Third Quarter 2021 Financial Supplement

Arch Capital Group Ltd.

Waterloo House, Ground Floor

100 Pitts Bay Road

Pembroke HM 08 Bermuda

Financial Supplement

Financial Information

as of September 30, 2021

The following financial supplement is provided to assist in your understanding of Arch Capital Group Ltd. ("Arch Capital") and its subsidiaries (collectively, the "Company").

This report is for informational purposes only. It should be read in conjunction with documents filed by Arch Capital with the U.S. Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and the Quarterly Reports on Form 10-Q. Please refer to the Company's website at www.archcapgroup.comfor further information describing Arch Capital.

Contacts
Arch Capital Group Ltd.	Investor Relations
François Morin: [phone]	Donald Watson: [phone]; [e-mail]

		Arch Capital Group Ltd. and Subsidiaries
		Table of Contents
			Page
I.	Financial	Highlights	3
II.
Consolidated Financial Statements
	a.	Consolidated Statements of Income	4
	b.	Consolidated Balance Sheets	5
	c.	Consolidated Statements of Changes in Shareholders' Equity	6
	d.	Consolidated Statements of Cash Flows	7
III.	Segment	Information
	a.	Overview	8
	b.	Consolidated Results	10
	c.	Insurance Segment Results	14
	d.	Reinsurance Segment Results	16
	e.	Mortgage Segment Results	18
	f.	Consolidated Results Excluding 'Other' Segment	22
	g.	Selected Information on Losses and Loss Adjustment Expenses	23
IV.	Investment Information
	a.	Investable Asset Summary and Investment Portfolio Metrics	24
	b.	Composition of Net Investment Income, Yield and Total Return	25
	c.	Composition of Fixed Maturities	26
	d.	Credit Quality Distribution and Maturity Profile	27
	e.	Analysis of Corporate Exposures	28
	f.	Structured Securities	29

1. Other

a.	Comments on Regulation G	30
b.	Operating Income Reconciliation and Annualized Operating Return on Average Common Equity	31
c.	Operating Income and Effective Tax Rate Calculations	32
d.	Capital Structure and Share Repurchase Activity	33

1

Arch Capital Group Ltd. and Subsidiaries

Basis of Presentation

Basis of Presentation

All financial information contained herein is unaudited, however, certain information relating to the consolidated balance sheet at December 31, 2020 is derived from or agrees to audited financial information. During the 2021 first quarter, the Company changed its presentation of 'income (loss) from operating affiliates' on its consolidated statements of income for all periods presented to reclass such item from 'other income (loss)'. The Company also changed its presentation of 'investment in operating affiliates' on its consolidated balance sheet for all periods presented to reclass such item from 'other assets'. Unless otherwise noted, all data is in thousands, except for share and per share amounts and ratio information.

In March 2014, the Company invested $100.0 million to acquire common equity and a warrant to purchase additional common equity of Watford Holdings Ltd. In accordance with GAAP, the Company consolidated the results of Watford Holdings Ltd. ("Watford") in its financial statements.Watford was considered a variable interest entity and the Company concluded that it was the primary beneficiary of Watford. As such, 100% of the results of Watford were included in the Company's consolidated financial statements through June 30, 2021. The portion of Watford's earnings owned by third parties was recorded in the consolidated statements of income as 'amounts attributable to noncontrolling interests.' In addition, through June 30, 2021 the Company reflected Watford's redeemable preference shares in the mezzanine section of the Company's consolidated balance sheets as 'redeemable noncontrolling interests'. In July 2021, the Company announced the completion of the previously disclosed acquisition of Watford by Greysbridge. Based on the governing documents of Greysbridge, the Company has concluded that, while it will retain significant influence over Watford, Watford no longer constitutes a variable interest entity of which the Company is the primary beneficiary. Accordingly, effective July 1, 2021, Arch no longer consolidates the results of Watford in its consolidated financial statements and footnotes.

Cautionary Note Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. This release or any other written or oral statements made by or on behalf of Arch Capital and its subsidiaries may include forward-looking statements, which reflect the Company's 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 release are forward-looking statements.

