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Arch’s mortgage ILS pass $4.7bn as $577m Bellemeade Re 2019-4 closes


The fourth mortgage insurance-linked securities (ILS) transaction of the year for Bermuda-headquartered re/insurer Arch Capital Group Ltd. takes its total issuance of mortgage ILS notes to over $4.7 billion, thanks to the $577 million Bellemeade Re 2019-4 Ltd. deal.

arch-capital-logoAs we reported over a week ago, Arch Capital returned to the capital markets for a fourth transaction in 2019 as it continues to leverage the capital markets and the insurance-linked securities (ILS) structure as a vehicle for securing reinsurance protection for its growing mortgage insurance underwriting book.

The successful issuance of the Bellemeade Re 2019-4 mortgage ILS deal sees Arch Capital subsidiary Arch Mortgage Insurance Company (Arch MI) securing $577 million of indemnity reinsurance protection for a pool of insurance risk representing $7.2 billion of mortgage loans.

The covered mortgage insurance risk is all relatively recently originated, being a portfolio of mortgage insurance policies linked to 113,180 loans issued by Arch MI and affiliates in 2019.

Jim Bennison, EVP, Alternative Markets for Arch Capital Group (U.S.) Inc. highlighted that the latest deal demonstrates Arch’s ongoing commitment to leverage the capital markets as a way to risk manage its mortgage insurance business.

“This transaction represents Arch’s continued commitment to actively managing the risk in our U.S. mortgage insurance business,” Bennison said. “Our efforts are supported by a wide range of private market investors that are attracted to Arch’s best in class pricing, asset selection and servicing of our mortgage insurance portfolio.”

As the fourth mortgage insurance-linked notes issuance in a single year, this latest Bellemeade Re 2019-4 transaction makes 2019 the year with the most ILN transactions ever conducted by a single mortgage insurer.

Including this new deal, Arch has now secured $2.24 billion of fully collateralised mortgage reinsurance protection from the capital markets in 2019 alone.

As its tenth mortgage ILS issuance so far, including the first two Bellemeade’s that were sponsored by United Guaranty which it subsequently acquired, Arch’s mortgage ILS transactions now account for $4.74 billion of mortgage insurance risk capital issued and sold to capital markets investors and mortgage reinsurance secured for the firm.

The reinsurance obligations of Bellemeade Re 2019-4 were funded through the issuance of five classes of amortizing notes with 10-year legal final maturities that were sold to third-party investors.

You can read more details on this $577 million Bellemeade Re 2019-4 Ltd. mortgage ILS deal from Arch Capital Group in our Deal Directory.

The mortgage insurance-linked securities market has now witnessed over $8.4 billion of issuance since the first transaction in 2015. Arch now accounts for over half of that issuance volume.

Details of every mortgage insurance-linked notes issuance can be found here in our Deal Directory.

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