<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>a2116201z424b3.txt
<DESCRIPTION>424B3
<TEXT>
<Page>

                                                   FILED PURSUANT TO RULE 424(b)
                                                           FILE NUMBER 333-98971

                             ARCH CAPITAL GROUP LTD.

                   PROSPECTUS SUPPLEMENT DATED AUGUST 1, 2003
                                       TO
                        PROSPECTUS DATED AUGUST 30, 2002


         This prospectus supplement supplements our prospectus dated August 30,
2002 relating to the reoffers and resales of our common shares, par value $.01
per share, issued or issuable under our 2002 Long Term Incentive and Share Award
Plan (the "Plan"). This prospectus supplement sets forth a list of the current
selling Shareholders and updates the number of common shares available to be
resold by each selling shareholder under the Plan. This prospectus supplement
should be read in conjunction with the prospectus and this prospectus supplement
is qualified by reference to the prospectus except to the extent that the
information contained herein supersedes the information contained in the
prospectus.

                              SELLING SHAREHOLDERS

         The following table sets forth certain information concerning the
selling shareholders as of August 1, 2003. Except as disclosed below, none of
the selling shareholders has, or within the past three years has had, any
position, office or other material relationship with us:

<Table>
<Caption>


                                                                                            MAXIMUM NUMBER OF
                                                                                            SHARES OWNED AND/OR
                                                                      SHARES OWNED          SUBJECT TO OUTSTANDING
                             POSITION WITH                            PRIOR TO              OPTIONS WHICH MAY BE
NAME                         THE COMPANY                              OFFERING              OFFERED HEREBY (1)
----                         -----------                              -------------         ----------------------
<S>                          <C>                                     <C>                    <C>
Robert Clements              Chairman                                 1,770,931 (2)         7,282 (2)
Peter A. Appel               President,  Chief Executive Officer        886,015 (3)         8,834 (3)
                             and Director
Wolfe H. Bragin              Director                                     1,800 (4)         1,800 (4)
John L. Bunce, Jr.           Director                                14,356,832 (5)         2,574 (5)
Sean Carney                  Director                                       441 (6)           441 (6)
Dwight R. Evans              President of Arch                          202,397 (7)        29,770 (7)
                             Reinsurance Ltd.
Constantine Iordanou         Director                                   809,491 (8)        17,668 (8)
Ralph F. Jones, III          President and Chief Executive Officer      150,100 (9)       150,000 (9)
                             of Arch Insurance Group Inc.
Kewsong Lee                  Director                                22,916,115 (10)       2,574 (10)
James J. Meenaghan           Director                                    24,187 (11)       2,574 (11)
David R. Tunnell             Director                                14,356,832 (12)       3,151 (12)
Robert F. Works              Director                                    28,046 (13)       2,574 (13)
John D. Vollaro              Executive Vice President, Chief            142,350 (14)       7,350 (14)
                             Financial Officer and Treasurer

</Table>


<Page>

<Table>
<Caption>

                                                                                            MAXIMUM NUMBER OF
                                                                                            SHARES OWNED AND/OR
                                                                       SHARES OWNED         SUBJECT TO OUTSTANDING
                             POSITION WITH                             PRIOR TO             OPTIONS WHICH MAY BE
NAME                         THE COMPANY                               OFFERING             OFFERED HEREBY (1)
----                         --------------                            -------------        -----------------------
<S>                          <C>                                      <C>                  <C>
John F. Rathgeber            Managing Director and Chief Operating    82,698 (15)           3,698 (15)
                             Officer of Arch Reinsurance Company
Louis T. Petrillo            President and General Counsel of Arch    95,800 (16)           1,943 (16)
                             Capital Services Inc.
Robert E. Glanville          Former Director                           1,551 (17)           1,551 (17)

</Table>
-------------------
(1)      Represents the number of common shares issued or issuable under the
         Plan to each selling shareholder. Does not constitute a commitment to
         sell any or all of the stated number of common shares. The number of
         shares offered shall be determined from time to time by each selling
         shareholder at his discretion.

(2)      Amounts include (a) 1,139,083 common shares, 32,198 common shares
         issuable upon exercise of class B warrants and 107,125 common shares
         issuable upon exercise of currently exercisable options owned directly
         by Mr. Clements, (b) 263,046 common shares and 18,698 common shares
         issuable upon exercise of class B warrants owned directly by the spouse
         of Mr. Clements, (c) 48,512 common shares and 56,302 common shares
         issuable upon exercise of class B warrants owned by a grantor retained
         annuity trust established for the benefit of the children of Mr.
         Clements and (d) 2,725 common shares acquired from the exercise of
         class A warrants and 103,242 series A convertible preference shares
         ("preference shares") acquired directly by Sound View Partners, L.P.
         ("Sound View") as part of the November 2001 capital infusion. Sound
         View is a limited partnership, the general partners of which are Mr.
         Clements and his spouse. Taracay Investors ("Taracay") owns
         approximately 50% of Sound View. Mr. Clements disclaims beneficial
         ownership of (a) all securities owned directly by his spouse, (b)
         approximately 97% of the securities owned directly by Taracay, which
         represents the ownership percentage of Taracay by Taracay partners
         other than Mr. Clements, and (c) approximately 98% of the securities
         directly owned by Sound View, which represents the ownership percentage
         of Sound View by Sound View partners other than Mr. Clements, but
         excluding that portion of Sound View held by Taracay to the extent of
         Mr. Clements' ownership of Taracay as stated herein.

