8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

June 29, 2009 (June 26, 2009)

Date of Report (Date of earliest event reported)

Arch Capital Group Ltd.

(Exact name of registrant as specified in its charter)

Bermuda	0-26456	N/A
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

Wessex House, 45 Reid Street, Hamilton HM 12, Bermuda

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code:
(441) 278-9250

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR.14d-2(b)

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR.13e-4(c))

ITEM 1.01Entry into a Material Definitive Agreement.

On June 26, 2009, Arch Capital Group Ltd. (the “Company”) signed the Second Amendment (the “Second Amendment”) to the Second Amended and Restated Credit Agreement (the “Second Credit Agreement”), dated as of August 30, 2006, and as amended on October 1, 2007, by and among the Company, Arch Capital Group (U.S.) Inc. and the following subsidiaries of the Company designated as subsidiary borrowers (each, a “Subsidiary Borrower”), Arch Reinsurance Ltd. (“ARL”), Arch Reinsurance Company, Arch Insurance Company, Arch Specialty Insurance Company, Arch Excess & Surplus Insurance Company, Arch Indemnity Insurance Company (formerly Western Diversified Casualty Insurance Company) and Arch Insurance Company (Europe) Limited with Barclays Bank Plc (“Barclays”), The Bank of New York, Calyon, New York Branch, Citibank, N.A., ING Bank N.V., London Branch (“ING”), Lloyds TSB Bank plc (“Lloyds TSB”) and Wachovia Bank, N.A., as documentation agents, Bank of America, N.A., as syndication agent, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders named therein.

On June 26, 2009, ARL, a subsidiary of the Company, as obligor, signed the Amendment (the “Amendment”) to the Letter of Credit and Reimbursement Agreement (the “Agreement”), dated as of December 12, 2007, with Lloyds TSB, as agent, Lloyds TSB, ING, and Barclays, as original lenders, and Lloyds TSB as mandated lead arranger.

The Second Amendment and the Amendment each provide that indebtedness incurred by Arch Investments I LLC (“Arch LLC”), a wholly-owned indirect subsidiary of both the Company and ARL, for the purpose of participating in the Term Asset-Backed Securities Loan Facility (“TALF”) will be a form of permitted indebtedness.  In addition, the assets and liabilities of Arch LLC will be excluded from certain calculations in the Second Credit Agreement and the Agreement.

Each of the Second Amendment and the Amendment is attached as Exhibit 10.1 and Exhibit 10.2, respectively, to this Current Report and is incorporated herein by reference.  The Second Credit Agreement was filed as an exhibit to the Company’s Report on Form 8-K filed with the Securities and Exchange Commission on August 31, 2006.  The Agreement was filed as an exhibit to the Company’s Report on Form 8-K filed with the Securities and Exchange Commission on December 14, 2007.

ITEM 2.03Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information in Item 1.01 of this Current Report is incorporated by reference.

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ITEM 9.01Exhibits.

EXHIBIT NO.	DESCRIPTION
10.1	Second Amendment, dated as of June 26, 2009, to the Second Amended and Restated Credit Agreement, dated as of August 30, 2006, as amended on October 1, 2007, by and among Arch Capital Group Ltd., Arch Capital Group (U.S.) Inc., Arch Reinsurance Ltd., Arch Reinsurance Company, Arch Insurance Company, Arch Specialty Insurance Company, Arch Excess & Surplus Insurance Company, Arch Indemnity Insurance Company (formerly Western Diversified Casualty Insurance Company) and Arch Insurance Company (Europe) Limited, with Barclays Bank Plc, The Bank of New York, Calyon, New York Branch, Citibank, N.A., ING Bank N.V., London Branch, Lloyds TSB Bank plc, and Wachovia Bank, N.A., as documentation agents, Bank of America, N.A., as syndication agent, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders named therein
10.2	Amendment, dated as of June 26, 2009, to the Letter of Credit and Reimbursement Agreement, dated as of December 12, 2007, by and among Arch Reinsurance Ltd., as obligor, Lloyds TSB Bank plc, as agent, Lloyds TSB Bank plc, ING Bank N.V., London Branch and Barclays Bank plc, as original lenders, and Lloyds TSB Bank plc, as mandated lead arranger

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned.

