PEMBROKE, BERMUDA--(BUSINESS WIRE)--Arch Capital Group Ltd. (NASDAQ: ACGL; “Arch” or “the Company”) announces its 2023 second quarter results. The results included:

•Net income available to Arch common shareholders of $661 million, or $1.75 per share, a 19.6% annualized net income return on average common equity, compared to $394 million, or $1.04 per share, for the 2022 second quarter.

•After-tax operating income available to Arch common shareholders(1) of $726 million, or $1.92 per share, a 21.5% annualized operating return on average common equity, compared to $506 million, or $1.34 per share, for the 2022 second quarter.

•Pre-tax current accident year catastrophic losses for the Company’s insurance and reinsurance segments, net of reinsurance and reinstatement premiums (1), of $119 million.

•Favorable development in prior year loss reserves, net of related adjustments(1) of $116 million.

•Combined ratio excluding catastrophic activity and prior year development(1) of 79.7%, compared to 80.8% for the 2022 second quarter.

•Book value per common share of $37.04 at June 30, 2023, a 4.8% increase from March 31, 2023.

All earnings per share amounts discussed in this release are on a diluted basis. The following table summarizes the Company’s underwriting results:

(1)    Presentation represents a “non-GAAP” financial measure as defined in Regulation G. See ‘Comments on Regulation G’ for further details.

The following table summarizes the Company’s consolidated financial data, including a reconciliation of net income or loss available to Arch common shareholders to after-tax operating income or loss available to Arch common shareholders and related diluted per share results (see ‘Comments on Regulation G’ for a discussion of non-GAAP financial measures):

(1)    Income tax expense (benefit) on net realized gains or losses, equity in net income (loss) of investment funds accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other reflects the relative mix reported by jurisdiction and the varying tax rates in each jurisdiction.

The following section provides analysis on the Company’s 2023 second quarter performance by operating segment. For additional details regarding the Company’s operating segments, please refer to the Company’s Financial Supplement dated June 30, 2023. The Company’s segment information includes the use of underwriting income (loss) and a combined ratio excluding catastrophic activity and prior year development. Such items are non-GAAP financial measures (see ‘Comments on Regulation G’ for further details).

Gross premiums written by the insurance segment in the 2023 second quarter were 14.7% higher than in the 2022 second quarter, while net premiums written were 18.4% higher than in the 2022 second quarter. Growth in net premiums written reflected increases in most lines of business, due in part to new business opportunities, increases in existing accounts and rate changes. In addition, the insurance segment retained more business in the 2023 second quarter than in the 2022 second quarter. Net premiums earned in the 2023 second quarter were 20.5% higher than in the 2022 second quarter, and reflect changes in net premiums written over the previous five quarters.

The 2023 second quarter loss ratio reflected 2.7 points of current year catastrophic activity, spread across a series of global events, compared to 1.2 points of catastrophic activity in the 2022 second quarter. Estimated net favorable development of prior year loss reserves, before related adjustments, reduced the loss ratio by 0.9 points in the 2023 second quarter, compared to 0.6 points in the 2022 second quarter. The improvement in the 2023 second quarter loss ratio also reflected the impact of rate increases and changes in mix of business.

The underwriting expense ratio was 34.6% in the 2023 second quarter, compared to 34.0% in the 2022 second quarter, reflecting higher acquisition expenses primarily due to lower ceding commissions received and changes in mix of business.

Gross premiums written by the reinsurance segment in the 2023 second quarter were 41.9% higher than in the 2022 second quarter, while net premiums written were 46.9% higher than in the 2022 second quarter. Growth in net premiums written primarily reflected increases in property catastrophe, property excluding property catastrophe and other specialty lines, due in part to rate increases, new business opportunities and growth in existing accounts. In addition, the 2023 second quarter net premiums written reflected a lower level of retrocession activity than in the 2022 second quarter. Net premiums earned in the 2023 second quarter were 44.7% higher than in the 2022 second quarter, and reflect changes in net premiums written over the previous five quarters.

