Arch Capital Group Ltd. (“Arch Capital”) and Gulf Investment Corporation (“GIC”) announced on 17th March that they have entered into a joint venture agreement to establish Gulf Re, a new specialist reinsurer to be based in the Dubai International Financial Centre.

GIC and Arch Capital will subscribe to a total of $400 million of capital. The initial paid up capital of Gulf Re will consist of $200 million, with an additional $200 million to be funded depending on the business needs of the company. Gulf Re will be owned by Arch Capital and GIC equally.

Gulf Re will initially target high-value oil and gas, industrial, utility and transportation assets primarily in the six member states of the Gulf Cooperation Council (“GCC”) which include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. The company will write a broad range of property and casualty lines of reinsurance, including aviation, energy, commercial transportation, marine, engineered risks and property, on both a treaty and facultative basis.

Gulf Re underwriting activities are expected to commence during the first half of 2008, subject to receipt of the necessary regulatory approvals from the Dubai Financial Services Authority.

“Gulf Re will meet the need for a Gulf based reinsurer with significant financial resources and specialist expertise” said Hisham Al-Razzuqi, the GIC CEO. “The company will add depth to the GCC insurance sector and support the growth of GCC insurers. Gulf Re will benefit from the technical expertise and support of Arch Capital, widely recognized for the quality of its management. The resources of both joint venture partners will provide strong support to Gulf Re as it builds its reinsurance business,” he added. “This is a strategic long term investment for GIC, in line with our mission to develop financial services in the GCC,” Mr. Al-Razzuqi said.

“The GCC is home to a large and fast growing, state-of-the-art tangible asset base, built and operated to the highest standards,” said Mr. Dinos Iordanou, the Arch Capital Group President and CEO. ” The joint venture will allow Arch to expand its platform in a region where there is a strong need for local reinsurance capacity and specialist expertise for these assets. Arch has extensive experience in the lines of business that will be focused on by Gulf Re,” he added. By partnering with GIC, a successful and highly regarded sponsor in the GCC, Gulf Re will be well-positioned for opportunities in the marketplace. Gulf Re will also benefit from an outstanding management team,” said Mr. Iordanou.

Gulf Re will be led by Gail Norstrom, who has over 36 years of insurance industry experience. Mr. Norstrom was previously a Managing Director of Aon Risk Services Property Practice Group in the USA. Prior to joining Aon, he served Industrial Risk Insurers in various senior executive capacities, including as President and CEO. Gulf Re core management team includes four additional senior executives with many years of experience in Europe and the US with leading European and US insurance firms.