Radian Guaranty, a subsidiary of US mortgage insurer Radian Group, has secured an additional $484 million of fully collateralised excess of loss reinsurance protection from Eagle Re 2021-2 Ltd.
This is the second time this year that Radian has looked to the capital markets for a source of mortgage reinsurance protection, after its $498 million Eagle Re 2021-1 Ltd. mortgage insurance-linked securities (ILS) transaction in Q2.
The latest excess of loss reinsurance obtained by the firm covers eligible mortgage insurance policies written by Radian predominantly from January 1st, 2021 through and including July 31st, 2021.
Eagle Re has funded its reinsurance obligations by issuing five classes of mortgage insurance-linked notes (ILNs) with a 12.5-year maturity and 7-year call option to eligible third-party capital markets investors in an unregistered private offering.
The ILNs issued by Eagle Re consist of $118,341,000 Class M-1A Notes with a coupon equal to one-month SOFR plus 155 basis points; $102,204,000 Class M-1B Notes with a coupon plus 205 basis points; $145,236,000 Class M-1C Notes with a coupon plus 345 basis points; $91,445,000 Class M-2 Notes with a coupon plus 425 basis points; and $26,896,000 Class B-1 Notes with a coupon plus 500 basis points.
Radian explains that after closing, investors have the option to exchange their M-1C Notes for proportionate interests in Class M-1C-1 Notes, Class M-1C-2 Notes and Class M-1C-3 Notes (Exchangeable Notes), and the Exchangeable Notes may be exchanged for Class M-1C Notes with the same proportionate interest.
As shown by our sister site Artemis’ Deal Directory, mortgage ILS issuance had reached new heights in 2021 at more than $5 billion, and that was prior to the launch of this latest deal from Radian.