	ARCH CAPITAL GROUP LTD.
Date: June 29, 2009	By:	/s/ Constantine Iordanou
		Name: Constantine Iordanou
		Title: President and Chief Executive Officer

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EXHIBIT INDEX

EXHIBIT NO.	DESCRIPTION
10.1	Second Amendment, dated as of June 26, 2009, to the Second Amended and Restated Credit Agreement, dated as of August 30, 2006, as amended on October 1, 2007, by and among Arch Capital Group Ltd., Arch Capital Group (U.S.) Inc., Arch Reinsurance Ltd., Arch Reinsurance Company, Arch Insurance Company, Arch Specialty Insurance Company, Arch Excess & Surplus Insurance Company, Arch Indemnity Insurance Company (formerly Western Diversified Casualty Insurance Company) and Arch Insurance Company (Europe) Limited, with Barclays Bank Plc, The Bank of New York, Calyon, New York Branch, Citibank, N.A., ING Bank N.V., London Branch, Lloyds TSB Bank plc, and Wachovia Bank, N.A., as documentation agents, Bank of America, N.A., as syndication agent, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders named therein
10.2	Amendment, dated as of June 26, 2009, to the Letter of Credit and Reimbursement Agreement, dated as of December 12, 2007, by and among Arch Reinsurance Ltd., as obligor, Lloyds TSB Bank plc, as agent, Lloyds TSB Bank plc, ING Bank N.V., London Branch and Barclays Bank plc, as original lenders, and Lloyds TSB Bank plc, as mandated lead arranger

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EX-10.1

Exhibit 10.1

Conformed

SECOND AMENDMENT

SECOND AMENDMENT (this “Amendment”), dated as of June 26, 2009, to the Second Amended and Restated Credit Agreement dated as of August 30, 2006 together with the First Amendment to the Second Amended and Restated Credit Agreement dated as of October 1, 2007 (together, as further amended, supplemented or modified from time to time, the “Credit Agreement”), among ARCH CAPITAL GROUP LTD., ARCH CAPITAL GROUP (U.S.) INC., various DESIGNATED SUBSIDIARY BORROWERS party thereto, the LENDERS party thereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, THE BANK OF NEW YORK, as Collateral Agent, BANK OF AMERICA, N.A., as Syndication Agent, and BARCLAYS BANK PLC, THE BANK OF NEW YORK, WACHOVIA BANK, N.A., CALYON, NEW YORK BRANCH, CITIBANK, N.A.,ING BANK N.V., LONDON BRANCH and LLOYDS TSB BANK PLC, as Documentation Agents.

W I T N E S S E T H:

WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make, and have made, certain loans and other extensions of credit to the Borrower;

WHEREAS, the Borrower has requested that certain provisions of the Credit Agreement be amended as set forth herein; and

WHEREAS, the Lenders are willing to agree to such amendment on the terms set forth herein;

NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, the undersigned hereby agree as follows:

I.Defined Terms.  Terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

II.Amendments to Section 1.01.

(a) Section 1 is amended by inserting in appropriate alphabetical order the following definitions:

“FRBNY” means the Federal Reserve Bank of New York, or any other governmental authority that is a successor or supplemental lender under TALF.

“Permitted TALF Indebtedness” has the meaning provided in the definition of Permitted Subsidiary Indebtedness in this Section 1.01.

“Permitted TALF Subsidiary” has the meaning provided in the definition of Permitted Subsidiary Indebtedness in this Section 1.01

“Second Amendment” means the Second Amendment, dated as of June 26, 2009, to this Agreement.

“Second Amendment Effective Date” has the meaning provided in the Second Amendment.

“TALF” means the Term Asset-Backed Securities Loan Facility, under which FRBNY will provide funding on a non-recourse basis (other than in the case of certain exceptions to the non-recourse provisions under TALF) to any eligible borrower secured by eligible collateral, as announced by the Board of Governors of the Federal Reserve System and in effect on the effective date of the Amendment and as thereafter amended or otherwise modified from time to time (including any successor or supplemental program thereto).