The 2023 second quarter loss ratio reflected 6.7 points of current year catastrophic activity, spread across a series of global events, compared to 7.5 points of catastrophic activity in the 2022 second quarter. Estimated net favorable development of prior year loss reserves, before related adjustments, reduced the loss ratio by 2.2 points in the 2023 second quarter, compared to 5.0 points in the 2022 second quarter. The improvement in the 2023 second quarter loss ratio also reflected the impact of rate increases and changes in mix of business.

The underwriting expense ratio was 26.6% in the 2023 second quarter, compared to 27.5% in the 2022 second quarter, with the decrease primarily due to growth in net premiums earned.

Gross premiums written by the mortgage segment in the 2023 second quarter were 6.7% lower than in the 2022 second quarter, while net premiums written were 9.9% lower than in the 2022 second quarter. The reduction in gross premiums written primarily reflected lower originations in the Australian market and a decrease in U.S. primary mortgage insurance business, which was partially offset by a higher volume of credit risk transfer transactions. Net premiums written for the 2023 second quarter reflected a higher level of ceded premiums through quota share reinsurance agreements than in the 2022 second quarter. Net premiums earned in the 2023 second quarter were 0.7% lower than in the 2022 second quarter, primarily due to higher ceded premiums and a decrease in U.S. primary mortgage insurance business, which was partially offset by the growth in credit risk transfer and international business.

Estimated net favorable development of prior year loss reserves, before related adjustments, decreased the loss ratio by 27.2 points, primarily related to the U.S. first lien portfolio from the 2021 and 2022 accident years, compared to 39.9 points in the 2022 second quarter. Such amounts were primarily related to better than expected cure rates in the 2020 through 2022 accident years. The 2023 second quarter loss ratio also reflected a higher level of new delinquencies than in the 2022 second quarter.

The underwriting expense ratio was 19.5% in the 2023 second quarter, compared to 20.4% in the 2022 second quarter. The decrease was primarily due to higher profit commissions on ceded U.S. primary mortgage insurance business.

The corporate segment results include net investment income, net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains and losses on derivative instruments and changes in the allowance for credit losses on financial assets), equity in net income or loss of investment funds accounted for using the equity method, other income (loss), corporate expenses, transaction costs and other, amortization of intangible assets, interest expense, net foreign exchange gains or losses, income taxes items, income or loss from operating affiliates and items related to the Company’s non-cumulative preferred shares.

Investment returns were as follows:

(1)    Presented on an annualized basis and excluding the impact of investments for which returns are not included within investment income, such as investments accounted for using the equity method and certain equities.

(2)    Presentation represents a “non-GAAP” financial measure as defined in Regulation G. See ‘Comments on Regulation G’ for further details.

The growth in net investment income in the 2023 second quarter primarily reflected the effects of higher interest rates available in the market along with growth in invested assets which benefited from strong operating cash flows. Net realized losses were $123 million for the 2023 second quarter, compared to losses of $267 million in the 2022 second quarter, and reflected sales of investments as well as the impact of financial market movements on the Company’s equity securities and investments accounted for under the fair value option method.

On a pre-tax basis, net foreign exchange losses for the 2023 second quarter were $5 million, compared to net foreign exchange gains of $88 million for the 2022 second quarter. For both periods, such amounts were primarily unrealized and resulted from the effects of revaluing the Company’s net insurance liabilities required to be settled in foreign currencies at each balance sheet date. Changes in the value of available-for-sale investments held in foreign currencies due to foreign currency rate movements are reflected as a direct increase or decrease to shareholders’ equity and are not included in the consolidated statements of income.

The Company’s effective tax rate on income before income taxes (based on the Company’s estimated annual effective tax rate) was 9.2% for the 2023 second quarter, compared to 5.2% for the 2022 second quarter. The Company’s effective tax rate on pre-tax operating income available to Arch common shareholders was 8.0% for the 2023 second quarter, compared to 5.7% for the 2022 second quarter. The effective tax rate may fluctuate from period to period based upon the relative mix of income or loss reported by jurisdiction, the level of catastrophic loss activity incurred, and the varying tax rates in each jurisdiction.

