8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

July 29, 2015

Date of Report (Date of earliest event reported)

Arch Capital Group Ltd.

(Exact name of registrant as specified in its charter)

Bermuda	0-26456	N/A
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

Waterloo House, Ground Floor, 100 Pitts Bay Road, Pembroke HM 08, Bermuda

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code:

(441) 278-9250

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02           Results of Operations and Financial Condition.

On July 29, 2015, Arch Capital Group Ltd. issued a press release reporting its earnings and the availability of its financial supplement for the three month period ended June 30, 2015.  The press release and financial supplement are attached to this Current Report on Form 8-K as Exhibit 99.1 and Exhibit 99.2, respectively, and are incorporated herein by reference.

The information in this Current Report on Form 8-K, including the information set forth in Exhibit 99.1 and Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing

ITEM 9.01           Exhibits.

EXHIBIT NO.	DESCRIPTION
99.1	Press Release dated July 29, 2015 announcing the earnings of Arch Capital Group Ltd. for the three month period ended June 30, 2015
99.2	Second Quarter 2015 Financial Supplement

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ARCH CAPITAL GROUP LTD.
Date: July 29, 2015	By:	/s/ W. Preston Hutchings
		Name:	W. Preston Hutchings
		Title:	Senior Vice President and Chief Investment Officer

3

EXHIBIT INDEX

EXHIBIT NO.	DESCRIPTION
99.1	Press Release dated July 29, 2015 announcing the earnings of Arch Capital Group Ltd. for the three month period ended June 30, 2015
99.2	Second Quarter 2015 Financial Supplement

4

EX-99.1

Exhibit 99.1

	Waterloo House, Ground Floor
	100 Pitts Bay Road
	Pembroke HM 08 Bermuda
	441-278-9250 441-278-9255 fax
PRESS RELEASE	CONTACT:
NASDAQ Symbol ACGL	Mark D. Lyons
For Immediate Release	Executive Vice President and
	Chief Financial Officer

ARCH CAPITAL GROUP LTD. REPORTS 2015 SECOND QUARTER RESULTS

HAMILTON, BERMUDA, July 29, 2015 -- Arch Capital Group Ltd. (NASDAQ: ACGL) reports that net income available to Arch common shareholders for the 2015 second quarter was $110.3 million, or $0.88 per share, compared to $202.5 million, or $1.48 per share, for the 2014 second quarter. The Company also reported after-tax operating income available to Arch common shareholders of $146.0 million, or $1.16 per share, for the 2015 second quarter, compared to $160.7 million, or $1.17 per share, for the 2014 second quarter. The Company’s after-tax operating income available to Arch common shareholders represented an annualized return on average common equity of 9.9% for the 2015 second quarter, compared to 11.2% for the 2014 second quarter. For the trailing twelve months ended June 30, 2015, after-tax operating income available to Arch common shareholders produced a 10.0% return on average common equity while net income available to Arch common shareholders produced a 14.0% return on average common equity. The Company’s book value per common share was $47.49 at June 30, 2015, a 0.6%decrease from $47.80 per share at March 31, 2015 and an 8.6%increase from $43.73 per share at June 30,2014.

After-tax operating income or loss available to Arch common shareholders, a non-GAAP measure, is defined as net income available to Arch common shareholders, excluding net realized gains or losses, net impairment losses recognized in earnings, equity in net income or loss of investment funds accounted for using the equity method and net foreign exchange gains or losses, net of income taxes. See ‘Comments on Regulation G’ for a further discussion of after-tax operating income or loss available to Arch common shareholders. All earnings per share amounts discussed in this release are on a diluted basis.

The following table summarizes the Company’s underwriting results, excluding amounts related to the ‘other’ segment (i.e., results of Watford Re). Although the Company owns approximately 11% of Watford Re’s common equity, pursuant to generally accepted accounting principles, it consolidates the results of Watford Re in its financial statements. All discussions of line items in this release exclude amounts related to the ‘other’ segment. For segment results reflecting the contribution of the ‘other’ segment, see pages 11 to 14 of the Company’s Financial Supplement dated June 30, 2015.

(U.S. dollars in thousands)	Three Months Ended June 30,								Six Months Ended June 30,
	2015			2014			% Change		2015			2014			% Change
Gross premiums written	$	1,155,253		$	1,256,934		(8.1	)	$	2,466,931		$	2,552,070		(3.3	)
Net premiums written	823,392			920,126			(10.5	)	1,765,809			1,952,922			(9.6	)
Net premiums earned	836,249			894,172			(6.5	)	1,674,247			1,751,786			(4.4	)
Underwriting income	108,343			125,133			(13.4	)	223,046			258,711			(13.8	)
Underwriting Ratios							% Point Change								% Point Change
Loss ratio	52.8		%	53.4		%	(0.6	)	52.9		%	52.1		%	0.8
Acquisition expense ratio	17.4		%	17.2		%	0.2		17.2		%	17.9		%	(0.7	)
Other operating expense ratio	17.7		%	15.6		%	2.1		17.6		%	15.5		%	2.1
Combined ratio	87.9		%	86.2		%	1.7		87.7		%	85.5		%	2.2

1

The following table summarizes, on an after-tax basis, the Company’s consolidated financial data, including a reconciliation of after-tax operating income available to Arch common shareholders to net income available to Arch common shareholders and related diluted per share results:

(U.S. dollars in thousands, except share data)	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
After-tax operating income available to Arch common shareholders	$	145,956		$	160,669		$	295,802		$	325,073
Net realized gains (losses), net of tax	(28,074		)	50,267			33,860			68,540
Net impairment losses recognized in earnings, net of tax	(1,113		)	(14,749		)	(6,912		)	(17,720		)
Equity in net income of investment funds accounted for using the equity method, net of tax	16,113			9,054			21,645			12,218
Net foreign exchange gains (losses), net of tax	(22,577		)	(2,710		)	43,762			(8,564		)
Net income available to Arch common shareholders	$	110,305		$	202,531		$	388,157		$	379,547
Diluted per common share results:
After-tax operating income available to Arch common shareholders	$	1.16		$	1.17		$	2.33		$	2.38
Net realized gains (losses), net of tax	(0.22		)	0.37			0.27			0.50
Net impairment losses recognized in earnings, net of tax	(0.01		)	(0.11		)	(0.06		)	(0.13		)
Equity in net income of investment funds accounted for using the equity method, net of tax	0.13			0.07			0.17			0.09
Net foreign exchange gains (losses), net of tax	(0.18		)	(0.02		)	0.34			(0.06		)
Net income available to Arch common shareholders	$	0.88		$	1.48		$	3.05		$	2.78
Weighted average common shares and common share equivalents outstanding - diluted	125,885,420			136,889,944			127,156,713			136,716,889

The Company’s investment portfolio continues to be comprised primarily of high quality fixed income securities with an average credit quality of “AA/Aa2.” The average effective duration of the Company’s investment portfolio was 3.05 years at June 30, 2015, compared to 3.34 years at December 31, 2014. Including the effects of foreign exchange, total return on the Company’s investment portfolio was (0.04)% for the 2015 second quarter, compared to 1.80% for the 2014 second quarter. Total return in the 2015 second quarter reflected the impact of the U.S. Dollar weakening against the British Pound Sterling, Euro and other major currencies on non-U.S. Dollar denominated investments and benefited from strong returns on alternatives and non-investment grade fixed income securities. Excluding the effects of foreign exchange, total return was (0.38)% for the 2015 second quarter, compared to 1.63% for the 2014 second quarter.

Net investment income for the 2015 second quarter was $0.53 per share, or $67.2 million, compared to $0.53 per share, or $72.5 million, for the 2014 second quarter, and $0.55 per share, or $70.3 million, for the 2015 first quarter. The lower level of net investment income per share compared to the 2015 first quarter was primarily related to a lower level of income on certain fund investments. The annualized pre-tax investment income yield was 2.05% for the 2015 second quarter, compared to 2.05% for the 2014 second quarter and 2.09% for the 2015 first quarter. Such yields reflect the effects of low prevailing interest rates available in the market and the Company’s investment strategy, which puts an emphasis on total return. Cash flow provided by operating activities was $231.8 million for the 2015 second quarter, compared to $254.2 million for the 2014 second quarter, primarily reflecting a lower level of net premiums collected than in the 2014 second quarter.

On a pre-tax basis, net foreign exchange losses for the 2015 second quarter were $22.6 million, compared to net foreign exchange losses for the 2014 second quarter of $2.8 million. For both periods, such amounts were primarily unrealized and resulted from the effects of revaluing the Company’s net insurance liabilities required to be settled in foreign currencies at each balance sheet date. Changes in the value of available-for-sale investments held in foreign currencies due to foreign currency rate movements are reflected as a direct increase or decrease to shareholders’ equity and are not included in the consolidated statements of income. The Company has not matched a portion of its projected liabilities in foreign currencies with investments in the same currencies and may not match such amounts in future periods, which could increase the Company’s exposure to foreign currency fluctuations and increase the volatility of the Company’s shareholders’ equity.

2

Interest expense of $4.0 million for the 2015 second quarter included $12.4 million related to the Company’s senior notes and other borrowings, partially offset by an $8.4 million reduction in interest expense on a deposit accounting liability (i.e., a contract that, in accordance with GAAP, does not pass risk transfer). The reduction in the 2015 second quarter resulted from a reassessment of this estimated ultimate liability due to a determination that paid losses are expected to be lower than previously anticipated.

The Company’s effective tax rate on income before income taxes (based on the Company’s estimated annual effective tax rate) was 5.5% for the 2015 second quarter, compared to 3.4% for the 2014 second quarter. The Company’s effective tax rate on pre-tax operating income available to Arch shareholders was 3.9% for the 2015 second quarter, compared to 3.6% for the 2014 second quarter. The Company’s effective tax rate fluctuates from year to year based upon the relative mix of income or loss reported by jurisdiction and the varying tax rates in each jurisdiction. The Company’s quarterly tax provision is adjusted to reflect changes in its estimated annual effective tax rate, if any.

During the 2015 second quarter, the Company repurchased 3.2 million common shares for an aggregate purchase price of $199.0 million under its share repurchase program. Since the inception of the share repurchase program through June 30, 2015, ACGL has repurchased 124.0 million common shares for an aggregate purchase price of $3.60 billion. At June 30, 2015, $525.3 million of repurchases were available under the share repurchase program.

At June 30, 2015, total capital available to Arch of $7.03 billion consisted of $791.2 million of senior notes, representing 11.3% of the total, $100.0 million of revolving credit agreement borrowings, representing 1.4% of the total, $325.0 million of preferred shares, representing 4.6% of the total, and common shareholders’ equity of $5.81 billion, representing 82.7% of the total. At March 31, 2015, total capital available to Arch of $7.18 billion consisted of $791.2 million of senior notes, representing 11.0% of the total, $100.0 million of revolving credit agreement borrowings, representing 1.4% of the total, $325.0 million of preferred shares, representing 4.5% of the total, and common shareholders’ equity of $5.96 billion, representing 83.1% of the total.

The Company will hold a conference call for investors and analysts at 11:00 a.m. Eastern Time on July 30, 2015. A live webcast of this call will be available via the Investors section of the Company’s website at

http://www.archcapgroup.com. A telephone replay of the conference call also will be available beginning on July 30, 2015 at 3:00 p.m. Eastern Time until August 6, 2015 at midnight Eastern Time. To access the replay, domestic callers should dial 888-286-8010 (passcode 92454111), and international callers should dial 617-801-6888 (passcode 92454111).

Please refer to the Company’s Financial Supplement dated June 30, 2015, which is available via the Investors section of the Company’s website at http://www.archcapgroup.com. The Financial Supplement provides additional detail regarding the financial performance of the Company. From time to time, the Company posts additional financial information and presentations to its website, including information with respect to its subsidiaries. Investors and other recipients of this information are encouraged to check the Company’s website regularly for additional information regarding the Company.

Arch Capital Group Ltd., a Bermuda-based company with approximately $7.03 billion in capital at June 30, 2015, provides insurance and reinsurance on a worldwide basis through its wholly owned subsidiaries.

3

Supplemental Information

Book Value Per Common Share

(U.S. dollars in thousands, except share data)	June 30, 2015		December 31, 2014
Calculation of book value per common share:
Total shareholders’ equity available to Arch	$	6,137,515	$	6,130,053
Less preferred shareholders’ equity	325,000		325,000
Common shareholders’ equity available to Arch	5,812,515		5,805,053
Common shares outstanding, net of treasury shares (1)	122,403,909		127,367,934
Book value per common share	$	47.49	$	45.58

(1) Excludes the effects of 7,913,680 and 7,804,033 stock options and 438,155 and 447,073 restricted stock units outstanding at June 30, 2015 and December 31, 2014, respectively.

Investment Information

(U.S. dollars in thousands, except share data)	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Components of net investment income (1):
Fixed maturities	$	61,191		$	64,499		$	123,559		$	126,948
Term loan investments (2)	4,566			5,233			8,841			10,902
Equity securities (dividends)	2,742			3,271			5,421			6,192
Short-term investments	183			103			378			508
Other (3)	10,472			9,067			23,209			13,785
Gross investment income	79,154			82,173			161,408			158,335
Investment expenses	(11,983		)	(9,715		)	(23,949		)	(18,884		)
Net investment income	$	67,171		$	72,458		$	137,459		$	139,451
Per share	$	0.53		$	0.53		$	1.08		$	1.02
Investment income yield, at amortized cost (1) (4):
Pre-tax	2.05		%	2.05		%	2.07		%	2.07		%
After-tax	1.90		%	1.91		%	1.92		%	1.93		%
Total return (1) (5):
Including effects of foreign exchange	(0.04		)%	1.80		%	1.07		%	2.84		%
Excluding effects of foreign exchange	(0.38		)%	1.63		%	1.68		%	2.67		%
Cash flow from operations (1)	$	231,762		$	254,168		$	247,361		$	451,563

(1) Excludes amounts related to the ‘other’ segment.

(2) Included in “investments accounted for using the fair value option” on the Company’s balance sheet.

(3) Includes income on other investments, funds held balances, cash balances and other.

(4) Presented on an annualized basis and excluding the impact of investments for which returns are not included within investment income, such as investments accounted for using the equity method and certain equities.

(5) Includes net investment income, equity in net income or loss of investment funds accounted for using the equity method, net realized gains and losses and the change in unrealized gains or losses generated by the Company’s investment portfolio. Total return is calculated on a pre-tax basis and before investment expenses.

4

Investment Information (continued)

(U.S. dollars in thousands)	June 30, 2015				December 31, 2014
	Amount			% of Total	Amount			% of Total
Investable assets (1) (2):
Fixed maturities available for sale, at fair value	$	9,927,603		68.4	$	10,750,770		73.6
Fixed maturities, at fair value (3)	387,941			2.7	377,053			2.6
Fixed maturities pledged under securities lending agreements, at fair value	373,969			2.6	50,802			0.3
Total fixed maturities	10,689,513			73.7	11,178,625			76.6
Short-term investments available for sale, at fair value	875,727			6.0	797,226			5.5
Cash	470,011			3.2	474,247			3.2
Equity securities available for sale, at fair value	701,623			4.8	658,182			4.5
Equity securities, at fair value (3)	248			—	—			—
Other investments available for sale, at fair value	377,677			2.6	296,224			2.0
Other investments, at fair value (3)	899,763			6.2	878,774			6.0
Investments accounted for using the equity method (4)	472,926			3.3	349,014			2.4
Securities transactions entered into but not settled at the balance sheet date	26,066			0.2	(32,802		)	(0.2	)
Total investable assets managed by the Company	$	14,513,554		100.0	$	14,599,490		100.0
Investment portfolio statistics (1):
Average effective duration (in years)	3.05				3.34
Average credit quality (Standard & Poor’s/Moody’s Investors Service)	AA/Aa2				AA/Aa2
Embedded book yield (before investment expenses)	2.07		%		2.18		%

(1) Excludes amounts related to the ‘other’ segment.

(2) This table excludes the collateral received and reinvested and includes the fixed maturities and short-term investments pledged under securities lending agreements, at fair value.

(3) Represents investments which are carried at fair value under the fair value option and reflected as “investments accounted for using the fair value option” on the Company’s balance sheet. Changes in the carrying value of such investments are recorded in net realized gains or losses.

(4) Changes in the carrying value of investment funds accounted for using the equity method are recorded as “equity in net income (loss) of investment funds accounted for using the equity method” rather than as an unrealized gain or loss component of accumulated other comprehensive income.

5

Selected Information on Losses and Loss Adjustment Expenses (1)

(U.S. dollars in thousands)	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Components of losses and loss adjustment expenses incurred
Paid losses and loss adjustment expenses	$	465,053		$	435,370		$	897,687		$	861,284
Change in unpaid losses and loss adjustment expenses	(23,305		)	41,954			(11,702		)	50,924
Total losses and loss adjustment expenses	$	441,748		$	477,324		$	885,985		$	912,208
Estimated net (favorable) adverse development in prior year loss reserves, net of related adjustments
Net impact on underwriting results:
Insurance	$	(17,167	)	$	(16,137	)	$	(22,122	)	$	(26,554	)
Reinsurance	(58,802		)	(67,700		)	(116,081		)	(137,802		)
Mortgage	(1,108		)	58			(3,920		)	(1,112		)
Total	$	(77,077	)	$	(83,779	)	$	(142,123	)	$	(165,468	)
Impact on losses and loss adjustment expenses:
Insurance	$	(18,595	)	$	(19,388	)	$	(27,349	)	$	(34,960	)
Reinsurance	(57,798		)	(69,115		)	(115,809		)	(139,514		)
Mortgage	(1,125		)	88			(3,740		)	(1,046		)
Total	$	(77,518	)	$	(88,415	)	$	(146,898	)	(175,520		)
Impact on acquisition expenses:
Insurance	$	1,428		$	3,251		$	5,227		$	8,406
Reinsurance	(1,004		)	1,415			(272		)	1,712
Mortgage	17			(30		)	(180		)	(66		)
Total	$	441		$	4,636		$	4,775		$	10,052
Impact on combined ratio:
Insurance	(3.4		)%	(3.2		)%	(2.2		)%	(2.7		)%
Reinsurance	(21.5		)%	(20.2		)%	(21.0		)%	(20.4		)%
Mortgage	(2.1		)%	0.1		%	(3.8		)%	(1.2		)%
Total	(9.2		)%	(9.4		)%	(8.5		)%	(9.4		)%
Impact on loss ratio:
Insurance	(3.6		)%	(3.8		)%	(2.7		)%	(3.5		)%
Reinsurance	(21.1		)%	(20.6		)%	(20.9		)%	(20.6		)%
Mortgage	(2.1		)%	0.2		%	(3.6		)%	(1.2		)%
Total	(9.3		)%	(9.9		)%	(8.8		)%	(10.0		)%
Impact on acquisition expense ratio:
Insurance	0.2		%	0.6		%	0.5		%	0.8		%
Reinsurance	(0.4		)%	0.4		%	(0.1		)%	0.2		%
Mortgage	—		%	(0.1		)%	(0.2		)%	—		%
Total	0.1		%	0.5		%	0.3		%	0.6		%
Estimated net losses incurred from current accident year catastrophic events (2)
Insurance	$	6,019		$	3,739		$	9,200		$	6,353
Reinsurance	9,842			12,748			11,272			15,682
Total	$	15,861		$	16,487		$	20,472		$	22,035
Impact on combined ratio:
Insurance	1.2		%	0.7		%	0.9		%	0.6		%
Reinsurance	3.6		%	3.8		%	2.0		%	2.3		%
Total	1.9		%	1.8		%	1.2		%	1.3		%

(1) Excludes amounts related to the ‘other’ segment.