(b) Section 1.01 is further amended by adding the following sentence to the end of the definition of “Indebtedness”:

For purposes of Section 8.04, “Indebtedness” shall not include any Permitted TALF Indebtedness.

(c) Section 1.01 is further amended by deleting the word “and” at the end of clause (k) of the definition of “Permitted Subsidiary Indebtedness”, replacing the period at the end of clause (l) with “and,” and inserting a new clause (m) immediately after such clause (l), to read in its entirety as follows:

(m) Indebtedness incurred by Arch Investments I LLC, a Delaware limited liability company, or any other Subsidiary directly or indirectly formed by the Parent Borrower solely for the purpose of participating in TALF (any such entity, a “Permitted TALF Subsidiary”), provided that the Administrative Agent consents to the designation of such other Subsidiary as a Permitted TALF Subsidiary, which consent shall not be unreasonably delayed or withheld, arising out of funding extended through TALF and any guarantee of any obligations relating thereto by an affiliate of the Permitted TALF Subsidiary (any such Indebtedness or guarantee, “Permitted TALF Indebtedness”); provided, that if TALF is amended or modified following the date hereafter such that a Permitted TALF Subsidiary incurring Indebtedness under TALF as so amended or modified would (i) be materially adverse to the interests of the Lenders, (ii) change any of the limitations or requirements set forth in this clause (m), or (iii) change in any material respect the exceptions to the non-recourse

provisions, then from the date of such amendment or modification, as applicable, no Permitted TALF Subsidiary shall incur any additional Indebtedness under TALF under this clause (m), unless such Indebtedness is consented to by the Administrative Agent.  For avoidance of doubt, the parties hereto acknowledge and agree that (x) amendments or modifications to TALF relating to eligibility requirements for borrowers or collateral, collateral haircuts, tenor and interest rates applicable to loans extended thereunder, administrative fees, program size, termination date or allocation procedures shall not be materially adverse to the interests of the Banks for purposes of this clause (m), and (y) any Indebtedness incurred under this clause (m) by a Permitted TALF Subsidiary prior to the date of the applicable amendment or modification discussed in the proviso above shall continue to constitute Permitted Subsidiary Indebtedness under this clause (m) regardless of any amendment or modification that may occur following the date such Indebtedness is incurred.

III.Amendment to Section 1.04.  Section 1.04 of the Credit Agreement is hereby amended by adding a new clause (b) reading:

(b) Notwithstanding the foregoing, for purposes of computing any amount under this Agreement (including, but not limited to, Consolidated Indebtedness, Consolidated Net Income, Consolidated Net Worth, Consolidated Tangible Net Worth, and Consolidated Total Capital) on a consolidated basis for any purpose under this Agreement, including, but not limited to, Section 7.09 Maximum Parent Borrower Leverage Ratio and Section 7.10 Minimum Consolidated Tangible Net Worth, neither Arch Investments I LLC nor any other Permitted TALF Subsidiary shall be considered a consolidated subsidiary of the Parent Borrower.

IV.Amendment to Section 7.04(a).  Section 7.04(a) of the Credit Agreement is hereby amended by deleting Section 7.04(a) and replacing it with a new Section 7.04(a), reading:

No Borrower will, nor will it permit any of its Subsidiaries to, create, incur, assume or permit to exist any Indebtedness, or agree, become or remain liable (contingent or otherwise) to do any of the foregoing, except in the case of any Borrower or Intermediate Holdings for the Loans and other Indebtedness which is either pari passu with, or subordinated in right of payment to, the Loans and the other Obligations and in the case of any Subsidiary that is not a Designated Subsidiary Borrower for Indebtedness that is permitted under section 7.04(b).

