Pembroke, Bermuda-based Arch Capital Group Ltd. (ACGL) provides insurance, reinsurance, and mortgage insurance products. Valued at a market cap of $35.1 billion, the company provides a wide range of products & services covering primary and excess casualty, professional indemnity, workers compensation, and umbrella and employers liability insurance, to name a few.

Companies valued at over $10 billion are typically classified as “large-cap stocks,” and Arch Capital Group fits the label perfectly. The company primarily focuses on specialty lines, the segment of the insurance industry where the more difficult and unusual risks are written.

Despite its strengths, the property & casualty insurer’s shares have slipped nearly 19.9% from its 52-week high of $116.47 reached on Oct. 7. Moreover, over the past three months, ACGL has declined 16.1%, significantly lagging behind the broader Financial Select Sector SPDR Fund’s (XLF) 11.7% gain. 

Moreover, in the longer term, ACGL has gained 25.7% on a YTD basis, underperforming XLF’s 32.2% returns. Shares of ACGL are up 17.7% over the past 52 weeks, lagging behind XLF’s 37.6% gains over the same time frame.

To confirm its bearish trend, ACGL has been trading below its 200-day moving average since late November and has remained below its 50-day moving average since mid-October. 

Shares of ACGL dipped 6.3% following its Q3 earnings release on Oct. 30, despite delivering a better-than-expected adjusted revenue of $4.4 billion and EPS of $1.99. However, a 13.6% year-over-year decline in EPS due to lower underwriting income across all the segments fueled by higher catastrophic losses stemming from Hurricane Helene might have dampened investor confidence. 

ACGL’s underperformance becomes more evident when compared to its rival, RenaissanceRe Holdings Ltd. (RNR), which gained 34.1% over the past 52 weeks and 37.3% on a YTD BASIS. 

Despite Arch Capital’s recent underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 18 analysts covering it, and the mean price target of $119 suggests a notable 27.5% premium to its current levels.