Income from operating affiliates for the 2023 second quarter was $22 million, or $0.06 per share, compared to $5 million, or $0.01 per share, for the 2022 second quarter, and primarily reflects amounts related to the Company’s investment in Somers Group Holdings Ltd. and Coface SA.

The Company will hold a conference call for investors and analysts at 11:00 a.m. Eastern Time on July 27, 2023. A live webcast of this call will be available via the Investors section of the Company’s website at http://www.archgroup.com/investors. A recording of the webcast will be available in the Investors section of the Company’s website approximately two hours after the event concludes and will be archived on the site for one year.

Please refer to the Company’s Financial Supplement dated June 30, 2023, which is available via the Investors section of the Company’s website at http://www.archgroup.com/investors. The Financial Supplement provides additional detail regarding the financial performance of the Company. From time to time, the Company posts additional financial information and presentations to its website, including information with respect to its subsidiaries. Investors and other recipients of this information are encouraged to check the Company’s website regularly for additional information regarding the Company.

Arch Capital Group Ltd., is a publicly listed Bermuda exempted company with approximately $17.4 billion in capital at June 30, 2023. Arch, which is part of the S&P 500 index, provides insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly owned subsidiaries.

Throughout this release, the Company presents its operations in the way it believes will be the most meaningful and useful to investors, analysts, rating agencies and others who use the Company’s financial information in evaluating the performance of the Company and that investors and such other persons benefit from having a consistent basis for comparison between quarters and for comparison with other companies within the industry. These measures may not, however, be comparable to similarly titled measures used by companies outside of the insurance industry. Investors are cautioned not to place undue reliance on these non-GAAP financial measures in assessing the Company’s overall financial performance.

This presentation includes the use of “after-tax operating income or loss available to Arch common shareholders,” which is defined as net income available to Arch common shareholders, excluding net realized gains or losses (which includes changes in the allowance for credit losses on financial assets and net impairment losses recognized in earnings), equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses, transaction costs and other, net of income taxes, and the use of annualized operating return on average common equity. The presentation of after-tax operating income available to Arch common shareholders and annualized operating return on average common equity are non-GAAP financial measures as defined in Regulation G. The reconciliation of such measures to net income available to Arch common shareholders and annualized net income return on average common equity (the most directly comparable GAAP financial measures) in accordance with Regulation G is included on page 2 of this release.

The Company believes that net realized gains or losses, equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other, in any particular period are not indicative of the performance of, or trends in, the Company’s business performance. Although net realized gains or losses, equity in net income or loss of investment funds accounted for using the equity method and net foreign exchange gains or losses are an integral part of the Company’s operations, the decision to realize these items are independent of the insurance underwriting process and result, in large part, from general economic and financial market conditions. Furthermore, certain users of the Company’s financial information believe that, for many companies, the timing of the realization of investment gains or losses is largely opportunistic. In addition, changes in the allowance for credit losses and net impairment losses recognized in earnings on the Company’s investments represent other-than-temporary declines in expected recovery values on securities without actual realization.

Transaction costs and other include advisory, financing, legal, severance, incentive compensation and other costs related to acquisitions. The Company believes that transaction costs and other, due to their non-recurring nature, are not indicative of the performance of, or trends in, the Company’s business performance.

The Company’s segment information includes the presentation of consolidated underwriting income or loss and a subtotal of underwriting income or loss. Such measures represent the pre-tax profitability of its underwriting operations and include net premiums earned plus other underwriting income, less losses and loss adjustment expenses, acquisition expenses and other operating expenses. Other operating expenses include those operating expenses that are incremental and/or directly attributable to the Company’s individual underwriting operations. Underwriting income or loss does not incorporate items included in the Company’s corporate segment. While these measures are presented in the Segment Information footnote to the Company’s Consolidated Financial Statements, they are considered non-GAAP financial measures when presented elsewhere on a consolidated basis. The reconciliations of underwriting income or loss to income before income taxes (the most directly comparable GAAP financial measure) on a consolidated basis, in accordance with Regulation G, is shown on the following pages.

