UBS reaffirmed a Buy rating on Arch Capital Group (NASDAQ:ACGL) and maintained a $124 price target, citing the insurer’s robust capital generation and ongoing share repurchase potential.
Following meetings with senior management, UBS noted increased confidence in ACGL’s ability to sustain solid premium growth and underwriting margins over the next 12–24 months. While premium growth may moderate, the company is projected to accumulate over $3 billion in capital in the coming year, with $2 billion potentially allocated to buybacks, special dividends, or M&A.
Importantly, management emphasized that ACGL does not hold capital for M&A unless opportunities emerge, and remains focused on repurchasing stock at valuations that can be recouped within three years. At around 1.6x book value and with a mid-teens ROE, shares appear attractively priced for buybacks, UBS said.
The firm slightly raised its EPS forecasts to $9.01 for 2026 and $9.98 for 2027, reflecting the positive impact of anticipated share repurchases.