(2) Equals estimated losses from catastrophic events occurring in the current accident year, net of reinsurance and reinstatement premiums. Amounts shown for the insurance segment are for named catastrophic events only. Amounts shown for the reinsurance segment include (i) named events with over $5 million of losses incurred by its Bermuda and Europe operations and (ii) all catastrophe losses incurred by its U.S. operations. Amounts not applicable for the mortgage segment.

6

Segment Information

The following section provides analysis on the Company’s 2015 second quarter performance by operating segment.For additional details regarding the Company’s operating segments, please refer to the Company’s Financial Supplement dated June 30, 2015. The Company’s segment information includes the use of a combined ratio excluding catastrophic activity and prior year development for the insurance segment and reinsurance segment and a combined ratio excluding prior year development for the mortgage segment. These ratios are “non-GAAP financial measures” as defined in Regulation G. See ‘Comments on Regulation G’ for further details.

Insurance Segment

	Three Months Ended June 30,
(U.S. dollars in thousands)	2015			2014			% Change
Gross premiums written	$	744,810		$	852,231		(12.6	)
Net premiums written	509,067			578,882			(12.1	)
Net premiums earned	509,825			507,712			0.4
Underwriting income	23,643			34,422			(31.3	)
Underwriting Ratios							% Point Change
Loss ratio	62.9		%	61.4		%	1.5
Acquisition expense ratio	15.0		%	15.1		%	(0.1	)
Other operating expense ratio	17.5		%	16.9		%	0.6
Combined ratio	95.4		%	93.4		%	2.0
Catastrophic activity and prior year development:
Current accident year catastrophic events, net of
reinsurance and reinstatement premiums	1.2		%	0.7		%	0.5
Net (favorable) adverse development in prior year loss
reserves, net of related adjustments	(3.4		)%	(3.2		)%	(0.2	)
Combined ratio excluding catastrophic activity and prior year development	97.6		%	95.9		%	1.7

Gross premiums written by the insurance segment in the 2015 second quarter were 12.6%lower than in the 2014 second quarter while net premiums written were 12.1%lower than in the 2014 second quarter. Changes in foreign currency rates resulted in a decrease in net premiums written in the 2015 second quarter of approximately $8 million, or 1.4%, compared to the 2014 second quarter. The lower level of net premiums written reflected reductions in property, energy and marine business, programs, professional lines and alternative markets business. The decrease in property, energy and marine business reflected rate decreases and strategic reductions in certain lines, while the reduction in program business reflected underwriting decisions to terminate two programs. The decline in professional lines was primarily related to the timing of premiums on renewal accounts while the decrease in alternative markets primarily reflected changes in renewal dates on business acquired as part of the renewal rights agreement entered into in the 2014 second quarter. Net premiums earned by the insurance segment in the 2015 second quarter were 0.4%higher than in the 2014 second quarter, and reflect changes in net premiums written over the previous five quarters.

The 2015 second quarter loss ratio reflected 1.2 points of current year catastrophic activity, compared to 0.7 points in the 2014 second quarter. Estimated net favorable development in prior year loss reserves, before related adjustments, reduced the loss ratio by 3.6 points in the 2015 second quarter, compared to 3.8 points in the 2014 second quarter. The estimated net favorable development in the 2015 second quarter primarily resulted from better than expected claims emergence in short-tail business from more recent accident years. The balance of the increase in the 2015 second quarter loss ratio primarily resulted from a higher level of non-catastrophic large loss activity.

The underwriting expense ratio was 32.5% in the 2015 second quarter, compared to 32.0% in the 2014 second quarter. The acquisition expense ratio was 15.0% in the 2015 second quarter, compared to 15.1% in the 2014 second quarter. The operating expense ratio was 17.5% in the 2015 second quarter, compared to 16.9% in the 2014 second quarter, and consistent with the 2015 first quarter ratio.

7

Reinsurance Segment

	Three Months Ended June 30,
(U.S. dollars in thousands)	2015			2014			% Change
Gross premiums written	$	342,101		$	349,841		(2.2	)
Net premiums written	252,655			290,847			(13.1	)
Net premiums earned	273,965			335,627			(18.4	)
Other underwriting income	2,658			303			777.2
Underwriting income	68,073			81,904			(16.9	)
Underwriting Ratios							% Point Change
Loss ratio	40.6		%	44.8		%	(4.2	)
Acquisition expense ratio	21.3		%	19.7		%	1.6
Other operating expense ratio	14.2		%	11.2		%	3.0
Combined ratio	76.1		%	75.7		%	0.4
Catastrophic activity and prior year development:
Current accident year catastrophic events, net of
reinsurance and reinstatement premiums	3.6		%	3.8		%	(0.2	)
Net (favorable) adverse development in prior year loss
reserves, net of related adjustments	(21.5		)%	(20.2		)%	(1.3	)
Combined ratio excluding catastrophic activity and prior year development	94.0		%	92.1		%	1.9

Gross premiums written by the reinsurance segment in the 2015 second quarter were 2.2%lower than in the 2014 second quarter, while net premiums written were 13.1%lower than in the 2014 second quarter. The difference in gross versus net premiums written primarily reflects an increase in cessions to Watford Re in the 2015 second quarter compared to the 2014 second quarter, primarily in casualty lines. Changes in foreign currency rates resulted in a decrease in net premiums written in the 2015 second quarter of approximately $14 million, or 4.8%, compared to the 2014 second quarter. The lower level of net premiums written reflected decreases in other specialty and property catastrophe business. The decrease in other specialty reflected non-renewals and share decreases in response to current market conditions, primarily in proportional motor contracts. The lower level of property catastrophe business reflected non-renewals and share decreases, also in response to current market conditions. Net premiums earned in the 2015 second quarter were 18.4%lower than in the 2014 second quarter, and primarily reflect changes in net premiums written over the previous five quarters, including the mix and type of business written.

The 2015 second quarter loss ratio reflected 3.7 points of current year catastrophic activity, compared to 4.1 points of catastrophic activity in the 2014 second quarter. Estimated net favorable development in prior year loss reserves, before related adjustments, reduced the loss ratio by 21.1 points in the 2015 second quarter, compared to 20.6 points in the 2014 second quarter. The estimated net favorable development in the 2015 second quarter primarily resulted from better than expected claims emergence in short-tail business from more recent underwriting years and in longer-tail business across earlier underwriting years. The balance of the decrease in the 2015 second quarter loss ratio primarily resulted from a lower level of non-catastrophic large loss activity, partially offset by the effects of a lower level of property catastrophe business than in the 2014 second quarter.

The underwriting expense ratio was 35.5% in the 2015 second quarter, compared to 30.9% in the 2014 second quarter. The acquisition expense ratio for the 2015 second quarter was 21.3%, compared to 19.7% for the 2014 second quarter. The comparison of the acquisition expense ratios in each period is influenced by, among other things, the mix and type of business written and earned, including a lower contribution from property catastrophe business than in the 2014 second quarter, and an increase in the level of ceding commissions. The operating expense ratio for the 2015 second quarter was 14.2%, compared to 11.2% in the 2014 second quarter, primarily reflecting the lower level of net premiums earned.

8

Mortgage Segment

	Three Months Ended June 30,
(U.S. dollars in thousands)	2015			2014			% Change
Gross premiums written	$	68,572		$	55,476		23.6
Net premiums written	61,670			50,397			22.4
Net premiums earned	52,459			50,833			3.2
Other underwriting income	3,686			1,216			203.1
Underwriting income	16,627			8,807			88.8
Underwriting Ratios							% Point Change
Loss ratio	18.4		%	30.4		%	(12.0	)
Acquisition expense ratio	19.4		%	22.6		%	(3.2	)
Other operating expense ratio	37.5		%	32.0		%	5.5
Combined ratio	75.3		%	85.0		%	(9.7	)
Net (favorable) adverse development in prior year loss
reserves, net of related adjustments	(2.1		)%	0.1		%	(2.2	)
Combined ratio excluding prior year development	77.4		%	84.9		%	(7.5	)

The mortgage segment includes the results of Arch Mortgage Insurance Company (“Arch MI U.S.”), a leading provider of mortgage insurance products and services to the U.S. marketplace, along with the Company’s other global mortgage insurance, reinsurance and risk-sharing products.

Gross premiums written by the mortgage segment in the 2015 second quarter were 23.6%higher than in the 2014 second quarter, while net premiums written were 22.4%higher than in the 2014 second quarter. Net premiums written in the 2015 second quarter included $30.6 million of business underwritten by Arch MI U.S., compared to $24.6 million in the 2014 second quarter. The 2015 second quarter amount reflected $23.8 million from credit union clients and $6.8 million from banks and other mortgage originators while substantially all of the 2014 second quarter amount related to credit union clients. Premiums written on reinsurance treaties covering U.S. and international mortgages were higher by $5.3 million compared to the 2014 second quarter.

Net premiums earned for the 2015 second quarter were 3.2%higher than in the 2014 second quarter, reflecting the contribution of Arch MI U.S. business and higher earnings from the mortgage segment’s quota share reinsurance business. Other underwriting income, which is primarily related to risk-sharing products issued to GSEs and mortgage lenders, was $3.7 million for the 2015 second quarter, compared to $1.2 million for the 2014 second quarter, and in line with the $7.7 million in the 2015 first quarter when taking into consideration approximately $3.5 million of non-recurring income in the period.

The loss ratio for the 2015 second quarter continues to reflect relatively low levels of reported delinquencies and reflects new business generated by the mortgage segment. As noted previously, the mortgage segment’s underwriting expense ratio is expected to stay at an elevated level until Arch MI U.S. reaches scale. At June 30, 2015, the mortgage segment’s risk-in-force consisted of $6.05 billion from Arch MI U.S. and an additional $4.61 billion through the mortgage segment’s reinsurance and risk-sharing operations. Arch MI U.S. generated $2.71 billion of new insurance written (“NIW”) during the 2015 second quarter, of which approximately 50% was from bank channel clients. For additional information on the mortgage segment, please refer to the Company’s Financial Supplement.

9

Cautionary Note Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 (“PSLRA”) provides a “safe harbor” for forward-looking statements. This release or any other written or oral statements made by or on behalf of the Company may include forward-looking statements, which reflect the Company’s current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements. Forward-looking statements, for purposes of the PSLRA or otherwise, can generally be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” and similar statements of a future or forward-looking nature or their negative or variations or similar terminology.

Forward-looking statements involve the Company’s current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. Important factors that could cause actual events or results to differ materially from those indicated in such statements are discussed below and elsewhere in this release and in the Company’s periodic reports filed with the Securities and Exchange Commission (the “SEC”), and include:

• the Company’s ability to successfully implement its business strategy during “soft” as well as “hard” markets;

• acceptance of the Company’s business strategy, security and financial condition by rating agencies and regulators, as well as by brokers and its insureds and reinsureds;

• the Company’s ability to maintain or improve its ratings, which may be affected by its ability to raise additional equity or debt financings, by ratings agencies’ existing or new policies and practices, as well as other factors described herein;

• general economic and market conditions (including inflation, interest rates, foreign currency exchange rates, prevailing credit terms and the depth and duration of a recession) and conditions specific to the reinsurance and insurance markets (including the length and magnitude of the current “soft” market) in which the Company operates;

• competition, including increased competition, on the basis of pricing, capacity, coverage terms or other factors;

• developments in the world’s financial and capital markets and the Company’s access to such markets;

• the Company’s ability to successfully enhance, integrate and maintain operating procedures (including information technology) to effectively support its current and new business;

• the loss of key personnel;

• the integration of businesses the Company has acquired or may acquire into its existing operations;

• accuracy of those estimates and judgments utilized in the preparation of the Company’s financial statements, including those related to revenue recognition, insurance and other reserves, reinsurance recoverables, investment valuations, intangible assets, bad debts, income taxes, contingencies and litigation, and any determination to use the deposit method of accounting, which for a relatively new insurance and reinsurance company, like the Company, are even more difficult to make than those made in a mature company since relatively limited historical information has been reported to the Company through June 30, 2015;

• greater than expected loss ratios on business written by the Company and adverse development on claim and/or claim expense liabilities related to business written by its insurance and reinsurance subsidiaries;

• severity and/or frequency of losses;

• claims for natural or man-made catastrophic events in the Company’s insurance or reinsurance business could cause large losses and substantial volatility in its results of operations;

• acts of terrorism, political unrest and other hostilities or other unforecasted and unpredictable events;

• availability to the Company of reinsurance to manage its gross and net exposures and the cost of such reinsurance;

• the failure of reinsurers, managing general agents, third party administrators or others to meet their obligations to the Company;

10

• the timing of loss payments being faster or the receipt of reinsurance recoverables being slower than anticipated by the Company;

• the Company’s investment performance, including legislative or regulatory developments that may adversely affect the fair value of the Company’s investments;

• the impact of the continued weakness of the U.S., European countries and other key economies, projected budget deficits for the U.S., European countries and other governments and the consequences associated with possible additional downgrades of securities of the U.S., European countries and other governments by credit rating agencies, and the resulting effect on the value of securities in the Company’s investment portfolio as well as the uncertainty in the market generally;

• losses relating to aviation business and business produced by a certain managing underwriting agency for which the Company may be liable to the purchaser of its prior reinsurance business or to others in connection with the May 5, 2000 asset sale described in the Company’s periodic reports filed with the SEC;

• changes in accounting principles or policies or in the Company’s application of such accounting principles or policies;

• changes in the political environment of certain countries in which the Company operates, underwrites business or invests;

• statutory or regulatory developments, including as to tax policy matters and insurance and other regulatory matters such as the adoption of proposed legislation that would affect Bermuda-headquartered companies and/or Bermuda-based insurers or reinsurers and/or changes in regulations or tax laws applicable to the Company, its subsidiaries, brokers or customers; and

• the other matters set forth under Item 1A “Risk Factors”, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of the Company’s Annual Report on Form 10-K, as well as the other factors set forth in the Company’s other documents on file with the SEC, and management’s response to any of the aforementioned factors.

All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein or elsewhere. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Comments on Regulation G

Throughout this release, the Company presents its operations in the way it believes will be the most meaningful and useful to investors, analysts, rating agencies and others who use the Company’s financial information in evaluating the performance of the Company. This presentation includes the use of after-tax operating income or loss available to Arch common shareholders, which is defined as net income available to Arch common shareholders, excluding net realized gains or losses, net impairment losses recognized in earnings, equity in net income or loss of investment funds accounted for using the equity method and net foreign exchange gains or losses, net of income taxes. The presentation of after-tax operating income or loss available to Arch common shareholders is a “non-GAAP financial measure” as defined in Regulation G. The reconciliation of such measure to net income available to Arch common shareholders (the most directly comparable GAAP financial measure) in accordance with Regulation G is included on page 2 of this release.

The Company believes that net realized gains or losses, net impairment losses recognized in earnings, equity in net income or loss of investment funds accounted for using the equity method and net foreign exchange gains or losses in any particular period are not indicative of the performance of, or trends in, the Company’s business performance. Although net realized gains or losses, net impairment losses recognized in earnings, equity in net income or loss of investment funds accounted for using the equity method and net foreign exchange gains or losses are an integral part of the Company’s operations, the decision to realize investment gains or losses, the recognition of the change in the carrying value of investments accounted for using the fair value option in net realized gains or losses, the

11

recognition of net impairment losses, the recognition of equity in net income or loss of investment funds accounted for using the equity method and the recognition of foreign exchange gains or losses are independent of the insurance underwriting process and result, in large part, from general economic and financial market conditions. Furthermore, certain users of the Company’s financial information believe that, for many companies, the timing of the realization of investment gains or losses is largely opportunistic. In addition, net impairment losses recognized in earnings on the Company’s investments represent other-than-temporary declines in expected recovery values on securities without actual realization. The use of the equity method on certain of the Company’s investments in certain funds that invest in fixed maturity securities is driven by the ownership structure of such funds (either limited partnerships or limited liability companies). In applying the equity method, these investments are initially recorded at cost and are subsequently adjusted based on the Company’s proportionate share of the net income or loss of the funds (which include changes in the fair value of the underlying securities in the funds). This method of accounting is different from the way the Company accounts for its other fixed maturity securities and the timing of the recognition of equity in net income or loss of investment funds accounted for using the equity method may differ from gains or losses in the future upon sale or maturity of such investments. Due to these reasons, the Company excludes net realized gains or losses, net impairment losses recognized in earnings, equity in net income or loss of investment funds accounted for using the equity method and net foreign exchange gains or losses from the calculation of after-tax operating income or loss available to Arch common shareholders.

The Company believes that showing net income available to Arch common shareholders exclusive of the items referred to above reflects the underlying fundamentals of the Company’s business since the Company evaluates the performance of and manages its business to produce an underwriting profit. In addition to presenting net income available to Arch common shareholders, the Company believes that this presentation enables investors and other users of the Company’s financial information to analyze the Company’s performance in a manner similar to how the Company’s management analyzes performance. The Company also believes that this measure follows industry practice and, therefore, allows the users of the Company’s financial information to compare the Company’s performance with its industry peer group. The Company believes that the equity analysts and certain rating agencies which follow the Company and the insurance industry as a whole generally exclude these items from their analyses for the same reasons.