Management measures segment performance for its three underwriting segments based on underwriting income or loss. The Company does not manage its assets by underwriting segment and, accordingly, investment income, income from operating affiliates and other corporate segment related items are not allocated to each underwriting segment.

Total return on investments includes investment income, equity in net income or loss of investment funds accounted for using the equity method, net realized gains and losses (excluding changes in the allowance for credit losses on non-investment related financial assets) and the change in unrealized gains and losses generated by Arch’s investment portfolio. Total return is calculated on a pre-tax basis and before investment expenses and reflects the effect of financial market conditions along with foreign currency fluctuations. Management uses total return on investments as a key measure of the return generated to Arch common shareholders, and compares the return generated by the Company’s investment portfolio against benchmark returns during the periods presented.

The following tables summarize the Company’s results by segment for the 2023 second quarter and 2022 second quarter and a reconciliation of underwriting income or loss to income or loss before income taxes and net income or loss available to Arch common shareholders:

(1)    Certain amounts included in the gross premiums written of each segment are related to intersegment transactions and are included in the gross premiums written of each segment. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total.

(2)    Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘Transaction costs and other.’ See ‘Comments on Regulation G’ for a further discussion of such items.

 

(1)    Certain amounts included in the gross premiums written of each segment are related to intersegment transactions and are included in the gross premiums written of each segment. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total.

(2)    Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘Transaction costs and other.’ See ‘Comments on Regulation G’ for a further discussion of such items.

The Private Securities Litigation Reform Act of 1995 (“PSLRA”) provides a “safe harbor” for forward-looking statements. This release or any other written or oral statements made by or on behalf of the Company may include forward-looking statements, which reflect the Company’s current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements. Forward-looking statements, for purposes of the PSLRA or otherwise, can generally be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” and similar statements of a future or forward-looking nature or their negative or variations or similar terminology.

Forward-looking statements involve the Company’s current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. Important factors that could cause actual events or results to differ materially from those indicated in such statements are discussed below and elsewhere in this release and in the Company’s periodic reports filed with the Securities and Exchange Commission (the “SEC”), and include:

•the Company’s ability to successfully implement its business strategy during “soft” as well as “hard” markets;

•acceptance of the Company’s business strategy, security and financial condition by rating agencies and regulators, as well as by brokers and its insureds and reinsureds;

•the Company’s ability to consummate acquisitions and integrate any businesses it has acquired or may acquire into its existing operations;

•the Company’s ability to maintain or improve its ratings, which may be affected by its ability to raise additional equity or debt financings, by ratings agencies’ existing or new policies and practices, as well as other factors described herein;

•general economic and market conditions (including inflation, interest rates, unemployment, housing prices, foreign currency exchange rates, prevailing credit terms and the depth and duration of a recession, including those resulting from COVID-19) and conditions specific to the reinsurance and insurance markets in which the Company operates;

•competition, including increased competition, on the basis of pricing, capacity (including alternative sources of capital), coverage terms or other factors;

•developments in the world’s financial and capital markets and the Company’s access to such markets;

•the Company’s ability to successfully enhance, integrate and maintain operating procedures (including information technology) to effectively support its current and new business;

•the loss and addition of key personnel;

•material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements;

•accuracy of those estimates and judgments utilized in the preparation of the Company’s financial statements, including those related to revenue recognition, insurance and other reserves, reinsurance recoverables, investment valuations, intangible assets, bad debts, income taxes, contingencies and litigation, and any determination to use the deposit method of accounting;

•greater than expected loss ratios on business written by the Company and adverse development on claim and/or claim expense liabilities related to business written by its insurance and reinsurance subsidiaries;

•the adequacy of the Company’s loss reserves;

•severity and/or frequency of losses;

