Arch Capital Group Ltd.’s U.S. mortgage insurance subsidiary, Arch Mortgage Insurance Company (Arch MI), has tapped the capital markets for $621 million of indemnity mortgage reinsurance protection.
The reinsurance protection is for a pool that represents $35.58 billion of mortgages from Bellemeade Re 2019-2 Ltd., a special purpose reinsurer.
The deal is structured in a similar way to a catastrophe bond transaction, with the insurance-linked note transaction providing Arch MI with collateralised reinsurance protection for potential losses on a portion of its mortgage insurance portfolio.
Bellemeade Re 2019-2 Ltd. is Arch’s second mortgage insurance-linked securities (ILS) transaction of 2019, and marks the eighth Bellemeade transaction Arch has issued, which have together provided aggregate reinsurance protection of roughly $3.5 billion.
Our sister publication, Artemis, tracks the Bellemeade transactions and other ILS deals in the Artemis Deal Directory.
Regarding the latest deal, the reinsurance is for a portfolio of mortgage insurance policies linked to 143,840 loans issued by Arch MI and affiliates, primarily during the second-half of 2018.
Jim Bennison, Executive Vice President (EVP), Alternative Markets for Arch Capital Group (U.S.) Inc., said: “These Bellemeade transactions are an important part of managing the capital and risk positions of our mortgage business. Since our initial Bellemeade issuance in 2015, we’ve seen a significant increase in global investor interest in this asset class. We believe that ILN transactions will continue to be a benefit to our entire industry.”
