3
Our ESG Reporting .........................................................	4
Our Sustainability Reports and Disclosures
Sustainability Reporting Updates
2020 Reporting Strategy
ESG at a Glance...............................................................	5
OUR PEOPLE.................................................................	6
Employee Well-Being......................................................	7
A Foundation of Comprehensive Benefits
Expanded Benefits for COVID-19 Support
1 Employee Recognition
Diversity and Inclusion................................................	10
Broadening and Developing Our Pool of Diverse Talent
Responding to Racial Injustice in 2020
Enhancing Our Culture of Inclusion
Career Development....................................................	13
Human Capital Management System
Career Framework and Job Architecture
Learning and Development
Early Career Development
Leadership and Professional Development

OUR OPERATIONS....................................................	16
Enterprise Risk Management.....................................	17
Strategy
Governance
2 Integrating Climate Change Risk
Ethics and Code of Business Conduct........................	18
Code of Business Conduct and Supporting Policies
Policy Against Discrimination and Harassment
Governance Practices
Oversight of Our Compliance Program
The Compliance Hotline and Monitoring Calls
Business Continuity......................................................	20
Oversight
Pandemic Response
Privacy and Data Protection.......................................	21
Responsible Supply Chain...........................................	22
Supplier Monitoring and Engagement
New Technology Solution
Operational Sustainability.........................................	23
The Global Facilities Team
Insights from Working from Home
2020 Initiatives
Improving Efficiency - 2021 Priorities
Greenhouse Gas Emissions and Methodology

OUR BUSINESS..........................................................	25
Underwriting and Our Thermal Coal Policy.............	26
Sustainable Insurance Solutions................................	27
Enabling Access to Housing and Mortgage Programs
3 Enabling Growth and Stability in Emerging Markets
Supporting and Protecting Our Community Heroes
Supporting Animal Well-Being through Specialized
Animal Welfare Programs
OUR INVESTING........................................................	32
Statement and Approach............................................	33
Our ESG Aware Statement and Approach
TCFD Reporting
4 Impact Investments
OUR COMMUNITIES................................................	35
Corporate Giving...........................................................	36
Health, Housing, Education
5 Supporting Communities in the Wake of COVID-19
Scholarships
Commitment to Social Justice
Employee Giving and Volunteering............................	39
Amplifying the Generosity of Our Employees
Creative Volunteer Activities in 2020

This report may include forward−looking statements, which reflect our current views with respect to future events, risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. We undertake no obligation to publicly update or revise any forward−looking statement, whether as a result of new information, future events or otherwise. For a complete description of the risks and factors that could cause actual results to differ from our current expectations, please see our annual reports on Form 10-K and quarterly reports on Form 10-Q filed with the SEC.

Our People

Our Operations

Our Business

Our Investing

Our Communities

2020 ESG ANNUAL REPORT | 2

A MESSAGE FROM OUR CEO

Despite the unprecedented challenges of 2020, I'm pleased that Arch faced the extraordinary year head on, persevered and emerged stronger. We held to our Purpose - We Enable Possibility - while advancing our Environmental, Social and Governance (ESG) strategy. And while it was a demanding year, it also gave us a clearer perspective on how our company can make a difference through focused efforts.

Supporting our employees, clients and communities as they navigated the pandemic was our priority in 2020. Early on, we recognized the importance of providing stability and assistance to those in need and quickly identified organizations that were aiding underserved communities and addressing the immediate and long-term needs of the most vulnerable.

We also mobilized to help our employees and their families. We expanded our existing financial, medical and mental health benefits to address the unique challenges of COVID-19 and established an employee assistance fund to provide monetary support for our people suffering financial hardships. Additionally, we offered several avenues for employees to bolster their mental and emotional well-being.

Beyond the pandemic, the past year was marked by historic protests for racial justice and equality. We committed resources to the fight against race-based violence and injustice by supporting organizations that champion diversity, inclusion and equity in the U.S. and around

the world. Internally, we expanded our commitment to diversity with the launch of a new Diversity and Inclusion strategy, approved by our executive leadership team and implemented in 2020. We are pleased with this progress while acknowledging the hard work that lies ahead for us to achieve our goals.

Last year we introduced our inaugural Sustainability Report, and as we advance the integration of our ESG considerations into our business strategy for long-term value creation,

we will continue to improve our disclosures. In 2020, we sharpened our focus on the environment and the effects of global climate change on our sustainability goals. Understanding that certain insurance transactions have heightened environmental risks, we adopted sector-specific guidelines that outline our approach to underwriting risks in the thermal coal industry. Additionally, our investment

team continues to manage ESG factors in our portfolio, improving the overall ESG rating of Arch's investments. With this increased emphasis on climate, we prepared our first climate-related report aligned with the framework set forth by the Task Force on Climate-related Financial Disclosures.

Recognizing the importance of minimizing our corporate footprint, for the first time, we measured our greenhouse gas emissions so we can continue to take steps to reduce and offset emissions from our operations.

This year marks Arch's 20th anniversary, and we are excited to enter our third decade in business and to continue our overall ESG journey.

MARC GRANDISSON

Chief Executive Officer

Arch Capital Group Ltd.

Our People

Our Operations

Our Business

Our Investing

Our Communities

2020 ESG ANNUAL REPORT | 3

OUR ESG REPORTING

In 2020, we set a goal to enhance our ESG strategy to focus on meaningful, companywide ESG integration. We believe in the value of transparency around our sustainability initiatives, and we are excited to share our 2020 progress.

