Bermuda-based Arch Capital's public offering has boosted trading in the stock and helped the price climb in yesterday's trading with more than three million shares changing hands during the day and the price rising by almost 3.5 percent.

The company announced that it had set the price of the public offering of 6.5 million common shares at $25.50 per common share on Tuesday, with the offering led by Credit Suisse First Boston and Merrill Lynch & Co.

The closing of the offering is scheduled for April 8, 2002, a move which could raise $165.75 million for the company.

The company, which also owns one of the reinsurers set up in the wake of the shortage of capacity caused by the September 11 terrorism attacks in the US, Arch Re, could raise even more cash if underwriters take up an option to purchase an additional 975,000 common shares to cover over-allotments.

The common shares are being 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.

Yesterday the shares were trading on Nasdaq, under the symbol ACGL, for $26.61 at 5 p.m. Bermuda time, up 88 cents on the day with 3,035,300 shares traded.

The average trade during a day is typically 143,000 and the current burst is 2,340 percent above the normal volume.

The company's 52 week high for its share price is $28.34 and its low $14.81. The company's shares shot up in value in October following the contraction in the amount of capital available in the insurance market and a rise in premiums.

The setting up of Arch Re is also said to have boosted the share price.

According to Stockconsultant.com, the stock may rise to almost $30, with an overall rating of "hold short term"

Goldman, Sachs & Co. and Salomon Smith Barney are co-managers for the offering, which was announced to the Securities and Exchange Commission on Tuesday.

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 own 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 world-wide 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 month 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.