Arch Capital Ups Share Repurchase Authorization; Provides Catastrophe Loss Estimates

Shares of Arch Capital Group Ltd. (ACGL) rose 1.1% in extended trade on Monday after the company’s board of directors agreed to increase its share repurchase program to up to $1.5 billion. Arch Capital provides insurance, reinsurance and mortgage insurance on a global level.

The buyback program comes with an expiration date of December 31, 2022. The timing and amount of the repurchase transactions will depend on factors like market conditions and corporate and regulatory considerations.  (See Arch Capital stock charts on TipRanks)

Meanwhile, the company said that it expected its third-quarter results to be negatively impacted due to the effects of Hurricane Ida, European floods and other global events. It estimates a pre-tax catastrophe loss in the range of $330 million to $345 million, across its property casualty insurance and reinsurance segments, net of reinsurance recoveries and reinstatement premiums.

Following the announcement, Wells Fargo analyst Elyse Greenspan maintained a Buy rating on Arch Capital with a price target of $48 (upside potential of 19.5% from current level).

Greenspan noted, “The larger size of the buyback program today in our view should reflect Arch having a greater level of excess capital today than they have in the past. Arch has not wanted to disclose an excess capital position given that it changes on a daily basis.”

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Overall, the Street is bullish on the stock and has a Strong Buy consensus rating based on 6 Buys and 1 Hold. The average Arch Capital price target of $49.29 implies upside potential of about 22.7% from current levels.

TipRanks data shows that financial blogger opinions are 100% Bullish on ACGL, compared to a sector average of 72%.

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