Arch Capital Reports Q4 Net Income of Just Over $100M for 2005

Bermuda-based Arch Capital Group Ltd. reported that net income for the 2005 fourth quarter was $100.9 million, or $1.34 per share, compared to $107.1 million, or $1.45 per share, for the 2004 fourth quarter.

For the year ended Dec. 31, 2005, the company reported net income of $256.5 million, or $3.43 per share, compared to $316.9 million, or $4.37 per share, for the year ended Dec. 31, 2004. The company’s diluted book value per share increased by 9.0% to $33.82 at Dec. 31, 2005 from $31.03 per share at Dec. 31, 2004.

Gross and net premiums written for the 2005 fourth quarter were $1.05 billion and $827.9 million, respectively, compared to $914.2 million and $675.6 million, respectively, for the 2004 fourth quarter, and $4.01 billion and $3.14 billion, respectively, for the year ended Dec. 31, 2005, compared to $3.67 billion and $2.98 billion, respectively, for the year ended Dec. 31, 2004. The company’s combined ratio was 87.2% for the 2005 fourth quarter, compared to 87.8% for the 2004 fourth quarter, and 95.8% for the year ended Dec. 31, 2005, compared to 92.1% for the year ended Dec. 31, 2004.

The combined ratio of the company’s insurance and reinsurance subsidiaries for the 2005 fourth quarter of 87.2% consisted of a loss ratio of 58.0% (including 7.5 points related to Hurricane Wilma) and an underwriting expense ratio of 29.2%. The combined ratio for the 2004 fourth quarter of 87.8% consisted of a loss ratio of 59.9% and an underwriting expense ratio of 27.9%.

The loss ratio for the 2005 fourth quarter was comprised of 30.8 points of paid losses, 31.3 points related to reserves for reported losses and a reduction of 4.1 points related to incurred but not reported reserves.