Arch Capital Group plans to consolidate its position in the market following a phenomenal period of growth which has seen profits soar and the company grow to having almost 50 employees on the Island.

Yesterday the company, which is one of the post September 11, 2001 start-up insurance companies, announced that its net income had grown from just $4 million in the first quarter last year to $52.5 million for the same period this year after significant growth in its reinsurance segment and a growth in the insurance sector.

"We are very happy with where we are today," said Dwight Evans, president of Arch Reinsurance Ltd., a unit of Arch Capital.

"That is as far as the reinsurance side and the people we have hired. In the short term we don't have plans to open offices around the world."

But he did say that on the reinsurance side, the company was looking to open an office in London to deal with business in the UK and Europe.

The company, based in Wessex House on Reid Street, Hamilton, reported operating income of $49.2 million, or 73 cents a share, in the quarter, compared with $8.4 million, or 16 cents a share, in the same quarter a year ago.

The insurer's operating income beat the Thomson First Call estimate of 51 cents a share. (Operating income excludes net realised investment gains or losses, foreign exchange gains or losses, certain other income and non-cash compensation.)

Net premiums written rose to $776.9 million in the quarter from $280.7 million a year earlier.

"We were able to get ourselves positioned early and because of that it has helped us get the business we have really been looking for," said Mr. Evans.

The company had already been set up with $300 million in capital before September 11, but following the terrorist attacks, this amount was taken up to $1 billion. But as it had already been registered it was able to be off the block before it rivals - which ended up being a total of eight insurance and reinsurance companies - Axis, Allied World Assurance Co., Arch, Endurance, Montpelier, Da Vinci and Goshawk.

"The quality of capital and the quality of the management team meant that we have really been able to maximise our efforts," said Mr. Evans.

"In this business you have to have the technical capacity and relationships in order to attract business. If you look back at 2001, everybody started off with a billion in capital, which was the minimum price of entry."

But he said despite the company's underwriting profit, on a GAAP basis, rising to $40.1 million for the 2003 first quarter, from to $3.8 million for the 2002 first quarter, this was not a time to expand further.

"I think we still have to prove ourselves in terms of reinsurance to both our clients and brokers and we are working hard to do that," he added.

In a release, Arch said the company's underwriting results for the 2003 first quarter reflect the significant growth achieved by the company's reinsurance segment over the past 15 months.

It also attributed the success of the company to the expansion of the insurance segment into additional lines of business, which occurred primarily during the second half of 2002.

During the first quarter of 2003 the company's reinsurance and insurance segments, respectively, provided 70.5 percent and 29.5 percent of net premiums written. A year ago this division stood at 94.4 percent for reinsurance and 5.6 percent for insurance of net premiums written for the 2002 first quarter.

Mr. Evans said would not be drawn on whether he thought the hard market - where prices for insurance is high - would last, but said that the present situation was unique and was therefore difficult to predict what would happen.

"The market will always have cycles," he said. "The question is how long will they stay in this state."

He said that there were two factors that had not been there in previous cycles - new regulatory influence and the low interest rates.

He said: "In the past it has always been about capacity and price."

But now there were other factors such as low interest rates which meant that companies could not rely on investments to make up profits as they had done in the past.

But he said the current market had made working in the business a joy with the possibility of high returns and more chance to be creative.

He added: "This is an extremely exciting time.''