Gallagher Re secures $140m of reinsurance for Arch's Bellemeade Re

Arch Capital Group's US mortgage insurance operation Arch MI has obtained $15.6 million of indemnity reinsurance in its fourth and final Bellemeade Re 2020 transaction with the help of reinsurance broker Gallagher Re.

Gallagher Re partnered with Arch Mortgage Insurance Company in raising and placing traditional reinsurance capacity of total $140 million over the course of four transactions.

Bellemeade Re 2020-4, a special purpose reinsurer, secured indemnity reinsurance on a pool representing approximately $33.3 billion of mortgages linked to loans issued by Arch MI and affiliates, primarily in the second half of 2019 – the same portfolio of MI policies as Bellemeade Re 2020-1.

In July, Bellemeade Re 2020-1 became the first mortgage indemnity insurance-linked note (ILN) transaction since the onset of COVID-19 and is said to be the first to incorporate traditional reinsurance capacity.

Danny Mamo, senior vice president of structured capital and reinsurance at Arch MI, said: “Our goal in 2020 was to explore the appetite of the traditional reinsurance market for simultaneous side-by-side participation in the Bellemeade Re programme with the Capital Markets. We knew the simultaneous execution would be a novelty in the market and despite the challenges brought on by the COVID-19 pandemic, we were able to attract consistent participation from multiple reinsurers on all Bellemeade Re transactions completed in 2020. We have found yet another innovative structure to expand our relationship with the reinsurance market.”

Freddie Scarratt, account executive at Gallagher Re, who managed and placed the reinsurance capacity of the transaction, said: “We are extremely pleased to have once again represented Arch MI in raising the required direct reinsurance capacity for its Bellemeade programme, bringing a total of over $140m traditional reinsurance capacity to these transactions over the past six months.

"In what has undoubtedly been a testing environment, collaborative partnership has never been more important. Reinsurers continue to demonstrate their preparedness to back new mortgage indemnity transactions when presented with risk transfer experience and expertise in this highly specialist field.”

Steve Rance, managing partner of mortgage indemnity reinsurance at Gallagher Re, added: “The growing relationship between Arch MI and reinsurers reinforces the importance and effectiveness of traditional reinsurance as a capital source for mortgage insurance business, both in the US and further afield. And to have raised in excess of the required reinsurance capacity – over multiple large-scale transactions and during a year when COVID-19 has created such extensive economic uncertainty – is a fantastic result.”