In addition, the Company’s segment information includes the use of a combined ratio excluding catastrophic activity and prior year development for the insurance segment and reinsurance segment and a combined ratio excluding prior year development for the mortgage segment. These ratios are “non-GAAP financial measures” as defined in Regulation G. The reconciliation of such measures to the combined ratio (the most directly comparable GAAP financial measure) in accordance with Regulation G are shown on the individual segment pages. The Company’s management utilizes the adjusted combined ratio excluding current accident year catastrophic events and favorable or adverse development in prior year loss reserves in its analysis of the core underwriting performance of each of its underwriting segments.

12

EX-99.2

Exhibit 99.2

	Waterloo House, Ground Floor
	100 Pitts Bay Road
	Pembroke HM 08 Bermuda
	441-278-9250
	441-278-9255 fax
	Contact:
	Mark D. Lyons
	Executive Vice President and Chief Financial Officer

Financial Supplement

Financial Information

as of June 30, 2015

The following financial supplement is provided to assist in your understanding of Arch Capital Group Ltd.

This report is for informational purposes only.  It should be read in conjunction with documents filed by Arch Capital Group Ltd. with the U.S. Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and the Quarterly Reports on Form 10-Q.  Please refer to the Company’s website at www.archcapgroup.com for further information describing Arch Capital Group Ltd. 

Arch Capital Group Ltd. and Subsidiaries

Table of Contents

			Page
I.	Financial Highlights		3
II.	Consolidated Financial Statements
	a.	Consolidated Statements of Income	4
	b.	Consolidated Balance Sheets	5
	c.	Consolidated Statements of Changes in Shareholders’ Equity	6
	d.	Consolidated Statements of Cash Flows	7
III.	Segment Information
	a.	Overview	8
	b.	Consolidated Results	10
	c.	Insurance Segment Results	14
	d.	Reinsurance Segment Results	16
	e.	Mortgage Segment Results	18
IV.	Investment Information
	a.	Investable Asset Summary and Investment Portfolio Metrics	21
	b.	Composition of Fixed Maturities	22
	c.	Credit Quality Distribution and Maturity Profile	23
	d.	Analysis of Corporate Exposures	24
	e.	Structured Securities	25
	f.	Bank Loan Investments	26
	g.	Eurozone Investments	27
V.	Other
	a.	Comments on Regulation G	28
	b.	Operating Income Reconciliation and Annualized Operating Return on Average Common Equity	29
	c.	Operating Income and Effective Tax Rate Calculations	30
	d.	Capital Structure and Share Repurchase Activity	31

1

Arch Capital Group Ltd. and Subsidiaries

Basis of Presentation

Basis of Presentation

All financial information contained herein is unaudited, however, certain information relating to the consolidated balance sheet at December 31, 2014 is derived from or agrees to audited financial information. The Company has reclassified the presentation of certain prior year information to conform to the current presentation. Such reclassifications had no effect on the Company’s net income, shareholders’ equity or cash flows. Unless otherwise noted, all data is in thousands, except for share and per share amounts and ratio information.

In March 2014, the Company invested $100.0 million to acquire approximately 11% of Watford Holdings Ltd.’s common equity and a warrant to purchase additional common equity. Watford Holdings Ltd. is the parent of Watford Re Ltd., a multi-line Bermuda reinsurance company (together with Watford Holdings Ltd., “Watford Re”). In accordance with GAAP, Watford is considered a variable interest entity and the Company concluded that it is the primary beneficiary of Watford Re. As such, 100% of the results of Watford Re are included in the Company’s consolidated financial statements. The portion of Watford Re’s earnings owned by third parties is recorded in the consolidated statements of income as ‘amounts attributable to noncontrolling interests.’ In addition, the Company reflects Watford Re’s redeemable preference shares in the mezzanine section of the Company’s consolidated balance sheets as ‘redeemable noncontrolling interests’ because they have redemption features that are not solely within the control of Watford Re.

Cautionary Note Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This release or any other written or oral statements made by or on behalf of Arch Capital Group Ltd. and its subsidiaries may include forward-looking statements, which reflect the Company’s current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements.

Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or their negative or variations or similar terminology. Forward-looking statements involve the Company’s current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: adverse general economic and market conditions; increased competition; pricing and policy term trends; fluctuations in the actions of rating agencies and the Company’s ability to maintain and improve the Company’s ratings; investment performance; the loss of key personnel; the adequacy of the Company’s loss reserves, severity and/or frequency of losses, greater than expected loss ratios and adverse development on claim and/or claim expense liabilities; greater frequency or severity of unpredictable natural and man-made catastrophic events; the impact of acts of terrorism and acts of war; changes in regulations and/or tax laws in the United States or elsewhere; the Company’s ability to successfully integrate, establish and maintain operating procedures as well as integrate the businesses we have acquired or may acquire into the existing operations; changes in accounting principles or policies; material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements; availability and cost to the Company of reinsurance to manage gross and net exposures; the failure of others to meet their obligations to the Company; and other factors identified in the Company’s filings with the U.S. Securities and Exchange Commission.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein or elsewhere. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on the Company’s behalf are expressly qualified in their entirety by these cautionary statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

2

Arch Capital Group Ltd. and Subsidiaries

Financial Highlights

The financial highlights below exclude amounts reflected in the ‘other’ segment (Watford Re):	Three Months Ended								Six Months Ended
	June 30,								June 30,
(U.S. Dollars in thousands, except share data)	2015			2014			Change		2015			2014			Change
Underwriting results:
Gross premiums written	$	1,155,253		$	1,256,934		(8.1	)%	$	2,466,931		$	2,552,070		(3.3	)%
Net premiums written	823,392			920,126			(10.5	)%	1,765,809			1,952,922			(9.6	)%
Net premiums earned	836,249			894,172			(6.5	)%	1,674,247			1,751,786			(4.4	)%
Underwriting income	108,343			125,133			(13.4	)%	223,046			258,711			(13.8	)%
Loss ratio	52.8		%	53.4		%	(0.6	)	52.9		%	52.1		%	0.8
Acquisition expense ratio	17.4		%	17.2		%	0.2		17.2		%	17.9		%	(0.7	)
Other operating expense ratio	17.7		%	15.6		%	2.1		17.6		%	15.5		%	2.1
Combined ratio	87.9		%	86.2		%	1.7		87.7		%	85.5		%	2.2
Net investment income	$	67,171		$	72,458		(7.3	)%	$	137,459		$	139,451		(1.4	)%
Per diluted share	$	0.53		$	0.53		—	%	$	1.08		$	1.02		5.9	%
Net income available to Arch common shareholders	$	110,305		$	202,531		(45.5	)%	$	388,157		$	379,547		2.3	%
Per diluted share	$	0.88		$	1.48		(40.5	)%	$	3.05		$	2.78		9.7	%
After-tax operating income available to Arch common shareholders (1)	$	145,956		$	160,669		(9.2	)%	$	295,802		$	325,073		(9.0	)%
Per diluted share	$	1.16		$	1.17		(0.9	)%	$	2.33		$	2.38		(2.1	)%
Comprehensive income available to Arch	$	24,208		$	318,180		(92.4	)%	$	336,711		$	549,435		(38.7	)%
Cash flow from operations	$	231,762		$	254,168		(8.8	)%	$	247,361		$	451,563		(45.2	)%
Diluted weighted average common shares and common share equivalents outstanding	125,885,420			136,889,944			(8.0	)%	127,156,713			136,716,889			(7.0	)%
Financial measures:
Change in book value per common share during period	(0.6		)%	5.3		%	(5.9	)	4.2		%	9.8		%	(5.6	)
Annualized operating return on average common equity	9.9		%	11.2		%	(1.3	)	10.2		%	11.6		%	(1.4	)
Total return on investments (2)
Including effects of foreign exchange	(0.04		)%	1.80		%	-184 bps		1.07		%	2.84		%	-177 bps
Excluding effects of foreign exchange	(0.38		)%	1.63		%	-201 bps		1.68		%	2.67		%	-99 bps

(1) See Comments on Regulation G.

(2) Total return on investments includes net investment income, equity in net income (loss) of investment funds accounted for using the equity method, net realized gains and losses and the change in unrealized gains and losses generated by the Company’s investment portfolio. Total return is calculated on a pre-tax basis and before investment expenses.

3

Arch Capital Group Ltd. and Subsidiaries

Consolidated Statements of Income

(U.S. Dollars in thousands, except share data)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2015			2015			2014			2014			2014			2015			2014
Revenues
Net premiums written	$	943,580		$	1,066,995		$	895,481		$	959,539		$	971,928		$	2,010,575		$	2,036,918
Change in unearned premiums	(142		)	(156,731		)	27,684			(55,888		)	(64,776		)	(156,873		)	(269,986		)
Net premiums earned	943,438			910,264			923,165			903,651			907,152			1,853,702			1,766,932
Net investment income	86,963			78,994			82,496			80,105			72,990			165,957			139,984
Net realized gains (losses)	(35,725		)	83,348			10,561			18,515			54,144			47,623			73,841
Net impairment losses recognized in earnings	(1,113		)	(5,799		)	(3,837		)	(8,593		)	(14,749		)	(6,912		)	(17,720		)
Other underwriting income	7,717			11,536			4,825			1,702			2,033			19,253			3,615
Equity in net income of investment funds accounted for using the equity method	16,167			5,889			2,424			4,966			9,240			22,056			12,493
Other income (loss)	2,205			(1,888		)	(5,183		)	(7,815		)	4,850			317			2,746
Total revenues	1,019,652			1,082,344			1,014,451			992,531			1,035,660			2,101,996			1,981,891
Expenses
Losses and loss adjustment expenses	(519,426		)	(493,716		)	(495,819		)	(501,673		)	(485,518		)	(1,013,142		)	(921,758		)
Acquisition expenses	(175,425		)	(163,076		)	(175,215		)	(163,547		)	(158,158		)	(338,501		)	(318,500		)
Other operating expenses	(168,608		)	(157,882		)	(154,595		)	(149,480		)	(156,350		)	(326,490		)	(302,149		)
Interest expense	(4,011		)	(12,736		)	(12,744		)	(4,152		)	(14,334		)	(16,747		)	(28,738		)
Net foreign exchange gains (losses)	(19,583		)	66,501			36,570			56,031			(2,294		)	46,918			(8,857		)
Total expenses	(887,053		)	(760,909		)	(801,803		)	(762,821		)	(816,654		)	(1,647,962		)	(1,580,002		)
Income before income taxes	132,599			321,435			212,648			229,710			219,006			454,034			401,889
Income tax expense	(6,780		)	(12,678		)	(5,514		)	(6,446		)	(7,289		)	(19,458		)	(11,027		)
Net income	125,819			308,757			207,134			223,264			211,717			434,576			390,862
Amounts attributable to noncontrolling interests	(10,029		)	(25,421		)	8,030			5,411			(3,701		)	(35,450		)	(346		)
Net income attributable to Arch	115,790			283,336			215,164			228,675			208,016			399,126			390,516
Preferred dividends	(5,485		)	(5,484		)	(5,485		)	(5,484		)	(5,485		)	(10,969		)	(10,969		)
Net income available to Arch common shareholders	$	110,305		$	277,852		$	209,679		$	223,191		$	202,531		$	388,157		$	379,547
Comprehensive income available to Arch	$	24,208		$	312,503		$	241,834		$	96,978		$	318,180		$	336,711		$	549,435
Net income per common share
Basic	$	0.91		$	2.24		$	1.65		$	1.69		$	1.53		$	3.16		$	2.87
Diluted	$	0.88		$	2.16		$	1.60		$	1.64		$	1.48		$	3.05		$	2.78
Weighted average common shares and common share equivalents outstanding
Basic	121,719,214			124,209,276			126,857,041			131,945,962			132,650,634			122,957,384			132,256,462
Diluted	125,885,420			128,451,054			130,855,218			135,876,605			136,889,944			127,156,713			136,716,889

4

Arch Capital Group Ltd. and Subsidiaries

Consolidated Balance Sheets

(U.S. Dollars in thousands, except share data)	June 30,			March 31,			December 31,			September 30,			June 30,
	2015			2015			2014			2014			2014
Assets
Investments:
Fixed maturities available for sale, at fair value	$	9,927,603		$	10,427,810		$	10,750,770		$	10,733,382		$	10,714,532
Short-term investments available for sale, at fair value	875,727			855,032			797,226			748,659			977,058
Investment of funds received under securities lending, at fair value	377,897			257,059			44,301			104,252			82,603
Equity securities available for sale, at fair value	701,623			687,713			658,182			582,075			608,820
Other investments available for sale, at fair value	377,677			329,677			296,224			431,833			457,567
Investments accounted for using the fair value option	2,613,487			2,421,522			2,425,053			2,198,693			2,041,018
Investments accounted for using the equity method	472,926			412,367			349,014			307,252			281,464
Total investments	15,346,940			15,391,180			15,320,770			15,106,146			15,163,062
Cash	525,074			471,012			485,702			663,726			926,443
Accrued investment income	80,129			73,282			74,316			65,042			64,869
Fixed maturities and short-term investments pledged under securities lending, at fair value	373,969			253,115			50,802			107,547			87,031
Premiums receivable	1,181,636			1,116,389			948,695			1,027,204			1,098,692
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses	1,831,227			1,788,619			1,812,845			1,814,190			1,796,403
Contractholder receivables	1,393,138			1,339,433			1,309,192			1,286,799			1,234,392
Prepaid reinsurance premiums	442,141			421,908			377,078			404,661			430,214
Deferred acquisition costs, net	448,647			442,775			414,525			409,174			399,385
Receivable for securities sold	454,057			400,113			78,170			672,259			261,669
Goodwill and intangible assets	102,518			106,745			109,539			111,528			118,721
Other assets	905,449			1,050,520			1,024,447			939,951			986,566
Total assets	$	23,084,925		$	22,855,091		$	22,006,081		$	22,608,227		$	22,567,447
Liabilities
Reserve for losses and loss adjustment expenses	$	9,082,281		$	8,928,950		$	9,036,448		$	8,958,734		$	9,018,989
Unearned premiums	2,442,923			2,400,834			2,231,578			2,303,247			2,299,692
Reinsurance balances payable	252,462			200,444			219,312			244,379			263,347
Contractholder payables	1,393,138			1,339,433			1,309,192			1,286,799			1,234,392
Deposit accounting liabilities	277,523			284,828			327,384			349,850			397,337
Senior notes	791,222			791,181			791,141			791,101			791,062
Revolving credit agreement borrowings	100,000			100,000			100,000			100,000			100,000
Securities lending payable	383,965			263,216			50,529			110,736			89,298
Payable for securities purchased	468,015			554,625			128,413			740,953			552,075
Other liabilities	756,005			693,680			693,438			639,943			580,190
Total liabilities	15,947,534			15,557,191			14,887,435			15,525,742			15,326,382
Redeemable noncontrolling interests	204,996			219,604			219,512			219,419			219,326
Shareholders’ equity
Non-cumulative preferred shares	325,000			325,000			325,000			325,000			325,000
Common shares	576			573			572			571			570
Additional paid-in capital	437,533			399,757			383,073			366,408			353,208
Retained earnings	7,242,728			7,132,423			6,854,571			6,644,892			6,421,701
Accumulated other comprehensive income, net of deferred income tax	66,441			158,023			128,856			102,186			233,883
Common shares held in treasury, at cost	(1,934,763		)	(1,727,074		)	(1,562,019		)	(1,358,011		)	(1,104,963		)
Total shareholders’ equity available to Arch	6,137,515			6,288,702			6,130,053			6,081,046			6,229,399
Non-redeemable noncontrolling interests	794,880			789,594			769,081			782,020			792,340
Total shareholders’ equity	6,932,395			7,078,296			6,899,134			6,863,066			7,021,739
Total liabilities, noncontrolling interests and shareholders’ equity	$	23,084,925		$	22,855,091		$	22,006,081		$	22,608,227		$	22,567,447
Common shares outstanding, net of treasury shares	122,403,909			124,760,841			127,367,934			130,700,619			135,030,886
Book value per common share (1)	$	47.49		$	47.80		$	45.58		$	44.04		$	43.73

(1)    Excludes the effects of stock options and restricted stock units outstanding.

