Nicolas Papadopoulo, Chief Executive Officer (CEO) of Bermuda-based Arch Capital Group, said today that the company remains bullish on the property catastrophe reinsurance business, despite the market being in its second round of rate decreases.
As property cat reinsurance rates soften from recent highs, the attractiveness of the business has been a key topic of third quarter earnings calls so far, with analysts eager to hear how executives at global re/insurers view the market ahead of the key 1.1 2026 renewals.
Arch’s reinsurance business produced another strong result in the third quarter of 2025, as underwriting income jumped 223.5% year-on-year to $482 million with a combined ratio of 76.1%, a 16.2 percentage point improvement on the prior year.
At the same time, reinsurance gross premiums written and net premiums written decreased year-on-year by 9% and 11%, respectively, which Arch attributed to the impact of two transactions in Q3’24 in the specialty line of business, and also the lower level of reinstatement premiums in Q3’25.
During the firm’s recently held earnings call, CEO Papadopoulo was questioned on how Arch views the upcoming property cat reinsurance renewal.
“On the cat side, we remain bullish. We like the margin. And maybe a couple of data points. The market really peaked in July 2024, so a little bit over a year ago. And I think in 2025, the price went down between 5 and 10%, so we are into our second round of rate decrease. And depending on the region, the increase that we witnessed from 2021 to 2024, some of those rates doubled,” he said.
“I think we are in a good place. It depends on the region, but generally, we remain optimistic that the business is attractive. There’s more demand. We had more demand last year; we expect more demand to come to the market in the US and international business. Overall, we think despite expected pressure on the rates, we think the margins are still attractive,” added Papadopoulo.
Earlier in the call, Papadopoulo and François Morin, Chief Financial Officer and Treasurer at Arch, were also quizzed on how they’re thinking about reinsurance growth going forward.
“So, I think for reinsurance, it’s pretty much the same outlook as insurance,” said Papadopoulo. “I think you have rate pressure on the short tail lines, but I think you’re seeing rate increase and dislocation on the casualty lines, that could provide opportunity.”
He went on to note that a big headwind is the fact that like Arch, a lot of ceding companies simply like the business.
“So, after a few years there’s less fear in the marketplace. People feel better about their balance sheets. What we’re seeing is companies retaining more, which is creating a significant headwind for the reinsurance group. By doing so, they either return the business, or very often do move more to an excess of loss position and that presents additional opportunities for us. I would say that the margin on the excess of loss is usually better than the margin on the quota share. So, I think we may see a different makeup on the margins going forward,” continued the CEO.
With ceding companies proactively retaining more, one analyst asked the executives whether the 17% decline in facultative property in the third quarter of 2025 was driven by Arch walking away from business, or declining exposures, as opposed to rate?
In response, Papadopoulo said: “No, I don’t think we are pulling back. I think at this stage, on the other property, I should clarify the other property line of business, I think the main factors there is a couple of our clients on the E&S side of the business, are retaining more of the business at this stage.
“We would like to do more. And also, let’s not forget the rates are also going down. So, some of our cedents are also revising some of their ceded premium to the downside. Those are the two components. The ability to retain more of the business, and also the refocusing of their growth downwards, which impact our reinsurance volume,” he explained.
Expanding on this, Morin commented: “It’s no question that the rate environment is down in property, there’s also a drop in exposure. But just to be clear, that drop in exposure is typically not our decision. It’s the cedents decision. There are some situations where, again, they decide to keep it net, or they use a different structure, but we still like the product, we still like the line, in most of what we do we like a lot. And any reduction in exposure that you see that we experience is, generally, at this time, more because the cedents choose to do something different, not because we decide to walk away.”
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