Bermuda-based re/insurer Arch Capital Group Ltd. last night reported net income of $274.4 million - a tenfold improvement over the same period last year.

The company also enjoyed a spectacular 14.4 percent increase in book value during the July through September period, boosted by the soaring value of its investments, and a rise of more than 35 percent for the first nine months of the year.

The profit broke down to $4.39 per share, and compared to $26.4 million, or $0.42 per share, for the 2008 third quarter.

The company also posted net income of $566.4 million, or $9.05 per share, for the nine months of the year, compared to $408.1 million, or $6.23 per share, for the 2008 period.

Combined ratio - the percentage of premium dollars spent on claims and expenses - improved to 90 percent from 105.3 percent in 2008. Last year, the third quarter was impacted by a high level of catastrophe claims, including those relating to hurricanes Ike and Gustav.

Arch's after-tax operating income available to common shareholders represented a 16.4 percent annualised return on average common equity for the 2009 third quarter, compared to 7.6 percent for the 2008 third quarter, and 18.1 percent for the nine months ended September 30, compared to 17.4 percent for the 2008 period.

Book value per common share increased to $69.48 at September 30, 2009, from $60.76 per share at June 30, 2009 and from $51.36 at December 31, 2008. Arch attributed this to growth in retained earnings and an after-tax increase in the market value of the company's investment portfolio.

Including the effects of foreign exchange, total return on the company's investment portfolio was approximately 4.75 percent for the 2009 third quarter, compared to a loss of 2.69 percent for the 2008 third quarter, and 10.01 percent for the nine months ended September 30, 2009, compared to minus 1.86 percent for the 2008 period.

Net investment income of $100.2 million was fractionally down on last year.

The company recorded $4.6 million of net impairment losses through earnings in the 2009 third quarter. The net impairment losses primarily resulted from reductions in the expected recovery values on mortgage backed and asset backed securities during the period.