Arch Capital Group Ltd reported a sharp rise in third-quarter net income, helped by lower catastrophe losses and strong underwriting performance across its global portfolio.

The Bermudian-based insurer and reinsurer posted net income available to common shareholders of $1.34 billion, or $3.56 per share, up from $978 million a year earlier. That represented a 23.8 per cent annualised return on equity, according to results released yesterday.

After-tax operating income rose to $1 billion, or $2.77 per share, compared with $762 million in the same period last year.

Nicolas Papadopoulo, the chief executive, said the quarter’s results reflected both favourable conditions and disciplined execution.

“We are extremely pleased with our financial performance this quarter, which resulted in record-level operating income,” Mr Papadopoulo said. “While we benefited from a relatively quiet quarter for natural catastrophes, we remain upbeat about our ability to perform well in the current market.”

The group’s combined ratio improved to 79.8 per cent from 86.6 per cent a year earlier, aided by reduced catastrophe activity. Arch reported pre-tax catastrophe losses of $72 million, a fraction of the $21.3 points of cat activity recorded in the reinsurance segment a year ago.

Net premiums written slipped 2.1 per cent to $3.96 billion, while prior-year reserve development was favourable by $103 million.

Arch also continued returning capital to shareholders, repurchasing $732 million in stock during the quarter. Book value per share climbed 5.3 per cent from the prior quarter to $62.32.

Arch, which has expanded its property catastrophe reinsurance business in Florida following state tort reforms, said it remains confident in the long-term outlook for both its insurance and reinsurance divisions.

Shares of Arch Capital Group Ltd closed at $85.94 yesterday, down 1.4 per cent on the day.