Arch Capital Group Ltd., a Bermuda-based insurance holding company (Nasdaq: ACGL), today announced that it has closed $763 million in private equity funding led by private equity firms Warburg Pincus and Hellman & Friedman. This financing increases the company's capitalization to over $1 billion of invested capital.

On October 24, 2001, the Company announced the launch of an underwriting initiative to meet current and future demand in the global insurance marketplace.

Peter Appel, President and CEO of Arch Capital, said: "The two most important components of our new initiative-the management team and a $1 billion capital base-are now in place. Our team, led by Paul Ingrey, is already in Bermuda helping to meet the increased demand for insurance and reinsurance products. Arch is now a key participant in the global insurance marketplace."

Paul Ingrey, Chairman and CEO of Arch Reinsurance, said: "The benefits of Arch's existing platform have become readily apparent. We've already been reviewing submissions, quoting terms and binding policies. With more than $1 billion of fresh capital, we are a significant source of capacity for the upcoming January renewal season."

Altogether the investment totaled $763 million. Warburg Pincus and Hellman & Friedman led the financing, investing $405 million and $225 million, respectively. Other institutional investors included funds affiliated with GE Capital, GE Asset Management, trident II, LP, and Farallon Capital Management. Included in the financing, management co-invested a combined $13.15 million.

The company also announced that Kewsong Lee, a Managing Director at Warburg Pincus, and Jack Bunce, a Managing Director at Hellman & Friedman, will join the board of directors.

"Arch is open for business," said Warburg Pincus' Kewsong Lee. "Instead of being distracted by raising money and building infrastructure, the Arch management team can focus on underwriting insurance to grow this company."

Added Jack Bunce of Hellman & Friedman, "We are confident the insurance market will value Arch's key assets-knowledgeable underwriters and lots of clean capital."

The company's reinsurance team, also announced last month, includes industry veterans Ingrey, formerly Chairman of F&G Re; Dwight Evans, formerly Executive Vice President, North American Property for St. Paul Re and F&G Re; and Marc Grandisson, Vice President and Actuary of the reinsurance division of Berkshire Hathaway. Together they represent more than 70 years of combined management experience in the reinsurance business.

About Arch Capital Group Ltd.

Arch Capital Group Ltd., through its subsidiaries, provides reinsurance and insurance products on a global basis. Upon the closing of this transaction, Arch Capital will have more than $1 billion in equity capital.

About Hellman & Friedman LLC

Hellman & Friedman LLC is a San Francisco-based private equity investment firm. Since its founding in 1984, the firm has raised and managed more than $4.9 billion of committed capital and invested in over 40 companies. The firm's strategy is to invest in superior business franchises and to be a knowledgeable, value-added, and flexible investor in select industries such as financial services, media, professional services, information services and communications. Representative investments include Mid Ocean Reinsurance; The Nasdaq Stock Market, Inc.; Franklin Resources, Inc.; Young & Rubicam, Inc.; Formula One Holdings, Ltd.; Western Wireless Corporation (Nasdaq: WWCA); VoiceStream Wireless Corporation; Eller Media Company, Inc.; and others. For more information on Hellman & Friedman, visit www.hf.com.

About Warburg Pincus LLC

Warburg Pincus is one of the largest private equity investment firms in the world. Working in partnership with management teams, Warburg Pincus has taken an active role in building businesses, including companies such as RenaissanceRe Holdings Ltd. (NYSE: RNR), Dime Bancorp, Inc. (NYSE: DME), Mellon Bank Corporation (NYSE: MEL), Knoll, Inc., BEA Systems (Nasdaq: BEAS) and VERITAS Software Corp. (Nasdaq: VRTS). Since 1971, Warburg Pincus has invested approximately $12 billion in 450 companies in 29 countries. The firm currently has $10 billion under management, with an additional $5 billion available for investment in a range of industries including: financial services, communications, healthcare and life sciences, information technology, media and natural resources. Throughout its 30-year history in private equity, Warburg Pincus has invested at all stages of a company's life cycle, from founding start-ups and providing growth capital to leading restructurings, recapitalizations and buy-outs. Further information is available at www.warburgpincus.com.

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. may include forward-looking statements that reflect the company's current views with respect to future events and financial performance. All statements other than statements of historical fact included in this release are forward-looking statements. Forward-looking statements involve the company's current assessment of risks and uncertainties, including statements regarding the expected benefits of the transaction, anticipated future financial results and prospects for the reinsurance markets generally. Actual events and results and prospects for the reinsurance markets may differ materially from those expressed or implied in these statements. In addition to risks and uncertainties related to the company's business described in filings by the company with the Securities Exchange Commission, the transactions described in this release are subject to various risks and uncertainties including, but not limited to, the risks relating to the successful integration of new management personnel into the company's existing structure and conditions in the insurance and reinsurance markets. 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.

Contacts: