Hurricane activity drove third quarter net income for Bermuda-based Arch Capital Group Ltd. to $18 million or 25 cents per share, compared to $82.6 million or $1.22 per share in the same period last year.

In its earnings release yesterday, Arch Capital said that net losses related to Hurricanes Charley, Frances, Ivan and Jeanne and Typhoon Songda, after reinsurance and after-tax, were approximately $144.6 million, or $1.97 per share. The recorded loss amounts are based on available information.

To date, Arch Capital has received relatively few claims advises from clients and brokers.

Net income for the nine months ended September 30 was $209.8 million, or $2.91 per share compared to $196.9 million, or $2.91 per share in the same period last year.

Diluted book value per share increased by 15.7 percent to $29.53 this quarter from $25.52 in 2003. Gross premiums written were $927.7 million for the 2004 third quarter, compared to $928.2 million for the 2003 third quarter, and $2.75 billion for the nine months ended September 30, 2004, compared to $2.46 billion last year.

After-tax operating income was $9.1 million, or $0.12 per share, for the 2004 third quarter, compared to $70.2 million, or $1.04 per share last year, and $202.8 million, or $2.81 per share, for the nine months ended September 30, 2004, compared to $178.6 million, or $2.64 per share, for the nine months ended September 30, 2003.

In its earnings release the company also said that it had launched an internal review in light of the current insurance probe being conducted by the New York Attorney General.

Arch Capital has not been served with any subpoena or complaint, but said: ?Since 2002, certain subsidiaries of the company have entered into some placement service and market service agreements with insurance brokers under which, to date, the company has paid a total of approximately $19.5 million.

While the company is not presently aware of any of its employees having engaged in any bid-rigging, such as alleged by the New York Attorney General in his complaint against certain brokers with repeat to other insurers, the company has engaged the law firm Cahill Gordon & Reindel LLP to conduct an internal review with respect to these issues as a proactive measure.?

Arch Capital?s reinsurance division incurred an underwriting loss of $39.3 million for the 2004 third quarter, compared to underwriting income of $39.0 million for the 2003 third quarter.

The combined ratio for the reinsurance division was 109.8 percent for the 2004 third quarter, compared to 89.1 percent a year earlier.

The reinsurance division incurred estimated pre-tax net losses, after reinsurance, related to Hurricanes Charley, Frances, Ivan and Jeanne and Typhoon Songda of $111.7 million in the 2004 third quarter. Before reinsurance, such estimated losses were $143.4 million.

The insurance division?s underwriting income was $15.6 million for the 2004 third quarter, compared to $24.6 million for the 2003 third quarter.

The insurance division?s combined ratio was 95.5 percent for the 2004 third quarter, compared to 90.5 percent for the 2003 third quarter. The insurance division incurred estimated pre-tax net losses, after reinsurance, related to Hurricanes Charley, Frances, Ivan and Jeanne of $40.2 million in the 2004 third quarter. Before reinsurance, such losses were estimated at $89.4 million.