Arch Capital Group’s mortgage insurance (MI) business has secured $368 million of indemnity reinsurance protection via the capital markets from Bellemeade Re 2017-1 Ltd., a special purpose insurance vehicle.
The latest issuance under the Bellemeade Re vehicle is the largest yet and a first for Arch’s Mortgage Group, and is also the first time any mortgage insurance-linked note has been rated in the industry, receiving a rating of BBB from Morningstar.
Previously, Arch acquired the mortgage insurance business of AIG, United Guaranty, which had previously sponsored two smaller Bellemeade mortgage ILS transactions, in Bellemeade Re Ltd. (Series 2015-1) and Bellemeade Re II Ltd. (Series 2016-1). Following the takeover of United Guaranty, Arch said it would continue the Bellemeade ILS deals.
The insurance-linked securities (ILS) transaction provides Arch MI with $368 million of fully-collateralised indemnity reinsurance protection for a portfolio of MI policies issued by Arch MI from January 2017 through June, 2017.
Chief Executive Officer (CEO) of Arch’s Global Mortgage Group, Andrew Rippert, said; “Transactions like this provide us with valuable feedback from third parties on the risk and capital management aspects of our business. This ILS transaction demonstrates our commitment to building a sustainable mortgage guaranty business model that can last through multiple housing cycles and positions Arch as the industry leader in proactively managing residential mortgage credit risk.”
The transaction is made up of three classes of amortizing notes that have ten-year legal final maturities.
