Arch net property cat premiums fell 27% in H1. CEO says more risk ceded to third-party capital

Over the first-half of 2026, Bermuda headquartered re/insurer Arch Capital reported a 27% reduction in net property catastrophe reinsurance premiums, while its senior executives noted higher cessions to reinsurance (likely retro) and third-party capital providers.

For the first-half of 2026, property catastrophe net premiums as a component of the Arch Re underwriting book fell from making up 22% of its total net premiums written in H1 2025 to just 17.4% in H1 2026.

Net property cat premiums amounted to $699 million in the first-half of this year, 27% lower than the $961 million Arch Re underwrote in H1 2025.

In the second-quarter, Arch Re’s net property cat premiums were $392 million, a 19% decrease from Q2 2025’s $484 million.

The effects of lower property catastrophe risk premiums being retained is evident in the Arch Capital 1-in-250 year probable maximum loss (PML) metric, which declined from 8.2% of shareholders equity or $1.892 billion at April 1st, down to 8% of equity or $1.828 billion as of July 1st 2026.

Arch Capital appears to be demonstrating cycle management here, in opting to leverage its diversified platform and access to retrocessional and third-party capital to support a reduction in net property catastrophe premiums at a time when the market has softened.

Arch CEO Nick Papadopoulos commented during the firm’s recent Q2 earnings call, “Net premiums written were down 10% from the same quarter last year, as some of our clients opted to retain more risk and increasing competition lowered rates, particularly in property.

“We increased our cession to traditional reinsurance and third-party capital, which impacted our net-to-gross ratio. Our ability to leverage these capabilities enables us to provide solutions to our brokers and cedents, while maintaining flexibility to manage our net risk portfolio.”

Commenting on the state of the reinsurance market, the CEO also stated, “The rate reductions are pretty much across the board, you know, on the property cat. So we would expect that the PML could reduce, but think of Florida as the highest margin business in our property cat books.”

François Morin. Chief Financial Officer, also said, “Turning to the reinsurance segment, net premiums written were down 10.4 percent from the same quarter one year ago, reflecting reduced ratings from lower rates and a higher level of retrocession purchases, primarily in the specialty and property catastrophe lines.”

In recent months we’ve had more evidence of Arch’s continuing third-party capital partnership initiatives, as well as its appetite for retrocession.

The company secured $150 million of property catastrophe retrocession for peak North American perils from the Ramble Re Ltd. (Series 2026-1) catastrophe bond issuance in June. This deal was $50 million bigger than its last cat bond sponsored in 2024, which also remains in-force at this time.

In addition, as we reported that Eaton Vance managed mutual funds had made investments in Arch’s Voussoir Re reinsurance sidecar structure this year, amounting to almost $75 million.

We suspect that beneath the reported net premium decline might sit higher cessions of property cat risk to third-party investors, as Arch continues to play a meaningful role as a partner and facilitator for investors looking to benefit from access to the returns of its underwriting in a direct manner, through insurance-linked securities structures.