Gallagher Re helped Arch to more mortgage reinsurance diversification

In securing its latest Bellemeade Re mortgage insurance-linked securities (ILS) transaction, sponsor Arch Capital Group also benefited from $93.21 million of traditional mortgage reinsurance placed alongside the capital markets deal, with the support of broker Gallagher Re.

Gallagher Re has been placing traditional mortgage reinsurance alongside Arch’s Bellemeade Re mortgage ILS issues for some time now.

Global reinsurance broker Gallagher Re, part of the wider Gallagher group, successfully brokered $140 million of traditional mortgage reinsurance for Arch Capital during 2020.

In 2021, Gallagher Re already brokered $63.86 million of reinsurance alongside Arch’s first mortgage ILS of the year, the $580 million Bellemeade Re 2021-1 Ltd. transaction.

Now, alongside Arch’s recently completed $523 million Bellemeade Re 2021-2 Ltd., Gallagher Re helped the company to another $93.21 million of traditional reinsurance protection.

Taking the 2021 total year-to-date to $157 million, already ahead of 2020’s traditional mortgage reinsurance placements alongside the Bellemeade Re program of mortgage insurance-linked notes.

Importantly, Gallagher Re said that this latest placement secured Arch the broadest reinsurance counterparty diversification yet, with seven reinsurers providing the $93.21 million of mortgage reinsurance.

That’s important, as Arch had also said itself that the investor panel diversification for the latest Bellemeade Re deal was the broadest achieved so far.

Accessing as many markets as possible, be they investors or reinsurers, is important for Arch, as it utilises reinsurance capital both to protect itself on an aggregate bases against mortgage losses and as a source of growth capacity to help it expand the Arch Mortgage Insurance book.

“We are delighted to have once again represented Arch MI and succeeded in raising a record amount of direct reinsurance capacity for its Bellemeade program, bringing a total of $157 million of traditional reinsurance capacity to these transactions in less than four months,” Freddie Scarratt, Account Executive at Gallagher Re, who managed and placed the reinsurance capacity of the transaction, explained. “The fact this already exceeds the $140 million total capacity raised through four deals last year, and with this latest transaction also involving the largest number of reinsurers to date, underlines this as a growth program.

“Despite the testing environment and turbulence of 2020, the success of the collaborative partnership we have built with Arch MI during this time has enabled us to establish these transactions as a consistent offering, with more counterparties joining the program each time, a more even spread across tranches and core markets returning to participate across each of the transactions.”

Danny Mamo, Senior Vice President of Structured Capital and Reinsurance at Arch MI, added, “Arch MI is pleased with the increased traditional reinsurance capacity provided on this transaction. This marks the 6th Bellemeade Re transaction featuring a simultaneous side-by- side traditional reinsurance execution, affording reinsurers another consistent opportunity for sharing in Arch MI’s risk.”

Steven Rance, Managing Partner of Mortgage Indemnity Reinsurance at Gallagher Re, also commented, “Over the course of the last 18 months, reinsurers have repeatedly demonstrated their willingness to collaborate on new transactions when working in partnership with experienced and specialist brokers and clients. It’s fantastic to be working with a growing number of reinsurers on these large-scale transactions for Arch MI to provide diversified counterparty capital to Bellemeade. Each successful raising of capacity reinforces the importance of traditional reinsurance as a capital source for mortgage insurance business.”

You can read all about Arch Capital’s new Bellemeade Re 2021-2 Ltd. mortgage insurance-linked securities (ILS) transaction and every mortgage ILS deal ever issued in the Artemis Deal Directory.