Mortgage insurer Essent Guaranty has completed a transaction with Radnor Re 2018-1, a newly formed special purpose insurer, which sees Essent obtain US $424.4 million of fully collateralized excess of loss reinsurance coverage on mortgage insurance policies written by Essent in 2017.
Essent Guaranty, which is a wholly owned subsidiary of Essent Group, used Radnor Re 2018-1 as a vehicle to issue a series of insurance-linked securities (ILS) that transferred a portion of the risk in Essent’s mortgage insurance portfolio to capital market investors, although Radnor Re is not itself a subsidiary or affiliate of Essent Group.
Radnor Re 2018-1 funded its reinsurance obligations through the issuance of three classes of mortgage insurance-linked notes with 10-year legal maturities, which received a rating of BBB from Morningstar Credit Ratings.
Mark Casale, Chairman and Chief Executive Officer (CEO) of Essent Guaranty, said: “We are very excited to announce the closing of our inaugural credit risk transfer transaction. This transaction is a significant milestone for our company, as it expands our capital sources while also providing a layer of protection against adverse credit losses.
Additionally, we believe that a transaction like this strengthens our mortgage insurance franchise and enhances the role that Essent plays in supporting a strong and robust U.S. housing finance system.”
