Arch MI Secures Over $621 Million of Indemnity Reinsurance through Bellemeade Re Insurance-Linked Note Transaction

Business Wire

GREENSBORO, N.C.--(BUSINESS WIRE)-- Arch Mortgage Insurance Company (“Arch MI”) announced today that it has obtained $621,022,000 of indemnity reinsurance on a pool representing $35.58 billion of mortgages from Bellemeade Re 2019-2 Ltd., a special purpose reinsurer. This insurance-linked note (ILN) transaction provides Arch MI with collateralized coverage for potential losses on a portion of its mortgage insurance (MI) portfolio.

The reinsurance is for a portfolio of MI policies linked to 143,840 loans issued by Arch MI and affiliates primarily during the second half of 2018. The most senior M-1A class notes received an A rating from Morningstar Credit Ratings, LLC.

This is Arch’s second 2019 ILN transaction, following Bellemeade 2019-1, which was issued in March. In total, Arch has issued eight Bellemeade transactions, which have provided aggregate reinsurance coverage of approximately $3.5 billion.

Bellemeade Re 2019-2 Ltd. is funding its reinsurance obligations through the issuance of five classes of amortizing notes with 10-year legal final maturities.

The notes consist of the following five classes:

$133,076,000 class M-1A notes with a coupon equal to one-month LIBOR plus 100 basis points.
$133,076,000 class M-1B notes with a coupon equal to one-month LIBOR plus 145 basis points.
$168,563,000 class M-1C notes with a coupon equal to one-month LIBOR plus 200 basis points.
$164,127,000 class M-2 notes with a coupon equal to one-month LIBOR plus 310 basis points.
$22,180,000 class B-1 notes with a coupon equal to one-month LIBOR plus 410 basis points.

“These Bellemeade transactions are an important part of managing the capital and risk positions of our mortgage business,” said Jim Bennison, EVP, Alternative Markets for Arch Capital Group (U.S.) Inc. “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.”

About Arch Mortgage Insurance Company

Arch Capital Group Ltd.’s U.S. mortgage insurance operation, Arch MI, is a leading provider of private insurance covering mortgage credit risk. 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, please visit archmi.com.

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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 our 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.

Forward−looking statements can generally be identified by the use of forward−looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or their negative or variations or similar terminology. Forward−looking statements involve our current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: adverse general economic and market conditions; increased competition; pricing and policy term trends; fluctuations in the actions of rating agencies and our ability to maintain and improve our ratings; investment performance; the loss of key personnel; the adequacy of our loss reserves, severity and/or frequency of losses, greater than expected loss ratios and adverse development on claim and/or claim expense liabilities; greater frequency or severity of unpredictable natural and man-made catastrophic events; the impact of acts of terrorism and acts of war; changes in regulations and/or tax laws in the United States or elsewhere; our ability to successfully integrate, establish and maintain operating procedures as well as integrate the businesses we have acquired or may acquire into the existing operations; changes in accounting principles or policies; material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements; availability and cost to us of reinsurance to manage our gross and net exposures; the failure of others to meet their obligations to us; and other factors identified in our filings with the U.S. Securities and Exchange Commission.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein or elsewhere. All subsequent written and oral forward−looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. We undertake no obligation to publicly update or revise any forward−looking statement, whether as a result of new information, future events or otherwise.