Arch Mortgage Insurance Company (Arch MI) has secured over $203 million in indemnity reinsurance through a transaction with Bellemeade Re 2024-1 Ltd, a special purpose reinsurer.
Based in Greensboro, North Carolina, 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. Its reinsurance covers a pool of approximately $30.5 billion in mortgages. This coverage was achieved through the issuance of around $163 million in bonds and $41 million in direct reinsurance.
The transaction primarily involves mortgage insurance policies issued by Arch MI and its affiliates from September 2023 to July 2024. The deal was finalized on August 15.
This transaction is Arch MI’s first Mortgage Insurance-Linked Note (MILN) issuance of 2024. Since the Bellemeade program’s inception in 2015, Arch MI has completed 21 such transactions, securing over $9.7 billion in indemnity reinsurance.
Bellemeade Re 2024-1 Ltd. will fulfill its reinsurance obligations through the issuance of five classes of amortizing notes, each with 10-year legal final maturities.
DBRS Morningstar rated the notes, assigning a BBB (low)(sf) rating to the Class M-1A notes, BB (high)(sf) to the Class M-1B notes, BB (low)(sf) to the Class M-1C notes, B (high)(sf) to the Class M-2 notes, and B (sf) to the Class B-1 notes.
The Class M-1A notes amount to $34,964,000 and carry a coupon rate of one-month SOFR plus 2.15%. The Class M-1B notes total $53,612,000 with a coupon rate of one-month SOFR plus 3.20%. The Class M-1C notes are valued at $37,294,000 with a coupon rate of one-month SOFR plus 3.95%.
The Class M-2 notes total $25,640,000 and have a coupon rate of one-month SOFR plus 4.60%. Finally, the Class B-1 notes amount to $11,654,000 with a coupon rate of one-month SOFR plus 5.55%. In addition to these notes, a total of $40,793,000 was placed with a panel of reinsurers.
Jennifer Weiss, vice president of structured capital and reinsurance for Arch MI, stated that the Bellemeade program continues to play a key role in the company’s risk and capital management strategy.
She also noted that despite current market conditions, the transaction was successfully executed.
Arch MI is a subsidiary of Arch Capital Group Ltd and a provider of private mortgage insurance in the US, offering protection against mortgage credit risk.
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