Arch Capital Group (ACGL) is a specialty insurer that offers coverage on everything, from terrorism to fine wine and vintage spirits. Now the IBD Big Cap 20 stock is in a buy zone and near record highs.
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Bermuda-based Arch Capital offers property and casualty, and mortgage insurance and reinsurance to customers in North America, Europe, Bermuda and Australia. Its variety of products includes liability coverage for marine accidents as well as aviation and space. It also has conventional accident, life and health insurance.
The company’s specialty includes higher risk coverage. It covers everything from cyber troubles to terrorism. It also will delve into riot-torn areas and politically charged environments. And Arch Capital offers protection for fine art, jewelry, classic cars and cryptocurrency storage.
The insurance stock holds the No. 5 spot out of 61 stocks in Investor’s Business Daily’s Property-Casualty-Title Insurance group, which ranks No. 48 out of 197 IBD industry groups.
Arch Capital Stock Holding In Buy Zone
Arch Capital stock is in a 5% buy zone reaching to 93.21 of an 88.77 cup-with-handle base buy point, according to MarketSurge pattern recognition. The stage-one cup formed after shares sold off in November and undercut the low of the prior base, resetting the base count.
Shares fell below the 10-week moving average the week of Dec. 1. The stock retook its 10-week line in mid-January without any tests since.
Arch reported better-than-expected fourth-quarter earnings and sales on Feb. 14. The insurance stock jumped 3% the following day but couldn’t break out.
Arch Capital stock tapped the buy point on Feb. 16, but closed lower to begin forming the handle. Shares found resistance around the buy point and formed a bullish three-weeks-tight pattern. The stock popped 3.1% on March 11, pushing it into the buy zone where it remains and is trading tightly.
The stock has gained around 24% in 2024 so far and reached an all-time high on April 1. Its relative strength line is slowly recovering from December lows.
Profits Growing For Now
For its fourth quarter ended Dec. 31, Arch’s earnings grew 16% on 29% sales growth. Analysts predict 19% profit growth for the first quarter and 10% in the second, then a decline the following two periods, according to MarketSurge. Arch Capital expects to report its first-quarter results on April 29.
Prior to 2024, quarterly sales growth decelerated for three straight periods with another drop estimated for this year’s first quarter. Sales growth is projected in the 10% to 15% range for the next four quarters.
The company said written premiums during the fourth quarter increased 17.6% over the prior year’s period. And its quarterly loss ratio increased to 49% from 45% over the prior year’s same quarter. The loss ratio measures total incurred losses vs. total collected premiums.
“We are bullish about our prospects for 2024 as our underwriters continue to lean into the excellent conditions prevalent in most of the markets where we operate,” Arch Capital Chief Executive Marc Grandisson said in the earnings report.
Analysts project full-year 2024 profit to drop 5% then rebound 6% in 2025.
Its Accumulation/Distribution Rating of B indicates moderate institutional buying over the last 13 weeks while its 1.2 up/down volume ratio supports the positive demand. In addition, mutual funds increased buying its shares for eight straight quarters.
Lastly, Arch holds 96 out of 99 possible IBD Composite and Earnings Per Share Ratings.
Follow Kimberley Koenig for more stock market news on X/Twitter @IBD_KKoenig.
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