5

Arch Capital Group Ltd. and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

(U.S. Dollars in thousands)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2015			2015			2014			2014			2014			2015			2014
Non-Cumulative Preferred Shares
Balance at beginning and end of period	$	325,000		$	325,000		$	325,000		$	325,000		$	325,000		$	325,000		$	325,000
Common Shares
Balance at beginning of period	573			572			571			570			567			572			565
Common shares issued, net	3			1			1			1			3			4			5
Balance at end of period	576			573			572			571			570			576			570
Additional Paid-in Capital
Balance at beginning of period	399,757			383,073			366,408			353,208			320,503			383,073			299,517
Common shares issued, net	7,378			—			3,189			41			6,360			7,378			6,360
Exercise of stock options	6,256			3,368			3,771			3,658			3,179			9,624			11,233
Amortization of share-based compensation	22,806			13,238			9,671			9,491			21,452			36,044			35,627
Other	1,336			78			34			10			1,714			1,414			471
Balance at end of period	437,533			399,757			383,073			366,408			353,208			437,533			353,208
Retained Earnings
Balance at beginning of period	7,132,423			6,854,571			6,644,892			6,421,701			6,219,170			6,854,571			6,042,154
Net income	125,819			308,757			207,134			223,264			211,717			434,576			390,862
Amounts attributable to noncontrolling interests	(10,029		)	(25,421		)	8,030			5,411			(3,701		)	(35,450		)	(346		)
Preferred share dividends	(5,485		)	(5,484		)	(5,485		)	(5,484		)	(5,485		)	(10,969		)	(10,969		)
Balance at end of period	7,242,728			7,132,423			6,854,571			6,644,892			6,421,701			7,242,728			6,421,701
Accumulated Other Comprehensive Income
Balance at beginning of period	158,023			128,856			102,186			233,883			123,719			128,856			74,964
Unrealized appreciation in value of available-for-sale investments, net of deferred income tax:
Balance at beginning of period	213,522			161,598			122,837			230,939			130,796			161,598			80,692
Unrealized holding gains (losses) arising during period, net of reclassification adjustment	(103,149		)	53,372			39,081			(108,102		)	100,143			(49,777		)	150,247
Portion of other-than-temporary impairment losses recognized in other comprehensive income, net of deferred income tax	(13		)	(1,448		)	(320		)	—			—			(1,461		)	—
Balance at end of period	110,360			213,522			161,598			122,837			230,939			110,360			230,939
Foreign currency translation adjustments:
Balance at beginning of period	(55,499		)	(32,742		)	(20,651		)	2,944			(7,077		)	(32,742		)	(5,728		)
Foreign currency translation adjustments	11,580			(22,757		)	(12,091		)	(23,595		)	10,021			(11,177		)	8,672
Balance at end of period	(43,919		)	(55,499		)	(32,742		)	(20,651		)	2,944			(43,919		)	2,944
Balance at end of period	66,441			158,023			128,856			102,186			233,883			66,441			233,883
Common Shares Held in Treasury, at Cost
Balance at beginning of period	(1,727,074		)	(1,562,019		)	(1,358,011		)	(1,104,963		)	(1,096,826		)	(1,562,019		)	(1,094,704		)
Shares repurchased for treasury	(207,689		)	(165,055		)	(204,008		)	(253,048		)	(8,137		)	(372,744		)	(10,259		)
Balance at end of period	(1,934,763		)	(1,727,074		)	(1,562,019		)	(1,358,011		)	(1,104,963		)	(1,934,763		)	(1,104,963		)
Total shareholders’ equity available to Arch	6,137,515			6,288,702			6,130,053			6,081,046			6,229,399			6,137,515			6,229,399
Non-redeemable noncontrolling interests	794,880			789,594			769,081			782,020			792,340			794,880			792,340
Total shareholders’ equity	$	6,932,395		$	7,078,296		$	6,899,134		$	6,863,066		$	7,021,739		$	6,932,395		$	7,021,739

6

Arch Capital Group Ltd. and Subsidiaries

Consolidated Statements of Cash Flows

(U.S. Dollars in thousands)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2015			2015			2014			2014			2014			2015			2014
Operating Activities
Net income	$	125,819		$	308,757		$	207,134		$	223,264		$	211,717		$	434,576		$	390,862
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized (gains) losses	27,089			(87,907		)	(14,478		)	(25,513		)	(65,153		)	(60,818		)	(87,520		)
Net impairment losses included in earnings	1,113			5,799			3,837			8,593			14,749			6,912			17,720
Equity in net income or loss of investment funds accounted for using the equity method and other income or loss	(8,379		)	(1,970		)	9,556			3,919			(9,694		)	(10,349		)	(135		)
Share-based compensation	22,806			13,238			9,671			9,491			21,452			36,044			35,627
Changes in:
Reserve for losses and loss adjustment expenses, net of unpaid losses and loss adjustment expenses recoverable	37,289			54,327			61,956			33,781			50,148			91,616			60,474
Unearned premiums, net of prepaid reinsurance premiums	142			156,731			(27,684		)	55,888			64,776			156,873			269,986
Premiums receivable	(14,395		)	(192,247		)	62,731			46,187			(83,337		)	(206,642		)	(325,953		)
Deferred acquisition costs, net	(2,705		)	(36,304		)	(9,464		)	(16,298		)	(13,834		)	(39,009		)	(55,822		)
Reinsurance balances payable	35,679			(16,022		)	(22,922		)	(16,182		)	60,375			19,657			65,803
Other liabilities	(45,985		)	(48,856		)	(16,132		)	74,756			(16,152		)	(94,841		)	43,133
Other items, net	121,265			(70,085		)	(26,734		)	(51,290		)	19,847			51,180			38,888
Net Cash Provided By Operating Activities	299,738			85,461			237,471			346,596			254,894			385,199			453,063
Investing Activities
Purchases of fixed maturity investments	(7,610,660		)	(7,030,731		)	(6,714,417		)	(7,719,114		)	(7,180,677		)	(14,641,391		)	(14,311,748		)
Purchases of equity securities	(162,672		)	(125,863		)	(154,239		)	(191,891		)	(85,460		)	(288,535		)	(174,687		)
Purchases of other investments	(588,283		)	(685,497		)	(660,790		)	(573,704		)	(718,533		)	(1,273,780		)	(1,022,987		)
Proceeds from sales of fixed maturity investments	7,498,060			6,857,459			6,538,323			7,080,015			6,190,573			14,355,519			13,204,854
Proceeds from sales of equity securities	146,437			125,906			106,328			206,347			49,073			272,343			98,687
Proceeds from sales, redemptions and maturities of other investments	473,412			605,263			612,099			412,194			287,531			1,078,675			618,707
Proceeds from redemptions and maturities of fixed maturities	202,327			272,657			126,266			204,689			263,556			474,984			432,040
Proceeds from investment in joint venture	40,000			—			—			—			—			40,000			—
Net sales (purchases) of short-term investments	(62,576		)	66,283			(101,262		)	248,084			274,042			3,707			430,304
Change in cash collateral related to securities lending	(12,800		)	(5,529		)	60,207			(21,438		)	14,032			(18,329		)	18,701
Purchase of business, net of cash acquired	3,250			(2,432		)	(1,528		)	—			—			818			(235,578		)
Purchases of furniture, equipment and other	(10,268		)	(32,897		)	(5,308		)	(4,215		)	(4,978		)	(43,165		)	(10,360		)
Net Cash Provided By (Used For) Investing Activities	(83,773		)	44,619			(194,321		)	(359,033		)	(910,841		)	(39,154		)	(952,067		)
Financing Activities
Purchases of common shares under share repurchase program	(198,979		)	(162,898		)	(202,218		)	(251,919		)	—			(361,877		)	—
Proceeds from common shares issued, net	2,590			(412		)	3,579			727			(500		)	2,178			2,521
Change in cash collateral related to securities lending	12,800			5,529			(60,207		)	21,438			(14,032		)	18,329			(18,701		)
Third party investment in non-redeemable noncontrolling interests	—			—			—			—			—			—			796,903
Third party investment in redeemable noncontrolling interests	—			—			—			—			32,340			—			219,233
Dividends paid to redeemable noncontrolling interests	(4,497		)	(4,816		)	(4,816		)	(4,816		)	(4,816		)	(9,313		)	(4,816		)
Other	25,239			29,779			58,414			1,853			3,006			55,018			4,706
Preferred dividends paid	(5,485		)	(5,484		)	(5,485		)	(5,484		)	(5,485		)	(10,969		)	(10,969		)
Net Cash Provided By (Used For) Financing Activities	(168,332		)	(138,302		)	(210,733		)	(238,201		)	10,513			(306,634		)	988,877
Effects of exchange rate changes on foreign currency cash	6,429			(6,468		)	(10,441		)	(12,079		)	2,272			(39		)	2,513
Increase (decrease) in cash	54,062			(14,690		)	(178,024		)	(262,717		)	(643,162		)	39,372			492,386
Cash beginning of period	471,012			485,702			663,726			926,443			1,569,605			485,702			434,057
Cash end of period	$	525,074		$	471,012		$	485,702		$	663,726		$	926,443		$	525,074		$	926,443
Income taxes paid, net	$	22,423		$	3,569		$	7,588		$	5,056		$	6,679		$	25,992		$	8,279
Interest paid	$	24,565		$	511		$	24,318		$	415		$	21,292		$	25,076		$	21,696

7

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Overview

The Company classifies its businesses into three underwriting segments — insurance, reinsurance and mortgage — and two other operating segments — ‘other’ and corporate (non-underwriting). The Company’s Insurance, Reinsurance and Mortgage segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to the Company’s chief operating decision makers, the Chairman, President and Chief Executive Officer of ACGL and the Chief Financial Officer of ACGL. The chief operating decision makers do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis. Management measures segment performance for its three underwriting segments based on underwriting income or loss. The Company does not manage its assets by underwriting segment and, accordingly, investment income is not allocated to each underwriting segment.

The Company determined its reportable operating segments using the management approach described in accounting guidance regarding disclosures about segments of an enterprise and related information. The accounting policies of the segments are the same as those used for the preparation of the Company’s consolidated financial statements. Intersegment business is allocated to the segment accountable for the underwriting results. The Corporate (non-underwriting) segment results include net investment income, other income (loss), other expenses incurred by the Company, interest expense, net realized gains or losses, net impairment losses included in earnings, equity in net income (loss) of investment funds accounted for using the equity method, net foreign exchange gains or losses, income taxes and items related to the Company’s non-cumulative preferred shares. Such amounts exclude the results of the ‘other’ segment.

Insurance Segment

The insurance segment consists of the Company’s insurance underwriting units which offer specialty product lines on a worldwide basis. Product lines include:

• Construction and national accounts: primary and excess casualty coverages to middle and large accounts in the construction industry and a wide range of products for middle and large national accounts, specializing in loss sensitive primary casualty insurance programs (including large deductible, self-insured retention and retrospectively rated programs).

• Excess and surplus casualty: primary and excess casualty insurance coverages, including middle market energy business, and contract binding, which primarily provides casualty coverage through a network of appointed agents to small and medium risks.

• Lenders products: collateral protection, debt cancellation and service contract reimbursement products to banks, credit unions, automotive dealerships and original equipment manufacturers and other specialty programs that pertain to automotive lending and leasing.

• Professional lines: directors’ and officers’ liability, errors and omissions liability, employment practices liability, fiduciary liability, crime, professional indemnity and other financial related coverages for corporate, private equity, venture capital, real estate investment trust, limited partnership, financial institution and not-for-profit clients of all sizes and medical professional and general liability insurance coverages for the healthcare industry. The business is predominately written on a claims-made basis.

• Programs: primarily package policies, underwriting workers’ compensation and umbrella liability business in support of desirable package programs, targeting program managers with unique expertise and niche products offering general liability, commercial automobile, inland marine and property business with minimal catastrophe exposure.

• Property, energy, marine and aviation: primary and excess general property insurance coverages, including catastrophe-exposed property coverage, for commercial clients. Coverages for marine include hull, war, specie and liability. Aviation and stand alone terrorism are also offered.

• Travel, accident and health: specialty travel and accident and related insurance products for individual, group travelers, travel agents and suppliers, as well as accident and health, which provides accident, disability and medical plan insurance coverages for employer groups, medical plan members, students and other participant groups.

• Other: includes alternative market risks (including captive insurance programs), excess workers’ compensation and employer’s liability insurance coverages for qualified self-insured groups, associations and trusts, and contract and commercial surety coverages, including contract bonds (payment and performance bonds) primarily for medium and large contractors and commercial surety bonds for Fortune 1,000 companies and smaller transaction business programs.

8

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Overview

Reinsurance Segment

The reinsurance segment consists of the Company’s reinsurance underwriting units which offer specialty product lines on a worldwide basis. Product lines include:

• Casualty: provides coverage to ceding company clients on third party liability and workers’ compensation exposures from ceding company clients, primarily on a treaty basis. Exposures include, among others, executive assurance, professional liability, workers’ compensation, excess and umbrella liability, excess motor and healthcare business.

• Marine and aviation: provides coverage for energy, hull, cargo, specie, liability and transit, and aviation business, including airline and general aviation risks. Business written may also include space business, which includes coverages for satellite assembly, launch and operation for commercial space programs.

• Other specialty: provides coverage to ceding company clients for proportional motor and other lines including surety, accident and health, workers’ compensation catastrophe, agriculture, trade credit and political risk.

• Property catastrophe: provides protection for most catastrophic losses that are covered in the underlying policies written by reinsureds, including hurricane, earthquake, flood, tornado, hail and fire, and coverage for other perils on a case-by-case basis. Property catastrophe reinsurance provides coverage on an excess of loss basis when aggregate losses and loss adjustment expense from a single occurrence of a covered peril exceed the retention specified in the contract.

• Property excluding property catastrophe: provides coverage for both personal lines and commercial property exposures and principally covers buildings, structures, equipment and contents. The primary perils in this business include fire, explosion, collapse, riot, vandalism, wind, tornado, flood and earthquake. Business is assumed on both a proportional and excess of loss basis. In addition, facultative business is written which focuses on commercial property risks on an excess of loss basis.

• Other. includes life reinsurance business on both a proportional and non-proportional basis, casualty clash business and, in limited instances, non-traditional business which is intended to provide insurers with risk management solutions that complement traditional reinsurance.

Mortgage Segment

The mortgage segment includes the results of Arch Mortgage Insurance Company (“Arch MI U.S.”), a leading provider of mortgage insurance products and services to the U.S. marketplace, along with the Company’s other global mortgage insurance, reinsurance and risk-sharing products. Arch MI U.S. is approved as an eligible mortgage insurer by Fannie Mae and Freddie Mac (each a government sponsored enterprise, or “GSE”).

Other Segment

The ‘other’ segment includes the results of Watford Holdings Ltd. and its subsidiary Watford Re Ltd., a multi-line Bermuda reinsurance company, which was launched in March 2014. The Company acts as Watford’s reinsurance manager, and Highbridge Principal Strategies, LLC, a subsidiary of JPMorgan Chase & Co., manages Watford’s investment assets, each under a long term services agreement. The Company invested $100 million to acquire approximately 11% of Watford’s common equity and a warrant to purchase additional common equity. Watford has its own management and board of directors and is responsible for the overall profitability of the ‘other’ segment. The Company is required to consolidate the results of Watford in its financial statements. The portion of Watford’s earnings attributable to third party investors is recorded in the consolidated statements of income as ‘amounts attributable to noncontrolling interests.’ Management measures segment performance for the ‘other’ segment based on net income or loss.

9

Arch Capital Group Ltd. and Subsidiaries

Segment Information

(U.S. Dollars in thousands)	Three Months Ended
	June 30, 2015
	Insurance			Reinsurance			Mortgage			Sub-total			Other			Total
Gross premiums written (1)	$	744,810		$	342,101		$	68,572		$	1,155,253		$	127,954		$	1,199,209
Premiums ceded	(235,743		)	(89,446		)	(6,902		)	(331,861		)	(7,766		)	(255,629		)
Net premiums written	509,067			252,655			61,670			823,392			120,188			943,580
Change in unearned premiums	758			21,310			(9,211		)	12,857			(12,999		)	(142		)
Net premiums earned	509,825			273,965			52,459			836,249			107,189			943,438
Other underwriting income	521			2,658			3,686			6,865			852			7,717
Losses and loss adjustment expenses	(320,926		)	(111,183		)	(9,639		)	(441,748		)	(77,678		)	(519,426		)
Acquisition expenses, net	(76,723		)	(58,360		)	(10,200		)	(145,283		)	(30,142		)	(175,425		)
Other operating expenses	(89,054		)	(39,007		)	(19,679		)	(147,740		)	(3,450		)	(151,190		)
Underwriting income (loss)	$	23,643		$	68,073		$	16,627		108,343			(3,229		)	105,114
Net investment income										67,171			19,792			86,963
Net realized gains (losses)										(26,860		)	(8,865		)	(35,725		)
Net impairment losses recognized in earnings										(1,113		)	—			(1,113		)
Equity in net income of investment funds accounted for using the equity method										16,167			—			16,167
Other income (loss)										2,205			—			2,205
Other expenses										(17,418		)	—			(17,418		)
Interest expense										(4,011		)	—			(4,011		)
Net foreign exchange gains (losses)										(22,571		)	2,988			(19,583		)
Income before income taxes										121,913			10,686			132,599
Income tax expense										(6,780		)	—			(6,780		)
Net income										115,133			10,686			125,819
Dividends attributable to redeemable noncontrolling interests										—			(4,743		)	(4,743		)
Amounts attributable to nonredeemable noncontrolling interests										—			(5,286		)	(5,286		)
Net income available to Arch										115,133			657			115,790
Preferred dividends										(5,485		)	—			(5,485		)
Net income available to Arch common shareholders										$	109,648		$	657		$	110,305
Underwriting Ratios
Loss ratio	62.9		%	40.6		%	18.4		%	52.8		%	72.5		%	55.1		%
Acquisition expense ratio	15.0		%	21.3		%	19.4		%	17.4		%	28.1		%	18.6		%
Other operating expense ratio	17.5		%	14.2		%	37.5		%	17.7		%	3.2		%	16.0		%
Combined ratio	95.4		%	76.1		%	75.3		%	87.9		%	103.8		%	89.7		%
Net premiums written to gross premiums written	68.3		%	73.9		%	89.9		%	71.3		%	93.9		%	78.7		%
Total investable assets										$	14,513,554		$	1,340,574		$	15,854,128
Total assets										21,323,611			1,761,314			23,084,925
Total liabilities										15,299,256			648,278			15,947,534

(1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions and are included in the gross premiums written of each segment. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total.

10

Arch Capital Group Ltd. and Subsidiaries

Segment Information

(U.S. Dollars in thousands)	Three Months Ended
	June 30, 2014
	Insurance			Reinsurance			Mortgage			Sub-total			Other			Total
Gross premiums written (1)	$	852,231		$	349,841		$	55,476		$	1,256,934		$	54,562		$	1,271,761
Premiums ceded	(273,349		)	(58,994		)	(5,079		)	(336,808		)	(2,760		)	(299,833		)
Net premiums written	578,882			290,847			50,397			920,126			51,802			971,928
Change in unearned premiums	(71,170		)	44,780			436			(25,954		)	(38,822		)	(64,776		)
Net premiums earned	507,712			335,627			50,833			894,172			12,980			907,152
Other underwriting income	514			303			1,216			2,033			—			2,033
Losses and loss adjustment expenses	(311,526		)	(150,325		)	(15,473		)	(477,324		)	(8,194		)	(485,518		)
Acquisition expenses, net	(76,449		)	(66,035		)	(11,481		)	(153,965		)	(4,193		)	(158,158		)
Other operating expenses	(85,829		)	(37,666		)	(16,288		)	(139,783		)	(1,635		)	(141,418		)
Underwriting income (loss)	$	34,422		$	81,904		$	8,807		125,133			(1,042		)	124,091
Net investment income										72,458			532			72,990
Net realized gains (losses)										50,966			3,178			54,144
Net impairment losses recognized in earnings										(14,749		)	—			(14,749		)
Equity in net income of investment funds accounted for using the equity method										9,240			—			9,240
Other income (loss)										4,850			—			4,850
Other expenses										(15,279		)	347			(14,932		)
Interest expense										(14,334		)	—			(14,334		)
Net foreign exchange gains (losses)										(2,764		)	470			(2,294		)
Income before income taxes										215,521			3,485			219,006
Income tax expense										(7,289		)	—			(7,289		)
Net income										208,232			3,485			211,717
Dividends attributable to redeemable noncontrolling interests										—			(4,857		)	(4,857		)
Amounts attributable to nonredeemable noncontrolling interests										—			1,156			1,156
Net income available to Arch										208,232			(216		)	208,016
Preferred dividends										(5,485		)	—			(5,485		)
Net income available to Arch common shareholders										$	202,747		$	(216	)	$	202,531
Underwriting Ratios
Loss ratio	61.4		%	44.8		%	30.4		%	53.4		%	63.1		%	53.5		%
Acquisition expense ratio	15.1		%	19.7		%	22.6		%	17.2		%	32.3		%	17.4		%
Other operating expense ratio	16.9		%	11.2		%	32.0		%	15.6		%	12.6		%	15.6		%
Combined ratio	93.4		%	75.7		%	85.0		%	86.2		%	108.0		%	86.5		%
Net premiums written to gross premiums written	67.9		%	83.1		%	90.8		%	73.2		%	94.9		%	76.4		%
Total investable assets										$	14,688,808		$	1,114,719		$	15,803,527
Total assets										21,204,129			1,363,318			22,567,447
Total liabilities										15,072,875			253,507			15,326,382

(1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions and are included in the gross premiums written of each segment. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total.

