Bermuda-based Arch Capital Group Ltd.’s reinsurance unit posted record underwriting revenue of $1.6 billion for all of 2025, and although the company saw a 10% to 20% drop in property catastrophe rates at renewals in January and expects additional pressure throughout 2026, CEO Nicolas Papadopoulo stressed that Arch still likes the business.
Arch’s reinsurance division performed strongly in 2025, contributing more than 50% of the company’s total underwriting profits in the final quarter of the year.
Recently, during the airline’s fourth-quarter 2025 earnings call, CEO Papadopoulou discussed the company’s experience on January 1, reinsurance renewals, and provided some thoughts on the property and casualty reinsurance market.
“Competition for property cat and more general short-tail excess renewals was very strong on January 1, with rates down 10% to 20%. As supply continues to outpace demand, ceding commissions are increasing proportionately. Despite these headwinds, our underwriting team performed well by leveraging the strength of our platform to pursue a number of new opportunities. These opportunities will reduce the negative impact of rate pressure on the top line,” the CEO said.
In a Q&A with analysts, Papadopoulou was asked about 1.1’s Real Estate Cat business and how the soft interest rate environment is affecting the company’s appetite, Arch writes.
“I think we still like the cat business that we wrote about in 1.1… We’ve seen very strong competition in Europe and I think it’s probably less competitive in the U.S. compared to Europe. And I think we’re just adjusting our writing based on the target profitability that we’ve set in the region.
“So, overall, I think we’ve been able to retain the majority of our renewals. We’ve had some very favorable signings from brokers because of the services we provide and the long-term relationships we have with a lot of the cedants. We still like the business. I think if rates continue to come down in the mid-teens, we’re going to have to recognize on a case-by-case basis where it makes sense and where it doesn’t,” he said.
Looking ahead to mid-year renewals, Papadopoulou noted that increased competition in the reinsurance market reflects the outperformance the company has benefited from over the past three years.
“The fact that we only have one major cat, the California wildfires, and no other major cats, I expect supply will continue to be there. So I think people should be looking at risk-adjusted returns going forward because that’s going to be a big factor in our underwriting business,” he continued.
In a subsequent conference call, the CEO was further questioned on the outlook for the reinsurance business in 2026 if expected further downward interest rate pressure materializes.
“On the reinsurance side, I think margins are definitely under pressure…that’s coming from excess loss pricing, and also on the expense side, we’re seeing ceded commissions going up. But we still like the business. We have a large, diversified platform and we operate in a lot of geographies. So we believe we can find ways to continue to grow in an attractive market. But yes, margins are very high, but margins are definitely under pressure,” he said.
Of course, while property cats often grab the headlines, Arch is also in the casualty reinsurance business, and the company’s CEO gave his thoughts on the casualty industry in 2026.
“So on the casualty side, before we talk about the reinsurance market, generally speaking, on the primary side, I think on the primary side, we feel like our rates are still above trend. It seems like things have slowed down a bit last quarter. But I personally think the pain is still there and I think we’re still going to see some adverse developments in the market over the last couple of years and into 2022, so I’m optimistic that rates will probably continue to be there for the foreseeable future, at least in line with the medium-term trend.
“When we look specifically at reinsurance, there’s a lot of supply and reinsurers are very willing to write business. I think what’s new is, maybe based on what I said before, the ability or willingness of cedants to retain more business… supply is constant and demand is steadily declining. So, it’s another layer of competition,” Papadopoulou said.