Arch Capital Group Ltd. Announces Agreement in Principle to Acquire Tri-City Brokerage, Inc.

Business Editors

GREENWICH, Conn.--(BUSINESS WIRE)--Sept. 5, 2001

Arch Capital Group Ltd. (NASDAQ: ACGL) announced today that it has reached an agreement in principle to acquire Tri-City Brokerage, Inc. from Ullico Inc. Tri-City is one of the largest independent brokers of specialized, wholesale insurance products and services in the United States. In 2000, Tri-City produced over $300 million in premiums in a variety of product lines, including casualty, property, financial services, program business and specialty products. Tri-City, which is led by John Hahn, its Chief Executive Officer, operates from offices located in Chicago, Long Island, Los Angeles, New York and San Francisco.

The transaction is subject to the completion of the Company's due diligence examination of Tri-City and the negotiation and completion of definitive documents, which will include standard closing conditions.

The acquisition of Tri-City will broaden the products and services currently offered to the retail brokerage segment of the insurance marketplace by Arch Insurance Services, a division of the Arch Capital Group. Arch Insurance Services provides a range of risk transfer, merchant banking and capital-related services to entities engaged in insurance distribution, including:

- underwriting capacity;

- insurance program design and management;

- rent-a-captive facilities and captive management for programs, retail agents,
associations, and affinity groups;

- merchant banking and capital-related services such as mergers and
acquisitions and capital raising advice; and

- private equity investing.

Peter Appel, President and CEO of Arch Capital, said, "The acquisition of Tri-City provides the Arch Capital Group with a national presence as a wholesale insurance provider and significantly expands the services offered by and the client base of Arch Insurance Services. We also believe that Tri-City is well-positioned for growth in the current market environment."

John Hahn, President and CEO of Tri-City, said, "The Arch Capital Group is a great fit for Tri-City. As part of Arch Insurance Services, we can increase the products and services offered to our existing and prospective clients, while the resources of Arch Capital will strengthen our ability to capitalize on improving conditions in the insurance marketplace."

Arch Capital Group Ltd. is a Bermuda-based, diversified financial services company with over $500 million in assets. The Arch Capital Group is engaged in a range of insurance and financial service activities through subsidiaries comprising its Arch Insurance Services division and the ownership of intermediaries, underwriting agencies, service providers and insurance companies.

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. All statements other than statements of historical fact included in this release are forward-looking statements. Forward-looking statements involve the Company's current assessment of risks and uncertainties, including statements regarding the completion of the proposed acquisition, expected benefits and anticipated future financial results. Actual events and results 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 transactions described in this release are subject to various risks and uncertainties including, but not limited to, the risks that a definitive acquisition agreement will not be reached or that the conditions to closing will not be satisfied, as well as risks relating to the successful integration of Tri-City's business into the Company's existing operations. 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.