July 25, 2019

Arch MI Secures Over $700 Million of Indemnity Reinsurance through Bellemeade Re Insurance-Linked Note Transaction

GREENSBORO, N.C.–()–Arch Mortgage Insurance Company (“Arch MI”) announced today that it has obtained $700,920,000 of indemnity reinsurance on a pool representing $49.6 billion of mortgages from Bellemeade Re 2019-3 Ltd., a special purpose reinsurer. The reinsurance is for a portfolio of MI policies linked to 219,994 loans issued by Arch MI and affiliates in 2016.

“Since the inception of the Bellemeade ILN program, one of our goals has been to transfer a portion of the risk across the entire U.S. mortgage insurance portfolio, which we’ve now largely achieved”

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This Insurance-Linked Note (“ILN”) transaction, Arch’s third of 2019, is particularly notable in that the $700 million of indemnity reinsurance marks the largest individual ILN ever conducted by a mortgage insurance company. In total, Arch has issued nine Bellemeade transactions, which have provided aggregate reinsurance coverage of over $4.1 billion.

Bellemeade Re 2019-3 Ltd. is funding its reinsurance obligations through the issuance of four classes of amortizing notes with 10-year legal final maturities. The most senior M-1A class notes received an AAA rating from Morningstar Credit Ratings, LLC and an A- (sf) rating from Fitch Ratings, Inc.

The notes consist of the following four classes:

  • $222,809,000 class M-1A notes with a coupon equal to one-month LIBOR plus 110 basis points.
  • $278,511,000 class M-1B notes with a coupon equal to one-month LIBOR plus 160 basis points.
  • $176,390,000 class M-1C notes with a coupon equal to one-month LIBOR plus 195 basis points.
  • $23,210,000 class B-1 notes with a coupon equal to one-month LIBOR plus 250 basis points.

“Since the inception of the Bellemeade ILN program, one of our goals has been to transfer a portion of the risk across the entire U.S. mortgage insurance portfolio, which we’ve now largely achieved,” said Jim Bennison, EVP, Alternative Markets for Arch Capital Group (U.S.) Inc. “With over four billion dollars of aggregate reinsurance protection on our portfolio, we believe we’re at the forefront of managing capital and risk in the mortgage insurance 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.

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 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.

Source: Arch Mortgage Insurance Company


Arch Capital Services Inc.

Greg Hare, 336-333-0416

[email protected]