$Arch Cap(ACGL.US)

Context:

The recent elevated global bond yields continue to expand net investment income for property and casualty insurers. In addition, the favorable pricing across reinsurance segments continue to provide durable earnings growth for companies like Arch Capital Group.

My trade:

I initiated a new long position in ACGL. Moving forward, I will scale into my position in tranches and continue to monitor their quarterly earnings updates to manage short term price fluctuations.

Takeaway:

I chose ACGL as it is a defensive compounder in my case. It has good financials like high ROE, single digit PE ratio and steady EPS, revenue growth.The higher yields environment should continue to drive the net investment income to maintain profitability. Their recent share repurchase authorization of $3.0 billion should also benefit the share price and accelerate their book value per share growth.