(3)      Amounts include (a) 146,187 common shares owned directly by Mr. Appel
         (including 6,625 restricted shares which are subject to vesting), (b)
         688,207 common shares issuable upon exercise of currently exercisable
         stock options and (c) 51,621 common shares issuable upon conversion of
         preference shares.

(4)      Amounts include 1,800 common shares issuable upon exercise of stock
         options (1,700 of such shares are issuable upon exercise of stock
         options which are subject to vesting).

(5)      Amounts include securities held by or for the benefit of HFCP IV
         (Bermuda), L.P. ("HFCP IV Bermuda"), H&F International Partners IV-A
         (Bermuda), L.P. ("HFIP IV-A Bermuda"), H&F International Partners IV-B
         (Bermuda), L.P. ("HFIP IV-B Bermuda") and H&F Executive Fund IV
         (Bermuda), L.P. ("HFEF Bermuda," and together with HFCP IV Bermuda,
         HFIP IV-A Bermuda and HFIP IV-B Bermuda, the "H&F Funds"). H&F
         Investors IV (Bermuda), L.P. ("HFI IV Bermuda") is the sole general
         partner of the H&F Funds. H&F Corporate Investors IV (Bermuda) Ltd.
         ("HFCI Bermuda") is the sole general partner of HFI IV Bermuda. HFI IV

                                       2

<Page>


         Bermuda may be deemed to control the H&F Funds. Mr. Bunce is a member
         of an investment committee of HFCI Bermuda which has investment
         discretion over the securities held by the H&F Funds. Mr. Bunce is a
         9.9% shareholder of HFCI Bermuda. All shares indicated as owned by Mr.
         Bunce are included because he is a member of the board of directors of
         ACGL and is affiliated with HFCI Bermuda. Mr. Bunce may be deemed to
         have an indirect pecuniary interest (within the meaning of Rule 16a-1
         under the Exchange Act) in an indeterminate portion of the shares
         beneficially owned by the H&F Funds. Mr. Bunce disclaims beneficial
         ownership of all shares owned by the H&F Funds, except to the extent of
         his indirect pecuniary interest in the issuer held through the H&F
         Funds. Based on a Form 4 dated March 4, 2003 filed with the Securities
         Exchange Commission ("SEC") by Mr. Bunce.

(6)      Amounts include (a) 141 common shares owned directly by Mr. Carney and
         (b) 300 common shares issuable upon exercise of stock options (200 of
         such shares are issuable upon exercise of stock options which are
         subject to vesting).

(7)      Amounts include (a) 56,749 common shares owned directly by Mr. Evans
         (including 53,578 restricted shares which are subject to vesting), (b)
         125,000 common shares issuable upon exercise of stock options (50,000
         of such shares are issuable upon exercise of stock options which are
         subject to vesting) and (c) 20,648 common shares issuable upon
         conversion of preference shares.

(8)      Amounts include (a) 384,491 common shares owned directly by Mr.
         Iordanou (including 325,000 restricted shares which are subject to
         vesting and 4,200 common shares owned directly by Mr. Iordanou's
         children) and (b) 425,000 common shares issuable upon exercise of stock
         options (141,667 of such shares are issuable upon exercise of stock
         options which are subject to vesting). In addition, Mr. Iordanou holds
         17,668 restricted common share units (13,251 of such units are subject
         to vesting) which will be settled in common shares of Arch Capital
         Group Ltd. upon termination of Mr. Iordanou's employment. Mr. Iordanou
         disclaims beneficial ownership of all shares owned by his children.

(9)      Amounts include (a) 50,100 common shares owned directly by Mr. Jones
         (including 50,000 restricted shares which are subject to vesting) and
         (b) 100,000 common shares issuable upon exercise of stock options which
         are subject to vesting.