Sustainability Reporting Updates

Following our 2019 ESG materiality assessment, we introduced our strategy in our inaugural Sustainability Report and made three commitments that remained at the heart of Arch's sustainability efforts throughout 2020:

"	Invest in our employees;
"	Build stronger communities; and

2020 Reporting Strategy

By focusing our 2020 ESG story on our efforts to integrate sustainability-driven thinking and decision-making into five core areas of our company, we seek to encompass Arch's collaborative ESG successes and sustainability progress across our operations. This updated reporting framework described below also enables us to highlight the sustainability goals we have set across each area on a go-forward basis. The first four sections of this report cover

Our Sustainability Reports and Disclosures

• 2020 Sustainability Report: Intended for all stakeholders and the general public. This report describes our comprehensive ESG narrative and strategy, including an overview of Arch's response to the COVID-19pandemic and support of the social justice movement.

• 2020 SASB (Sustainability Accounting Standards Board) Report: Intended for investors, SASB
  has disclosures around the financial impacts of sustainability. Click here to view the report>>
• 2020 TCFD Report: Aligned with the framework set forth by the Task Force on Climate-related Financial Disclosures (TCFD), this report is intended for investors, regulators, and other significant stakeholders. Click here to view the report>>

" Operate responsibly and sustainably.

To better reflect our growing ESG maturity and drive to remain a responsible company through our sustainability practices, we adjusted our 2020 reporting structure to ensure our commitments and ESG processes are clear and appropriately targeted to our key stakeholder groups.

our worldwide human capital management, operations, business segments and investments. The final section highlights our ongoing commitment to supporting the communities where our employees and customers live and work, a commitment of heightened importance to Arch and our people during the extraordinary year of 2020.

2020 Report Framework: Sustainability at Arch across Five Key Impact Areas

In this report, we outline our ESG strategy by applying an updated commitment to driving the integration of material environmental and social risks and opportunities across:

Our People	Our Operations	Our Business	Our Responsible	Our Commitment
			Investing	to Communities
We are committed to	By actively managing	As a global (re)insurer,	We believe incorporating	Striving to make a
investing in the success	ESG risks and embedding	integrating ESG	material, nonfinancial ESG	difference by investing
of our employees	compliance, transparency,	considerations into our	factors into investment	in our communities is
as individuals and	data protection and	underwriting allows	selection and risk	one of Arch's core values,
professionals to	resiliency across all areas	us to reduce risk and	management has the	woven into the fabric of
create long-term	of our operations, we	take advantage of	potential to enhance long-	our culture.
sustainable growth as	protect our people and	opportunities for the	term investment returns.
an organization.	customers who entrust	benefit of our customers,
	us with their personal	shareholders and other
	information and business.	stakeholders.

Our People

Our Operations

Our Business

Our Investing

Our Communities

2020 ESG ANNUAL REPORT | 4

ESG AT A GLANCE

ESG and Sustainability at Arch*

Sustainability at Arch is not a stand-alone initiative. Instead, it is an element of our business ethos and strategy that weaves throughout our day-to-day operations, decision-making and consistent efforts to support and build resilience in the communities where we live and work.

As a global specialty property and casualty (re)insurance provider and a mortgage (re)insurance company, we approach sustainability with a firm understanding and established history of delivering reliable risk management expertise to our markets. At its core, our worldwide

ESG strategy is grounded in this fundamental, collective understanding of risk. While we recognize that certain ESG topics could present significant risks to our business

ESG Workflow and Integration Oversight

The ESG team is part of our legal department and reports to Arch's General Counsel, however much of our sustainability work involves ongoing collaboration with other Arch

departments and business segments to drive the integration - and disclosure - of sustainability best practices. The chart below is a visual overview of Arch's sustainability workflow.

Our ESG Governance			Board	of Directors
In 2019, we formalized our ESG oversight
at the Board of Directors level with the
Nominating & Governance Committee and
established an executive-level ESG Steering			ESG Steering
Committee made up of leaders from across
			Committee
the business. As our program continues to
mature, this established oversight structure
will expand to incorporate subcommittees at
the business and operating levels to manage
specific ESG integration initiatives.

and stakeholders if left unaddressed, we are committed to sharing robust ESG disclosures and heightened transparency around our strategy and mitigation efforts.

Moreover, we have long believed in the value of embedding sustainable practices in our business and pursuing environmental and social impact opportunities to drive better long-term outcomes for the world in which we operate. We know from our materiality assessment that this is a priority for all of our stakeholders, and perhaps most significantly, for our people.

Stakeholder Groups:

Employees, Board of Directors, Shareholders/Investors, Regulators, Sustainability Experts.

Material Topics:

Diversity and Inclusion, Human Capital Management, Ethics/Governance, Climate Risk Management, Operational Environmental Efficiency, Data and Privacy Security, Housing Insecurity, Food Insecurity, Health

Investments

Investment

Management

	ESG Department		Corporate/
		(Legal)			Operations
					Enterprise Risk
					Management
					Corporate
					Communications
			Underwriting		Human Resources
			Management
					IT
Insurance	Mortgage	Reinsurance

Insecurity.

*Material issues for sustainability purposes most important to our business and stakeholders and are not related to financial material issues, as defined by the SEC.

	Segment/Department	Real Estate/
ESG Integration Area	Involved with ESG Integration	Facilities

Our People

Our Operations

Our Business

Our Investing

Our Communities

2020 ESG ANNUAL REPORT | 5