Bermuda-based Arch Capital Group Ltd.’s reinsurance arm delivered record underwriting income of $1.6 billion for the full year 2025, and while the firm saw property catastrophe rate declines between 10% and 20% at the January renewals, with additional pressure expected throughout 2026, CEO Nicolas Papadopoulo has emphasised that Arch still likes the business.
Arch’s reinsurance arm had a strong 2025, contributing more than 50% of the firm’s total underwriting profit in the final quarter of the year.
Speaking recently during the carrier’s fourth quarter 2025 earnings call, CEO Papadopoulo discussed the firm’s experience at the January 1st, reinsurance renewals, and also provided some thoughts on the property and casualty reinsurance markets.
“On January 1, property cat and more generally, short tail excess of loss renewals were highly competitive, with rates down 10 to 20%. Ceding commission increased in proportional reinsurance as supply continued to outpace demand. Despite these headwinds, our underwriting teams performed well by leveraging the strengths of our platform to source a handful of new opportunities. These opportunities will reduce the negative top-line impact from the rate pressure,” said the CEO.
During the Q&A with analysts, Papadopoulo was quizzed on the property cat business Arch wrote at 1.1 and how the softening rate environment impacts the firm’s appetite.
“I think we still like the cat business we wrote at 1.1… We’ve seen Europe being very competitive, I think in the US probably less so compared to Europe. And I think we just adjust our writings to the target profitability that is set by region.
“So, overall, I think we were able to retain most of our renewals. We got some very favorable signing from our broker because of the service we provide and the long-standing relationship we have with many of our ceding companies. We still like the business. I think if rates were to continue to go down in the mid-teens, we will have to, on a case by case basis, realize where it makes sense and where it doesn’t,” he said.
Looking ahead to the mid-year renewals, Papadopoulo noted that the increased competition in the reinsurance market is a reflection of the excellent results companies have benefited from over the last three years.
“The fact that we had only one major cat, which was the California wildfires, absent of any other major cat I would expect the supply to continue to be there. So, I think people should pay attention to the risk-adjusted return going forward, because it will be a big element of how we underwrite the business,” he continued.
Later in the call, the CEO was questioned further on the outlook for the reinsurance business in 2026, if the expected, further downward rate pressure comes to fruition.
“On the reinsurance side, I think margins are definitely under pressure… It comes from the pricing on the excess of loss, and also on the expense side, we’re seeing also ceding commission going up. But we still like the business. We have a big, diversified platform, we write the business in many geographies. So, we believe that we can find ways to continue in an attractive market. But yes, the margins, they were very high, but the margins are definitely under pressure,” he said.
Of course, while property cat often grabs the headlines, Arch also writes casualty reinsurance, and the firm’s CEO offered his views on the casualty sector in 2026.
“So, on the casualty side, generally on the primary before we talk about the reinsurance market, I think on the primary side, we feel that we are still getting more rate than trend. It seems that it’s decelerating a little bit of what we saw in the last quarter. But I personally believe that there’s still pain, I think we still will see some unfavourable developments in the market for the old years and the prior to 2022, so I’m optimistic that the rates could continue to at least meet mid-trend for the foreseeable future.
“When we look specifically at the reinsurance, there’s a lot of supply, a lot of willingness for the reinsurer to write the business. And I think the thing that has been new is, maybe based on what I said earlier, the ability, or the willingness of ceding companies to retain more of the business… The supply is constant and the demand is stable to down. So, that is another layer of competition there,” said Papadopoulo.
