Arch secures $700m ILS reinsurance for mortgage risk with Bellemeade Re

Bermuda-based Arch Capital Group' US mortgage insurance operation Arch Mortgage Insurance Company (Arch MI) has confirmed a $700 million of indemnity reinsurance from special purpose reinsurer Bellemeade Re 2019-3 in an insurance-linked security (ILS) deal.

The transaction, which covers a pool representing nearly $49.6 billion of mortgages, is Arch’s third of 2019 and represents the largest individual insurance-linked note (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.

The reinsurance is for a portfolio of MI policies linked to 219,994 loans issued by Arch MI and affiliates in 2016.

Bellemeade Re 2019-3 is funding its reinsurance obligations through the issuance of four classes of amortizing notes with 10-year legal final maturities.

“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 (US). “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.”