Arch Mortgage Insurance Company (“Arch MI”) has obtained $621,022,000 of indemnity reinsurance on a pool representing $35.58 billion of mortgages from Bellemeade Re 2019-2 Ltd., a special purpose reinsurer.
Arch MI said in a statement that this insurance-linked note (“ILN”) transaction provides Arch MI with collateralized coverage for potential losses on a portion of its mortgage insurance (“MI”) portfolio.
The reinsurance is for a portfolio of MI policies linked to 143,840 loans issued by Arch MI and affiliates primarily during the second half of 2018. The most senior M-1A class notes received an A rating from Morningstar Credit Ratings, LLC.
This is Arch's second 2019 ILN transaction, following Bellemeade 2019-1, which was issued in March. In total, Arch has issued eight Bellemeade transactions, which have provided aggregate reinsurance coverage of approximately $3.5 billion.
Bellemeade Re 2019-2 Ltd. is funding its reinsurance obligations through the issuance of five classes of amortizing notes with 10-year legal final maturities.
The notes consist of the following five classes:
- $133,076,000 class M-1A notes with a coupon equal to one-month LIBOR plus 100 basis points;
- $133,076,000 class M-1B notes with a coupon equal to one-month LIBOR plus 145 basis points;
- $168,563,000 class M-1C notes with a coupon equal to one-month LIBOR plus 200 basis points;
- $164,127,000 class M-2 notes with a coupon equal to one-month LIBOR plus 310 basis points; and
- $22,180,000 class B-1 notes with a coupon equal to one-month LIBOR plus 410 basis points.
“These Bellemeade transactions are an important part of managing the capital and risk positions of our mortgage business,” said Jim Bennison, executive vice president of alternative markets for Arch Capital Group (U.S.) Inc. “Since our initial Bellemeade issuance in 2015, we've seen a significant increase in global investor interest in this asset class. We believe that ILN transactions will continue to be a benefit to our entire industry.”
Learn more: www.archmi.com.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].