11

Arch Capital Group Ltd. and Subsidiaries

Segment Information

(U.S. Dollars in thousands)	Six Months Ended
	June 30, 2015
	Insurance			Reinsurance			Mortgage			Sub-total			Other			Total
Gross premiums written (1)	$	1,510,963		$	827,213		$	129,113		$	2,466,931		$	256,587		$	2,541,231
Premiums ceded	(459,893		)	(226,015		)	(15,572		)	(701,122		)	(11,821		)	(530,656		)
Net premiums written	1,051,070			601,198			113,541			1,765,809			244,766			2,010,575
Change in unearned premiums	(33,331		)	(47,516		)	(10,715		)	(91,562		)	(65,311		)	(156,873		)
Net premiums earned	1,017,739			553,682			102,826			1,674,247			179,455			1,853,702
Other underwriting income	948			4,087			11,404			16,439			2,814			19,253
Losses and loss adjustment expenses	(638,822		)	(223,715		)	(23,448		)	(885,985		)	(127,157		)	(1,013,142		)
Acquisition expenses, net	(151,801		)	(114,964		)	(20,618		)	(287,383		)	(51,118		)	(338,501		)
Other operating expenses	(177,173		)	(77,051		)	(40,048		)	(294,272		)	(5,455		)	(299,727		)
Underwriting income (loss)	$	50,891		$	142,039		$	30,116		223,046			(1,461		)	221,585
Net investment income										137,459			28,498			165,957
Net realized gains (losses)										38,649			8,974			47,623
Net impairment losses recognized in earnings										(6,912		)	—			(6,912		)
Equity in net income of investment funds accounted for using the equity method										22,056			—			22,056
Other income (loss)										317			—			317
Other expenses										(26,763		)	—			(26,763		)
Interest expense										(16,747		)	—			(16,747		)
Net foreign exchange gains (losses)										44,282			2,636			46,918
Income before income taxes										415,387			38,647			454,034
Income tax expense										(19,458		)	—			(19,458		)
Net income										395,929			38,647			434,576
Dividends attributable to redeemable noncontrolling interests										—			(9,651		)	(9,651		)
Amounts attributable to nonredeemable noncontrolling interests										—			(25,799		)	(25,799		)
Net income available to Arch										395,929			3,197			399,126
Preferred dividends										(10,969		)	—			(10,969		)
Net income available to Arch common shareholders										$	384,960		$	3,197		$	388,157
Underwriting Ratios
Loss ratio	62.8		%	40.4		%	22.8		%	52.9		%	70.9		%	54.7		%
Acquisition expense ratio	14.9		%	20.8		%	20.1		%	17.2		%	28.5		%	18.3		%
Other operating expense ratio	17.4		%	13.9		%	38.9		%	17.6		%	3.0		%	16.2		%
Combined ratio	95.1		%	75.1		%	81.8		%	87.7		%	102.4		%	89.2		%
Net premiums written to gross premiums written	69.6		%	72.7		%	87.9		%	71.6		%	95.4		%	79.1		%

(1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions and are included in the gross premiums written of each segment. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total.

12

Arch Capital Group Ltd. and Subsidiaries

Segment Information

(U.S. Dollars in thousands)	Six Months Ended
	June 30, 2014
	Insurance			Reinsurance			Mortgage			Sub-total			Other			Total
Gross premiums written (1)	$	1,582,877		$	866,894		$	103,383		$	2,552,070		$	86,756		$	2,566,897
Premiums ceded	(458,393		)	(132,121		)	(9,718		)	(599,148		)	(2,760		)	(529,979		)
Net premiums written	1,124,484			734,773			93,665			1,952,922			83,996			2,036,918
Change in unearned premiums	(139,271		)	(57,798		)	(4,067		)	(201,136		)	(68,850		)	(269,986		)
Net premiums earned	985,213			676,975			89,598			1,751,786			15,146			1,766,932
Other underwriting income	1,014			619			1,982			3,615			—			3,615
Losses and loss adjustment expenses	(598,296		)	(289,961		)	(23,951		)	(912,208		)	(9,550		)	(921,758		)
Acquisition expenses, net	(153,381		)	(139,468		)	(20,635		)	(313,484		)	(5,016		)	(318,500		)
Other operating expenses	(166,973		)	(73,861		)	(30,164		)	(270,998		)	(2,744		)	(273,742		)
Underwriting income (loss)	$	67,577		$	174,304		$	16,830		258,711			(2,164		)	256,547
Net investment income										139,451			533			139,984
Net realized gains (losses)										70,663			3,178			73,841
Net impairment losses recognized in earnings										(17,720		)	—			(17,720		)
Equity in net income of investment funds accounted for using the equity method										12,493			—			12,493
Other income (loss)										2,746			—			2,746
Other expenses										(26,078		)	(2,329		)	(28,407		)
Interest expense										(28,738		)	—			(28,738		)
Net foreign exchange gains (losses)										(9,420		)	563			(8,857		)
Income before income taxes										402,108			(219		)	401,889
Income tax expense										(11,027		)	—			(11,027		)
Net income										391,081			(219		)	390,862
Dividends attributable to redeemable noncontrolling interests										—			(4,909		)	(4,909		)
Amounts attributable to nonredeemable noncontrolling interests										—			4,563			4,563
Net income available to Arch										391,081			(565		)	390,516
Preferred dividends										(10,969		)	—			(10,969		)
Net income available to Arch common shareholders										$	380,112		$	(565	)	$	379,547
Underwriting Ratios
Loss ratio	60.7		%	42.8		%	26.7		%	52.1		%	63.1		%	52.2		%
Acquisition expense ratio	15.6		%	20.6		%	23.0		%	17.9		%	33.1		%	18.0		%
Other operating expense ratio	16.9		%	10.9		%	33.7		%	15.5		%	18.1		%	15.5		%
Combined ratio	93.2		%	74.3		%	83.4		%	85.5		%	114.3		%	85.7		%
Net premiums written to gross premiums written	71.0		%	84.8		%	90.6		%	76.5		%	96.8		%	79.4		%

(1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions and are included in the gross premiums written of each segment. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total.

13

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Insurance Segment

(U.S. Dollars in thousands)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2015			2015			2014			2014			2014			2015			2014
Gross premiums written	$	744,810		$	766,153		$	699,109		$	726,683		$	852,231		$	1,510,963		$	1,582,877
Premiums ceded	(235,743		)	(224,150		)	(215,933		)	(187,689		)	(273,349		)	(459,893		)	(458,393		)
Net premiums written	509,067			542,003			483,176			538,994			578,882			1,051,070			1,124,484
Change in unearned premiums	758			(34,089		)	29,594			(19,607		)	(71,170		)	(33,331		)	(139,271		)
Net premiums earned	509,825			507,914			512,770			519,387			507,712			1,017,739			985,213
Other underwriting income	521			427			622			499			514			948			1,014
Losses and loss adjustment expenses	(320,926		)	(317,896		)	(324,338		)	(338,319		)	(311,526		)	(638,822		)	(598,296		)
Acquisition expenses, net	(76,723		)	(75,078		)	(81,152		)	(81,775		)	(76,449		)	(151,801		)	(153,381		)
Other operating expenses	(89,054		)	(88,119		)	(85,046		)	(83,138		)	(85,829		)	(177,173		)	(166,973		)
Underwriting income	$	23,643		$	27,248		$	22,856		$	16,654		$	34,422		$	50,891		$	67,577
Underwriting Ratios
Loss ratio	62.9		%	62.6		%	63.3		%	65.1		%	61.4		%	62.8		%	60.7		%
Acquisition expense ratio	15.0		%	14.8		%	15.8		%	15.7		%	15.1		%	14.9		%	15.6		%
Other operating expense ratio	17.5		%	17.3		%	16.6		%	16.0		%	16.9		%	17.4		%	16.9		%
Combined ratio	95.4		%	94.7		%	95.7		%	96.8		%	93.4		%	95.1		%	93.2		%
Catastrophic activity and prior year development:
Current accident year catastrophic events, net of
reinsurance and reinstatement premiums	1.2		%	0.6		%	1.1		%	0.4		%	0.7		%	0.9		%	0.6		%
Net (favorable) adverse development in prior year loss
reserves, net of related adjustments	(3.4		)%	(1.0		)%	(1.8		)%	(1.6		)%	(3.2		)%	(2.2		)%	(2.7		)%
Combined ratio excluding catastrophic activity and prior year development (1)	97.6		%	95.1		%	96.4		%	98.0		%	95.9		%	96.4		%	95.3		%
Net premiums written to gross premiums written	68.3		%	70.7		%	69.1		%	74.2		%	67.9		%	69.6		%	71.0		%

(1) See Comments on Regulation G.

14

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Insurance Segment

(U.S. Dollars in thousands)	Three Months Ended																				Six Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
	2015				2015				2014				2014				2014				2015				2014
Net premiums written
Programs	$	106,179	20.9	%	$	118,197	21.8	%	$	102,391	21.2	%	$	129,227	24.0	%	$	126,722	21.9	%	$	224,376	21.3	%	$	248,962	22.1	%
Professional lines (1)	100,100		19.7	%	111,178		20.5	%	119,487		24.7	%	119,798		22.2	%	114,411		19.8	%	211,278		20.1	%	237,319		21.1	%
Construction and national accounts	77,096		15.1	%	96,503		17.8	%	56,984		11.8	%	55,342		10.3	%	79,171		13.7	%	173,599		16.5	%	174,668		15.5	%
Property, energy, marine and aviation	62,049		12.2	%	58,667		10.8	%	43,869		9.1	%	53,485		9.9	%	84,530		14.6	%	120,716		11.5	%	147,286		13.1	%
Excess and surplus casualty (2)	53,971		10.6	%	49,370		9.1	%	59,238		12.3	%	50,552		9.4	%	58,789		10.2	%	103,341		9.8	%	102,729		9.1	%
Travel, accident and health	35,416		7.0	%	38,912		7.2	%	26,001		5.4	%	44,500		8.3	%	34,393		5.9	%	74,328		7.1	%	75,231		6.7	%
Lenders products	24,011		4.7	%	22,816		4.2	%	25,693		5.3	%	27,799		5.2	%	24,909		4.3	%	46,827		4.5	%	46,915		4.2	%
Other (3)	50,245		9.9	%	46,360		8.6	%	49,513		10.2	%	58,291		10.8	%	55,957		9.7	%	96,605		9.2	%	91,374		8.1	%
Total	$	509,067	100.0	%	$	542,003	100.0	%	$	483,176	100.0	%	$	538,994	100.0	%	$	578,882	100.0	%	$	1,051,070	100.0	%	$	1,124,484	100.0	%
Client location
United States	$	436,106	85.7	%	$	445,858	82.3	%	$	389,125	80.5	%	$	448,932	83.3	%	$	464,730	80.3	%	$	881,964	83.9	%	$	888,124	79.0	%
Europe	30,761		6.0	%	67,282		12.4	%	55,959		11.6	%	40,810		7.6	%	57,918		10.0	%	98,043		9.3	%	143,367		12.7	%
Asia and Pacific	14,000		2.8	%	11,983		2.2	%	15,834		3.3	%	21,314		4.0	%	23,833		4.1	%	25,983		2.5	%	42,416		3.8	%
Other	28,200		5.5	%	16,880		3.1	%	22,258		4.6	%	27,938		5.2	%	32,401		5.6	%	45,080		4.3	%	50,577		4.5	%
Total	$	509,067	100.0	%	$	542,003	100.0	%	$	483,176	100.0	%	$	538,994	100.0	%	$	578,882	100.0	%	$	1,051,070	100.0	%	$	1,124,484	100.0	%
Underwriting location
United States	$	421,830	82.9	%	$	438,865	81.0	%	$	380,828	78.8	%	$	442,193	82.0	%	$	449,823	77.7	%	$	860,695	81.9	%	$	865,866	77.0	%
Europe	70,901		13.9	%	92,418		17.1	%	86,791		18.0	%	82,820		15.4	%	108,115		18.7	%	163,319		15.5	%	224,819		20.0	%
Other	16,336		3.2	%	10,720		2.0	%	15,557		3.2	%	13,981		2.6	%	20,944		3.6	%	27,056		2.6	%	33,799		3.0	%
Total	$	509,067	100.0	%	$	542,003	100.0	%	$	483,176	100.0	%	$	538,994	100.0	%	$	578,882	100.0	%	$	1,051,070	100.0	%	$	1,124,484	100.0	%
Net premiums earned
Programs	$	112,942	22.2	%	$	115,964	22.8	%	$	119,081	23.2	%	$	118,087	22.7	%	$	114,043	22.5	%	$	228,906	22.5	%	$	223,224	22.7	%
Professional lines (1)	107,420		21.1	%	107,872		21.2	%	109,529		21.4	%	118,204		22.8	%	116,031		22.9	%	215,292		21.2	%	228,775		23.2	%
Construction and national accounts	71,580		14.0	%	72,230		14.2	%	68,529		13.4	%	68,229		13.1	%	72,064		14.2	%	143,810		14.1	%	141,053		14.3	%
Property, energy, marine and aviation	53,825		10.6	%	55,081		10.8	%	57,732		11.3	%	59,432		11.4	%	66,221		13.0	%	108,906		10.7	%	127,810		13.0	%
Excess and surplus casualty (2)	51,709		10.1	%	52,347		10.3	%	50,601		9.9	%	48,716		9.4	%	43,600		8.6	%	104,056		10.2	%	82,707		8.4	%
Travel, accident and health	39,979		7.8	%	33,732		6.6	%	33,990		6.6	%	34,991		6.7	%	30,645		6.0	%	73,711		7.2	%	58,710		6.0	%
Lenders products	21,259		4.2	%	22,859		4.5	%	24,252		4.7	%	23,591		4.5	%	22,763		4.5	%	44,118		4.3	%	46,595		4.7	%
Other (3)	51,111		10.0	%	47,829		9.4	%	49,056		9.6	%	48,137		9.3	%	42,345		8.3	%	98,940		9.7	%	76,339		7.7	%
Total	$	509,825	100.0	%	$	507,914	100.0	%	$	512,770	100.0	%	$	519,387	100.0	%	$	507,712	100.0	%	$	1,017,739	100.0	%	$	985,213	100.0	%

(1)    Includes professional liability, executive assurance and healthcare business.

(2)    Includes casualty and contract binding business.

(3)    Includes alternative markets, excess workers’ compensation and surety business.

15

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Reinsurance Segment

(U.S. Dollars in thousands)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2015			2015			2014			2014			2014			2015			2014
Gross premiums written	$	342,101		$	485,112		$	314,604		$	345,747		$	349,841		$	827,213		$	866,894
Premiums ceded	(89,446		)	(136,569		)	(45,631		)	(83,502		)	(58,994		)	(226,015		)	(132,121		)
Net premiums written	252,655			348,543			268,973			262,245			290,847			601,198			734,773
Change in unearned premiums	21,310			(68,826		)	36,832			34,303			44,780			(47,516		)	(57,798		)
Net premiums earned	273,965			279,717			305,805			296,548			335,627			553,682			676,975
Other underwriting income	2,658			1,429			2,333			215			303			4,087			619
Losses and loss adjustment expenses	(111,183		)	(112,532		)	(118,705		)	(123,784		)	(150,325		)	(223,715		)	(289,961		)
Acquisition expenses, net	(58,360		)	(56,604		)	(61,765		)	(60,205		)	(66,035		)	(114,964		)	(139,468		)
Other operating expenses	(39,007		)	(38,044		)	(37,766		)	(36,337		)	(37,666		)	(77,051		)	(73,861		)
Underwriting income	$	68,073		$	73,966		$	89,902		$	76,437		$	81,904		$	142,039		$	174,304
Underwriting Ratios
Loss ratio	40.6		%	40.2		%	38.8		%	41.7		%	44.8		%	40.4		%	42.8		%
Acquisition expense ratio	21.3		%	20.2		%	20.2		%	20.3		%	19.7		%	20.8		%	20.6		%
Other operating expense ratio	14.2		%	13.6		%	12.3		%	12.3		%	11.2		%	13.9		%	10.9		%
Combined ratio	76.1		%	74.0		%	71.3		%	74.3		%	75.7		%	75.1		%	74.3		%
Catastrophic activity and prior year development:
Current accident year catastrophic events, net of
reinsurance and reinstatement premiums	3.6		%	0.5		%	4.7		%	4.1		%	3.8		%	2.0		%	2.3		%
Net (favorable) adverse development in prior year loss
reserves, net of related adjustments	(21.5		)%	(20.5		)%	(20.7		)%	(20.4		)%	(20.2		)%	(21.0		)%	(20.4		)%
Combined ratio excluding catastrophic activity and prior year development (1)	94.0		%	94.0		%	87.3		%	90.6		%	92.1		%	94.1		%	92.4		%
Net premiums written to gross premiums written	73.9		%	71.8		%	85.5		%	75.8		%	83.1		%	72.7		%	84.8		%

(1) See Comments on Regulation G.

