Arch Mortgage Insurance Secures $368 Million of Indemnity Reinsurance from a Rated Insurance-Linked Note Transaction

Arch Mortgage Insurance Secures $368 Million of Indemnity Reinsurance from a Rated Insurance-Linked Note Transaction

AMILTON, Bermuda--()--Arch Capital Group Ltd. [NASDAQ: ACGL] announced today that its mortgage insurance (MI) business obtained $368 million of indemnity reinsurance from Bellemeade Re 2017-1 Ltd., a special purpose insurer. The reinsurance is for a portfolio of MI policies issued by Arch MI from January through June of this year (2017). This transaction marks the first time that Arch’s Mortgage Group has accessed the capital markets for a risk transfer involving a mortgage insurance portfolio, as well as the first time any mortgage insurance-linked note in the industry has been rated. The senior M-1 class note has received a rating of BBB from Morningstar.

Bellemeade Re 2017-1 Ltd. is funding its reinsurance obligations through the issuance of three classes of amortizing notes with 10-year legal final maturities. This insurance-linked securities (ILS) transaction provides Arch with fully collateralized coverage from Bellemeade Re 2017-1 Ltd. for potential losses on a portion of its 2017 MI portfolio.

Andrew Rippert, CEO of Arch’s Global Mortgage Group said, “Transactions like this provide us with valuable feedback from third parties on the risk and capital management aspects of our business.” Mr. Rippert added, “This ILS transaction demonstrates our commitment to building a sustainable mortgage guaranty business model that can last through multiple housing cycles and positions Arch as the industry leader in proactively managing residential mortgage credit risk.”

Arch Capital Group Ltd., a Bermuda-based company with approximately $11.04 billion in capital at September 30, 2017, provides insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly owned subsidiaries.

Cautionary Note Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward−looking statements. This release or any other written or oral statements made by or on behalf of Arch Capital Group Ltd. and its subsidiaries may include forward−looking statements, which reflect our current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward−looking statements.

Forward−looking statements can generally be identified by the use of forward−looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or their negative or variations or similar terminology. Forward−looking statements involve our current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: adverse general economic and market conditions; increased competition; pricing and policy term trends; fluctuations in the actions of rating agencies and our ability to maintain and improve our ratings; investment performance; the loss of key personnel; the adequacy of our loss reserves, severity and/or frequency of losses, greater than expected loss ratios and adverse development on claim and/or claim expense liabilities; greater frequency or severity of unpredictable natural and man-made catastrophic events; the impact of acts of terrorism and acts of war; changes in regulations and/or tax laws in the United States or elsewhere; our ability to successfully integrate, establish and maintain operating procedures as well as integrate the businesses we have acquired or may acquire into the existing operations; changes in accounting principles or policies; material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements; availability and cost to us of reinsurance to manage our gross and net exposures; the failure of others to meet their obligations to us; and other factors identified in our filings with the U.S. Securities and Exchange Commission.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein or elsewhere. All subsequent written and oral forward−looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. We undertake no obligation to publicly update or revise any forward−looking statement, whether as a result of new information, future events or otherwise.