Arch MI Secures Over $528 Million of Indemnity Reinsurance Through Bellemeade Re Insurance-Linked Note Transaction and Related Reinsurance

2020 JUL 10 (NewsRx) -- By a News Reporter-Staff News Editor at CDC & FDA Daily -- Arch Mortgage Insurance Company (Arch MI) announced that it has obtained $528 million of indemnity reinsurance on a pool representing approximately $44 billion of mortgages from Bellemeade Re 2020-1 Ltd., a special purpose reinsurer. The coverage was obtained by issuing approximately $450 million in bonds and $78.5 million in direct reinsurance. This transaction covers a portfolio of MI policies linked to 163,292 loans and issued by Arch MI and affiliates primarily in the second half of 2019.

This Mortgage Insurance-Linked Note (MILN) transaction is Arch’s first of 2020 and is also the first mortgage credit risk transfer (CRT) completed by any company in the COVID-19 era. Additionally, this marks Moody’s initial rating of an MILN execution, providing an A1 rating for the most senior M-1A class notes. DBRS Morningstar, which has rated previous Bellemeade transactions, provided an A (low) rating on the most senior notes.

Bellemeade Re 2020-1 Ltd. is the inaugural Bellemeade transaction to include coverage from both fixed income investors and reinsurers. The MILN is funding its reinsurance obligations through the issuance of three classes of amortizing notes with 10-year legal final maturities.

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