Arch Capital Group CEO Nicolas Papadopoulo recently stated that the reinsurance market has entered a more disciplined period, as rates have moderately declined from historic highs in the sector. During the company’s Q1 2025 earnings call, Papadopoulo said that while rates have modestly declined, the market still offers good opportunities and remains fundamentally sound.
Papadopoulo emphasized that there are no rashly behaving reinsurance market participants and that, although new entrants are beginning to come into the market, their presence remains relatively small. “We are still bullish on property catastrophe business,” he said, continuing that overall industry behavior has been comforting.
Reinsurance Market Fragmentation: A Tale of Two Property Markets
Discussing the broader property reinsurance market and insurance market—specifically in the Excess & Surplus (E&S) and the North American property classes —Papadopoulo described the climate as being fragmented.
He stated that mid-market business admitted to retail has been under constant pressure from convective storms and wildland fire activity and has compelled carriers to push for more rates to offset rising catastrophe costs.
E&S Reinsurance Market Recovery Driven by Coastal and Earthquake Perils
At the same time, however, in the E&S market, particularly in coastal and earthquake-exposure perils where MGAs are more prominent, he added that the reinsurance market snapped back rapidly. “We witnessed surprising strength and rapid double-digit rate increases in these classes,” he continued.
Hurricane Ian and Its Impact on Reinsurance Market Dynamics
Looking back at how the market behaved after Hurricane Ian, Papadopoulo indicated that the event exposed weaknesses. The vast majority of carriers had written huge limits and recorded huge losses. The aftermath led to a noticeable shift in underwriting behavior.
“Exposures started decreasing, and, in 2023, reinsurers cut capacity, increased rates, and hardened terms and conditions,” he continued. The shift had a significant impact in building a healthier and sustainable market profile.
MGA Growth Reflects Positive Reinsurance Market Outlook
Interestingly, Papadopoulo pointed out that MGAs, which previously kept their exposure to short-tail risks in check, have returned with greater underwriting limits. This is an indication of growing confidence in the market’s stability.
MGAs Signal Confidence with Expanded Reinsurance Market Capacity
“The MGA industry has seen more capacity this year, and they’ve been very effective in bringing competitiveness back into the market,” Papadopoulo said.
