Is Arch Capital Group Ltd. overvalued or undervalued?

As of 30 June 2025, the valuation grade for Arch Capital Group Ltd. moved from expensive to fair. Based on the current metrics, the company appears fairly valued. The P/E ratio stands at 14, which is competitive compared to peers like The Hartford Financial Services Group, Inc. with a P/E of 13.05, and Cincinnati Financial Corp. at 16.32. Additionally, the Price to Book Value is 2.53, and the Dividend Yield is 3.42%, indicating a reasonable return for investors.
In terms of peer comparison, Arch Capital's valuation is more favorable than American International Group, Inc., which is considered expensive with a P/E of 35.96. While the stock has underperformed against the S&P 500 over the past year with a return of -21.98% compared to 17.14%, it has shown strong performance over the longer term, with a 5-year return of 199.15% versus 96.61% for the index. This suggests that while the company may be experiencing short-term challenges, its long-term growth potential remains robust.