V.Amendment to Section 7.11.  Section 7.11 of the Credit Agreement is hereby amended by deleting clause (xiv) and replacing it with a new clause (xiv), reading:

(xiv) pursuant to an agreement or instrument relating to any Permitted Subsidiary Indebtedness of the type described in clause (e), (h), (i), (k), or (m) of the definition thereof if such encumbrance or restriction is not materially more disadvantageous to the Lenders than is customary in comparable financings and such encumbrance or restriction will not materially affect such Borrower’s ability to make principal or interest payments on the Loans or to reimburse Unpaid Drawings and

VI.Effective Date.  This Amendment shall become effective on the date (the “Second Amendment Effective Date”) on which the Administrative Agent shall have received a counterpart of this Amendment, executed and delivered by each Borrower, Intermediate Holdings and the Required Lenders

VII.Expenses.  The Parent Borrower agrees to pay and reimburse the Administrative Agent for all its reasonable costs and out-of-pocket expenses incurred in connection with the preparation and delivery of this Amendment, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent.

VIII.Representations and Warranties.  Each Credit Party hereby represents that as of the Second Amendment Effective Date: (i) each of the representations and warranties made by it in or pursuant to the Credit Documents is true and correct in all material respects as if made on and as of such date (it being understood and agreed that any representation or warranty that by its terms is made as of a specific date shall be required to be true and correct in all material respects only as of such specified date), (ii) no Default or Event of Default has occurred and is continuing after giving effect to the amendments contemplated herein and (iii) the consolidated balance sheet of the Parent and its Subsidiaries as at December 31, 2008 and the related consolidated statements of income, shareholders’ equity and cash flows for the fiscal year ended on such date, reported on by  PricewaterhouseCoopers LLP are complete and correct and present fairly the consolidated financial condition of the Parent Borrower and its Subsidiaries as at such date, and the consolidated results of their operations for the fiscal year then ended.

IX.Amendment Fee.  The Borrower agrees to pay each Lender which consents to this Second Amendment on or prior to 12:00 p.m., EDT Friday, June 26, 2009 (by executing and delivering to the Administrative Agent or its counsel an executed counterpart to this Second Amendment on or prior to such time), an amendment fee in an amount equal to 0.035% of the aggregate amount of such Lender’s Revolving Credit Commitment; such fees shall be payable no later than 5:00 p.m., EDT Wednesday, July 1, 2009 in immediately available funds to the Administrative Agent on behalf of the applicable Lender.  Payment of the amendment fee hereunder is contingent upon receipt of at least the consents from the Required Lenders on or prior to 12:00 p.m., EDT Friday, June 26, 2009.

X.Effect.  Except as expressly amended and waived hereby, all of the representations, warranties, terms, covenants and conditions of the Credit Documents shall remain unamended and not waived and shall continue to be in full force and effect.

XI.Counterparts.  This Amendment may be executed in any number of counterparts by the parties hereto (including by facsimile transmission), each of which

counterparts when so executed shall be an original, but all the counterparts shall together constitute one and the same instrument.

XII.GOVERNING LAW.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written.

ARCH CAPITAL GROUP LTD.
By	/s/ W. Preston Hutchings
	Name: W. Preston Hutchings
	Title: SVP & Chief Investment Officer
ARCH CAPITAL GROUP (U.S.) INC.
By	/s/ Fred S. Eichler
	Name: Fred S. Eichler
	Title: Sr VP & CFO
ARCH REINSURANCE LTD.
By	/s/ Nicolas Papadopoulo
	Name: Nicolas Papadopoulo
	Title: President & Chief Executive Officer
ARCH REINSURANCE COMPANY
By	/s/ John F. Rathgeber
	Name: John F. Rathgeber
	Title: Chairman & CEO
ARCH INSURANCE COMPANY
By	/s/ Fred S. Eichler
	Name: Fred S. Eichler
	Title: Sr VP & CFO

SIGNATURE PAGE – AMENDMENT

ARCH INDEMNITY INSURANCE COMPANY
(formerly WESTERN DIVERSIFIED CASUALTY INSURANCE COMPANY)
By	/s/ Fred S. Eichler
	Name: Fred S. Eichler
	Title: Sr VP & CFO
ARCH SPECIALTY INSURANCE COMPANY
By	/s/ Fred S. Eichler
	Name: Fred S. Eichler
	Title: Sr VP & CFO
ARCH EXCESS & SURPLUS INSURANCE COMPANY
By	/s/ Fred S. Eichler
	Name: Fred S. Eichler
	Title: Sr VP & CFO
ARCH INSURANCE COMPANY (EUROPE) LIMITED
By	/s/ Paul Robothom
	Name: Paul Robotham
	Title: Chief Financial Officer

