Still runway to make good cat profits, but there are some worrying signs: Convergence CEO panel

At the Convergence 2026 conference in Bermuda this week, CEO’s of reinsurance companies explained that while property catastrophe rates have declined from recent generational highs they still feel there is adequacy and a runway to make good profits, albeit there are some worrying signs.

Ryan Mather, CEO of Ariel Re and Cathal Carr, CEO of Oak Global, both participated in the final CEO panel discussion at the event and while they still believe the business to be profitable, there was a dose of realism and caution in their words.

The two CEO’s were responding to questions about how they feel regarding the current stage of the reinsurance market cycle, how it compares to previous years and whether they feel attractive opportunities persist.

Mather, the CEO of Ariel Re said, “Something like 85% of our risk comes from property cat, in the USA mostly, and although prices have reduced in the last year we still see plenty of runway.

“There is still plenty of well-priced risk where strong capital is required. It’s not all property risk, but for those people that know what they’re doing, we think there is still plenty of runway to make good profits there.”

Carr, CEO of Oak Global then commented, “At Oak, what we try to do, is to take some of the emotion out of it and quantify how we think about attractive, okay, and poor markets. In terms of where we are at the present moment in time, we’re not in a soft market, we’re in a softening market, and you know the trajectory we must separate from the actual adequacy piece.

“We develop the frameworks, we think about net combined ratio, obviously return on capital, but then the amount of risk that we’re taking within each of our syndicates. So we look at various return periods and how much we’re exposing our investors, and we create different boundaries for surplus return, adequate return, and inadequate return. Obviously the definition of those boundaries is subjective, different investors will have different views, but it’s something that we wanted to have internally, to give us a guide in terms of how we plan for a subsequent year, how we hold ourselves to account in terms of delivering that return, but ultimately then how we talk to investors.

“That’s a really important part of it, to have that transparent conversation around, here’s what we think about the return profile at the moment.

“I would say that we would have been in a surplus return environment from 2023 through to 2025, 2026. We’ve moved into an adequate environment, I would say, and we expect next year to continue to be within that band, based on where we think rates are going.

“So yes, it’s coming off, but there’s a lot of fundamentals that are still very positive.”

Later in the discussion, Mather gave some more context as to how he thinks about the current phase of the cycle versus other years.

“We’re coming off a generational high market that peaked in ’23 to ’24, and I can tell you, at Ariel at least, we saw risk-adjusted rate change of 48% from ’22 to ’23. So that was a massive shift upwards, and then we saw a little bit more rate from ’24 to ’25, and then we’ve seen it come off. But in fact, we’re still something like 25% higher than we were in ’22, which we thought was adequate. It wasn’t brilliant, but it was adequate,” Mather explained.

Continuing, “Because of what happened in ’23, we had first dibs complete access to whatever line, whatever business we wanted to write, and we were able to construct what we thought was the absolute perfect portfolio then. From here on in we’re going to defend it, because we still think it’s a pretty good portfolio. So it’s not just about price. There are so many other dynamics as well, especially portfolio construction.

“So here we are, prices are definitely going down. But to me it feels like, and I was talking to someone earlier today and they said it feels a bit like 2013, something like that. Maybe it does, just on a read-across basis. But I think that the market is better set up now, I think there is more resilience, more robustness. I think the years that we’ve just had have been great to recharge the balance-sheets.”

Mather then gave a dose of realism by saying, “But there are some worrying signs. One of them being that I don’t think I’ve ever seen the rates go down as quickly as I saw in 2026.

“So let’s hope that was a correction, a one-year correction back down to a level-set, rather than the beginning of a trend.”

Carr then noted that it’s important not to get too caught up in how previous cycles have played out, as loss activity will inevitably return.

He cautioned, “You can see different points in time where fear and greed do play a role, in terms of how people behave. The underwriting businesses and the investors that generate alpha through the cycles will be the businesses that don’t put too much weight in whether it’s too much activity, or a lack of activity in the previous years.

“That’s something that I think we as an industry need to be very careful about, as we go into next year and the year after and the year after. That frequency is there, we just haven’t realised it yet. But it’s critical that we price for that expected loss.”