Arch MI Secures Over $ 639 Million In Indemnity Reinsurance Through Bellemeade Re Insurance Linked Notes Transaction And Related Reinsurance

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GREENSBORO, NC – (COMMERCIAL THREAD) – Arch Mortgage Insurance Company (Arch MI) announced that it has secured more than $ 639 million in indemnity reinsurance on a pool of approximately $ 28.7 billion in mortgages from Bellemeade Re 2021-3 Ltd., a specialized reinsurer. Coverage was obtained through the issuance of approximately $ 508 million in bonds and $ 131 million in direct reinsurance. This transaction largely covers a portfolio of MI policies issued by Arch MI and its affiliates from April to June 2021.

This Mortgage Insurance Linked Note (MILN) transaction is Arch’s third in 2021 and Bellemeade’s 17th transaction since the program’s inception in 2015.

Bellemeade Re 2021-3 Ltd. finances its reinsurance obligations by issuing six categories of amortizable notes with final legal maturities of 10 years.

The A2 note class has received an A2 rating from Moody’s Investor Service (Moody’s). The M-1A note category has received an A2 rating from Moody’s and A (low) from DBRS Morningstar. The M-1B note category received a Baa2 from Moody’s and a BBB (high) from DBRS Morningstar. The M-1C has received a Baa3 rating from Moody’s and BBB (low) from DBRS Morningstar. The M-2 class received a B1 rating from Moody’s and BB (low) from DBRS Morningstar. The B-1 received a B (high) from DBRS Morningstar and was not rated by Moody’s.

The price details for the five ticket classes offered are below:

  • $ 122,961,000 of class A2 notes with a coupon equal to the one-month SOFR plus 100 basis points.
  • $ 104,926,000 in class M-1A notes with a coupon equal to one-month SOFR plus 100 basis points.
  • $ 64,329,000 of class M-1B notes with a coupon equal to one SOFR month plus 140 basis points.
  • $ 81,397,000 of class M-1C notes with a coupon equal to the one-month SOFR plus 155 basis points.
  • $ 115,524,000 of class M-2 notes with a coupon equal to the one-month SOFR plus 315 basis points.
  • Class B-1 tickets of $ 19,500,000 with a coupon equal to the one-month SOFR plus 385 basis points.

In addition, a total of $ 131,518,000 has been placed with a panel of reinsurers.

“The introduction of a Class A2 is the latest structural refinement of the Bellemeade program to better optimize capital in support of Arch’s mortgage insurance business,” said Jim Bennison, Executive Vice President, Alternative Markets for Arch MI. “The closing of this transaction brings the total protection provided by the Bellemeade program to $ 1.9 billion since the start of the year, which is a testament to both the strength of the Bellemeade franchise and the market interest. for the mortgage credit risk generated by Arch.

About Arch MI

Arch MI, a wholly owned subsidiary of Arch Capital Group Ltd., is a leading private insurance provider covering mortgage credit risk in the United States. Based in Greensboro, NC, Arch MI’s mission is to protect lenders against credit risk, while extending responsible home ownership to qualified borrowers. Arch MI’s flagship mortgage insurer, Arch Mortgage Insurance Company, is licensed to purchase 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-listed and exempt company with approximately $ 16.7 billion in capital as of June 30, 2021, provides insurance, reinsurance and mortgage insurance to the globally through its wholly owned subsidiaries.

Caution Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This press release or any other written or oral statement made by or on behalf of Arch Capital Group Ltd. and its subsidiaries may include forward-looking statements, which reflect our current views regarding future events and financial performance. All statements other than statements of historical fact included or incorporated by reference in this press release are forward-looking statements.

Forward-looking statements can generally be identified by the use of forward-looking terms 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 such statements. A non-exclusive list of important factors that could cause actual results to differ materially from those shown in these forward-looking statements include the following: adverse general economic and market conditions; increased competition; price trends and policy terms; fluctuations in the actions of rating agencies and the Company’s ability to maintain and improve its ratings; return on investments; loss of key personnel; the adequacy of the Company’s claims reserves, the severity and / or frequency of claims, higher than expected premium claim ratios and an unfavorable development in claim liabilities and / or claim costs; greater frequency or severity of unforeseeable natural and man-made catastrophic events, including pandemics such as 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; the Company’s ability to successfully integrate, establish and maintain operating procedures as well as to integrate businesses that the Company has acquired or may acquire into existing operations; changes in accounting principles or policies; significant differences between actual and expected valuations for guarantee funds and mandatory pool agreements; the availability and cost to the Reinsurance Company to manage the Company’s gross and net exposures; non-compliance by third parties with their obligations towards the Company; changes in the method of determining the London Interbank Offered Rate (“LIBOR”) and the potential replacement of LIBOR and other factors identified in documents filed by the Company with the Securities and Exchange Commission (“SEC”) of United States.

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

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