[February 26, 2015]

Arch MI's Risk Index Continues to Forecast Low Probability of Home Price Declines in the Next Two Years

Arch Mortgage Insurance Company ("Arch MI"), a leading provider of private mortgage insurance and a wholly owned subsidiary of Arch Capital Group Ltd., today released the Winter 2015 Edition of its Housing and Mortgage Market Review and the latest Arch MI Risk Index^SM. The state- and city-level risk indices analyze the likelihood of home prices in a state or Metropolitan Statistical Area ("MSA") being lower in two years, based on recent economic and housing market data.

"As a result of the sharp drop in oil prices since last summer, Arch MI's economic team has been studying the implications for regional and national home prices in oil-producing states and MSAs. In particular, focusing on states with high levels of oil production and related employment, including Alaska, Colorado, Louisiana, New Mexico, North Dakota, Oklahoma, Texas and Wyoming," said Ralph DeFranco, Arch MI's Senior Director of Risk Analytics and Pricing. "While no one knows if current oil price levels will be sustained long-term, we view the dramatic decline in the price of oil as having a real and meaningful impact on the potential for home price declines in these regions. As a result, our ranking for the highest-risk states and MSAs has shifted significantly since our last publication of the Review, the Fall 2014 edition."

"Our latest edition of the Arch MI Housing and Mortgage Market Review shows a relatively large increase in risk scores in states with high levels of employment in the oil extraction and related industries due to the global decline in the price of oil," continued Mr. DeFranco. "Our findings in this edition show that, while the national average risk score remains low at 8%, risk scores of states with high levels of employment in the oil sector, including North Dakota and Louisiana, have risen sharply. Additionally, the highest individual MSA risk score was registered by Midland, Texas, due to a high level of employment in the oil and gas sector."

Two states moved into the moderate-risk category: Louisiana (35% chance of decline) and North Dakota (37%), while six states registered in the 15-20% range: Alaska, Colorado, New Mexico, Oklahoma, Texas and Wyoming. New York State, at only 9%, had the largest improvement in scores, due to accelerating home price growth and economic activity as well as falling unemployment and mortgage delinquencies.

The riskiest of the nation's 384 MSAs was Midland, Texas, with a probability of a price decline of 60%. Atlantic City, New Jersey, posted the second highest risk of 57% due to its continued high unemployment and decline in home prices over the past year. Only one of the 50 most populous MSAs falls within the moderate risk category: West Palm Beach - Boca Raton - Boynton Beach, Florida at 33%. This was due to high home prices relative to incomes and above-average unemployment. This MSA is likely to improve in the future due to strong population growth and falling unemployment rates.

More details are available in the Housing & Mortgage Market Review - Winter 2015 edition, available at www.archmi.com. *The affordability index comes from the National Association of Realtors^®.

About Arch MI's Housing & Mortgage Market Review and Risk Index

The Housing & Mortgage Market Review, which presents Arch MI Risk Index results, is published seasonally by Arch Mortgage Insurance Company. The Risk Index is a proprietary statistical model that measures home price risk by estimating the probability that home prices in a state or one of the nation's 384 largest metropolitan statistical areas (MSAs) will be lower in two years, times 100 (for example, a score of 25 indicates a 25 percent chance that home prices will be lower in two years.) The Arch MI Risk Index weights various local economic and housing market factors, such as affordability, unemployment rates, economic growth rates, net migration, housing starts, etc. based on a statistical model built on data going back to the early 1980s. It is updated after each quarterly release of the FHFA All-Transactions Regional Housing Price Index (HPI (News - Alert)).

ABOUT ARCH MORTGAGE INSURANCE COMPANY

Arch Capital Group Ltd.'s U.S. mortgage insurance operation, Arch MI, is a leading provider of private insurance covering mortgage credit risk. Headquartered in Walnut Creek, CA (News - Alert), Arch MI's mission is to protect lenders against credit risk, while extending the possibility of responsible homeownership to qualified borrowers. Arch MI's flagship mortgage insurer, Arch Mortgage Insurance Company, is licensed to write mortgage insurance in all 50 states, the District of Columbia, and Puerto Rico. For more information, please visit www.archmi.com.

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 Arch Capital Group Ltd. and its subsidiaries may include forward-looking statements, which reflect our current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements.

Forward-looking statements can generally be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or their negative or variations or similar terminology. Forward-looking statements involve our current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: adverse general economic and market conditions; increased competition; pricing and policy term trends; fluctuations in the actions of rating agencies and our ability to maintain and improve our ratings; investment performance; the loss of key personnel; the adequacy of our loss reserves, severity and/or frequency of losses, greater than expected loss ratios and adverse development on claim and/or claim expense liabilities; greater frequency or severity of unpredictable natural and man-made catastrophic events; the impact of acts of terrorism and acts of war; changes in regulations and/or tax laws in the United States or elsewhere; our ability to successfully integrate, establish and maintain operating procedures as well as integrate the businesses we have acquired or may acquire into the existing operations; changes in accounting principles or policies; material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements; availability and cost to us of reinsurance to manage our gross and net exposures; the failure of others to meet their obligations to us; and other factors identified in our filings with the U.S. Securities and Exchange Commission.

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. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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