Hamilton, Bermuda-based insurer Arch reported 2007 fourth-quarter net income fell 2 percent, and management said the company's loss exposure from subprime mortgage investments and risks it covers is minimal.

The company reported net income fell to $240 million, down by $5 million, but it has increased earnings per share by 19 cents to $3.31 with the help of a stock buyback. Revenues were off by 5 percent, or $44.6 million, to $858.2 million.

For the year, net income grew 20 percent, or $145 million, to $857 million, or $11.28 a share, an increase of $2.20 a share. Revenues were virtually unchanged at $3.45 billion.

The company's combined ratio improved 1.3 points, dropping to 84.1. Its insurance book deteriorated 1.3 points, rising to 91.2, while reinsurance decreased 6.2 points to 74.5.

During an investors' conference call Dinos Iordanou, president and chief executive officer, said the company had very little subprime exposure in its financial holdings. He said liability exposure from claims against businesses it insures was "not significant" in either its insurance or reinsurance book. He said the company has been reducing its directors and officers liability exposure since 2005.

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