16

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Reinsurance Segment

(U.S. Dollars in thousands)	Three Months Ended																					Six Months Ended
	June 30,					March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
	2015					2015				2014				2014				2014				2015				2014
Net premiums written
Other specialty (1)	$	72,134		28.6	%	$	101,148	29.0	%	$	67,094	24.9	%	$	84,702	32.3	%	$	105,721	36.3	%	$	173,282	28.8	%	$	253,330	34.5	%
Casualty (2)	64,778			25.6	%	117,858		33.8	%	59,412		22.1	%	64,048		24.4	%	67,823		23.3	%	182,636		30.4	%	194,536		26.5	%
Property excluding property catastrophe (3)	57,005			22.6	%	89,924		25.8	%	115,843		43.1	%	77,186		29.4	%	54,887		18.9	%	146,929		24.4	%	150,014		20.4	%
Property catastrophe	46,046			18.2	%	15,443		4.4	%	6,917		2.6	%	24,056		9.2	%	53,986		18.6	%	61,489		10.2	%	106,498		14.5	%
Marine and aviation	9,461			3.7	%	20,844		6.0	%	16,886		6.3	%	9,767		3.7	%	6,880		2.4	%	30,305		5.0	%	23,791		3.2	%
Other (4)	3,231			1.3	%	3,326		1.0	%	2,821		1.0	%	2,486		0.9	%	1,550		0.5	%	6,557		1.1	%	6,604		0.9	%
Total	$	252,655		100.0	%	$	348,543	100.0	%	$	268,973	100.0	%	$	262,245	100.0	%	$	290,847	100.0	%	$	601,198	100.0	%	$	734,773	100.0	%
Pro rata	$	128,976		51.0	%	$	130,235	37.4	%	$	204,803	76.1	%	$	160,472	61.2	%	$	123,663	42.5	%	$	259,211	43.1	%	$	297,860	40.5	%
Excess of loss	123,679			49.0	%	218,308		62.6	%	64,170		23.9	%	101,773		38.8	%	167,184		57.5	%	341,987		56.9	%	436,913		59.5	%
Total	$	252,655		100.0	%	$	348,543	100.0	%	$	268,973	100.0	%	$	262,245	100.0	%	$	290,847	100.0	%	$	601,198	100.0	%	$	734,773	100.0	%
Client location
United States	$	130,780		51.8	%	$	140,687	40.4	%	$	107,392	39.9	%	$	123,966	47.3	%	$	134,649	46.3	%	$	271,467	45.2	%	$	357,897	48.7	%
Europe	55,566			22.0	%	142,939		41.0	%	61,967		23.0	%	62,102		23.7	%	74,817		25.7	%	198,505		33.0	%	231,666		31.5	%
Asia and Pacific	24,729			9.8	%	14,134		4.1	%	70,122		26.1	%	24,590		9.4	%	27,024		9.3	%	38,863		6.5	%	47,914		6.5	%
Bermuda	22,503			8.9	%	24,249		7.0	%	12,011		4.5	%	25,537		9.7	%	30,497		10.5	%	46,752		7.8	%	40,072		5.5	%
Other	19,077			7.6	%	26,534		7.6	%	17,481		6.5	%	26,050		9.9	%	23,860		8.2	%	45,611		7.6	%	57,224		7.8	%
Total	$	252,655		100.0	%	$	348,543	100.0	%	$	268,973	100.0	%	$	262,245	100.0	%	$	290,847	100.0	%	$	601,198	100.0	%	$	734,773	100.0	%
Underwriting location
Bermuda	$	89,363		35.4	%	$	85,220	24.5	%	$	121,459	45.2	%	$	65,891	25.1	%	$	100,011	34.4	%	$	174,583	29.0	%	$	207,001	28.2	%
United States	102,057			40.4	%	138,467		39.7	%	90,655		33.7	%	120,095		45.8	%	99,636		34.3	%	240,524		40.0	%	282,141		38.4	%
Europe	63,587			25.2	%	121,983		35.0	%	50,539		18.8	%	64,341		24.5	%	87,080		29.9	%	185,570		30.9	%	228,943		31.2	%
Other	(2,352		)	(0.9	)%	2,873		0.8	%	6,320		2.3	%	11,918		4.5	%	4,120		1.4	%	521		0.1	%	16,688		2.3	%
Total	$	252,655		100.0	%	$	348,543	100.0	%	$	268,973	100.0	%	$	262,245	100.0	%	$	290,847	100.0	%	$	601,198	100.0	%	$	734,773	100.0	%
Net premiums earned
Other specialty (1)	$	80,256		29.3	%	$	83,798	30.0	%	$	93,946	30.7	%	$	97,337	32.8	%	$	118,504	35.3	%	$	164,054	29.6	%	$	233,442	34.5	%
Casualty (2)	83,186			30.4	%	73,381		26.2	%	79,119		25.9	%	79,477		26.8	%	90,176		26.9	%	156,567		28.3	%	168,922		25.0	%
Property excluding property catastrophe (3)	69,600			25.4	%	79,764		28.5	%	87,287		28.5	%	71,663		24.2	%	69,172		20.6	%	149,364		27.0	%	144,546		21.4	%
Property catastrophe	24,325			8.9	%	27,270		9.7	%	28,674		9.4	%	32,423		10.9	%	39,870		11.9	%	51,595		9.3	%	89,664		13.2	%
Marine and aviation	13,423			4.9	%	12,613		4.5	%	13,854		4.5	%	13,110		4.4	%	15,259		4.5	%	26,036		4.7	%	34,154		5.0	%
Other (4)	3,175			1.2	%	2,891		1.0	%	2,925		1.0	%	2,538		0.9	%	2,646		0.8	%	6,066		1.1	%	6,247		0.9	%
Total	$	273,965		100.0	%	$	279,717	100.0	%	$	305,805	100.0	%	$	296,548	100.0	%	$	335,627	100.0	%	$	553,682	100.0	%	$	676,975	100.0	%
Pro rata	$	143,835		52.5	%	$	153,515	54.9	%	$	163,590	53.5	%	$	156,830	52.9	%	$	178,344	53.1	%	$	297,350	53.7	%	$	365,781	54.0	%
Excess of loss	130,130			47.5	%	126,202		45.1	%	142,215		46.5	%	139,718		47.1	%	157,283		46.9	%	256,332		46.3	%	311,194		46.0	%
Total	$	273,965		100.0	%	$	279,717	100.0	%	$	305,805	100.0	%	$	296,548	100.0	%	$	335,627	100.0	%	$	553,682	100.0	%	$	676,975	100.0	%

(1)  Includes executive assurance, professional liability, workers’ compensation, excess motor, healthcare and other.                (3) Includes facultative business.

(2)  Includes proportional motor, surety, accident and health, workers’ compensation catastrophe, agriculture, trade credit and other.        (4) Includes life, casualty clash and other.

17

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Mortgage Segment

(U.S. Dollars in thousands)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2015			2015			2014			2014			2014			2015			2014
Gross premiums written	$	68,572		$	60,541		$	57,584		$	66,389		$	55,476		$	129,113		$	103,383
Premiums ceded	(6,902		)	(8,670		)	(4,897		)	(7,904		)	(5,079		)	(15,572		)	(9,718		)
Net premiums written	61,670			51,871			52,687			58,485			50,397			113,541			93,665
Change in unearned premiums	(9,211		)	(1,504		)	(1,658		)	(5,539		)	436			(10,715		)	(4,067		)
Net premiums earned	52,459			50,367			51,029			52,946			50,833			102,826			89,598
Other underwriting income (1)	3,686			7,718			1,870			988			1,216			11,404			1,982
Losses and loss adjustment expenses	(9,639		)	(13,809		)	(15,736		)	(15,987		)	(15,473		)	(23,448		)	(23,951		)
Acquisition expenses, net	(10,200		)	(10,418		)	(16,807		)	(11,958		)	(11,481		)	(20,618		)	(20,635		)
Other operating expenses	(19,679		)	(20,369		)	(18,814		)	(17,913		)	(16,288		)	(40,048		)	(30,164		)
Underwriting income	$	16,627		$	13,489		$	1,542		$	8,076		$	8,807		$	30,116		$	16,830
Underwriting Ratios
Loss ratio	18.4		%	27.4		%	30.8		%	30.2		%	30.4		%	22.8		%	26.7		%
Acquisition expense ratio	19.4		%	20.7		%	32.9		%	22.6		%	22.6		%	20.1		%	23.0		%
Other operating expense ratio	37.5		%	40.4		%	36.9		%	33.8		%	32.0		%	38.9		%	33.7		%
Combined ratio	75.3		%	88.5		%	100.6		%	86.6		%	85.0		%	81.8		%	83.4		%
Net (favorable) adverse development in prior year loss
reserves, net of related adjustments	(2.1		)%	(5.6		)%	1.7		%	(1.4		)%	0.1		%	(3.8		)%	(1.2		)%
Combined ratio excluding prior year development (2)	77.4		%	94.1		%	98.9		%	88.0		%	84.9		%	85.6		%	84.6		%
Net premiums written to gross premiums written	89.9		%	85.7		%	91.5		%	88.1		%	90.8		%	87.9		%	90.6		%
Net premiums written by client location
United States	$	47,460		$	45,822		$	47,027		$	54,639		$	46,111		$	93,282		$	82,667
Other	14,210			6,049			5,660			3,846			4,286			20,259			10,998
Total	$	61,670		$	51,871		$	52,687		$	58,485		$	50,397		$	113,541		$	93,665
Net premiums written by underwriting location
United States	$	30,589		$	27,956		$	25,255		$	32,229		$	24,594		$	58,545		$	41,325
Other	31,081			23,915			27,432			26,256			25,803			54,996			52,340
Total	$	61,670		$	51,871		$	52,687		$	58,485		$	50,397		$	113,541		$	93,665

(1)     Represents income earned on various risk-sharing products offered to government sponsored enterprises and mortgage lenders.

(2)    See Comments on Regulation G.

18

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Mortgage Segment

(U.S. Dollars in millions)	June 30, 2015					March 31, 2015					December 31, 2014					September 30, 2014
Insurance In Force (IIF) (1)
U.S. mortgage insurance	$	24,175		41.6	%	$	22,984		40.9	%	$	22,402		47.1	%	$	22,055		46.3	%
Mortgage reinsurance	19,245			33.1	%	20,262			36.1	%	20,772			43.7	%	21,097			44.3	%
Other (2)	14,734			25.3	%	12,944			23.0	%	4,400			9.2	%	4,464			9.4	%
Total	$	58,154		100.0	%	$	56,190		100.0	%	$	47,574		100.0	%	$	47,616		100.0	%
Risk In Force (RIF) (3)
U.S. mortgage insurance	$	6,053		56.8	%	$	5,733		54.3	%	$	5,600		55.3	%	$	5,506		54.4	%
Mortgage reinsurance	3,923			36.8	%	4,209			39.9	%	4,393			43.4	%	4,483			44.3	%
Other (2)	684			6.4	%	619			5.9	%	136			1.3	%	136			1.3	%
Total	$	10,660		100.0	%	$	10,561		100.0	%	$	10,129		100.0	%	$	10,125		100.0	%
Supplemental disclosures for U.S. mortgage insurance:
Total RIF by credit quality (FICO score):
>=740	$	3,238		53.5	%	$	3,009		52.5	%	$	2,917		52.1	%	$	2,864		52.0	%
680-739	1,994			32.9	%	1,895			33.1	%	1,846			33.0	%	1,803			32.7	%
620-679	696			11.5	%	698			12.2	%	700			12.5	%	694			12.6	%
<620	125			2.1	%	131			2.3	%	137			2.4	%	145			2.6	%
Total	$	6,053		100.0	%	$	5,733		100.0	%	$	5,600		100.0	%	$	5,506		100.0	%
Weighted average FICO score	735					734					733					733
Total RIF by Loan-To-Value (LTV):
95.01% and above	$	1,093		18.1	%	$	1,102		19.2	%	$	1,123		20.1	%	$	1,139		20.7	%
90.01% to 95.00%	2,959			48.9	%	2,742			47.8	%	2,652			47.4	%	2,558			46.5	%
85.01% to 90.00%	1,685			27.8	%	1,590			27.7	%	1,552			27.7	%	1,544			28.0	%
85.00% and below	316			5.2	%	299			5.2	%	273			4.9	%	265			4.8	%
Total	$	6,053		100.0	%	$	5,733		100.0	%	$	5,600		100.0	%	$	5,506		100.0	%
Weighted average LTV	93.2		%			93.3		%			93.4		%			93.4		%
Total RIF by State:
Wisconsin	$	554		9.2	%	$	536		9.3	%	$	538		9.6	%	$	532		9.7	%
California	527			8.7	%	492			8.6	%	480			8.6	%	474			8.6	%
Texas	325			5.4	%	307			5.4	%	302			5.4	%	293			5.3	%
Florida	297			4.9	%	280			4.9	%	273			4.9	%	271			4.9	%
Minnesota	291			4.8	%	278			4.8	%	274			4.9	%	271			4.9	%
Washington	243			4.0	%	234			4.1	%	232			4.1	%	231			4.2	%
Massachusetts	217			3.6	%	213			3.7	%	210			3.8	%	209			3.8	%
Virginia	215			3.6	%	206			3.6	%	200			3.6	%	196			3.6	%
Alaska	208			3.4	%	209			3.6	%	209			3.7	%	207			3.8	%
Michigan	200			3.3	%	186			3.2	%	181			3.2	%	176			3.2	%
Others	2,976			49.2	%	2,792			48.7	%	2,701			48.2	%	2,646			48.1	%
Total	$	6,053		100.0	%	$	5,733		100.0	%	$	5,600		100.0	%	$	5,506		100.0	%
Weighted average coverage (end of period RIF divided by IIF)	25.0		%			24.9		%			25.0		%			25.0		%
Analysts’ persistency (4)	78.2		%			79.6		%			80.9		%			81.2		%
Risk-to-capital ratio (5)	9.7:1					9.3:1					9.5:1					9.3:1

(1)    The aggregate dollar amount of each insured mortgage loan’s original principal balance.     

(2)    Includes risk-sharing products offered to government sponsored enterprises and mortgage lenders and international insurance business.        

(3)    The aggregate dollar amount of each insured mortgage loan’s current principal balance multiplied by the insurance coverage percentage specified in the policy for insurance policies issued.

(4)    Represents the percentage of IIF at the beginning of a 12-month period that remained in force at the end of the period.        

(5)    Represents total current (non-delinquent) RIF, net of reinsurance, divided by total statutory capital. Ratio calculated for Arch Mortgage Insurance Company only (estimate for June 30, 2015).

19

Arch Capital Group Ltd. and Subsidiaries

Segment Information — Mortgage Segment

(U.S. Dollars in millions, except policy/loan/claim count)	Three Months Ended																				Six Months Ended
	June 30, 2015					March 31, 2015					December 31, 2014					September 30, 2014					June 30, 2015
Supplemental disclosures for U.S. mortgage insurance:
Total new insurance written (NIW) (1)	$	2,709				$	1,808				$	1,359				$	1,982				$	4,517
Total NIW by credit quality (FICO score):
>=740	$	1,723		63.6	%	$	1,064		58.8	%	$	730		53.7	%	$	1,279		64.5	%	$	2,787		61.7	%
680-739	842			31.1	%	602			33.3	%	480			35.3	%	629			31.7	%	1,444			32.0	%
620-679	143			5.3	%	142			7.9	%	149			11.0	%	74			3.7	%	285			6.3	%
<620	1			—	%	—			—	%	—			—	%	—			—	%	1			—	%
Total	$	2,709		100.0	%	$	1,808		100.0	%	$	1,359		100.0	%	$	1,982		100.0	%	$	4,517		100.0	%
Total NIW by LTV:
95.01% and above	$	165		6.1	%	$	86		4.8	%	$	79		5.8	%	$	81		4.1	%	$	251		5.6	%
90.01% to 95.00%	1,227			45.3	%	682			37.7	%	620			45.6	%	904			45.6	%	1,909			42.3	%
85.01% to 90.00%	908			33.5	%	583			32.2	%	389			28.6	%	646			32.6	%	1,491			33.0	%
85.01% and below	409			15.1	%	457			25.3	%	271			19.9	%	351			17.7	%	866			19.2	%
Total	$	2,709		100.0	%	$	1,808		100.0	%	$	1,359		100.0	%	$	1,982		100.0	%	$	4,517		100.0	%
Total NIW purchase vs. refinance:
Purchase	$	1,830		67.6	%	$	918		50.8	%	$	950		69.9	%	$	1,234		62.3	%	$	2,748		60.8	%
Refinance	879			32.4	%	890			49.2	%	409			30.1	%	748			37.7	%	1,769			39.2	%
Total	$	2,709		100.0	%	$	1,808		100.0	%	$	1,359		100.0	%	$	1,982		100.0	%	$	4,517		100.0	%
Ending number of policies in force (PIF)	137,724					133,079					131,111					129,665
Rollforward of insured loans in default:
Beginning delinquent number of loans	3,006					3,474					3,625					3,641					3,474
Plus: new notices	1,145					1,190					1,402					1,553					2,335
Less: cures	(1,011		)			(1,376		)			(1,202		)			(1,168		)			(2,387		)
Less: paid claims	(292		)			(288		)			(351		)			(397		)			(580		)
Less: delinquent rescissions and denials	2					6					—					(4		)			8
Ending delinquent number of loans	2,850					3,006					3,474					3,625					2,850
Ending percentage of loans in default	2.1		%			2.3		%			2.6		%			2.8		%
Losses:
Number of claims paid	292					288					351					397					580
Total paid claims (in thousands)	$	12,672				$	12,180				$	15,358				$	17,093				$	24,852
Average per claim (in thousands)	$	43.4				$	42.3				$	43.8				$	43.1				$	42.8
Severity (2)	97.0		%			97.1		%			99.2		%			93.7		%			97.1		%
Average reserve per default (in thousands)	$	32.9				$	33.1				$	27.5				$	27.1

(1)    The original principal balance of all loans that received coverage during the period.        

(2)    Represents total paid claims divided by RIF of loans for which claims were paid.

