Arch Capital Group

None of the warning signs we check for were found.

We look for five warning signs: doubt it can keep going, weak checks on its own accounts, a notice that its past accounts can't be relied on, a change of auditor, and one customer bringing in a big share of sales. We don't check lawsuits, investigations or debt yet.

We checked the auditor's report, internal controls, restatement notices, auditor changes and big customers in the 10-K filed 26 Feb 2026, plus the 10-Q filed 4 Aug 2026 and 9 later 8-Ks.

Cheap for a reason is the question the numbers cannot answer.

Whether the price already reflects the risks is what the deep dive is for.

• Our information technology systems and our pace of adoption of new technologies, including AI, may not be adequate to meet the demands of our customers or impact negatively our ability to compete with our peers.

  Could happen

  Additionally, the regulatory landscape surrounding traditional AI and generative AI is evolving, and the expanded use of these technologies may become subject to regulatory scrutiny under new or existing laws. Moreover, the intellectual property and ownership rights associated with both forms of artificial intelligence have not been fully addressed by courts in the U.S. or in other jurisdictions that we operate in. We established the Artificial Intelligence Governance and Oversight Committee (“AIGOC”) to evaluate and approve new AI use cases and issue and oversee our Company’s Artificial Intelligence Policy. While we believe the AIGOC and our larger AI governance framework is responsive to new risks and regulations, failure to comply with the applicable AI-related regulations could result in fines, penalties, litigation, or restrictions on our business operations. These outcomes may have a materially adverse effect on our business or financial condition.

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• Our information technology systems and our pace of adoption of new technologies, including AI, may not be adequate to meet the demands of our customers or impact negatively our ability to compete with our peers.

  Could happen

  With new technologies and AI tools emerging at a rapid pace, there is no assurance that we will be able to evaluate and integrate new technologies or update our existing systems to keep pace with our competitors and customer needs. While we believe AI presents significant opportunities to support our strategic goals, we may not be successful in implementing AI technologies. It is possible that any AI we use does not perform as anticipated, suffers from “hallucinations” or that its outputs may not be as expected or may result in unlawful discrimination, which may put us at a competitive disadvantage, result in reputational damage and regulatory fines and actions.

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• Certain U.S. policies and actions have created geopolitical risks which are not possible to manage or predict, some of which may result in uncertainty in the global markets.

  Recent U.S. policies and actions, such as actions relating to Venezuela and Greenland, may jeopardize certain global alliances and create geopolitical uncertainty. While the long-term impact of these policies is currently unknown, these policies and other geopolitical tensions have resulted in, or could result in, volatile global capital markets, sanctions, trade restrictions and harm countries’ relationships.

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• The implementation of the Basel III Capital Accord and FHFA’s Enterprise Regulatory Capital Framework may adversely affect the use of mortgage insurance and SRT and CRT opportunities.

  Could happen

  While some countries outside of the EU have begun implementing the Basel III Endgame, both the U.K. and the EU have announced that the start of implementation will be delayed until January 1, 2027. In addition, the U.K. is considering applying different rules for smaller banks, and the EU is consulting on proposals to amend the EU Securitization Regulation (“SECR”) and Capital Requirements Regulation (“CRR”), which implement the Basel III Endgame. The proposed SECR and CRR amendments improve the capital relief EU banks receive from insurance-based SRT transactions in which the Company participates. The timing, requirements, and implementation of the final rules remain uncertain and subject to continued debate, which could negatively impact the capital relief afforded by the protection we provide and the volume of insurance-based SRT transactions in the EU.

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• The ultimate performance of our mortgage insurance portfolios remains uncertain.

  Could happen

  The frequency and severity of claims we incur is uncertain and will depend largely on general economic factors outside of our control, including, among others, changes in unemployment and home prices affordability. Inflated home prices followed by a decline in home values could significantly decrease a borrower’s equity in their home, which would limit their ability to sell the property without incurring a loss and could increase the frequency and severity of claims. Changes to credit scoring models, data inputs or evaluation frameworks could result in borrowers being assessed as lower risk than their actual performance ultimately reflect, increasing uncertainty in default and claim performance due to model changes.

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