Oct 27 (Reuters) - Arch Capital's ( ACGL ) third-quarter

profit rose 37% as strong underwriting softened the hit from

elevated costs, the insurer said on Monday.

The results mirror those of peers W. R. Berkley and

Chubb, which reported higher quarterly profits last week

on underwriting strength.

Growing confidence in financial stability has spurred

clients into seeking more comprehensive policy coverage.

Stronger underwriting reflects an insurer's ability to price

risk effectively, bolstering profits despite higher claims.

Arch Capital ( ACGL ) posted underwriting income of $871 million in

the quarter, compared with $538 billion a year earlier.

Gross premiums written fell 0.6% to $5.41 billion, while

pre-tax net investment income grew 0.74% to $408 million in the

three months ended September 30.

That helped offset costs from higher expenses on

investigating and settling claims. Losses and loss adjustment

expenses were $1.16 billion, compared with $1.08 billion a year

earlier.

Profit available to common shareholders was $1.34 billion,

or $3.56 per share, for the quarter, compared with $978 million,

or $2.56 per share, last year.

The company's shares were up 1.2% in after-hours trading.