July 1, 2020

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

GREENSBORO, N.C.–()–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.

“The response from both fixed income investors and reinsurers speaks to the attractiveness of our program. This is our eleventh Bellemeade transaction and the program remains an important tool for managing the risk and capital requirements of our U.S. Mortgage Insurance business.”

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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.

The notes consist of the following three classes:

  • $252,124,000 class M-1A notes with a coupon equal to one-month LIBOR plus 265 basis points.
  • $171,489,000 class M-1B notes with a coupon equal to one-month LIBOR plus 340 basis points.
  • $26,427,000 class B-1 notes with a coupon equal to one-month LIBOR plus 440 basis points.

Additionally, a total of $78,500,000 was placed with a panel of reinsurers.

“We’re pleased that we were able to bring this transaction to market during this period of uncertainty related to COVID-19,” said Jim Bennison, EVP, Alternative Markets for Arch MI. “The response from both fixed income investors and reinsurers speaks to the attractiveness of our program. This is our eleventh Bellemeade transaction and the program remains an important tool for managing the risk and capital requirements of our U.S. Mortgage Insurance business.”

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., a Bermuda-based company with approximately $13.10 billion in capital at March 31, 2020, 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 (“PSLRA”) 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 ours 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, for purposes of the PSLRA or otherwise, can generally be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” and similar statements of a future or forward-looking nature 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 effect of contagious diseases (including COVID-19); 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; changes in the method for determining the London Inter-bank Offered Rate (“LIBOR”) and the potential replacement of LIBOR 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.


Arch Capital Services Inc.

Greg Hare, 336-333-0416

[email protected]