Arch Mortgage Insurance Company (Arch MI), a subsidiary of Bermudian insurance and reinsurance group Arch Capital, has secured $374.46 million of indemnity reinsurance from the capital markets through Bellemeade Re 2018-1 Ltd., a special purpose insurer (SPI).
The reinsurance protection provides Arch MI with fully collateralised coverage for a portfolio of mortgage insurance policies it issued last year, and will be funded by Bellemeade Re through the issuance of three tranches of notes with ten-year terms, rated BBB by Morningstar.
This is the second time that Arch MI has accessed the capital markets directly for mortgage reinsurance through an insurance-linked securities (ILS) issuance, although United Guaranty, which was acquired by Arch from AIG in 2016, had previously conducted two similar ILS deals with the Bellemeade Re vehicle.
Altogether, the four Bellemeade transactions have generated over $1.3 billion of reinsurance protection for loans representing over $117 billion of unpaid principal balance.
Andrew Rippert, Chief Executive Officer (CEO) of Arch’s Global Mortgage Group, said, “Executing transactions like this on a programmatic basis is a critical part of running a sustainable mortgage guaranty business.
“Not only does it provide us with catastrophic risk protection, it also gives us timely feedback from unbiased third parties on how they view the risk in the U.S. mortgage market.”
Headquartered in Greensboro, North Carolina, Arch MI is the U.S mortgage insurance operation of Arch Capital Group Ltd., providing private mortgage credit risk insurance to lenders and promoting responsible home ownership to qualified borrowers.