Nicolas Papadopoulo, Chief Executive Officer (CEO) of re/insurer Arch Capital Group, believes the reinsurance market is more disciplined, noting that while rate decreases have been seen, they are from the peak of the market—and the sector remains attractive.
Speaking during Arch Capital Group’s Q1 2025 earnings call, Papadopoulo said he hasn’t seen any actors behaving in a totally irrational way. He acknowledged that while new entrants are emerging, they remain small.
“And so, I think we are very optimistic about property cat, and the way the industry behaves in general on that aspect,” said Papadopoulo.
When it comes to catastrophe and property in general—especially E&S property and North American E&S property—Papadopoulo described it as a tale of two markets.
He said, “I think you have the middle market, more admitted retail, where the convective storm and some of the recent cat element, I would include the wildfire, to a certain extent, keep putting pressure on the companies, and they have to keep on getting rates to make sure that they cover their cat load, which has gone up in the last few years.
“And then you have the more E&S, cat, coastal, maybe earthquake driven risk where the MGAs play a bigger role. I think the market has responded, to my surprise, very, very quickly, giving up double digit rate increases.”
Papadopoulo noted that in the aftermath of Hurricane Ian, the industry was caught off guard, citing that people didn’t like big limits and took significant losses.
“In 2023, I think the market became much more disciplined and cut limits,” he said. “When the capacity withdraws, that’s when you see rates going up, so we got a huge upswing, re-underwriting, terms and conditions.”
He added that a year and a half later, they witnessed MGAs—whose capacity had previously been short tail—returning with much larger limits.
“I think the capacity of MGAs has gone up this year. So, I think they play a big role, my view, in how quickly the market turned to be much more competitive,” he said.
