Bermuda's insurance and reinsurance capital raising race shows no signs of slowing down after Arch Capital Group Ltd. announced that it plans to make a public offering of 6.5 million shares.

At current prices of $26.40, this would raise $171.6 million through common shares for the Bermuda company which currently has a market capitalisation of $339.72 million.

Arch Capital said in a statement that this does not include 975,000 common shares subject to the underwriters' over-allotment option. Arch Capital is the main backer of one of the new reinsurers to have set up on the Island in the wake of the shortage of capacity in the insurance and reinsurance industry, Arch Re.

The company said common shares would be offered under Arch Capital Group's shelf registration statement which was filed with the Securities and Exchange Commission on February 12, 2002 and declared effective on March 18, 2002.

Arch Capital Group's common shares are traded on Nasdaq Market under the trading symbol “ACGL”, and have a 52 week high of $28.34 and low of $14.81.

The latest offering will be led by Credit Suisse First Boston and Merrill Lynch & Co., as joint lead managers and bookrunners. Goldman, Sachs & Co. and Salomon Smith Barney will be co-managers for the offering.

Arch Capital Group Ltd., was formerly Risk Capital but sold off the assets of Risk Capital Reinsurance to Folksamerica Reinsurance.

It retained the core of the company and renamed it Arch US, but in order to take advantage of the Island's tax breaks, it reincorporated in Bermuda.

It then positioned itself to re-enter the insurance market and acquired merchant banker Hale & Company, which specialises in insurance mergers and acquisitions and property/casualty insurer American Independent Insurance.

Looking to capitalise on soaring rates following the attacks on the World Trade Centre, it changed the focus of an already existing reinsurer, Arch Re, and positioned it to take advantage of the shortage of capacity.

Marsh & McLennan and Merrill Lynch each owns about 15 percent of the company. Arch Re is also backed by two private equity firms, Warburg Pincus and Hellman & Friedman.

It has $1 billion in new capital and currently employs about 15 in Bermuda in its offices in Craig Appen House in Hamilton and 21 in the US.

Arch Capital is listed as having more than $1 billion in equity capital, provides insurance and reinsurance on a worldwide basis through its wholly owned subsidiaries.

Arch Capital, as the parent company of Bermuda-based Arch Re and a second subsidiary Arch Reinsurance Co. USA, reported last week that the two companies have entered into 800 reinsurance treaties since January.

This is expected to provide an estimated $500 million in annualised gross reinsurance premiums in 2002.

President and chief executive officer of Arch Capital, Peter Appel, said: “We are very pleased with the progress we have made in our underwriting initiatives. The benefits of our existing platform, new underwriting team and strong balance sheet have allowed our Bermuda and US-based reinsurance operations to participate actively in the strong January renewal season.”

The company reported its year-end and fourth quarter 2001 results, but Arch Re CFO John Vollaro said the results represent little reinsurance activity, as the companies were formed in the fourth quarter.

Arch Capital reported a net income of $4.7 million for the three months ended December 31, 2001 compared to a net loss of $15.3 million a year before.

Arch Capital, which has 168 employees, reported sales of $76.5 million and total net income for the year of $22 million.