<?xml version="1.0"?>
<ownershipDocument>

    <schemaVersion>X0202</schemaVersion>

    <documentType>4</documentType>

    <periodOfReport>2006-05-03</periodOfReport>

    <notSubjectToSection16>0</notSubjectToSection16>

    <issuer>
        <issuerCik>0000947484</issuerCik>
        <issuerName>ARCH CAPITAL GROUP LTD.</issuerName>
        <issuerTradingSymbol>ACGL</issuerTradingSymbol>
    </issuer>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001162870</rptOwnerCik>
            <rptOwnerName>WARBURG PINCUS LLC</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>466 LEXINGTON AVENUE</rptOwnerStreet1>
            <rptOwnerStreet2></rptOwnerStreet2>
            <rptOwnerCity>NEW YORK</rptOwnerCity>
            <rptOwnerState>NY</rptOwnerState>
            <rptOwnerZipCode>10017</rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>0</isDirector>
            <isOfficer>0</isOfficer>
            <isTenPercentOwner>1</isTenPercentOwner>
            <isOther>0</isOther>
        </reportingOwnerRelationship>
    </reportingOwner>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001157334</rptOwnerCik>
            <rptOwnerName>WARBURG PINCUS PRIVATE EQUITY VIII L P</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>466 LEXINGTON AVENUE</rptOwnerStreet1>
            <rptOwnerStreet2></rptOwnerStreet2>
            <rptOwnerCity>NEW YORK</rptOwnerCity>
            <rptOwnerState>NY</rptOwnerState>
            <rptOwnerZipCode>10017</rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>0</isDirector>
            <isOfficer>0</isOfficer>
            <isTenPercentOwner>1</isTenPercentOwner>
            <isOther>0</isOther>
        </reportingOwnerRelationship>
    </reportingOwner>

    <nonDerivativeTable>
        <nonDerivativeTransaction>
            <securityTitle>
                <value>Common Shares, $0.01 par value per share</value>
                <footnoteId id="F1"/>
            </securityTitle>
            <transactionDate>
                <value>2006-05-03</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>J</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
                <footnoteId id="F2"/>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>4028333</value>
                </transactionShares>
                <transactionPricePerShare>
                    <footnoteId id="F2"/>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>D</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>18882145</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>I</value>
                </directOrIndirectOwnership>
                <natureOfOwnership>
                    <value>Partnership</value>
                    <footnoteId id="F1"/>
                </natureOfOwnership>
            </ownershipNature>
        </nonDerivativeTransaction>
    </nonDerivativeTable>

    <footnotes>
        <footnote id="F1">THE SECURITY HOLDERS ARE WARBURG PINCUS (BERMUDA) PRIVATE EQUITY VIII, L.P. (&quot;WP VIII BERMUDA&quot;) AND WARBURG PINCUS (BERMUDA)
 INTERNATIONAL PARTNERS, L.P. (&quot;WPIP BERMUDA&quot;) AND WARBURG PINCUS NETHERLANDS INTERNATIONAL PARTNERS I, C.V. (&quot;WPIP
 NETHERLANDS I&quot;). WARBURG PINCUS (BERMUDA) PRIVATE EQUITY LTD. (&quot;WP VIII BERMUDA LTD.&quot;) IS THE SOLE GENERAL PARTNER OF WP
 VIII BERMUDA. WARBURG PINCUS (BERMUDA) INTERNATIONAL LTD. (&quot;WPIP BERMUDA LTD.&quot;) IS THE SOLE GENERAL PARTNER OF WPIP BERMUDA.
 WARBURG PINCUS PARTNERS, LLC IS THE SOLE GENERAL PARTNER OF WPIP NETHERLANDS I. WP VIII BERMUDA, WPIP BERMUDA AND WPIP
 NETHERLANDS I ARE MANAGED BY WARBURG PINCUS LLC (&quot;WP LLC&quot;). CHARLES R. KAYE AND JOSEPH P. LANDY ARE MANAGING MEMBERS AND
 CO-PRESIDENTS OF WP LLC AND MAY BE DEEMED TO CONTROL THE WARBURG PINCUS ENTITIES.</footnote>
        <footnote id="F2">ON MAY 3, 2006, THE REPORTING PERSONS DISTRIBUTED AN AGGREGATE OF 4,028,333 COMMON SHARES OF THE ISSUER TO THEIR LIMITED AND
 GENERAL PARTNERS.</footnote>
    </footnotes>

    <ownerSignature>
        <signatureName>/s/ Scott A. Arenare, Managing Director</signatureName>
        <signatureDate>2006-05-05</signatureDate>
    </ownerSignature>
</ownershipDocument>