SIGNATURE PAGE – AMENDMENT

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent and Lender
By	/s/ Melvin Jackson
	Name: Melvin Jackson
	Title: Vice President

SIGNATURE PAGE – AMENDMENT

BANK OF AMERICA, N.A., Individually and as Syndication Agent
By	/s/ Tiffany Burgess
	Name: Tiffany Burgess
	Title: Vice President

SIGNATURE PAGE – AMENDMENT

THE BANK OF NEW YORK MELLON, Individually and as Collateral Agent
By	/s/ Michael Pensari
	Name: Michael Pensari
	Title: V.P.

SIGNATURE PAGE – AMENDMENT

WACHOVIA BANK N.A.
By	/s/ Ronald J. Fry
	Name: Ronald J. Fry
	Title: Vice President
By	/s/ M. Eugene Wood, III
	Name: M. Eugene Wood, III
	Title: Managing Director

SIGNATURE PAGE – AMENDMENT

ING BANK N.V., LONDON BRANCH
By	/s/ N J Marchant
	Name: N J Matchant
	Title: Director
By	/s/ M E R Sharman
	Name: M E R Sharman
	Title: Managing Director

SIGNATURE PAGE – AMENDMENT

HSBC BANK USA, NATIONAL ASSOCIATION
By	/s/ Lawrence Karp
	Name: Lawrence Karp
	Title: Senior Vice President

SIGNATURE PAGE – AMENDMENT

BARCLAYS BANK PLC
By	/s/ David Barton
	Name: David Barton
	Title: Director

SIGNATURE PAGE – AMENDMENT

CALYON, NEW YORK BRANCH
By	/s/ Jay Buckley
	Name: Jay Buckley
	Title: Managing Director
By	/s/ Charlie Kornberger
	Name: Charlie Korneberger
	Title: Managing Director

SIGNATURE PAGE – AMENDMENT

CITBANK, N.A.
By:	/s/ Peter C. Bickford
	Name: Peter C. Bickford
	Title: Vice President

SIGNATURE PAGE – AMENDMENT

ROYAL BANK OF SCOTLAND PLC
By:	RBS Securities, Inc., as agent
	for The Royal Bank of Scotland plc
By	/s/ David Howes
	Name: David Howes
	Title: Vice President

SIGNATURE PAGE – AMENDMENT

LLOYDS TSB BANK PLC
By	/s/ Candi Obrentz
	Name: Candi Obrentz
	Title: Associate Director
	Financial Institutions, USA
	0013
By	/s/ Alexander Wilson
	Name: Alexander Wilson
	Title:         Director
	Financial Institutions, USA
	W055

SIGNATURE PAGE – AMENDMENT

CHANG HWA COMMERCIAL BANK, LTD; NEW YORK BRANCH
By:	/s/ Jim C.Y. Chen
	Name: JIM C.Y. CHEN
	Title: VP & GENERAL MANAGER

SIGNATURE PAGE – AMENDMENT

EX-10.2

Exhibit 10.2

Conformed

AMENDMENT

AMENDMENT (this “Amendment”), dated as of June 26, 2009, to the Letter of Credit and Reimbursement Agreement dated as of December 12, 2007 (as further amended, supplemented or modified from time to time, the “Facility Agreement”), among ARCH REINSURANCE LTD., as Obligor, LLOYDS TSB BANK PLC, as Agent and Mandated Lead Arranger and LLOYDS TSB BANK PLC, ING BANK N.V., LONDON BRANCH and BARCLAYS BANK PLC, as Original Lenders.

W I T N E S S E T H:

WHEREAS, pursuant to the Facility Agreement, the Agent has agreed to issue Letters of Credit on behalf of the Lenders;

WHEREAS, the Obligor has requested that certain provisions of the Facility Agreement be amended as set forth herein; and

WHEREAS, the Agent and the Majority Lenders are willing to agree to such amendment on the terms set forth herein;

NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, the undersigned hereby agree as follows:

I.Defined Terms.  Terms defined in the Facility Agreement and used herein shall have the meanings given to them in the Facility Agreement.

