Arch MI secures over $577m of indemnity reinsurance through Bellemeade Re ILN transaction

Arch Mortgage Insurance Company (Arch MI) has obtained $577 million of indemnity reinsurance on a pool representing $7.2 billion of mortgages from Bellemeade Re 2019-4, a special purpose reinsurer. The reinsurance is for a portfolio of MI policies linked to 113,180 loans issued by Arch MI and affiliates in 2019.

This insurance-linked note (ILN) transaction was Arch’s fourth of 2019, marking the most ILN transactions conducted in a single year by a mortgage insurer. In total, Arch has issued 10 Bellemeade transactions, which have provided aggregate reinsurance coverage of over $4.7 billion.

Bellemeade Re 2019-4 is funding its reinsurance obligations through the issuance of five classes of amortising notes with 10-year legal final maturities.

The notes consist of the following five classes: $144 million class M-1A notes with a coupon equal to one-month LIBOR plus 140 basis points; $144 million class M-1B notes with a coupon equal to one-month LIBOR plus 200 basis points; $126 million class M-1C notes with a coupon equal to one-month LIBOR plus 250 basis points; $144 million class M-2 notes with a coupon equal to one-month LIBOR plus 285 basis points; and $18 million class B-1 notes with a coupon equal to one-month LIBOR plus 385 basis points.

“This transaction represents Arch’s continued commitment to actively managing the risk in our US mortgage insurance business,” said Jim Bennison, EVP, alternative markets for Arch Capital Group (US).

“Our efforts are supported by a wide range of private market investors that are attracted to Arch’s best-in-class pricing, asset selection and servicing of our mortgage insurance portfolio.”

Arch MI, a wholly owned subsidiary of Arch Capital Group, is a provider of private insurance covering mortgage credit risk in the US. Headquartered in Greensboro, North Carolina, Arch MI’s flagship mortgage insurer, Arch Mortgage Insurance Company, is licensed to write MI in all 50 states, the District of Columbia and Puerto Rico.