Arch Posts $185.5 Million Q3 Net Income

October 30, 2006

The Bermuda-based Arch Capital Group Ltd. reported net income available to common shareholders of $185.8 million, or $2.44 per share, for the third quarter of 2006, compared to a net loss of $86.3 million, or $1.15 per share “on a pro forma basis” for the 2005 third quarter.

For the nine months ended September 30, 2006, the Company reported net income available to common shareholders of $453.3 million, or $5.96 per share, compared to $155.6 million, or $2.09 per share, for the 2005 period. The Company said its “book value per common share increased to $40.82 at September 30, 2006 from $33.82 per share at December 31, 2005.” The share amounts are on “a diluted basis.”

After tax operating income, which excludes capital transactions, for the third quarter was $200.1 million, or $2.62 per share, compared to a net loss of $82.5 million, or $1.10 per share “on a pro forma basis”, for the 2005 third quarter. For the nine months ended September 30, 2006, the Company reported after-tax operating income available to common shareholders of $514.2 million, or $6.76 per share, compared to $142.5 million, or $1.91 per share, for the 2005 period.

Arch said its “after-tax operating income available to common shareholders represented a 28.0 percent annualized return on average common equity for the 2006 third quarter and 24.9 percent for the nine months ended September 30, 2006.” Gross premiums written during the period rose to nearly $3.41 billion from $2.97 billion for the first nine months of 2005.

Arch’s combined ratio for the third quarter dropped to 84.3 percent from 117.7 percent in Q3 2005. Its combined ratio for the first three quarters was 86.3 percent.

The full report, additional information and a replay of the investors’ and analysts’ conference call may be obtained on the Group’s Website at: http://www.archcapgroup.bm. The conference call will be archived on the website from 1:00 p.m. Eastern Time on October 27 through midnight Eastern Time on November 27, 2006. A telephone replay of the conference call also will be available beginning on October 27 at 1:00 p.m. Eastern Time until November 3 at midnight Eastern Time. To access the replay, domestic callers should dial 888-286-8010 (passcode 87955154), and international callers should dial 617-801-6888 (passcode 87955154).

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