Insurance company Arch Capital Group Ltd. (ACGL, Financial) announced strong fourth quarter earnings and book value growth, but the stock still fell modestly in the first quarter, negatively impacted by industry-wide underperformance in property & casualty insurance stocks due to weaker pricing trends. The industry is overcapitalized following a period of few major catastrophes, low inflation, and an influx of capital from non- traditional sources. We retain conviction based on Arch's strong management team, opportunistic underwriting strategy and industry- leading returns on equity. (Josh Saltman)
From Baron Funds' first quarter 2014 letter to shareholders.
