Arch MI’s flagship North Carolina-based insurer, Arch Mortgage Insurance Company, is licensed to operate mortgage insurance across the entire US. Its reinsurance covers a pool of around $30 billion in mortgages. This coverage was gained through the issuance of approximately $163 million in bonds, as well as $41 million in direct reinsurance.
This transaction is Arch MI’s first Mortgage Insurance-Linked Note (MILN) issuance of 2024. Since its inception in 2015, Arch MI has completed 21 similar transactions, securing over $9.7 billion in indemnity reinsurance.
DBRS Morningstar has assigned ratings to the notes, giving a BBB (low)(sf) rating to the Class M-1A notes, BB (high)(sf) to the Class M-1B notes, BB (low)(sf) to the Class M-1C notes, B (high)(sf) to the Class M-2 notes, and B (sf) to the Class B-1 notes.
The Class M-1A notes are valued at $34,964,000 and have a coupon rate of one-month SOFR plus 2.15%. The Class M-1B notes total $53,612,000 with a coupon rate of one-month SOFR plus 3.20%. The Class M-1C notes are worth $37,294,000 and carry a coupon rate of one-month SOFR plus 3.95%.
The Class M-2 notes amount to $25,640,000 with a coupon rate of one-month SOFR plus 4.60%. Lastly, the Class B-1 notes total $11,654,000 and have a coupon rate of one-month SOFR plus 5.55%. Additionally, $40,793,000 was allocated to a panel of reinsurers.
Jennifer Weiss, VP of Structured Capital and Reinsurance at Arch MI, stated that the Bellemeade programme remains a key role in the company’s risk and capital management strategy. She also noted how the transaction had been successfully executed amidst troubling current conditions.
Arch MI is a subsidiary of Arch Capital Group Ltd and a provider of private mortgage insurance in the US, offering protection against mortgage credit risk.
