Arch MI Obtains Over $315 Million in Indemnity Reinsurance Through Bellemeade Re Insurance Linked Note Transaction and Related Reinsurance

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GREENSBORO, NC–(BUSINESS WIRE)–Arch Mortgage Insurance Company (Arch MI) announced that it has secured more than $315 million in indemnity reinsurance on a pool of approximately $6.3 billion in mortgages from Bellemeade Re 2022-1 Ltd., a specialized reinsurer. Cover was obtained by issuing approximately $282 million in bonds and $33 million in direct reinsurance. This transaction largely covers a portfolio of MI policies issued by Arch MI and its affiliates from July to November 2021.

This mortgage insurance linked note (MILN) transaction is Arch’s first in 2022, following three issuances in 2021. Since the Bellemeade program began in 2015, Arch has completed 18 transactions that have secured over $8 billion in dollars in indemnity reinsurance.

Bellemeade Re 2022-1 Ltd. finances its reinsurance obligations by issuing five classes of redeemable notes with legal final maturities of 10 years.

The M-1A senior note class is rated Baa2 by Moody’s and BBB (high) by DBRS Morningstar. The M-1B note class received a Baa3 from Moody’s and a BBB (high) from DBRS Morningstar. The M-1C received a Ba3 rating from Moody’s and BB from DBRS Morningstar. The M-2 category received a rating of B3 from Moody’s and B (high) 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:

  • Class M-1A notes of $63,352,000 with a coupon equal to one-month SOFR plus 175 basis points.

  • Class M-1B notes of $58,284,000 with a coupon equal to one-month SOFR plus 215 basis points.

  • $118,736,000 M-1C class notes with a coupon equal to one month’s SOFR plus 370 basis points.

  • Class M-2 notes of $29,458,000 with a coupon equal to one month’s SOFR plus 460 basis points.

  • Class B-1 notes of $12,670,000 with a coupon equal to one month’s SOFR plus 550 basis points.

In addition, a total of $33,260,000 was placed with a panel of reinsurers.

“We are very pleased with this placement in Bellemeade, which has generated strong interest from bond investors and reinsurers and provided important feedback on Arch’s core mortgage insurance business through their participation,” said Jim Bennison, EVP, Alternative Markets for Arch MI. “In addition to obtaining investor views on mortgage lending and pricing, these transactions continue to be an effective source of capital and loss protection for Arch.”

About Arch MI

Arch MI, a wholly owned subsidiary of Arch Capital Group Ltd., is a leading provider of private mortgage credit risk insurance in the United States. Based in Greensboro, North Carolina, Arch MI’s mission is to protect lenders against credit risk, while expanding the opportunity for responsible homeownership to qualified borrowers. Arch MI’s flagship mortgage insurer, Arch Mortgage Insurance Company, is licensed to underwrite 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-exempt listed company with approximately $16.1 billion in capital as of September 30, 2021, provides insurance, reinsurance and mortgage insurance globally through of 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 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 beliefs regarding future events and financial performance. All statements other than statements of historical facts included or incorporated by reference in this release are forward-looking statements.

Forward-looking statements can generally be identified by the use of forward-looking words such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”. or “continuous” or their negative or variations thereof 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 by these statements. A non-exclusive list of important factors that could cause actual results to differ materially from those set forth in these forward-looking statements include the following: adverse general economic and market conditions; increased competition; pricing and policy duration trends; fluctuations in the actions of rating agencies and the Company’s ability to maintain and improve its ratings; investment returns; loss of key personnel; the adequacy of the Company’s claims reserves, the severity and/or frequency of claims, higher than expected loss ratios and adverse developments in claim liabilities and/or claims expenses; greater frequency or severity of unpredictable 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; material differences between actual and expected valuations for guarantee funds and mandatory pooling arrangements; the availability and cost to the Company of reinsurance to manage the gross and net risks of the Company; failure by others to meet their obligations to the Company; changes to the method of determining the London Inter-bank Offered Rate (“LIBOR”) and potential replacement of LIBOR and other factors identified in the Company’s filings with the Securities and Exchange Commission (“SEC”) the United States.

The foregoing discussion of important factors should not be construed as complete and should be read in conjunction with other cautionary statements included herein or elsewhere. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The Company undertakes 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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