HAMILTON, Bermuda--(BUSINESS WIRE)--July 28, 2005--Arch Capital Group Ltd. (NASDAQ: ACGL) reports that net income for the 2005 second quarter was $126.0 million, or $1.69 per share, compared to $104.3 million, or $1.42 per share, for the 2004 second quarter, and $241.9 million, or $3.26 per share for the six months ended June 30, 2005, compared to $191.7 million, or $2.69 per share, for the six months ended June 30, 2004.

The Company's diluted book value per share increased by 11.2% to $34.49 at June 30, 2005 from $31.03 per share at December 31, 2004.

Gross and net premiums written for the 2005 second quarter were $940.8 million and $723.7 million, respectively, compared to $816.3 million and $677.6 million, respectively, for the 2004 second quarter, and $1.92 billion and $1.52 billion, respectively, for the six months ended June 30, 2005, compared to $1.83 billion and $1.56 billion, respectively, for the six months ended June 30, 2004.

The Company's combined ratio was 89.3% for the 2005 second quarter, compared to 87.8% for the 2004 second quarter, and 89.0% for the six months ended June 30, 2005, compared to 88.4% for the six months ended June 30, 2004. All per share amounts discussed in this release are on a diluted basis.

The Company also reported after-tax operating income of $113.7 million, or $1.53 per share, for the 2005 second quarter, compared to $106.9 million, or $1.45 per share, for the 2004 second quarter, and $226.3 million, or $3.05 per share, for the six months ended June 30, 2005, compared to $193.7 million, or $2.72 per share, for the six months ended June 30, 2004. The Company's after-tax operating income represented a 19.0% annualized return on average equity for the 2005 second quarter.

Operating income, a non-GAAP measure, is defined as net income or loss, excluding net realized gains or losses, net foreign exchange gains or losses, certain non-cash compensation and other income or loss, net of income taxes. See page 6 for a further discussion of operating income and Regulation G.

The Company also reports that it currently expects to incur net losses of between $15 million and $25 million in the 2005 third quarter resulting from Hurricanes Dennis and Emily.

The estimates relating to these events are based on currently available information derived from modeling techniques, industry assessments of exposure and claims information obtained from the Company's clients and brokers. To date, the Company has received relatively few claims advices from clients and brokers. The Company's actual losses from these events may vary materially from the estimated net losses due to the inherent uncertainties in making such determinations resulting from several factors, including the potential inaccuracies and inadequacies in the data provided by clients and brokers, the modeling techniques and the application of such techniques, as well as the frequency of recent catastrophic events and the effects of any resultant demand surge on claims activity.