Arch Capital Group Ltd. saw its profits drop by almost $50 million during a tough period's trading over the first quarter of 2009.

The insurer's net income fell from $189.4 million or $2.78 per share in the fourth quarter of 2008 to $139.9 million or $2.24 per share for the same period this year.

The company also reported after-tax operating income available to common shareholders of $169 million or $2.70 per share for the first quarter, compared to $202 million or $2.97 per share, for last year's first quarter.

Its book value per common share, meanwhile, increased by 6.3 percent to $54.61 at March 31, 2009, from $51.36 per share at December 31, 2008.

Arch's after-tax operating income available to common shareholders represented a 21.1 percent annualised return on average common equity for the 2009 first quarter, versus 21.9 percent for the 2008 first quarter.

Gross premiums written were also down, from $1.05 billion in Q1 2008 to $1.02 billion for the corresponding period this year, while the company's combined ratio increased to 86.7 percent from 86.2 percent. Net investment income for the 2009 first quarter was $95.9 million or $1.53 per share, compared to $111.7 million or $1.79 per share in the 2008 fourth quarter and $122.2 million or $1.80 per share in the 2008 first quarter. Contributing to the decrease was a decline in the portfolio's book yield from 4.55 percent at year-end to 4.17 percent, due in part to lower available yields and a reduction in the portfolio's effective duration.