Arch Capital Group Ltd. boosted its profits by more than $70 million during the first quarter of 2010 as its book value grew based on operating income and investment returns.

The insurer made $210.5 million or $3.79 per share in this year's first three months compared to $139.9 million or $2.24 per share for the same period in 2009.

The company also reported after-tax operating income of $98.7 million, or $1.78 per share, versus $169 million, or $2.70 per share, in 2009.

Arch's book value per share was $76.91 at March 31, 2010, a 5.3 percent increase from $73.01 per share at December 31, 2009, generated by operating income and investment returns.

The insurance company's after-tax operating income represented a 9.8 percent annualised return on average common equity for the 2010 first quarter, compared to 21.1 percent for the 2009 first quarter.

It recorded gross premiums written of $953.7 million during the first quarter of 2010 versus $1 billion in 2009 and a combined ratio of 96.4 percent compared to 86.7 percent over the respective period.

The combined ratio of the company's re/insurance subsidiaries consisted of a loss ratio of 63.9 percent and an underwriting expense ratio of 32.5 percent for the quarter, versus a loss ratio of 57.2 percent and an underwriting expense ratio of 29.5 percent for the 2009 first quarter.

The loss ratio was comprised of 50.3 points of paid losses, 1.7 points related to reserves for reported losses and 11.9 points related to incurred but not reported reserves, including approximately 8.7 points for current accident year catastrophic events, primarily linked to the Chilean earthquake, European Windstorm Xynthia and the Australian hailstorms and floods.

Arch's investment portfolio continued to be made up mainly of high quality fixed income securities with an average credit quality of "AA+" and no direct holdings of collateralised debt obligations, collateralised loan obligations or credit default swaps.

Including the effects of foreign exchange, total return on the company's investment portfolio was approximately 1.58 percent for the 2010 first quarter, compared to 1.09 percent for the 2009 first quarter.

In November 2009, the board of directors authorised the company to invest up to an additional $1 billion in its common shares through the share repurchase programme. During the 2010 first quarter, Arch repurchased 2.5 million common shares for an aggregate purchase price of $181.3 million.

Since the inception of the share repurchase programme through March 31, 2010, it has bought back 24.5 million common shares for an aggregate purchase price of $1.69 billion.

At March 31, 2010, $810.1 million of repurchases were available under the share repurchase programme.

ARCH CAPITAL Q1 REPORT CARD

Net income: $210.5 million compared to $139.9 million in 2009

Combined ratio: 96.4 percent compared to 86.7 percent in 2009

Gross premiums written: $953.7 million compared to $1 billion in 2009