Arch Capital Group Ltd. reported a staggering increase of more than 44 percent in profits for the second quarter compared to the same time last year.

With net income up from $137.8 million or $1.81 per share in 2006 to $199.4m or $2.65 this year, the company also reported after-tax operating income of $209m or $2.78 per share for the 2007 second quarter, compared to $171.0m or $2.24 per share for last year.

This represented a 24.5 percent annual return on average common equity for the second quarter, compared to 26.1 percent for the 2006 second quarter.

The company's book value per common share, including the effects of share repurchases, also increased to $47.41 at June 30 2007 from $43.97 per share at December 31, 2006.

But gross and net premiums written for the second quarter were $1.1 billion and $757.9m respectively, compared to $1.14bn and $794.6m respectively for the previous year, and $2.31bn and $1.63bn respectively, for the six months ended June 30 2007, compared to $2.3bn and $1.67bn respectively for the 2006 period. Another positive result saw ceded premiums written by the reinsurance segment reach 28.4 percent of gross premiums written for the 2007 second quarter, compared to 22.8 percent for 2006.

Arch Re Bermuda ceded $115.9m or 27.1 percent gross premiums written of certain line sof property and marine premiums written to Flatiron Re Ltd, in the second quarter, as opposed to $77.7m or 15.6 percent last year.

On an earned basis, Arch Re Bermuda ceded $72.5m to Flatiron in the 2007 last quarter, up significantly on last year's figure of $25.3m.

Primarily as a result of the additional business ceded to Flatiron, the decrese in net premiums written of 20.6 percent from the 2006 to the 2007 second quarter was more than the 14.4 percent decrease in gross premiums written.