Reinsurance News

Essent closes $237.9m capital markets mortgage deal

22nd September 2022 - Author: Matt Sheehan

Essent Group subsidiary Essent Guaranty has obtained $237.9 million of fully collateralized excess of loss mortgage reinsurance coverage from the capital markets.

essent-group-logoThe reinsurance applies to policies written in October 2021 through July 2022 from Radnor Re 2022-1 Ltd., a newly formed Bermuda special purpose insurer.

Radnor Re 2022-1 has funded its reinsurance obligations through the issuance of four classes of mortgage insurance-linked notes.

The notes have 10-year legal maturities and were issued to eligible third-party capital markets investors in an unregistered private offering.

According to our ILS-focused sister publication, Artemis, this offering is essentially structured like a catastrophe bond, as notes can be triggered by a rise in mortgage insurance claims, so are exposed to credit risk but the securities issued are still a pure insurance-linked asset.

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The mortgage insurance-linked notes issued by Radnor Re 2022-1 Ltd. consist of $84,118,000 Class M-1A Notes with an initial interest rate of SOFR Rate plus 375 basis points, $88,325,000 Class M-1B Notes with an SOFR Rate plus 675 basis points, $49,069,000 Class M-2 Notes plus 850 basis points, and $16,356,000 Class B-1 Notes plus 1050 basis points.

It was specified that Radnor Re 2022-1 is not a subsidiary or an affiliate of Essent Group Ltd.

Further details on the Radnor Re issurance and every other capital markets reinsurance transaction since the market’s inception can be found in the Artemis Catastrophe Bond and Insurance-linked Securities Deal Directory.

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