Arch MI, the private mortgage insurance subsidiary of Arch Capital, has obtained nearly $452 million of indemnity reinsurance from the capital markets.
The company secured coverage on a pool representing $31 billion of mortgages from Bellemeade Re 2020-3 Ltd., a special purpose reinsurer.
Arch MI explained that the reinsurance was obtained by issuing approximately $418 million in bonds and $34 million in direct reinsurance.
This transaction covers a portfolio of MI policies linked to 112,274 loans insured by Arch MI and affiliates primarily from June through August of 2020.
This Mortgage Insurance-Linked Note (MILN) transaction is Arch’s third in 2020, netting the insurer over $1.5 billion of indemnity reinsurance this year.
“Given the circumstances of 2020, completing our third Bellemeade transaction of the year was no small feat. I’m pleased that we were able to restart the MILN market in June and am encouraged by the recent offerings by other mortgage insurers,” said Jim Bennison, EVP, Alternative Markets for Arch MI.
“Each subsequent Bellemeade deal of 2020 has had a lower attachment point than the previous, signaling that investors are increasingly comfortable taking on mortgage credit risk as they get more clarity on COVID-19’s effect on the housing market.”
Bellemeade Re 2020-3 Ltd. is funding its reinsurance obligations through the issuance of five classes of amortizing notes with 10-year legal final maturities.
Additionally, a total of $33,658,000 was placed with a panel of reinsurers.