20

Arch Capital Group Ltd. and Subsidiaries

Investment Information — Investable Asset Summary and Investment Portfolio Metrics

The following table summarizes the Company’s investable assets and portfolio metrics:

(U.S. Dollars in thousands)	June 30,					March 31,					December 31,					September 30,					June 30,
	2015					2015					2014					2014					2014
Investable assets (1) (2):
Fixed maturities available for sale, at fair value	$	9,927,603		68.4	%	$	10,427,810		72.2	%	$	10,750,770		73.6	%	$	10,733,382		73.6	%	$	10,714,532		72.9	%
Fixed maturities, at fair value (3)	387,941			2.7	%	348,689			2.4	%	377,053			2.6	%	359,409			2.5	%	372,746			2.5	%
Fixed maturities pledged under securities lending agreements, at fair value	373,969			2.6	%	253,115			1.8	%	50,802			0.3	%	107,547			0.7	%	82,730			0.6	%
Total fixed maturities	10,689,513			73.7	%	11,029,614			76.4	%	11,178,625			76.6	%	11,200,338			76.8	%	11,170,008			76.0	%
Short-term investments available for sale, at fair value	875,727			6.0	%	855,032			5.9	%	797,226			5.5	%	748,659			5.1	%	977,058			6.7	%
Short-term investments pledged under securities lending agreements, at fair value	—			—	%	—			—	%	—			—	%	—			—	%	4,301			—	%
Cash	470,011			3.2	%	402,314			2.8	%	474,247			3.2	%	486,351			3.3	%	471,721			3.2	%
Equity securities available for sale, at fair value	701,623			4.8	%	687,713			4.8	%	658,182			4.5	%	582,075			4.0	%	608,820			4.1	%
Equity securities, at fair value (3)	248			—	%	907			—	%	—			—	%	—			—	%	—			—	%
Other investments available for sale, at fair value	377,677			2.6	%	329,677			2.3	%	296,224			2.0	%	431,833			3.0	%	457,567			3.1	%
Other investments, at fair value (3)	899,763			6.2	%	880,660			6.1	%	878,774			6.0	%	833,752			5.7	%	848,791			5.8	%
Investments accounted for using the equity method (4)	472,926			3.3	%	412,367			2.9	%	349,014			2.4	%	307,252			2.1	%	281,464			1.9	%
Securities transactions entered into but not settled at the balance sheet date	26,066			0.2	%	(162,136		)	(1.1	)%	(32,802		)	(0.2	)%	(9,835		)	(0.1	)%	(130,922		)	(0.9	)%
Total investable assets managed by the Company	$	14,513,554		100.0	%	$	14,436,148		100.0	%	$	14,599,490		100.0	%	$	14,580,425		100.0	%	$	14,688,808		100.0	%
Average effective duration (in years)	3.05					3.35					3.34					3.28					3.14
Average S&P/Moody’s credit ratings (5)	AA/Aa2					AA/Aa2					AA/Aa2					AA/Aa2					AA/Aa2
Embedded book yield (before investment expenses)	2.07		%			2.21		%			2.18		%			2.21		%			2.17		%

(1)    This table excludes investable assets attributable to the ‘other’ segment. Such amounts are summarized as follows:

(U.S. Dollars in thousands)	June 30,			March 31,		December 31,			September 30,			June 30,
	2015			2015		2014			2014			2014
Investable assets in ‘other’ segment:
Cash	$	55,063		$	68,698	$	11,455		$	177,375		$	454,722
Investments accounted for using the fair value option	1,325,535			1,191,266		1,169,226			1,005,532			819,481
Securities transactions entered into but not settled at the balance sheet date	(40,024		)	7,624		(17,441		)	(58,859		)	(159,484		)
Total investable assets included in ‘other’ segment	$	1,340,574		$	1,267,588	$	1,163,240		$	1,124,048		$	1,114,719

(2)    This table excludes the collateral received and reinvested and includes the fixed maturities and short-term investments pledged under securities lending agreements, at fair value.

(3)    Represents investments which are carried at fair value under the fair value option and reflected as “investments accounted for using the fair value option” on the balance sheet.

(4) Changes in the carrying value of investment funds accounted for using the equity method are recorded as “equity in net income (loss) of investment funds accounted for using the equity method” rather than as an unrealized gain or loss component of accumulated other comprehensive income.

(5)    Average credit ratings on the Company’s investment portfolio on securities with ratings assigned by Standard & Poor’s (“S&P”) and Moody’s Investors Service (“Moody’s”).

21

Arch Capital Group Ltd. and Subsidiaries

Investment Information — Composition of Fixed Maturities

The following table summarizes the Company’s fixed maturities and fixed maturities pledged under securities lending agreements (excluding amounts included in the ‘other’ segment):

(U.S. Dollars in thousands)	Fair Value		Gross Unrealized Gains		Gross Unrealized Losses			Net Unrealized Gains (Losses)			Amortized Cost		Fair Value / Amortized Cost		% of Total
At June 30, 2015
Corporates	$	2,976,046	$	24,786	$	(48,482	)	$	(23,696	)	$	2,999,742	99.2	%	27.8	%
Non-U.S. government-backed corporates	104,602		1,615		(3,235		)	(1,620		)	106,222		98.5	%	1.0	%
U.S. government and government agencies	1,899,868		8,463		(3,720		)	4,743			1,895,125		100.3	%	17.8	%
Agency mortgage-backed securities	633,159		2,985		(2,470		)	515			632,644		100.1	%	5.9	%
Non-agency mortgage-backed securities	263,086		9,330		(1,761		)	7,569			255,517		103.0	%	2.5	%
Agency commercial mortgage-backed securities	60,291		303		(42		)	261			60,030		100.4	%	0.6	%
Non-agency commercial mortgage-backed securities	771,868		6,457		(4,880		)	1,577			770,291		100.2	%	7.2	%
Municipal bonds	1,760,384		19,601		(9,004		)	10,597			1,749,787		100.6	%	16.5	%
Non-U.S. government securities	868,853		10,343		(32,720		)	(22,377		)	891,230		97.5	%	8.1	%
Asset-backed securities	1,351,356		7,324		(3,364		)	3,960			1,347,396		100.3	%	12.6	%
Total	$	10,689,513	$	91,207	$	(109,678	)	$	(18,471	)	$	10,707,984	99.8	%	100.0	%
At December 31, 2014
Corporates	$	3,295,930	$	36,682	$	(37,175	)	$	(493	)	$	3,296,423	100.0	%	29.5	%
Non-U.S. government-backed corporates	83,209		1,246		(1,799		)	(553		)	83,762		99.3	%	0.7	%
U.S. government and government agencies	1,447,972		8,345		(1,760		)	6,585			1,441,387		100.5	%	13.0	%
Agency mortgage-backed securities	664,151		7,481		(2,133		)	5,348			658,803		100.8	%	5.9	%
Non-agency mortgage-backed securities	301,382		11,362		(1,709		)	9,653			291,729		103.3	%	2.7	%
Agency commercial mortgage-backed securities	133,366		183		(2,971		)	(2,788		)	136,154		98.0	%	1.2	%
Non-agency commercial mortgage-backed securities	981,162		14,411		(851		)	13,560			967,602		101.4	%	8.8	%
Municipal bonds	1,494,122		31,227		(1,044		)	30,183			1,463,939		102.1	%	13.4	%
Non-U.S. government securities	1,099,390		21,311		(37,203		)	(15,892		)	1,115,282		98.6	%	9.8	%
Asset-backed securities	1,677,941		8,425		(6,089		)	2,336			1,675,605		100.1	%	15.0	%
Total	$	11,178,625	$	140,673	$	(92,734	)	$	47,939		$	11,130,686	100.4	%	100.0	%

22

Arch Capital Group Ltd. and Subsidiaries

Investment Information — Credit Quality Distribution and Maturity Profile

The following table summarizes the credit quality distribution and maturity profile of the Company’s fixed maturities and fixed maturities pledged under securities lending agreements, excluding amounts included in the ‘other’ segment:

(U.S. Dollars in thousands)	June 30,				March 31,				December 31,				September 30,				June 30,
	2015				2015				2014				2014				2014
Credit quality distribution of total fixed maturities (1) (2):
U.S. government and government agencies (3)	$	2,593,318	24.3	%	$	2,199,182	19.9	%	$	2,245,489	20.1	%	$	2,328,587	20.8	%	$	2,339,891	20.9	%
AAA	3,639,910		34.1	%	4,166,106		37.8	%	4,299,060		38.5	%	4,282,341		38.2	%	4,250,726		38.1	%
AA	1,967,666		18.4	%	2,000,435		18.1	%	1,917,392		17.2	%	1,964,325		17.5	%	2,072,825		18.6	%
A	1,474,583		13.8	%	1,603,861		14.5	%	1,739,922		15.6	%	1,623,894		14.5	%	1,462,471		13.1	%
BBB	337,517		3.2	%	410,147		3.7	%	339,395		3.0	%	322,067		2.9	%	330,207		3.0	%
BB	212,561		2.0	%	195,163		1.8	%	157,232		1.4	%	166,799		1.5	%	169,865		1.5	%
B	170,859		1.6	%	176,590		1.6	%	184,869		1.7	%	203,395		1.8	%	195,951		1.8	%
Lower than B	136,784		1.3	%	150,000		1.4	%	154,823		1.4	%	157,499		1.4	%	177,309		1.6	%
Not rated	156,315		1.5	%	128,130		1.2	%	140,443		1.3	%	151,431		1.4	%	170,763		1.5	%
Total fixed maturities, at fair value	$	10,689,513	100.0	%	$	11,029,614	100.0	%	$	11,178,625	100.0	%	$	11,200,338	100.0	%	$	11,170,008	100.0	%
Maturity profile of total fixed maturities (1):
Due in one year or less	$	387,896	3.6	%	$	288,299	2.6	%	$	247,825	2.2	%	$	266,002	2.4	%	$	222,741	2.0	%
Due after one year through five years	4,288,771		40.1	%	3,983,422		36.1	%	4,288,440		38.4	%	4,409,460		39.4	%	4,640,884		41.5	%
Due after five years through ten years	2,556,513		23.9	%	2,771,736		25.1	%	2,587,397		23.1	%	2,310,260		20.6	%	2,057,463		18.4	%
Due after 10 years	376,573		3.5	%	382,273		3.5	%	296,961		2.7	%	273,106		2.4	%	263,696		2.4	%
	7,609,753		71.2	%	7,425,730		67.3	%	7,420,623		66.4	%	7,258,828		64.8	%	7,184,784		64.3	%
Mortgage-backed securities	896,245		8.4	%	839,621		7.6	%	965,533		8.6	%	984,767		8.8	%	1,155,192		10.3	%
Commercial mortgage-backed securities	832,159		7.8	%	1,106,332		10.0	%	1,114,528		10.0	%	1,232,092		11.0	%	1,119,401		10.0	%
Asset-backed securities	1,351,356		12.6	%	1,657,931		15.0	%	1,677,941		15.0	%	1,724,651		15.4	%	1,710,631		15.3	%
Total fixed maturities, at fair value	$	10,689,513	100.0	%	$	11,029,614	100.0	%	$	11,178,625	100.0	%	$	11,200,338	100.0	%	$	11,170,008	100.0	%

(1)    This table excludes the collateral received and reinvested and includes the fixed maturities and short-term investments pledged under securities lending agreements, at fair value.

(2)     For individual fixed maturities, S&P ratings are used. In the absence of an S&P rating, ratings from Moody’s are used, followed by ratings from Fitch Ratings.

(3)     Includes U.S. government-sponsored agency mortgage backed securities and agency commercial mortgage backed securities.

23

Arch Capital Group Ltd. and Subsidiaries

Investment Information — Analysis of Corporate Exposures

The following table summarizes the Company’s corporate bonds by sector, excluding government-backed securities and amounts included in the ‘other’ segment:

(U.S. Dollars in thousands)	June 30,				March 31,				December 31,				September 30,				June 30,
	2015				2015				2014				2014				2014
Sector:
Industrials	$	1,705,524	57.3	%	$	1,840,470	55.8	%	$	1,727,553	52.4	%	$	1,557,042	47.9	%	$	1,619,675	52.4	%
Financials	896,655		30.1	%	1,014,923		30.8	%	1,149,620		34.9	%	1,237,335		38.0	%	1,071,628		34.7	%
Covered bonds	171,368		5.8	%	184,197		5.6	%	209,611		6.4	%	232,292		7.1	%	235,787		7.6	%
Utilities	147,563		5.0	%	191,341		5.8	%	146,442		4.4	%	148,331		4.6	%	128,012		4.1	%
All other (1)	54,936		1.8	%	65,090		2.0	%	62,704		1.9	%	77,381		2.4	%	37,221		1.2	%
Total fixed maturities, at fair value	$	2,976,046	100.0	%	$	3,296,021	100.0	%	$	3,295,930	100.0	%	$	3,252,381	100.0	%	$	3,092,323	100.0	%
Credit quality distribution (2):
AAA	$	429,889	14.4	%	$	476,205	14.4	%	$	423,819	12.9	%	$	446,836	13.7	%	$	421,711	13.6	%
AA	778,677		26.2	%	840,763		25.5	%	773,893		23.5	%	852,197		26.2	%	843,638		27.3	%
A	1,101,592		37.0	%	1,236,797		37.5	%	1,399,218		42.5	%	1,211,315		37.2	%	1,059,987		34.3	%
BBB	243,514		8.2	%	320,014		9.7	%	271,826		8.2	%	262,418		8.1	%	277,614		9.0	%
BB	161,134		5.4	%	150,996		4.6	%	127,010		3.9	%	126,557		3.9	%	126,092		4.1	%
B	152,712		5.1	%	163,263		5.0	%	173,582		5.3	%	193,645		6.0	%	180,907		5.9	%
Lower than B	10,332		0.3	%	13,606		0.4	%	20,223		0.6	%	21,248		0.7	%	34,213		1.1	%
Not rated	98,196		3.3	%	94,377		2.9	%	106,359		3.2	%	138,165		4.2	%	148,161		4.8	%
Total fixed maturities, at fair value	$	2,976,046	100.0	%	$	3,296,021	100.0	%	$	3,295,930	100.0	%	$	3,252,381	100.0	%	$	3,092,323	100.0	%

(1)    Includes sovereign securities, supernational securities and other.

(2)    For individual fixed maturities, S&P ratings are used. In the absence of an S&P rating, ratings from Moody’s are used, followed by ratings from Fitch Ratings.

The following table summarizes the Company’s top ten exposures to fixed income corporate issuers by fair value at June 30, 2015, excluding government-backed securities, covered bonds and amounts included in the ‘other’ segment:

(U.S. Dollars in thousands)	Fair Value		% of Asset Class		% of Investable Assets		Credit Quality (1)
Issuer:
Apple Inc.	$	81,071	2.7	%	0.6	%	AA+/Aa1
General Electric Co.	75,677		2.5	%	0.5	%	AA+/A1
Exxon Mobil Corp.	71,048		2.4	%	0.5	%	AAA/Aaa
International Business Machines Corp.	69,076		2.3	%	0.5	%	AA-/Aa3
Microsoft Corporation	59,000		2.0	%	0.4	%	AAA/Aaa
Porsche Automobil Holding SE	56,999		1.9	%	0.4	%	A/A2
Chevron Corp.	54,335		1.8	%	0.4	%	AA/Aa1
Daimler AG	50,662		1.7	%	0.3	%	A-/A3
Oracle Corporation	50,051		1.7	%	0.3	%	AA-/A1
Toyota Motor Corporation	46,020		1.5	%	0.3	%	AA-/Aa3
Total	$	613,939	20.6	%	4.2	%

(1)    Average credit ratings assigned by S&P and Moody’s, respectively.

24

Arch Capital Group Ltd. and Subsidiaries

Investment Information — Structured Securities

The following table provides information on the Company’s mortgage-backed securities (MBS) and commercial mortgage-backed securities (CMBS) at June 30, 2015, excluding amounts guaranteed by U.S. government agencies and amounts included in the ‘other’ segment:

(U.S. Dollars in thousands)				Average	Estimated Fair Value
	Issuance	Amortized		Credit			% of Amortized		% of Investable			Non-Agency		Non-Agency
	Year	Cost		Quality	Total		Cost		Assets		Additional Statistics:	MBS		CMBS (1)
Non-agency MBS:	2003-2008	$	113,967	CC+	$	122,725	107.7	%	0.8	%	Wtd. average loan age (months)	74		25
	2009	24,481		AAA	24,328		99.4	%	0.2	%	Wtd. average life (months) (2)	48		54
	2010	18,943		AA	18,511		97.7	%	0.1	%	Wtd. average loan-to-value % (3)	57.1	%	53.1	%
	2013	28,555		AAA	28,418		99.5	%	0.2	%	Total delinquencies (4)	9.7	%	0.5	%
	2014	44,747		AA	44,734		100.0	%	0.3	%	Current credit support % (5)	13.3	%	39.2	%
	2015	24,824		AA-	24,370		98.2	%	0.2	%
Total non-agency MBS		$	255,517	BB+	$	263,086	103.0	%	1.8	%
Non-agency CMBS:	2002-2008	$	38,887	BBB+	$	39,660	102.0	%	0.3	%
	2009	364		BBB-	367		100.8	%	—	%
	2010	10,312		AAA	10,505		101.9	%	0.1	%
	2011	44,008		AAA	44,291		100.6	%	0.3	%
	2012	66,343		AAA	67,460		101.7	%	0.5	%
	2013	117,096		AA+	119,660		102.2	%	0.8	%
	2014	283,569		AAA	284,337		100.3	%	2.0	%
	2015	209,714		AAA	205,588		98.0	%	1.4	%
Total non-agency CMBS		$	770,293	AA+	$	771,868	100.2	%	5.3	%

(1) Loans defeased with government/agency obligations represented were not material to the collateral underlying the Company’s CMBS holdings.

(2) The weighted average life for MBS is based on the interest rates in effect at June 30, 2015. The weighted average life for CMBS reflects the average life of the collateral underlying the Company’s CMBS holdings.

(3) The range of loan-to-values on MBS is 18% to 106%, while the range of loan-to-values on CMBS is 7% to 203%.

(4) Total delinquencies includes 60 days and over.

(5) Current credit support % represents the % for a collateralized mortgage obligation (CMO) or CMBS class/tranche from other subordinate classes in the same CMO or CMBS deal.

