Arch Mortgage Insurance Company (Arch MI) has announced that it has obtained over $358 million of indemnity reinsurance on a pool representing approximately $51.7 billion of mortgages from special purpose reinsurance, Bellemeade Re 2022-2 Ltd.
The coverage was obtained by issuing approximately $201 million in bonds and $157 million in direct reinsurance.
The transaction largely covers a portfolio of MI policies issued by Arch MI and affiliates from November 2021 through June 2022.
Moreover, this Mortgage Insurance-Linked Note (MILN) transaction is Arch’s second of 2022. Since the Bellemeade program began in 2015, Arch has completed 19 transactions which have secured over $9 billion in indemnity reinsurance.
Bellemeade Re 2022-2 Ltd. is funding its reinsurance obligations through the issuance of four classes of amortizing notes with 10-year legal final maturities.
The senior M-1A class of notes received a Baa3 rating from Moody’s and BBB (high) from DBRS Morningstar. The M-1B class of notes received a Ba3 from Moody’s and BB (high) from DBRS Morningstar. The M-2 class received a B3 rating from Moody’s and BB (low) from DBRS Morningstar. The B-1 received a B (high) from DBRS Morningstar and was not rated by Moody’s.
Pricing detail for the four classes of offered notes include: $52,857,000 class M-1A notes with a coupon equal to one-month SOFR plus 400 basis points. $105,000,000 class M-1B notes with a coupon equal to one-month SOFR plus 750 basis points. $21,574,000 class M-2 notes with a coupon equal to one-month SOFR plus 925 basis points. $21,574,000 class B-1 notes with a coupon equal to one-month SOFR plus 1200 basis points.
In addition, a total of $157,424,000 was placed with a panel of reinsurers.
Jim Bennison, EVP, Alternative Markets for Arch MI, said: “Our Bellemeade program continues to be is an important part of Arch MI’s risk and capital management strategy. We are pleased with the continued support from our investors particularly during difficult market conditions.”