Forward-looking statements can generally be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or their negative or variations or similar terminology. Forward-looking statements involve the Company's current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: adverse general economic and market conditions; increased competition; pricing and policy term trends; fluctuations in the actions of rating agencies and the Company's ability to maintain and improve the Company's ratings; investment performance; the loss of key personnel; the adequacy of the Company's loss reserves, severity and/or frequency of losses, greater than expected loss ratios and adverse development on claim and/or claim expense liabilities; greater frequency or severity of unpredictable natural and man-made catastrophic events; including pandemics such as COVID-19; the impact of acts of terrorism and acts of war; changes in regulations and/or tax laws in the United States or elsewhere; the Company's ability to successfully integrate, establish and maintain operating procedures as well as integrate the businesses we have acquired or may acquire into the existing operations; changes in accounting principles or policies; material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements; availability and cost to the Company of reinsurance to manage gross and net exposures; the failure of others to meet their obligations to the Company; changes in the method for determining the London Inter-bank Offered Rate ("LIBOR") and the potential replacement of LIBOR and other factors identified in the Company's filings with the U.S. Securities and Exchange Commission.

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. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on the Company's behalf are expressly qualified in their entirety by these cautionary statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

2

Arch Capital Group Ltd. and Subsidiaries

Financial Highlights

The following table presents financial highlights (1):

(U.S. Dollars in thousands, except share data)		Three Months Ended					Nine Months Ended
				September 30,						September 30,
		2021			2020			Change			2021			2020			Change
Underwriting results:
Gross premiums written	$	3,207,415	$	2,556,914			25.4 %	$	9,602,213	$	7,461,860			28.7 %
Net premiums written		2,075,929			1,726,828			20.2 %			6,629,208			5,239,829			26.5 %
Net premiums earned		1,929,337			1,625,061			18.7 %			5,666,700			4,763,285			19.0 %
Underwriting income (loss) (2)		173,745			104,877			65.7 %			768,129			251,527			205.4 %
Loss ratio		63.5 %			67.7 %			(4.2)			58.8 %			67.8 %			(9.0)
Acquisition expense ratio		15.9 %			13.8 %			2.1			15.6 %			14.3 %			1.3
Other operating expense ratio		12.0 %			12.4 %			(0.4)			12.4 %			13.0 %			(0.6)
Combined ratio		91.4 %			93.9 %			(2.5)			86.8 %			95.1 %			(8.3)
Net investment income	$	88,195	$	99,857			(11.7)%	$	256,354	$	313,916			(18.3)%
Per diluted share	$	0.22	$	0.24			(8.3)%	$	0.63	$	0.77			(18.2)%
Net income available to Arch common shareholders	$	388,751	$	408,636			(4.9)%	$	1,480,324	$	830,768			78.2 %
Per diluted share	$	0.98	$	1.00			(2.0)%	$	3.66	$	2.02			81.2 %
After-tax operating income available to Arch common shareholders (2)	$	294,688	$	120,321			144.9 %	$	941,673	$	326,691			188.2 %
Per diluted share	$	0.74	$	0.29			155.2 %	$	2.33	$	0.80			191.3 %
Comprehensive income (loss) available to Arch	$	239,078	$	455,907			(47.6)%	$	1,093,872	$	1,036,243			5.6 %
Net cash provided by operating activities	$	1,014,979	$	963,654			5.3 %	$	2,580,697	$	2,198,037			17.4 %
Weighted average common shares and common share equivalents outstanding - diluted	397,903,347	409,194,657			(2.8)%	404,260,485	410,314,897			(1.5)%
Financial measures:
Change in book value per common share during period		1.3 %			4.1 %			(2.8)			7.0 %			8.8 %			(1.8)
Annualized net income return on average common equity		12.3 %			14.3 %			(2.0)			15.9 %			9.9 %			6.0
Annualized operating return on average common equity (2)		9.3 %			4.2 %			5.1			10.1 %			3.9 %			6.2
Total return on investments (3)		0.01 %			2.30 %			-229 bps			1.50 %			5.19 %			-369 bps

1. Presented on a 'core' basis which excludes amounts related to the 'other' segment (i.e., results of Watford). See 'Comments on Regulation G' for a further discussion of the presentation of 'core' results.
2. See 'Comments on Regulation G' for a further discussion of consolidated underwriting income or loss, after-tax operating income or loss available to Arch common shareholders and annualized operating return on average common equity.
3. Total return on investments includes net investment income, equity in net income (loss) of investment funds accounted for using the equity method, net realized gains and losses and the change in unrealized gains and losses and is calculated on a pre-tax basis and before investment expenses. See 'Comments on Regulation G' for a further discussion of the presentation of total return on investments.

