Arch MI Secures Over $233 Million of Indemnity Reinsurance through Bellemeade Re Insurance-Linked Note Transaction and Related Reinsurance

By: Arch Capital Group Ltd. via Business Wire

October 31, 2023 at 13:29 PM EDT

Arch Mortgage Insurance Company (Arch MI) announced it has obtained over $233 million of indemnity reinsurance on a pool representing approximately $32.4 billion of mortgages from Bellemeade Re 2023-1 Ltd., a special purpose reinsurer. The coverage was obtained by issuing approximately $186 million in bonds and $46 million in direct reinsurance. This transaction largely covers a portfolio of MI policies issued by Arch MI and affiliates primarily from January 2023 through September 2023 and closed on Oct. 31.

This Mortgage Insurance-Linked Note (MILN) transaction is Arch’s first of 2023. Since the Bellemeade program began in 2015, Arch has completed 20 transactions that have secured over $9 billion in indemnity reinsurance.

Bellemeade Re 2023-1 Ltd. is funding its reinsurance obligations through the issuance of five classes of amortizing notes with 10-year legal final maturities.

The notes received ratings from DBRS Morningstar as follows: Class M-1A was BBB (low)(sf), Class M-1B was BB (high)(sf), Class M-1C was BB (low)(sf), Class M-2 was B (high)(sf) and Class B-1 was B (sf).

Pricing detail for the four classes of offered notes is below:

$49,755,000 class M-1A notes with a coupon equal to one-month SOFR plus 2.20%.
$54,731,000 class M-1B notes with a coupon equal to one-month SOFR plus 4.25%.
$42,292,000 class M-1C notes with a coupon equal to one-month SOFR plus 4.85%.
$27,365,000 class M-2 notes with a coupon equal to one-month SOFR plus 5.65%.
$12,438,000 class B-1 notes with a coupon equal to one-month SOFR plus 6.70%.

Additionally, a total of $46,647,000 was placed with a panel of reinsurers.

“Our ability to secure such favorable pricing speaks to the strength of our business, especially when compared to other recent deals we’ve seen in the market,” said Jennifer Weiss, VP of Structured Capital and Reinsurance for Arch MI. “Bellemeade is a key element of our risk and capital management strategy. We are glad to see strong, continued support from both investors and reinsurers.”

About Arch MI

Arch MI, a wholly owned subsidiary of Arch Capital Group Ltd., is a leading provider of private insurance covering mortgage credit risk in the U.S. Headquartered in Greensboro, North Carolina, Arch MI's mission is to protect lenders against credit risk, while extending the possibility of responsible home ownership to qualified borrowers. Arch MI’s flagship mortgage insurer, Arch Mortgage Insurance Company, is licensed to write mortgage insurance in all 50 states, the District of Columbia and Puerto Rico. For more information, visit archmi.com.

About Arch Capital Group Ltd.

Arch Capital Group Ltd. (Nasdaq: ACGL) is a publicly listed Bermuda exempted company with approximately $18.0 billion in capital at Sept. 30, 2023. Arch, which is part of the S&P 500 Index, provides insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly owned subsidiaries.

Cautionary Note Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward−looking statements. This release or any other written or oral statements made by or on behalf of Arch Capital Group Ltd. and its subsidiaries may include forward−looking statements, which reflect the Company’s current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward−looking statements.

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