ARCH CAPITAL GROUP LTD. ANNOUNCES
               CASH EXERCISE OF WARRANTS BY PRINCIPAL SHAREHOLDERS


         HAMILTON, BERMUDA, SEPTEMBER 24, 2002 - Arch Capital Group Ltd.
[NASDAQ: ACGL] today announced that its principal shareholders, private equity
investment funds affiliated with Warburg Pincus and Hellman & Friedman, and
certain other investors exercised for cash the Class A warrants that they
purchased as part of the capital infusion in November 2001. In addition, Robert
Clements, Chairman of the Company's Board, exercised for cash 120,000 of his
Class A warrants. An aggregate of 3,842,450 common shares were issued upon the
exercise of all outstanding Class A warrants, which were exercisable for $20.00
per share and were scheduled to expire on September 19, 2002. Payment of the
exercise price for these Class A warrants increased shareholders' equity by
approximately $74 million.

         "We are very pleased to increase our commitment to Arch," said Kewsong
Lee, a Managing Director of Warburg Pincus. "Over the past year, the Company has
achieved tremendous progress in its underwriting initiatives and in expanding
its reinsurance and insurance operations. We continue to believe in the
Company's long-term growth potential," Mr. Lee said.

         Added Jack Bunce, a Managing Director of Hellman & Friedman, "We remain
convinced that Arch is well positioned to grow and prosper in this strong
insurance and reinsurance marketplace. Our additional investment in the Company
illustrates our confidence in the progress and execution of the Company's
business plan."

         Arch Capital Group Ltd., a Bermuda-based company with over $1.3 billion
in equity capital, provides insurance and reinsurance on a worldwide basis
through its wholly owned subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

         The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. This release or any other written or
oral statements made by or on behalf of the Company may include forward-looking
statements which reflect




the Company's current views with respect to future events and financial
performance. Forward-looking statements involve the Company's current assessment
of risks and uncertainties, including statements regarding anticipated future
financial results and prospects for the insurance and reinsurance markets
generally. Actual events and results and prospects for the insurance and
reinsurance markets may differ materially from those expressed or implied in
these statements. In addition to risks and uncertainties related to the
Company's business described in filings by the Company with the Securities
Exchange Commission, the items addressed in this release are subject to various
risks and uncertainties including, but not limited to, the risks relating to the
successful integration of new management personnel into the Company's existing
structure and conditions in the insurance and reinsurance markets. The foregoing
review of important factors should not be construed as exhaustive and should be
read in conjunction with other cautionary statements that are included herein or
elsewhere. The Company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future events
or otherwise.

                                      # # #


CONTACT: ARCH CAPITAL GROUP LTD.
         John D. Vollaro
         (441) 278-9250



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