Arch Capital Group Ltd. held firm as its profits dropped only marginally from $199.4 million to $192.3 million for the second quarter 2008.

Net income for the first six months of this year was also down at $381.7 million or $5.71 per share in contrast to $397.9 million or $5.24 per share for the same period in 2007.

The company also reported after-tax operating income available to common shareholders of $185.4 million or $2.82 per share for the 2008 second quarter compared to $205.6 million or $2.73 per share, for last year's second quarter, and $387.4 million or $5.79 per share, for the six months ended June 30, 2008, compared to $410.4 million or $5.40 per share for the 2007 period.

Gross premiums written similarly went into decline from $1.1 billion in the first half of 2007 compared to $886.9 million for the same period this year, while combined ration edged up to 87.1 percent from 84.1 percent over the respective periods.

Net premiums earned for the second quarter 2008 were at $705.7 million, down from $751.4 million last year, as was underwriting income, from $120.3 million in the opening six months of 2007 to $91.4 million during the first half of this year.

In May, Arch invested $100 million in Gulf Reinsurance Ltd., a newly-formed property and casualty reinsurer based in the Dubai International Financial Centre, as part of the company's 50:50 joint venture agreement with Gulf Investment Corporation.

It funded this investment by drawing on its exiting credit facility, which expires in August 2011, with interest calculated based on one, three and six-month LIBOR rates plus 27.5 basis points.