Arch Capital’s second-quarter net income fell to $US173.8 million ($218.3 million) from $US205.6 million ($258.2 million), squeezed by sluggish market conditions.

The insurance operation’s gross written premium (GWP) fell 2.4% to $US743.9 million ($934.3 million) for the three months to June 30, and net written premium declined 3.6% to $US496.5 million ($623.6 million).

The business made an underwriting loss of $US4.5 million ($5.7 million), compared with a profit of $US4.3 million ($5.4 million) in the corresponding period last year.

The combined operating ratio worsened to 100.8% from 99.2%.

“The decrease in net premium written largely reflected our response to weaker market conditions, with reductions in construction, excess and surplus casualty and property lines, partially offset by growth in programs,” Arch says.

Arch’s reinsurance operation increased its GWP by 10% to $US453.2 million ($569 million), and net written premium increased 15.7% to $US337.9 million ($424.3 million). The combined operating ratio deteriorated to 94% from 82%.

The Bermuda-based insurer’s overall GWP increased 21% to $US1.61 billion ($2 billion). Net written premium grew 22% to $US1.25 billion ($1.57 billion) and the combined operating ratio improved to 84.6% from 90.9%.