FILED PURSUANT TO RULE 424(b)
FILE NUMBER 333-86145
FILE NUMBER 33-99974
ARCH CAPITAL GROUP LTD.
PROSPECTUS SUPPLEMENT DATED JULY 15, 2003
TO
PROSPECTUSES DATED NOVEMBER 7, 2000 AND FEBRUARY 14, 2002
This prospectus supplement supplements our prospectuses dated November
7, 2000 and February 14, 2002 relating to the reoffers and resales of our
common shares, par value $.01 per share, issued or issuable under our 1999
Long Term Incentive and Share Award Plan (the "1999 Incentive Plan"), 1995
Long Term Incentive and Share Award Plan (the "1995 Incentive Plan") and 1995
Employee Stock Purchase Plan (together with the 1999 and 1995 Incentive
Plans, the "Plans"). This prospectus supplement sets forth a list of the
current selling shareholders and updates the number of common shares
available to be resold by each selling shareholder under the Plans. This
prospectus supplement should be read in conjunction with the prospectuses and
this prospectus supplement is qualified by reference to the prospectuses
except to the extent that the information contained herein supersedes the
information contained in the prospectuses.
SELLING SHAREHOLDERS
The following table sets forth certain information concerning the
selling shareholders as of July 15, 2003. Except as disclosed below, none of
the selling shareholders has, or within the past three years has had, any
position, office or other material relationship with us:
MAXIMUM NUMBER OF
SHARES OWNED AND/OR
SHARES OWNED SUBJECT TO OUTSTANDING
POSITION WITH PRIOR TO OPTIONS WHICH MAY BE
NAME THE COMPANY OFFERING OFFERED HEREBY(1)
---- ------------- ------------ ----------------------
Robert Clements Chairman, Director 1,770,931 (2) 182,514 (2)
Peter A. Appel President, Chief
Executive Officer and
Director 886,015 (3) 824,159 (3)
John L. Bunce, Jr. Director 14,356,832 (4) 3,063 (4)
Kewsong Lee Director 22,916,115 (5) 3,063 (5)
James J. Meenaghan Director 24,187 (6) 18,613 (6)
Robert F. Works Director 28,046 (7) 25,472 (7)
Louis T. Petrillo President and 95,800 (8) 93,857 (8)
General Counsel of Arch
Capital Services Inc.
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(1) Represents the number of common shares issued or issuable under the Plans
to each selling shareholder. Does not constitute a commitment to sell any
or all of the stated number of common shares. The number of shares offered
shall be determined from time to time by each selling shareholder at his
discretion.
(2) Amounts include (a) 1,139,083 common shares, 32,198 common shares issuable
upon exercise of class B warrants and 107,125 common shares issuable upon
exercise of currently exercisable options owned directly by Mr. Clements,
(b) 263,046 common shares and 18,698 common shares issuable upon exercise
of class B warrants owned directly by the spouse of Mr. Clements, (c)
48,512 common shares and 56,302 common shares issuable upon exercise of
class B warrants owned by a grantor retained annuity trust established for
the benefit of the children of Mr. Clements and (d) 2,725 common shares
acquired from the exercise of class A warrants and 103,242 series A
convertible preference shares ("preference shares") acquired directly by
Sound View Partners, L.P. ("Sound View") as part of the November 2001
capital infusion. Sound View is a limited partnership, the general
partners of which are Mr. Clements and his spouse. Taracay Investors
("Taracay") owns approximately 50% of Sound View. Mr. Clements disclaims
beneficial ownership of (a) all securities owned directly by his spouse,
(b) approximately 97% of the securities owned directly by Taracay, which
represents the ownership percentage of Taracay by Taracay partners other
than Mr. Clements and (c) approximately 98% of the securities directly
owned by Sound View, which represents the ownership percentage of Sound
View by Sound View partners other than Mr. Clements, but excluding that
portion of Sound View held by Taracay to the extent of Mr. Clements'
ownership of Taracay as stated herein.
(3) Amounts include (a) 146,187 common shares owned directly by Mr. Appel
(including 6,625 restricted shares which are subject to vesting), (b)
688,207 common shares issuable upon exercise of currently exercisable stock
options and (c) 51,621 common shares issuable upon conversion of preference
shares.
(4) Amounts include securities held by or for the benefit of HFCP IV (Bermuda),
L.P. ("HFCP IV Bermuda"), H&F International Partners IV-A (Bermuda), L.P.
