Arch MI buys indemnity reinsurance for mortgage portfolio

Arch Mortgage Insurance Company has obtained $374.46 million of indemnity reinsurance from Bellemeade Re 2018-1, a special purpose insurer. The reinsurance is for a portfolio of mortgage insurance (MI) policies issued by Arch MI primarily from July through December of 2017.

This transaction marks the second time that Arch MI has accessed the capital markets for a risk transfer involving an MI portfolio. Previously, United Guaranty, which was acquired by Arch from AIG in 2016, had conducted two similar transactions through Bellemeade Re special purpose vehicles. Altogether, the four Bellemeade transactions have garnered over $1.3 billion of reinsurance protection for loans representing over $117 billion of unpaid principal balance.

Bellemeade Re 2018-1 is funding its reinsurance obligations through the issuance of three classes of amortising notes with 10-year legal final maturities. This insurance-linked securities (ILS) transaction provides Arch with fully collateralised coverage from Bellemeade Re 2018-1 for potential losses on a portion of its 2017 MI portfolio.

said, “Executing transactions like this on a programmatic basis is a critical part of running a sustainable mortgage guaranty business,” said Andrew Rippert, CEO of Arch’s Global Mortgage Group. “Not only does it provide us with catastrophic risk protection, it also gives us timely feedback from unbiased third parties on how they view the risk in the US mortgage market.”