Arch Mortgage Insurance Company (Arch MI) has secured $341.79m of indemnity reinsurance from Bellemeade Re in an insurance-linked security (ILS) transaction.

The reinsurance deal represents approximately $23bn of mortgages. The ILS transaction offers collateralised coverage to Arch MI for potential losses on a portion of its mortgage insurance (MI) portfolio.

The reinsurance provides coverage to a portfolio of MI policies issued by Arch MI and affiliates through 2015.

Arch MI & Bellemeade

Arch Capital Group (US) executive vice president Jim Bennison said: “This subject portfolio is unique in that it contains policies covering loans originated during the crisis, some of which have been modified.

“Those policies, plus the pre- and post-crisis collateral in the pool, resulted in a transaction that was very appealing to investors and demonstrates Arch’s continued efforts to creatively manage capital and risk positions in our mortgage business.”

The ILS deal represents Arch’s first transaction in 2019 after three earlier issuances were conducted with Bellemeade for $1.5bn of reinsurance protection for loans representing over $136bn of unpaid principal balance in 2018.

The latest agreement, according to Arch MI, is important as about half the covered mortgages have been modified under GSE or servicer modification programmes.