Arch Capital Reports $82.6 million Q3 Net; Files for $500 Million Offering

Bermuda-based Arch Capital Group Ltd. reported net income for the 2003 third quarter of $82.6 million, or $1.22 per share, compared to a net loss of $7.7 million, or $0.36 per share for the third quarter of 2002. It also announced that it has filed a registration statement with the SEC to sell up to $500 million in debt and equity securities.

Arch’s first nine-month results were equally strong. It posted net income of $196.9 million, or $2.91 per share, compared to $15.5 million, or $0.27 per share, for the nine months ended September 30, 2002. “The Company’s diluted book value per share increased by 15.2% to $24.43 at September 30, 2003 from $21.20 at December 31, 2002,” said the bulletin.

It also reported increased net premiums written for the 2003 third quarter to $774.2 million from $318.7 million for the 2002 third quarter, while net premiums written for the nine months ended September 30, 2003 increased to $2.11 billion from $822.4 million for the nine months ended September 30, 2002. “The growth in net premiums written was due to substantial increases in business written by both the Company’s reinsurance and insurance segments,” said the announcement.

After-tax operating income for the 2003 third quarter was $70.2 million, or $1.04 per share, compared to $22.5 million, or $1.04 per share, in the 2002 third quarter. Arch noted that “The per share amounts for the 2002 third quarter were based on a significantly lower number of shares.” It gave details later in its statement.

After-tax operating income for the nine months ended September 30, 2003 was $178.6 million, or $2.64 per share, compared to $46.3 million, or $0.82 per share, for the nine months ended September 30, 2002. “The Company’s after-tax operating income for the 2003 third quarter represented a 17.9% return on beginning equity, on an annualized basis,” said the announcement.

According to reports the registration statement indicated that Arch plans to use the proceeds generated from the sale for general corporate purposes. It also indicated that a major shareholder, the investment bank Pincus Warburg, may sell as many as 5.2 million of the 22.9 million shares of Arch it owns. This would decrease its stake in the company from the current 46.7 percent to around 36 percent. Other Arch investors, who own around 4.7 million shares, were also listed in the statement as potential sellers.