The following table provides information on the Company’s asset-backed securities (ABS) at June 30, 2015, excluding amounts included in the ‘other’ segment:

(U.S. Dollars in thousands)			Average	Weighted		Estimated Fair Value
	Amortized		Credit	Average Credit				% of Amortized		% of Investable
	Cost		Quality	Support		Total		Cost		Assets
Sector:
Credit cards	$	488,734	AAA	16	%	$	490,188	100.3	%	3.4	%
Autos	331,042		AAA	26	%	332,204		100.4	%	2.3	%
Loans	274,485		AA-	27	%	275,156		100.2	%	1.9	%
Equipment	156,103		AA-	10	%	155,391		99.5	%	1.1	%
Other (1)	97,030		A	17	%	98,418		101.4	%	0.7	%
Total ABS (2)	$	1,347,394	AA+			$	1,351,357	100.3	%	9.3	%

(1) Including rate reduction bonds, commodities, home equity, U.K. securitized and other.

(2) The effective duration of the total ABS was 1.7 years at June 30, 2015. The Company’s investment portfolio included sub-prime securities with a par value of $20.9 million and estimated fair value of $11.9 million and an average credit quality of “CCC-/Caa3” from S&P/Moody’s at June 30, 2015. Such amounts were primarily in the home equity sector of ABS with the balance in other ABS, MBS and CMBS sectors. In addition, the portfolio of collateral backing the Company’s securities lending program contains sub-prime securities with an estimated fair value of $5.7 million and an average credit quality of “CCC/Ca” from S&P/Moody’s at June 30, 2015.

25

Arch Capital Group Ltd. and Subsidiaries

Investment Information — Bank Loan Investments

The Company’s investments in bank loans are included in the following categories at June 30, 2015, excluding amounts included in the ‘other’ segment:

(U.S. Dollars in thousands)	Fair Value		% of Asset Class		% of Investable Assets
Composition:
Investment funds accounted for using the equity method	$	3,858	1.1	%	—	%
Term loan investments (1)	357,936		98.9	%	2.5	%
Total	$	361,794	100.0	%	2.5	%
Currency:
U.S.-denominated	$	255,348	70.6	%	1.8	%
Euro-denominated	106,446		29.4	%	0.7	%
Total	$	361,794	100.0	%	2.5	%
Sector:
Consumer non-cyclical	$	83,384	23.0	%	0.6	%
Consumer cyclical	82,446		22.8	%	0.6	%
Industrials	64,141		17.7	%	0.4	%
Media	41,280		11.4	%	0.3	%
Basic materials	34,483		9.5	%	0.2	%
Utilities	32,639		9.0	%	0.2	%
All other	23,421		6.5	%	0.2	%
Total	$	361,794	100.0	%	2.5	%
Weighted average rating factor (Moody's)	B1

(1)    Included in “investments accounted for using the fair value option” on the Company’s balance sheet.

26

Arch Capital Group Ltd. and Subsidiaries

Investment Information — Eurozone Investments

The fair value of the Company’s Eurozone investments are as follows at June 30, 2015, excluding amounts included in the ‘other’ segment:

(U.S. Dollars in thousands)			Financial		Other		Bank		Equities
	Sovereign (2)		Corporates		Corporates		Loans (3)		and Other		Total
Country (1):
Netherlands	$	95,510	$	8,630	$	52,424	$	10,890	$	—	$	167,454
Germany	85,932		—		31,776		27,549		62		145,319
Ireland	—		—		30,963		118		13,974		45,055
Supranational (4)	34,233		—		—		—		—		34,233
Luxembourg	—		—		28,203		5,816		—		34,019
France	2,107		1,755		5,187		4,019		5,872		18,940
Belgium	9,920		—		—		—		—		9,920
Slovenia	1,722		—		—		—		—		1,722
Austria	902		—		—		168		—		1,070
Italy	—		—		558		459		—		1,017
Spain	—		—		817		—		—		817
Greece	60		—		—		—		—		60
Total	$	230,386	$	10,385	$	149,928	$	49,019	$	19,908	$	459,626

(1) The country allocations set forth in the table are based on various assumptions made by the Company in assessing the country in which the underlying credit risk resides, including a review of the jurisdiction of organization, business operations and other factors. Based on such analysis, the Company does not believe that it has any other Eurozone investments at June 30, 2015.

(2) Sovereign includes securities issued and/or guaranteed by Eurozone governments.

(3) Included in “term loan investments” in the Bank Loan Investments table.

(4) Includes World Bank, European Investment Bank, International Finance Corp. and European Bank for Reconstruction and Development.

27

Arch Capital Group Ltd. and Subsidiaries

Comments on Regulation G

Throughout this financial supplement, the Company presents its operations in the way it believes will be the most meaningful and useful to investors, analysts, rating agencies and others who use the Company’s financial information in evaluating the performance of the Company. This presentation includes the use of after-tax operating income available to Arch common shareholders, which is defined as net income available to Arch common shareholders, excluding net realized gains or losses, net impairment losses recognized in earnings, equity in net income or loss of investment funds accounted for using the equity method and net foreign exchange gains or losses, net of income taxes. The presentation of after-tax operating income available to Arch common shareholders is a “non-GAAP financial measure” as defined in Regulation G. The reconciliation of such measure to net income available to Arch common shareholders (the most directly comparable GAAP financial measure) in accordance with Regulation G is included on the following page.

The Company believes that net realized gains or losses, net impairment losses recognized in earnings, equity in net income or loss of investment funds accounted for using the equity method and net foreign exchange gains or losses in any particular period are not indicative of the performance of, or trends in, the Company’s business performance. Although net realized gains or losses, net impairment losses recognized in earnings, equity in net income or loss of investment funds accounted for using the equity method and net foreign exchange gains or losses are an integral part of the Company’s operations, the decision to realize investment gains or losses, the recognition of the change in the carrying value of investments accounted for using the fair value option in net realized gains or losses, the recognition of net impairment losses recognized in earnings, the recognition of equity in net income or loss of investment funds accounted for using the equity method and the recognition of foreign exchange gains or losses are independent of the insurance underwriting process and result, in large part, from general economic and financial market conditions. Furthermore, certain users of the Company’s financial information believe that, for many companies, the timing of the realization of investment gains or losses is largely opportunistic. In addition, net impairment losses recognized in earnings represent other-than-temporary declines in expected recovery values on securities without actual realization. The use of the equity method on certain of the Company’s investments in certain funds that invest in fixed maturity securities is driven by the ownership structure of such funds (either limited partnerships or limited liability companies). In applying the equity method, these investments are initially recorded at cost and are subsequently adjusted based on the Company’s proportionate share of the net income or loss of the funds (which include changes in the market value of the underlying securities in the funds). This method of accounting is different from the way the Company accounts for its other fixed maturity securities and the timing of the recognition of equity in net income or loss of investment funds accounted for using the equity method may differ from gains or losses in the future upon sale or maturity of such investments. Due to these reasons, the Company excludes net realized gains or losses, net impairment losses recognized in earnings, equity in net income or loss of investment funds accounted for using the equity method and net foreign exchange gains or losses from the calculation of after-tax operating income available to Arch common shareholders.

The Company believes that showing net income available to Arch common shareholders exclusive of the items referred to above reflects the underlying fundamentals of the Company’s business since the Company evaluates the performance of and manages its business to produce an underwriting profit. In addition to presenting net income available to Arch common shareholders, the Company believes that this presentation enables investors and other users of the Company’s financial information to analyze the Company’s performance in a manner similar to how the Company’s management analyzes performance. The Company also believes that this measure follows industry practice and, therefore, allows the users of the Company’s financial information to compare the Company’s performance with its industry peer group. The Company believes that the equity analysts and certain rating agencies which follow the Company and the insurance industry as a whole generally exclude these items from their analyses for the same reasons.

In addition, the Company’s segment information includes the use of a combined ratio excluding catastrophic activity and prior year development for the insurance segment and reinsurance segment and a combined ratio excluding prior year development for the mortgage segment. These ratios are “non-GAAP financial measures” as defined in Regulation G. The reconciliation of such measures to the combined ratio (the most directly comparable GAAP financial measure) in accordance with Regulation G are shown on the individual segment pages. The Company’s management utilizes the adjusted combined ratio excluding current accident year catastrophic events and favorable or adverse development in prior year loss reserves in its analysis of the core underwriting performance of each of its underwriting segments.

28

Arch Capital Group Ltd. and Subsidiaries

Operating Income Reconciliation and Annualized Operating Return on Average Common Equity

The following table provides a reconciliation of after-tax operating income (loss) available to Arch common shareholders to net income available to Arch common shareholders along with related per common share results:

(U.S. Dollars in thousands, except share data)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2015			2015			2014			2014			2014			2015			2014
After-tax operating income available to Arch common shareholders	$	145,956		$	149,846		$	150,184		$	142,055		$	160,669		$	295,802		$	325,073
Net realized gains (losses), net of tax	(28,074		)	61,934			26,847			27,476			50,267			33,860			68,540
Net impairment losses recognized in earnings, net of tax	(1,113		)	(5,799		)	(3,837		)	(8,593		)	(14,749		)	(6,912		)	(17,720		)
Equity in net income of investment funds accounted for using the equity method, net of tax	16,113			5,532			2,252			4,765			9,054			21,645			12,218
Net foreign exchange gains (losses), net of tax	(22,577		)	66,339			34,233			57,488			(2,710		)	43,762			(8,564		)
Net income available to Arch common shareholders	$	110,305		$	277,852		$	209,679		$	223,191		$	202,531		$	388,157		$	379,547
Diluted per common share results:
After-tax operating income available to Arch common shareholders	$	1.16		$	1.17		$	1.15		$	1.05		$	1.17		$	2.33		$	2.38
Net realized gains (losses), net of tax	$	(0.22	)	$	0.48		$	0.21		$	0.20		$	0.37		$	0.27		$	0.50
Net impairment losses recognized in earnings, net of tax	$	(0.01	)	$	(0.05	)	$	(0.03	)	$	(0.06	)	$	(0.11	)	$	(0.06	)	$	(0.13	)
Equity in net income of investment funds accounted for using the equity method, net of tax	$	0.13		$	0.04		$	0.01		$	0.03		$	0.07		$	0.17		$	0.09
Net foreign exchange gains (losses), net of tax	$	(0.18	)	$	0.52		$	0.26		$	0.42		$	(0.02	)	$	0.34		$	(0.06	)
Net income available to Arch common shareholders	$	0.88		$	2.16		$	1.60		$	1.64		$	1.48		$	3.05		$	2.78
Weighted average common shares and common share equivalents outstanding — diluted	125,885,420			128,451,054			130,855,218			135,876,605			136,889,944			127,156,713			136,716,889

The following table provides the calculation of annualized operating return on average common equity:

(U.S. Dollars in thousands)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2015			2015			2014			2014			2014			2015			2014
After-tax operating income available to Arch common shareholders	$	145,956		$	149,846		$	150,184		$	142,055		$	160,669		$	295,802		$	325,073
Annualized after-tax operating income available to Arch common shareholders (a)	$	583,824		$	599,384		$	600,736		$	568,220		$	642,676		$	591,604		$	650,146
Beginning common shareholders’ equity	$	5,963,702		$	5,805,053		$	5,756,046		$	5,904,399		$	5,567,133		$	5,805,053		$	5,322,496
Ending common shareholders’ equity	5,812,515			5,963,702			5,805,053			5,756,046			5,904,399			5,812,515			5,904,399
Average common shareholders’ equity (b)	$	5,888,109		$	5,884,378		$	5,780,550		$	5,830,223		$	5,735,766		$	5,808,784		$	5,613,448
Annualized operating return on average common equity (a)/(b)	9.9		%	10.2		%	10.4		%	9.7		%	11.2		%	10.2		%	11.6		%

29

Arch Capital Group Ltd. and Subsidiaries

Operating Income and Effective Tax Rate Calculations

The following table provides a reconciliation of the components of after-tax operating income available to Arch common shareholders and the effective tax rate on pre-tax operating income available to Arch common shareholders:

(U.S. Dollars in thousands)	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2015			2015			2014			2014			2014			2015			2014
Arch Operating Income Components (excludes ‘Other’ segment):
Income before income taxes	$	121,913		$	293,474		$	222,280		$	236,400		$	215,521		$	415,387		$	402,108
Less:
Net realized gains	(26,860		)	65,509			31,310			31,411			50,966			38,649			70,663
Net impairment losses recognized in earnings	(1,113		)	(5,799		)	(3,837		)	(8,593		)	(14,749		)	(6,912		)	(17,720		)
Equity in net income of investment funds accounted for using the equity method	16,167			5,889			2,424			4,966			9,240			22,056			12,493
Net foreign exchange gains (losses)	(22,571		)	66,853			34,467			57,611			(2,764		)	44,282			(9,420		)
Pre-tax operating income	156,290			161,022			157,916			151,005			172,828			317,312			346,092
Arch share of ‘Other’ segment operating income (loss) (1)	1,305			612			452			317			(536		)	1,917			(978		)
Pre-tax operating income available to Arch (b)	157,595			161,634			158,368			151,322			172,292			319,229			345,114
Income tax expense (a)	(6,154		)	(6,304		)	(2,699		)	(3,783		)	(6,138		)	(12,458		)	(9,072		)
After-tax operating income available to Arch	151,441			155,330			155,669			147,539			166,154			306,771			336,042
Preferred dividends	(5,485		)	(5,484		)	(5,485		)	(5,484		)	(5,485		)	(10,969		)	(10,969		)
After-tax operating income available to Arch common shareholders	$	145,956		$	149,846		$	150,184		$	142,055		$	160,669		$	295,802		$	325,073
Effective tax rate on pre-tax operating income available to Arch (a)/(b)	3.9		%	3.9		%	1.7		%	2.5		%	3.6		%	3.9		%	2.6		%
Balances in ‘Other’ segment:
Underwriting income (loss)	$	(3,229	)	$	1,768		$	(836	)	$	(80	)	$	(1,042	)	$	(1,461	)	$	(2,164	)
Net investment income	19,792			8,706			9,850			7,866			532			28,498			533
Other expenses	—			—			—			—			347			—			(2,329		)
Preferred dividends	(4,743		)	(4,908		)	(4,910		)	(4,909		)	(4,857		)	(9,651		)	(4,909		)
Pre-tax operating income available to common shareholders	11,820			5,566			4,104			2,877			(5,020		)	17,386			(8,869		)
Arch ownership	11		%	11		%	11		%	11		%	11		%	11		%	11		%
Arch share of ‘Other’ segment operating income (loss) (1)	$	1,305		$	612		$	452		$	317		$	(536	)	$	1,917		$	(978	)

(1)     Excludes amounts attributable to net realized gains or losses and net foreign exchange gains or losses in the ‘other’ segment (see ‘Segment Information’).

30

Arch Capital Group Ltd. and Subsidiaries

Capital Structure and Share Repurchase Activity

The following table provides an analysis of the Company’s capital structure:

(U.S. Dollars in thousands, except share data)	June 30,			March 31,			December 31,			September 30,			June 30,
	2015			2015			2014			2014			2014
Debt:
Senior notes, due May 1, 2034 ($300,000 principal, 7.35%) (1)	$	296,834		$	296,815		$	296,796		$	296,777		$	296,759
Senior notes, due November 1, 2043 ($500,000 principal, 5.144%) (2)	494,388			494,366			494,345			494,324			494,303
Revolving credit agreement borrowings, due June 30, 2019 (variable)	100,000			100,000			100,000			100,000			100,000
Total debt	$	891,222		$	891,181		$	891,141		$	891,101		$	891,062
Shareholders’ equity available to Arch:
Non-cumulative preferred shares (6.75%)	$	325,000		$	325,000		$	325,000		$	325,000		$	325,000
Common shareholders’ equity (a)	5,812,515			5,963,702			5,805,053			5,756,046			5,904,399
Total shareholders’ equity available to Arch	$	6,137,515		$	6,288,702		$	6,130,053		$	6,081,046		$	6,229,399
Total capital available to Arch	$	7,028,737		$	7,179,883		$	7,021,194		$	6,972,147		$	7,120,461
Common shares outstanding, net of treasury shares (b)	122,403,909			124,760,841			127,367,934			130,700,619			135,030,886
Book value per common share (3) (a)/(b)	$	47.49		$	47.80		$	45.58		$	44.04		$	43.73
Leverage ratios:
Senior notes/total capital	11.3		%	11.0		%	11.3		%	11.3		%	11.1		%
Revolving credit agreement borrowings/total capital	1.4		%	1.4		%	1.4		%	1.4		%	1.4		%
Debt/total capital	12.7		%	12.4		%	12.7		%	12.8		%	12.5		%
Preferred/total capital	4.6		%	4.5		%	4.6		%	4.7		%	4.6		%
Debt and preferred/total capital	17.3		%	16.9		%	17.3		%	17.4		%	17.1		%

(1) Issued by Arch Capital Group Ltd. (“ACGL”).

(2) Issued by Arch Capital Group (U.S.) Inc., a wholly owned subsidiary of ACGL, and fully and unconditionally guaranteed by ACGL.

(3) Excludes the effects of stock options and restricted stock units outstanding.

The following table provides an analysis of the Company’s share repurchase program:

(U.S. Dollars in thousands except share data)	Three Months Ended														Cumulative
	June 30,			March 31,			December 31,			September 30,			June 30,		June 30,
	2015			2015			2014			2014			2014		2015
Effect of share repurchases:
Aggregate cost of shares repurchased	$	198,979		$	162,898		$	202,218		$	251,919		$	—	$	3,603,899
Shares repurchased	3,165,975			2,731,248			3,593,114			4,593,726			—		124,031,305
Average price per share repurchased	$	62.85		$	59.64		$	56.28		$	54.84		$	—	$	29.06
Average book value per common share (1)	$	47.65		$	46.69		$	44.81		$	43.89		$	42.63
Average repurchase price-to-book multiple	1.32		x	1.28		x	1.26		x	1.25		x	—
Remaining share repurchase authorization (2)	$	525,263

(1)    Equals average of beginning and ending book value per common share for each period presented.

(2) Repurchases under the share repurchase authorization may be effected from time to time in open market or privately negotiated transactions through December 2016. The timing and amount of the repurchase transactions under this program will depend on a variety of factors, including market conditions and corporate and regulatory considerations.

31