II.Amendments to Section 1.1.

(a) Section 1.1 is amended by inserting in appropriate alphabetical order the following definitions:

“Amendment” means the Amendment dated as of June 26, 2009 to this Agreement.

“Amendment Effective Date” has the meaning provided in the Amendment.

“FRBNY” means the Federal Reserve Bank of New York, or any other governmental authority that is a successor or supplemental lender under TALF.

“Permitted TALF Indebtedness” has the meaning provided in the definition of Permitted Indebtedness in this Section 1.01.

“Permitted TALF Subsidiary” has the meaning provided in the definition of Permitted Indebtedness in this Section 1.01

“TALF” means the Term-Asset Backed Securities Loan Facility, under which FRBNY will provide funding on a non-recourse basis (other than in the case of certain exceptions to the non-recourse provisions under TALF) to any eligible borrower secured by eligible collateral, as announced by the Board of Governors of the Federal Reserve System and in effect on the effective date of the Amendment and as thereafter amended or otherwise modified from time to time (including any successor or supplemental program thereto).

(b) Section 1.1 is further amended by adding the following sentence to the end of the definition of “Indebtedness”:

For purposes of Section 6.1.12, “Indebtedness” shall not include any Permitted TALF Indebtedness.

III.Amendment to Section 1.2.  Section 1.2 of the Facility Agreement is hereby amended by adding a new Section 1.2.7 reading:

1.2.7  For purposes of computing any amount under this Agreement (including, but not limited to, Parent Consolidated Indebtedness, Consolidated Net Income, Consolidated Tangible Net Worth, and Parent Consolidated Total Capital) on a consolidated basis for any purpose under this Agreement, including, but not limited to, Section 6.1.2 and Section 6.1.3, neither Arch Investments I LLC nor any other Permitted TALF Subsidiary shall be considered a consolidated subsidiary of the Parent.

IV.Amendment to Section 5.6.3(b).  Section 5.6.3(b) of the Facility Agreement is hereby amended by deleting Section 5.6.3(b) and replacing it with a new Section 5.6.3(b), reading:

The Obligor shall not, nor will it permit any of its Subsidiaries to, create, incur, assume or permit to exist any Indebtedness, or agree, become or remain liable (contingent or otherwise) to do any of the foregoing, except for (i) Indebtedness incurred by the Obligor or any of its Subsidiaries hereunder and other Indebtedness which is either pari passu with, or subordinated in right of payment to, the Indebtedness incurred by the Obligor hereunder and the other obligations owing hereunder and under the Fundamental Documents and (ii) in the case of any Subsidiary, Indebtedness that is permitted under Section 5.6.3(a).

V.Amendment to Section 5.6.3(c)(ii).  Section 5.6.3(c)(ii) is amended by deleting the word “and” at the end of clause (11) of the definition of “Permitted Indebtedness”,

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replacing the period at the end of clause (12) with “and,” and inserting a new clause (13) immediately after such clause (12), to read in its entirety as follows:

(13) Indebtedness incurred by Arch Investments I LLC, a Delaware limited liability company, or any other Subsidiary directly or indirectly formed by the Parent solely for the purpose of participating in TALF (any such entity, a “Permitted TALF Subsidiary”), provided that the Agent consents to the designation of such other Subsidiary as a Permitted TALF Subsidiary, which consent shall not be unreasonably delayed or withheld, arising out of funding extended through TALF and any guarantee of any obligations relating thereto by an affiliate of the Permitted TALF Subsidiary (any such Indebtedness or guarantee, “Permitted TALF Indebtedness”); provided, that if TALF is amended or modified following the date hereafter such that a Permitted TALF Subsidiary incurring Indebtedness under TALF as so amended or modified would (i) be materially adverse to the interests of the Lenders, (ii) change any of the limitations or requirements set forth in this clause (13), or (iii) change in any material respect the exceptions to the non-recourse provisions, then from the date of such amendment or modification, as applicable, no Permitted TALF Subsidiary shall incur any additional Indebtedness under TALF under this clause (13), unless such Indebtedness is consented to by the Agent.  For avoidance of doubt, the parties hereto acknowledge and agree that (x) amendments or modifications to TALF relating to eligibility requirements for borrowers or collateral, collateral haircuts, tenor and interest rates applicable to loans extended thereunder, administrative fees, program size, termination date or allocation procedures shall not be materially adverse to the interests of the Lenders for purposes of this clause (13), and (y) any Indebtedness incurred under this clause (13) by a Permitted TALF Subsidiary prior to the date of the applicable amendment or modification discussed in the proviso above shall continue to constitute Permitted Indebtedness under this clause (13) regardless of any amendment or modification that may occur following the date such Indebtedness is incurred.

