Issuer:

Arch Capital Group Ltd.

Security:

7.875% Non-Cumulative Preferred Shares, Series B

Size:

$125,000,000 (5,000,000 shares)

Maturity:

Perpetual

Ratings (Moody’s / S&P / Fitch):

Baa3 / BB+ / BBB-

Type of security:

SEC Registered

Dividend rights:

7.875% of the liquidation preference per annum, when, as and if declared by the board of directors, on a non-cumulative basis. If declared, the dividend payable on the period from May 24, 2006 to August 15, 2006 would be $0.44 per preferred share.

Dividend payment dates:

February 15th, May 15th, August 15th, November 15th, commencing on August 15, 2006.

Optional Redemption:

On or after May 15, 2011 at $25 per share (subject to certain exceptions described in the prospectus supplement)

Liquidation preference:

$25 per share

Estimated net proceeds:

$120 million

Trade Date:

May 17, 2006

Settle:

May 24, 2006 (T+5)

Public Offering Price:

$25 per share

Bookrunners:

Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., J.P. Morgan Securities Inc., Wachovia Capital Markets LLC.

Senior Co-Managers:

Credit Suisse Securities (USA) LLC, UBS Securities LLC

CUSIP:

G0450A154

Listing:

Arch intends to apply to have the preferred shares approved for listing on the NYSE under the symbol “ARHPRB”

Dividends:

Dividends paid on the Series B Non-Cumulative Preferred Shares should qualify as “qualified dividend income” if, as is intended, the Series B Non-Cumulative Preferred Shares are approved for listing on the NYSE. Qualified dividend income paid in the taxable years beginning on or before December 31, 2008 to certain shareholders is subject to tax at long-term capital gain rates. Congress has passed a bill which would extend this benefit to taxable years beginning on or before December 31, 2010. Dividends paid on the Series B Non-Cumulative Preferred Shares to U.S. corporate shareholders will not be eligible for the dividends-received deduction. There is a risk that dividends, if any, paid prior to the listing of the Series B Non-Cumulative Preferred Shares on the NYSE may not constitute qualified dividend income