•greater frequency or severity of unpredictable natural and man-made catastrophic events;

•claims resulting from natural or man-made catastrophic events or severe economic events in the Company’s insurance, reinsurance and mortgage businesses could cause large losses and substantial volatility in the Company’s results of operations;

•the effect of climate change on the Company’s business;

•the effect of contagious diseases (including COVID-19) on the Company’s business;

•acts of terrorism, political unrest and other hostilities or other unforecasted and unpredictable events;

•availability to the Company of reinsurance to manage its gross and net exposures and the cost of such reinsurance;

•the failure of reinsurers, managing general agents, third party administrators or others to meet their obligations to the Company;

•the timing of loss payments being faster or the receipt of reinsurance recoverables being slower than anticipated by the Company;

•the Company’s investment performance, including legislative or regulatory developments that may adversely affect the fair value of the Company’s investments;

•changes in general economic conditions, including new or continued sovereign debt concerns or downgrades of U.S. securities by credit rating agencies, which could affect the Company’s business, financial condition and results of operations;

•the volatility of the Company’s shareholders’ equity from foreign currency fluctuations, which could increase due to us not matching portions of the Company’s projected liabilities in foreign currencies with investments in the same currencies;

•changes in accounting principles or policies or in the Company’s application of such accounting principles or policies;

•changes in the political environment of certain countries in which the Company operates, underwrites business or invests;

•a disruption caused by cyber-attacks or other technology breaches or failures on the Company or the Company’s business partners and service providers, which could negatively impact the Company’s business and/or expose the Company to litigation;

•statutory or regulatory developments, including as to tax matters and insurance and other regulatory matters such as the adoption of proposed legislation that would affect Bermuda-headquartered companies and/or Bermuda-based insurers or reinsurers and/or changes in regulations or tax laws applicable to the Company, its subsidiaries, brokers or customers, including the possible implementation of the Organization for Economic Cooperation and Development (“OECD”) Pillar I and Pillar II initiative; and

•the other matters set forth under Item 1A “Risk Factors”, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of the Company’s Annual Report on Form 10-K, as well as the other factors set forth in the Company’s other documents on file with the SEC, and management’s response to any of the aforementioned factors.

All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein or elsewhere. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

 

The following financial supplement is provided to assist in your understanding of Arch Capital Group Ltd. (“Arch”) and its subsidiaries (collectively, the “Company”).

 

This report is for informational purposes only. It should be read in conjunction with documents filed by Arch with the U.S. Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and the Quarterly Reports on Form 10-Q. Please refer to the Company’s website at www.archgroup.com for further information describing Arch.

All financial information contained herein is unaudited, however, certain information relating to the consolidated balance sheet at December 31, 2022 is derived from or agrees to audited financial information. Unless otherwise noted, all amounts are in millions, except for per share amounts and ratio information. Amounts presented have been rounded for presentation purposes and may not reconcile due to rounding differences.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This release or any other written or oral statements made by or on behalf of Arch and its subsidiaries may include forward-looking statements, which reflect the Company’s current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements.

Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or their negative or variations or similar terminology. Forward-looking statements involve the Company’s current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: adverse general economic and market conditions; increased competition; pricing and policy term trends; fluctuations in the actions of rating agencies and the Company’s ability to maintain and improve the Company’s ratings; investment performance; the loss and addition of key personnel; the adequacy of the Company’s loss reserves, severity and/or frequency of losses, greater than expected loss ratios and adverse development on claim and/or claim expense liabilities; greater frequency or severity of unpredictable natural and man-made catastrophic events; including pandemics such as COVID-19; the impact of acts of terrorism and acts of war; changes in regulations and/or tax laws in the United States or elsewhere; the Company’s ability to successfully integrate, establish and maintain operating procedures as well as integrate the businesses we have acquired or may acquire into the existing operations; changes in accounting principles or policies; material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements; availability and cost to the Company of reinsurance to manage gross and net exposures; the failure of others to meet their obligations to the Company; a disruption caused by cyber-attacks or other technology breaches or failures on the Company or the Company’s business partners and service providers, which could negatively impact the Company’s business and/or expose the Company to litigation; and other factors identified in the Company’s filings with the U.S. Securities and Exchange Commission.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein or elsewhere. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on the Company’s behalf are expressly qualified in their entirety by these cautionary statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

The following table presents financial highlights:

 

(1)See ‘Comments on Regulation G’ for a further discussion of consolidated underwriting income or loss, after-tax operating income or loss available to Arch common shareholders and annualized operating return on average common equity.

