10-Q/APeriod: Q1 FY2006

ARCH CAPITAL GROUP LTD. Quarterly Report (Amendment) for Q1 Ended Mar 31, 2006

Filed August 4, 2006For Securities:ACGLACGLNACGLO

Summary

Arch Capital Group Ltd. (ACGL) filed an amendment to its Quarterly Report on Form 10-Q for the period ended March 31, 2006. The amendment primarily corrected a date in the Independent Registered Public Accounting Firm's report. Financially, for the first quarter of 2006, ACGL reported a significant increase in net income available to common shareholders to $129.6 million, up from $115.9 million in the prior year's comparable period. This growth was driven by increased underwriting income from both its insurance and reinsurance segments, as well as a substantial rise in net investment income. The company also successfully raised $193.5 million in net proceeds from a public offering of Series A non-cumulative preferred shares, bolstering its capital position to support underwriting activities. ACGL's investment portfolio remains of high quality, predominantly invested in investment-grade fixed maturities.

Key Highlights

  • 1Net income available to common shareholders increased to $129.6 million in Q1 2006, from $115.9 million in Q1 2005.
  • 2Total revenues grew to $840.3 million in Q1 2006, compared to $753.6 million in Q1 2005.
  • 3Net premiums earned for the insurance segment increased to $380.3 million, while the reinsurance segment's net premiums earned were $381.3 million for Q1 2006.
  • 4The company raised $193.5 million in net proceeds from the issuance of Series A non-cumulative preferred shares.
  • 5Invested assets totaled $7.43 billion at March 31, 2006, with a high concentration in investment-grade fixed maturities.
  • 6The company's combined ratio for the insurance segment improved slightly to 91.2% in Q1 2006 from 90.2% in Q1 2005.
  • 7The reinsurance segment's combined ratio improved to 85.3% in Q1 2006 from 87.5% in Q1 2005.

Frequently Asked Questions

The amendment was filed to correct a minor clerical error regarding the date referenced in the Report of the Independent Registered Public Accounting Firm concerning the financial statements for the quarterly period ended March 31, 2006.

Arch Capital Group showed improved financial performance, with net income available to common shareholders increasing to $129.6 million in Q1 2006 from $115.9 million in Q1 2005. This was driven by growth in underwriting income from both insurance and reinsurance segments, and a significant increase in net investment income.

In February 2006, Arch Capital Group issued $200 million in Series A non-cumulative preferred shares, raising approximately $193.5 million in net proceeds. These funds were used to support the underwriting activities of its insurance and reinsurance subsidiaries, strengthening its capital base.

The company actively manages its investment portfolio with a strategy focused on capital preservation, market liquidity, and risk diversification. As of March 31, 2006, the company's invested assets totaled approximately $7.43 billion, with a significant portion in fixed maturities classified as available-for-sale. The credit quality of the fixed maturities portfolio is high, with a substantial majority rated 'A' or better by Standard & Poor's.