Arch gets new Bellemeade Re mortgage ILS, adds reinsurance to secure $233m cover

Bermuda headquartered re/insurer Arch Capital has now successfully closed its latest mortgage insurance-linked securities (ILS) issuance, securing the targeted roughly $186.6 million of coverage from the Bellemeade Re 2023-1 Ltd. issuance, while adding $46 million in direct reinsurance to take the total protection to just over $233 million.

We reported earlier in October that Arch Capital had returned to the capital markets for mortgage reinsurance for the first time in more than one year, looking to sponsor a new series of mortgage insurance-linked securities (ILS) to boost its mortgage reinsurance arrangements.

Arch Capital is the most prolific of sponsors in the mortgage insurance-linked securities (ILS), or mortgage insurance-linked notes, sector, with 20 deals under the Bellemeade name now completed.

Prior to this one, Arch had secured almost $7.85 billion of collateralized mortgage reinsurance from the capital markets through ILS arrangements.

View details on every Bellemeade Re mortgage ILS sponsored by Arch in our Deal Directory.

However, Arch’s last Bellemeade Re mortgage ILS deal was completed in September 2022, so this new 2023-1 issuance marked a return to the capital markets for the company.

As we explained, there has been a resurgence of activity in the mortgage ILS space thanks in part to a calming in certain capital markets, after a period of volatility, plus the fact recent deals have priced more keenly and upsized, which is now helping interest to build again amongst sponsors.

Now, Arch has closed the new mortgage ILS deal, and thanks to the addition of traditional reinsurance has secured $233 million of indemnity reinsurance on a pool representing approximately $32.4 billion of mortgages from Bellemeade Re 2023-1 Ltd.

The coverage was obtained by issuing the over $186 million in mortgage ILS bonds and securing $46 million in direct reinsurance via Bellemeade 2023-1 as well.

Arch said, this transaction largely covers a portfolio of MI policies issued by Arch Mortgage Insurance Company and affiliates largely between January 2023 through September 2023 and the ILS deal closed on October 31st.

The additional $46,647,000 of mortgage reinsurance was placed with a panel of reinsurers, Arch explained.

“Our ability to secure such favorable pricing speaks to the strength of our business, especially when compared to other recent deals we’ve seen in the market,” commented Jennifer Weiss, VP of Structured Capital and Reinsurance for Arch MI. “Bellemeade is a key element of our risk and capital management strategy. We are glad to see strong, continued support from both investors and reinsurers.”

With mortgage ILS issuance having picked up of late, the total completed this year has now reached $1.15 billion, according to Artemis’ data.

You can read all about the Bellemeade Re 2023-1 Ltd. mortgage insurance-linked securities transaction and every other mortgage ILS deal in our specific directory of mortgage ILS deals, as well as in our all-encompassing Artemis Deal Directory.