(2)Total return on investments includes investment income, equity in net income (loss) of investment funds accounted for using the equity method, net realized gains and losses and the change in unrealized gains and losses and is calculated on a pre-tax basis and before investment expenses. See ‘Comments on Regulation G’ for a further discussion of the presentation of total return on investments.

(U.S. Dollars and shares in millions, except per share data)						June 30,						March 31,						December 31,						September 30,						June 30,
						2023						2023						2022						2022						2022
Assets
Investments:
Fixed maturities available for sale, at fair value						$	21,434					$	20,692					$	19,683					$	18,121					$	17,585
Short-term investments available for sale, at fair value						1,702						1,553						1,332						1,941						2,228
Equity securities, at fair value						911						859						860						810						773
Other investments						1,846						1,776						1,644						1,578						1,634
Investments accounted for using the equity method						4,073						3,896						3,774						3,566						3,496
Total investments						29,966						28,776						27,293						26,016						25,716
Cash						904						803						855						814						814
Accrued investment income						233						163						159						116						116
Investment in operating affiliates						973						1,015						965						891						968
Premiums receivable						5,296						4,513						3,625						3,579						3,634
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses						6,717						6,612						6,564						6,356						5,939
Contractholder receivables						1,761						1,750						1,731						1,736						1,758
Ceded unearned premiums						2,459						2,116						1,799						2,116						2,124
Deferred acquisition costs						1,452						1,355						1,264						1,123						1,070
Receivable for securities sold						97						84						12						27						157
Goodwill and intangible assets						775						785						804						807						868
Other assets						3,223						3,131						2,919						2,756						2,555
Total assets						$	53,856					$	51,103					$	47,990					$	46,337					$	45,719
Liabilities
Reserve for losses and loss adjustment expenses						$	21,268					$	20,758					$	20,032					$	19,288					$	18,194
Unearned premiums						9,052						8,218						7,337						7,271						7,145
Reinsurance balances payable						2,191						1,819						1,530						1,669						1,635
Contractholder payables						1,764						1,752						1,734						1,738						1,761
Collateral held for insured obligations						275						252						249						255						251
Senior notes						2,726						2,726						2,725						2,725						2,725
Payable for securities purchased						526						262						95						175						292
Other liabilities						1,411						1,317						1,367						1,411						1,290
Total liabilities						39,213						37,104						35,069						34,532						33,293
Redeemable noncontrolling interests						2						11						11						9						8
Shareholders’ equity
Non-cumulative preferred shares						830						830						830						830						830
Common shares						1						1						1						1						1
Additional paid-in capital						2,278						2,260						2,211						2,187						2,170
Retained earnings						17,258						16,597						15,892						15,043						15,036
Accumulated other comprehensive income (loss), net of deferred income tax						(1,319)						(1,297)						(1,646)						(1,892)						(1,258)
Common shares held in treasury, at cost						(4,407)						(4,403)						(4,378)						(4,373)						(4,361)
Total shareholders’ equity						14,641						13,988						12,910						11,796						12,418
Total liabilities, noncontrolling interests and shareholders’ equity						$	53,856					$	51,103					$	47,990					$	46,337					$	45,719
Common shares and common share equivalents outstanding, net of treasury shares						372.9						372.2						370.3						369.3						369.3
Book value per common share (1)						$	37.04					$	35.35					$	32.62					$	29.69					$	31.37

(1) Excludes the effects of stock options and restricted stock units outstanding.