The company, Mr. Iordanou said, will maintain future income levels through a unique process of board oversight of underwriting decisions and companywide attention to analytical business models.

Speaking during the Bermuda-based company's conference call, Mr. Iordanou and John Vollaro, the chief financial officer, reported that Arch was able to absorb significant catastrophe losses last year, achieving after-tax operating income of $320 million, compared to $266 million in 2003.

For the quarter, operating income grew 33 percent to $117.4 million.

In both the last quarter and for the full year, net income was lower than operating income?mainly due to the impact of a $16 million charge for foreign exchange losses (the effects of revaluing net insurance liabilities required to be settled in foreign currencies). Net income for the year, compared with 2003, was up roughly 13 percent, or $316.9 million, amounting to $4.37 per share.

The middle of 2004 was "the high watermark for the cycle," Mr. Iordanou said, recognizing the positive effects of high prices in the hard market on Arch and industry financial results.

"On the negative side," he said that moving past midyear, "competition emerged not only in property but casualty lines," adding, however, that Arch is prepared to deal with the market transition to lower pricing.

He explained that the company uses analytics to monitor rates and test internal rate movements against industry benchmarks, both within each business unit and based on independent reviews by the actuarial department.

On top of that, "Arch's board [of directors] maintains an underwriting oversight committee" that looks at price adequacy, business mix and strategies. "We believe this is unique in the industry," he said.

Mr. Iordanou gave his assessment of market conditions for various business segments, making some notable remarks about the directors and officers and program business segments.

For directors and officers liability, he delivered some positive news, noting that in recent months, rate competition for excess limit policies had cooled, after 15 percent declines in the prior quarter. He attributed this to the WorldCom settlement and continued regulatory investigations.

Reinsurance "support for D&O was definitely withdrawn" at January 1, added Mr. Vollaro, the CFO.

Turning to program business, Mr. Iordanou said program business premiums were down 17 percent year over year, noting that the company made a strategic decision to down its relationships with managing general underwriters who produce this business. Fourteen MGU relationships existed at the beginning of 2004, but there were only eight by year end, he said.

All the MGU programs "meet or exceed our profitability requirements, and rates remain remarkably stable. But strategically, [this] is not going to be a big part of our business," he said.

Later when questioned, he explained, "We like what we have, but we don't want to have a significant part of the business of this company subject to contractual agreements?where they [MGUs] can walk out at any time subject to no notice."

He said he would rather "own the business" through, emphasizing business where Arch has the relationship with a retail broker, contrasting the situation on program business, where the MGU owns the renewal.

In a written announcement of the company's earnings this morning, Arch also commented on ongoing investigations by regulatory authorities.

The statement said: "As previously reported, the company has received various formal and informal information requests from insurance regulatory authorities as to relationships with, and payments to, brokers and other agents.

"In addition, the company received a subpoena from the New York State attorney general requesting certain information concerning its underwriting activities with respect to insurance coverages to lawyers and law firms for acts of professional malpractice. The company is cooperating with these requests."

The statement also said that in view of the ongoing industry investigation, the company retained Cahill Gordon & Reindel LLP to conduct an internal review relating to certain business practices in the insurance industry currently being investigated.

According to Arch, Cahill recently informed the company that their review is substantially complete and that no evidence that the company has engaged in illegal bid-rigging or price-fixing has been uncovered. Also, there was no evidence that the company has engaged in any illegal tying of insurance and reinsurance services.