("HFIP IV-A Bermuda"), H&F International Partners IV-B (Bermuda), L.P.
("HFIP IV-B Bermuda") and H&F Executive Fund IV (Bermuda), L.P. ("HFEF
Bermuda," and together with HFCP IV Bermuda, HFIP IV-A Bermuda and HFIP
IV-B Bermuda, the "H&F Funds"). H&F Investors IV (Bermuda), L.P. ("HFI IV
Bermuda") is the sole general partner of the H&F Funds. H&F Corporate
Investors IV (Bermuda) Ltd. ("HFCI Bermuda") is the sole general partner of
HFI IV Bermuda. HFI IV Bermuda may be deemed to control the H&F Funds. Mr.
Bunce is a member of an investment committee of HFCI Bermuda which has
investment discretion over the securities held by the H&F Funds. Mr. Bunce
is a 9.9% shareholder of HFCI Bermuda. All shares indicated as owned by Mr.
Bunce are included because he is a member of the board of directors of
Arch Capital Group Ltd and is affiliated with HFCI Bermuda. Mr. Bunce may
be deemed to have an indirect pecuniary interest (within the meaning of
Rule 16a-1 under the Exchange Act) in an indeterminate portion of the
shares beneficially owned by the H&F Funds. Mr. Bunce disclaims beneficial
ownership of all shares owned by the H&F Funds, except to the extent of
his indirect pecuniary interest in the issuer held through the H&F Funds.
Based on a Form 4 dated March 4, 2003 filed with the Securities and
Exchange Commission ("SEC") by Mr. Bunce.
(5) Amounts include securities held by or for the benefit of Warburg Pincus
(Bermuda) Private Equity VIII, L.P. ("WP VIII Bermuda"), Warburg Pincus
(Bermuda) International Partners, L.P. ("WPIP Bermuda"), Warburg Pincus
Netherlands International Partners I, C.V. ("WPIP Netherlands I") and
Warburg Pincus Netherlands International Partners II, C.V. ("WPIP
Netherlands II"). Warburg Pincus (Bermuda) Private Equity Ltd. ("WP VIII
Bermuda Ltd.") is the sole general partner of WP VIII Bermuda. Warburg
Pincus (Bermuda) International Ltd. ("WPIP Bermuda Ltd.") is the sole
general partner of WPIP Bermuda. Warburg, Pincus & Co. ("WP") is the sole
general partner of WPIP Netherlands I and WPIP Netherlands II. WP VIII
Bermuda, WPIP Bermuda, WPIP Netherlands I and WPIP Netherlands II are
managed by Warburg Pincus LLC ("WP LLC"). The foregoing is based on a
Schedule 13D dated December 18, 2002 and filed with the SEC by these
entities. Mr. Lee is a general partner of WP, a managing director and
member of WP LLC and a beneficial owner of certain shares of capital
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stock of WP VIII Bermuda Ltd. and WPIP Bermuda Ltd. All shares indicated as
owned by Mr. Lee are included because he is a member of our Board and is
affiliated with these Warburg Pincus entities. Mr. Lee may be deemed to
have an indirect pecuniary interest (within the meaning of Rule 16a-1 under
the Exchange Act) in an indeterminate portion of the shares owned by WP
VIII Bermuda, WPIP Bermuda, WPIP Netherlands I and WPIP Netherlands II. Mr.
Lee disclaims beneficial ownership of all shares owned by these Warburg
Pincus entities.
(6) Amounts include (a) 5,887 common shares owned directly by Mr. Meenaghan and
(b) 18,300 common shares issuable upon exercise of stock options (1,500 of
such shares are issuable upon exercise of stock options which are subject
to vesting).
(7) Amounts include (a) 6,746 common shares owned directly by Mr. Works and (b)
21,300 common shares issuable upon exercise of stock options (1,500 of such
shares are issuable upon exercise of stock options which are subject to
vesting).
(8) Amounts include (a) 8,000 common shares owned directly by Mr. Petrillo
(including 1,457 restricted shares which are subject to vesting) and (b)
87,800 common shares issuable upon exercise of stock options (13,337 of
such shares are issuable upon exercise of stock options which are subject
to vesting).
Information concerning the selling shareholders may change from time to
time and will be set forth in future supplements. Accordingly, the identity of
the selling shareholders may change and the number of shares of common shares
offered hereby may increase or decrease. Full copies of the prospectuses will
be provided upon request.
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