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Arch Capital Group Ltd. and Subsidiaries

Consolidated Statements of Income

(U.S. Dollars in thousands, except share data)					Three Months Ended								Nine Months Ended
	September 30,			June 30,			March 31,	December 31,		September 30,		September 30,		September 30,
		2021			2021			2021				2020			2020			2021			2020
Revenues
Net premiums earned	$	1,929,337	$	2,120,909	$	1,948,422			$	1,811,045	$	1,771,092	$	5,998,668	$	5,180,890
Net investment income		88,195			111,613			98,856				114,458			128,512			298,664			405,150
Net realized gains (losses)		(25,040)			202,907			142,461				353,333			280,499			320,328			470,127
Other underwriting income		7,274			5,529			6,110				7,852			5,413			18,913			18,932
Equity in net income (loss) of investment funds accounted for using the equity method		105,398			122,186			71,686				89,286			126,735			299,270			57,407
Other income (loss)		(3,960)			6,852			(1,741)				(36)			-			1,151			65
Total revenues		2,101,204			2,569,996			2,265,794				2,375,938			2,312,251			6,936,994			6,132,571
Expenses
Losses and loss adjustment expenses		(1,226,019)			(1,159,831)			(1,203,100)				(1,127,385)			(1,216,273)			(3,588,950)			(3,562,214)
Acquisition expenses		(306,015)			(335,143)			(304,481)				(254,828)			(247,942)			(945,639)			(750,014)
Other operating expenses		(230,832)			(244,943)			(261,033)				(215,697)			(215,686)			(736,808)			(659,479)
Corporate expenses		(19,672)			(15,951)			(25,384)				(25,335)			(17,937)			(61,007)			(56,653)
Amortization of intangible assets		(20,135)			(15,286)			(14,402)				(19,196)			(16,715)			(49,823)			(49,835)
Interest expense		(33,176)			(35,700)			(38,346)				(38,419)			(41,343)			(107,222)			(105,037)
Net foreign exchange gains (losses)		36,078			(17,775)			20,063				(72,209)			(44,885)			38,366			(11,425)
Total expenses		(1,799,771)			(1,824,629)			(1,826,683)				(1,753,069)			(1,800,781)			(5,451,083)			(5,194,657)
Income (loss) before income taxes and income (loss) from operating affiliates		301,433			745,367			439,111				622,869			511,470			1,485,911			937,914
Income tax expense		(4,137)			(51,179)			(38,860)				(34,059)			(23,707)			(94,176)			(77,779)
Income (loss) from operating affiliates		124,119			24,476			75,457				10,504			919			224,052			6,262
Net income (loss)		421,415			718,664			475,708				599,314			488,682			1,615,787			866,397
Net (income) loss attributable to noncontrolling interests		(1,473)			(43,178)			(37,552)				(55,770)			(69,643)			(82,203)			(4,420)
Net income (loss) attributable to Arch		419,942			675,486			438,156				543,544			419,039			1,533,584			861,977
Preferred dividends		(16,090)			(11,666)			(10,403)				(10,403)			(10,403)			(38,159)			(31,209)
Loss on redemption of preferred shares		(15,101)			-			-		-			-			(15,101)			-
Net income (loss) available to Arch common shareholders	$	388,751		$	663,820		$	427,753			$	533,141		$	408,636		$	1,480,324		$	830,768
Comprehensive income (loss) available to Arch	$	239,078	$	699,705	$	155,089			$	646,082	$	455,907	$	1,093,872	$	1,036,243
Net income (loss) per common share and common share equivalent
Basic	$	1.00	$	1.67	$	1.07			$	1.32	$	1.01	$	3.74	$	2.06
Diluted	$	0.98	$	1.63	$	1.05			$	1.30	$	1.00	$	3.66	$	2.02
Weighted average common shares and common share equivalents outstanding
Basic		389,274,220			397,743,402			400,807,895				403,005,335			402,850,485			395,899,591			403,081,266
Diluted		397,903,347			406,485,994			409,223,253				410,281,852			409,194,657			404,260,485			410,314,897

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