(10)     Amounts include securities held by or for the benefit of Warburg Pincus
         (Bermuda) Private Equity VIII, L.P. ("WP VIII Bermuda"), Warburg Pincus
         (Bermuda) International Partners, L.P. ("WPIP Bermuda"), Warburg Pincus
         Netherlands International Partners I, C.V. ("WPIP Netherlands I") and
         Warburg Pincus Netherlands International Partners II, C.V. ("WPIP
         Netherlands II"). Warburg Pincus (Bermuda) Private Equity Ltd. ("WP
         VIII Bermuda Ltd.") is the sole general partner of WP VIII Bermuda.
         Warburg Pincus (Bermuda) International Ltd. ("WPIP Bermuda Ltd.") is
         the sole general partner of WPIP Bermuda. Warburg, Pincus & Co. ("WP")
         is the sole general partner of WPIP Netherlands I and WPIP Netherlands
         II. WP VIII Bermuda, WPIP Bermuda, WPIP Netherlands I and WPIP
         Netherlands II are managed by Warburg Pincus LLC ("WP LLC"). The
         foregoing is based on a Schedule 13D dated December 18, 2002 and filed
         with the SEC by these entities. Mr. Lee is a general partner of WP, a
         managing director and member of WP LLC and a beneficial owner of
         certain shares of capital stock of WP VIII Bermuda Ltd. and WPIP
         Bermuda Ltd. All shares indicated as owned by Mr. Lee are included
         because he is a member of our Board and is affiliated with these
         Warburg Pincus entities. Mr. Lee may be deemed to have an indirect
         pecuniary interest (within the meaning of Rule 16a-1 under the Exchange
         Act) in an indeterminate portion of the shares owned by WP VIII
         Bermuda, WPIP Bermuda, WPIP Netherlands I and WPIP Netherlands II. Mr.
         Lee disclaims beneficial ownership of all shares owned by these Warburg
         Pincus entities.

                                       3

<Page>

  (11)   Amounts include (a) 5,887 common shares owned directly by Mr. Meenaghan
         and (b) 18,300 common shares issuable upon exercise of stock options
         (1,500 of such shares are issuable upon exercise of stock options which
         are subject to vesting).

  (12)   Amounts include securities held by or for the benefit of HFCP IV
         (Bermuda), L.P. ("HFCP IV Bermuda"), H&F International Partners IV-A
         (Bermuda), L.P. ("HFIP IV-A Bermuda"), H&F International Partners IV-B
         (Bermuda), L.P. ("HFIP IV-B Bermuda") and H&F Executive Fund IV
         (Bermuda), L.P. ("HFEF Bermuda," and together with HFCP IV Bermuda,
         HFIP IV-A Bermuda and HFIP IV-B Bermuda, the "H&F Funds"). H&F
         Investors IV (Bermuda), L.P. ("HFI IV Bermuda") is the sole general
         partner of the H&F Funds. H&F Corporate Investors IV (Bermuda) Ltd.
         ("HFCI Bermuda") is the sole general partner of HFI IV Bermuda. HFI IV
         Bermuda may be deemed to control the H&F Funds. The foregoing is based
         on a Schedule 13D and a Form 4 dated March 4, 2003 and December 18,
         2002, respectively, and filed with the SEC. Mr. Tunnell is a member of
         an investment committee of HFCI Bermuda which has investment discretion
         over the securities held by the H&F Funds. Mr. Tunnell is a 5.45%
         shareholder of HFCI Bermuda. All shares indicated as owned by Mr.
         Tunnell are included because he is a member of the board of directors
         of ACGL and is affiliated with HFCI Bermuda. Mr. Tunnell may be deemed
         to have an indirect pecuniary interest (within the meaning of Rule
         16a-1 under the Exchange Act) in an indeterminate portion of the shares
         beneficially owned by the H&F Funds. Mr. Tunnell disclaims beneficial
         ownership of all shares owned by the H&F Funds, except to the extent of
         his indirect pecuniary interest in the issuer held through the H&F
         Funds.

 (13)    Amounts include (a) 6,746 common shares owned directly by Mr. Works and
         (b) 21,300 common shares issuable upon exercise of stock options (1,500
         of such shares are issuable upon exercise of stock options which are
         subject to vesting).

 (14)    Amounts include (a) 57,350 common shares owned directly by Mr. Vollaro
         (including 55,512 restricted shares which are subject to vesting) and
         (b) 85,000 common shares issuable upon exercise of stock options
         (28,333 of such shares are issuable upon exercise of stock options
         which are subject to vesting).

 (15)    Amounts include (a) 17,698 common shares owned directly by Mr.
         Rathgeber (including 12,773 restricted shares which are subject to
         vesting) and (b) 65,000 common shares issuable upon exercise of stock
         options (21,673 of such shares are issuable upon exercise of stock
         options which are subject to vesting).

 (16)    Amounts include (a) 8,000 common shares owned directly by Mr. Petrillo
         (including 1,457 restricted shares which are subject to vesting) and
         (b) 87,800 common shares issuable upon exercise of stock options
         (13,337 of such shares are issuable upon exercise of stock options
         which are subject to vesting).

 (17)    Amounts include (a) 1,351 common shares owned directly by
         Mr. Glanville and (b) 200 common shares issuable upon exercise of
         stock options.

         Information concerning the selling shareholders may change from time to
time and will be set forth in future supplements. Accordingly, the identity of
the selling shareholders may change and the number of shares of common shares
offered hereby may increase or decrease. Full copies of the prospectus will be
provided upon request.


                                       4

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