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Arch profit down on foreign exchange

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Arch Capital Group Ltd. on Thursday reported a sharply lower profit in the first quarter due to the effects foreign exchange.

The Hamilton, Bermuda-based insurer and reinsurer reported $149.3 million in net income, a 46.3% decline that Arch said was due mainly to revaluating its net insurance liabilities in 2015 and 2016 that were settled in foreign currencies.

The insurer generated $977.1 million in net written premiums, up 3.7% from a year ago. Growth in its mortgage segment, along with modest growth in construction and alternative market business, accounted for the bulk of the increase, Arch Chairman and CEO Dinos Iordanou said during a conference call with analysts.

“We saw areas of opportunity of growth in construction, national accounts, travel and alternative market lines,” President and Chief Operating Officer Marc Grandisson said in the conference call. “The vast majority of our growth came from our ability to take advantage of the current dislocation in those areas where some major players were being challenged.”

Net investment income for the quarter rose slightly to $70.4 million.

Arch's combined ratio improved slightly to 87.1% compared with 87.5% a year ago.