FILED PURSUANT TO RULE 424(b)
FILE NUMBER 333-98971
ARCH CAPITAL GROUP LTD.
PROSPECTUS SUPPLEMENT DATED JULY 15, 2003
TO
PROSPECTUS DATED AUGUST 30, 2002
This prospectus supplement supplements our prospectus dated August 30,
2002 relating to the reoffers and resales of our common shares, par value $.01
per share, issued or issuable under our 2002 Long Term Incentive and Share Award
Plan (the "PLAN"). 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 Plan. This prospectus supplement
should be read in conjunction with the prospectus and this prospectus supplement
is qualified by reference to the prospectus except to the extent that the
information contained herein supersedes the information contained in the
prospectus.
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 1,770,931(2) 7,282(2)
Peter A. Appel President, Chief Executive Officer 886,015(3) 8,834(3)
and Director
Wolfe H. Bragin Director 1,800(4) 1,800(4)
John L. Bunce, Jr. Director 14,356,832(5) 2,574(5)
Sean Carney Director 441(6) 441(6)
Dwight R. Evans President of Arch 202,397(7) 29,770(7)
Reinsurance Ltd.
Constantine Iordanou Director 809,491(8) 17,668(8)
Ralph F. Jones, III President and Chief Executive Officer 150,100(9) 150,000(9)
of Arch Insurance Group Inc.
Kewsong Lee Director 22,916,115(10) 2,574(10)
James J. Meenaghan Director 24,187(11) 2,574(11)
David R. Tunnell Director 14,356,832(12) 3,151(12)
Robert F. Works Director 28,046(13) 2,574(13)
John D. Vollaro Executive Vice President, Chief 142,350(14) 7,350(14)
Financial Officer and Treasurer
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)
---- ----------- -------- ------------------
John F. Rathgeber Managing Director and Chief Operating 82,698(15) 3,698(15)
Officer of Arch Reinsurance Company
Louis T. Petrillo President and General Counsel of Arch 95,800(16) 1,943(16)
Capital Services Inc.
-------------------
(1) Represents the number of common shares issued or issuable under the Plan
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 1,800 common shares issuable upon exercise of stock
options (1,700 of such shares are issuable upon exercise of stock
options which are subject to vesting).
(5) 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
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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 ACGL 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 Exchange Commission ("SEC") by Mr. Bunce.
(6) Amounts include (a) 141 common shares owned directly by Mr. Carney and
(b) 300 common shares issuable upon exercise of stock options (200 of
such shares are issuable upon exercise of stock options which are
subject to vesting).
(7) Amounts include (a) 56,749 common shares owned directly by Mr. Evans
(including 53,578 restricted shares which are subject to vesting), (b)
125,000 common shares issuable upon exercise of stock options (50,000 of
such shares are issuable upon exercise of stock options which are
subject to vesting) and (c) 20,648 common shares issuable upon
conversion of preference shares.
(8) Amounts include (a) 384,491 common shares owned directly by Mr. Iordanou
(including 325,000 restricted shares which are subject to vesting and
4,200 common shares owned directly by Mr. Iordanou's children) and (b)
425,000 common shares issuable upon exercise of stock options (141,667
of such shares are issuable upon exercise of stock options which are
subject to vesting). In addition, Mr. Iordanou holds 17,668 restricted
common share units (13,251 of such units are subject to vesting) which
will be settled in common shares of Arch Capital Group Ltd. upon
termination of Mr. Iordanou's employment. Mr. Iordanou disclaims
beneficial ownership of all shares owned by his children.
(9) Amounts include (a) 50,100 common shares owned directly by Mr. Jones
(including 50,000 restricted shares which are subject to vesting) and
(b) 100,000 common shares issuable upon exercise of stock options which
are subject to vesting.
(10) 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
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.
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(11) 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).
(12) 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. The foregoing is based on a Schedule 13D and a
Form 4 dated March 4, 2003 and December 18, 2002, respectively, and
filed with the SEC. Mr. Tunnell is a member of an investment committee
of HFCI Bermuda which has investment discretion over the securities held
by the H&F Funds. Mr. Tunnell is a 5.45% shareholder of HFCI Bermuda.
All shares indicated as owned by Mr. Tunnell are included because he is
a member of the board of directors of ACGL and is affiliated with HFCI
Bermuda. Mr. Tunnell 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. Tunnell 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.
(13) 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).
(14) Amounts include (a) 57,350 common shares owned directly by Mr. Vollaro
(including 55,512 restricted shares which are subject to vesting) and
(b) 85,000 common shares issuable upon exercise of stock options (28,333
of such shares are issuable upon exercise of stock options which are
subject to vesting).
(15) Amounts include (a) 17,698 common shares owned directly by Mr. Rathgeber
(including 12,773 restricted shares which are subject to vesting) and
(b) 65,000 common shares issuable upon exercise of stock options (21,673
of such shares are issuable upon exercise of stock options which are
subject to vesting).
(16) 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 prospectus will be
provided upon request.
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