Arch Capital initiated with a Buy at Deutsche Bank

Deutsche Bank initiated coverage of Arch Capital with a Buy rating and $81 price target. The analyst believes the company can leverage its mortgage insurance cash flows to fund growth in property catastrophe reinsurance, where returns on invested capital are accretive to return on equity. The firm says the reinsurance industry is in a “sweet spot” as pricing is finally catching up to five years of elevated catastrophe losses, while supply of new capital is still “relatively muted.”