Bermuda domiciled mortgage insurer Essent Group Ltd. has announced that its subsidiary, Essent Guaranty, Inc., has secured a further $495.9 million of fully collateralised excess of loss reinsurance coverage from the capital markets.
The coverage was obtained through Radnor Re 2020-1 Ltd, a newly formed Bermuda special purpose insurer, and relates to mortgage insurance policies written by Essent in January through August 2019.
This transaction marks the fourth time Essent has tapped the capital markets for mortgage reinsurance and the first time in 2020.
It previously obtained $424.4 million of coverage in March 2018 via Radnor Re 2018-1, and then returned twice in 2019 to secure first $473.2 million of coverage in March, and then $333.8 million in June.
For mortgage insurers like Essent, the capital markets and the catastrophe bond structure is now providing an effective way to source efficiently priced reinsurance protection for their mortgage insurance portfolios.
This capital is being used to help the companies grow their mortgage insurance books, while protecting the balance-sheet and ensuring potential significant mortgage delinquency or default events are effectively hedged.
Essent explained that Radnor Re 2020-1 funded its reinsurance obligations through the issuance of six classes of mortgage insurance-linked notes, with 10-year legal maturities, to eligible third party capital markets investors in an unregistered private offering.
Further details of the transaction can be found in the Deal Directory of our ILS-focused sister publication, Artemis.