Arch Capital Reports Substantial Rise in Q3, 9-Month Net Income

October 27, 2009

The Bermuda-based Arch Capital Group reported that net income available to common shareholders for the 2009 third quarter was $274.4 million, or $4.39 per share, compared to $26.4 million, or $0.42 per share, for the 2008 third quarter For the first none months of 2009 net income was $566.4 million, or $9.05 per share, compared to $408.1 million, or $6.23 per share, for the 2008 period.

The Company also reported after-tax operating income available to common shareholders of $160.3 million, or $2.56 per share, for the 2009 third quarter, compared to $64.1 million, or $1.02 per share, for the 2008 third quarter, and $492.4 million, or $7.87 per share, for the nine months ended September 30, 2009, compared to $451.5 million, or $6.89 per share, for the 2008 period. All earnings per share amounts discussed in this release are on a diluted basis.

In addition Arch noted that its book value per common share increased to $69.48 at September 30, 2009, a 14.4 percent increase from $60.76 per share at June 30, 2009 and a 35.3 percent increase from $51.36 at December 31, 2008, due to growth in retained earnings and an after-tax increase in the market value of the Company’s investment portfolio.

The Company’s after-tax operating income available to common shareholders represented a 16.4 percent annualized return on average common equity for the 2009 third quarter, compared to 7.6 percent for the 2008 third quarter, and 18.1 percent for the nine months ended September 30, 2009, compared to 17.4 percent for the 2008 period.

The Company’s combined ratio for the third quarter dropped to 90 percent, compared to 105.3 percent in the third quarter of 2008. For the first nine months its was88 percent, compared to 92.9 percent in 2008.

The full report and additional information may be obtained on the Company’s web site at: www.archcapgroup.bm.

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