VI.Effective Date.  This Amendment shall become effective on the date (the “Amendment Effective Date”) on which the Agent shall have received a counterpart of this Amendment, executed and delivered by the Obligor and the Majority Lenders.

VII.Expenses.  The Obligor agrees to pay and reimburse the Agent for all its reasonable costs and out-of-pocket expenses incurred in connection with the preparation and delivery of this Amendment, including, without limitation, the reasonable fees and disbursements of counsel to the Agent.

VIII.Representations and Warranties.  The Obligor hereby represents that as of the Amendment Effective Date: (i) each of the representations and warranties made by it in or pursuant to the Fundamental Documents is true and complete in all material respects as if made on and as of such date (it being understood and agreed that any representation or warranty that by its terms is made as of a specific date shall be required to be true and complete in all material respects only as of such specified date), (ii) no Default or Event of Default has occurred and is continuing after giving effect to the amendments contemplated herein and (iii) the consolidated

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balance sheet of the Parent and its Subsidiaries as at December 31, 2008 and the related consolidated statements of income, shareholders’ equity and cash flows for the fiscal year ended on such date, reported on by PricewaterhouseCoopers LLP are complete and correct and present fairly the consolidated financial condition of the Parent and its Subsidiaries as at such date, and the consolidated results of their operations for the fiscal year then ended.

IX.Amendment Fee.  The Obligor agrees to pay each Lender which consents to this Amendment on or prior to 12:00 p.m., EDT Friday, June 26, 2009 (by executing and delivering to the Agent or its counsel an executed counterpart to this Amendment on or prior to such time), an amendment fee in an amount equal to 0.035% of the aggregate amount of such Lender’s Commitment; such fees shall be payable no later than 5:00 p.m., EDT Wednesday, July 1, 2009 in immediately available funds to the Agent on behalf of the applicable Lender.  Payment of the amendment fee hereunder is contingent upon receipt of at least the consents from the Majority Lenders on or prior to 12:00 p.m., EDT Friday, June 26, 2009.

X.Effect.  Except as expressly amended and waived hereby, all of the representations, warranties, terms, covenants and conditions of the Fundamental Documents shall remain unamended and not waived and shall continue to be in full force and effect.

XI.Counterparts.  This Amendment may be executed in multiple counterparts each of which shall be an original and all of which when taken together shall constitute but one and the same Agreement.

XII.GOVERNING LAW.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written.

ARCH REINSURANCE LTD.
By	/s/ Nicolas Papadopoulo
	Name: Nicolas Papadopoulo
	Title: President & CEO

SIGNATURE PAGE – AMENDMENT

LLOYDS TSB BANK PLC, as Agent and Lender
By	/s/ W.S. Thomas
	Name: W.S. Thomas
	Title: Director, Loan Syndicate

SIGNATURE PAGE – AMENDMENT

ING BANK N.V., LONDON BRANCH
By:	/s/ N J Marchant
	Name: N J Marchant
	Title: Director
By:	/s/ M E R Sharman
	Name: M E R Sharman
	Title: Director

SIGNATURE PAGE – AMENDMENT

BARCLAYS BANK PLC
By:	/s/ David Barton
	Name: David Barton
	Title: Director

SIGNATURE PAGE – AMENDMENT