Arch Mortgage Insurance Company, a subsidiary of Arch Capital Group, has secured over $449 million of indemnity reinsurance from special purpose reinsurer Bellemeade Re 2020-2 Ltd.
The Mortgage Insurance-Linked Note (MILN) transaction, which covers a portfolio of MI policies linked to 117,562 loans issued in the first five months of 2020, is Arch’s second of the year.
Coverage was obtained by issuing approximately $423 million in bonds and $26 million in direct reinsurance.
Arch’s earlier MILN, Bellemeade Re 2020-1, was the first mortgage credit risk transfer (CRT) completed by any company in the COVID-19 era.
The most senior class M-1A of notes received an A2 rating by Moody’s Investors Service and a BBB (high) from DBRS Morningstar.
The MILN is funding its reinsurance obligations through the issuance of five classes of amortising notes with 10-year legal final maturities.
The notes consist of five classes and include a total of $25,747,000 placed with a panel of reinsurers.
“We’re pleased that we were able to bring our second Bellemeade transaction of 2020 to market. Investor interest was incredibly strong, as reflected in tighter credit spreads and a lower attachment compared to Bellemeade 2020-1,” said Jim Bennison, EVP, Alternative Markets for Arch MI.
“Investors have gotten much more comfortable with mortgage credit risk over the past several months as the effect of COVID-19 on the housing market becomes clearer.”
