Radian lowers cost-of-capital with $498m Eagle Re 2021 mortgage ILS

Radian lowers cost-of-capital with $498m Eagle Re 2021 mortgage ILS

Radian Guaranty, the United States home mortgage insurance provider entity of the Radian Group, has actually stated that the effective completion of its latest home loan insurance-linked securities (ILS) offer, the $498 million Eagle Re 2021-1 Ltd. transaction, is a capital efficient way to secure reinsurance for the company.We discussed back in early April that Radian was back in the market with its largest mortgage insurance-linked securities (ILS) issuance considering that the pandemic outbreak, in search of additional collateralized home mortgage reinsurance capacity.
The mortgage insurer has actually now effectively protected its target $498 countless capital markets backed and totally collateralised mortgage reinsurance, protected utilizing a catastrophe bond like structure, thanks to $498 million of notes issued by Bermuda unique purpose insurance company Eagle Re 2021-1 Ltd
. Its Radians 5th mortgage ILS handle total, bringing the overall reinsurance protection the company has protected through the Eagle Re series of mortgage ILS deals to over $2.37 billion.
The conclusion of Radians latest offer takes issuance of home mortgage insurance-linked notes arrangements to $1.97 billion currently in 2021, with one more deal still in the market and yet to complete. All are detailed in the Artemis Deal Directory, which you can filter to show just mortgage ILS offers.
Highlighting the performance of accessing reinsurance from the capital markets, the company explained that this brand-new home loan ILS, “Reduces Radians overall expense of capital, increases capital efficiency and improves return on capital.”
In addition it supports the capital requirements Radian is subject to, under its ranking firm and PMIERs, while moving danger in case of unfavorable development of the reinsured organization.
Radian also stated that the deal increases its counterparty strength, while likewise reducing its income declaration and balance sheet volatility across the economic cycle.
This deal is likewise significant as the first Eagle Re mortgage ILS transaction from Radian to have a 12.5-year term, with the notes scheduled for final maturity on October 25th 2033.
It is likewise the very first Eagle Re mortgage ILS offer to utilize the Secured Overnight Financing Rate (SOFR) for the base for its coupon rates, instead of the previously used Libor.
The excess of loss reinsurance cover the notes provide covers eligible home mortgage insurance coverage financed by Radian Guaranty in between August 2020 through December 2020
The transaction is structured as follows, together with the coupons to be paid:

You can check out all about the Eagle Re 2021-1 Ltd. mortgage ILS deal and every other home loan ILS offer in the Artemis Deal Directory.

$ 82,956,000 Class M-1A Notes with a discount coupon equivalent to one-month SOFR plus 170 basis points
$ 82,956,000 Class M-1B Notes with a discount coupon equivalent to one-month SOFR plus 215 basis points
$ 165,912,000 Class M-1C Notes with a discount coupon equivalent to one-month SOFR plus 270 basis points
$ 110,607,000 Class M-2 Notes with a coupon equal to one-month SOFR plus 445 basis points
$ 27,652,000 Class B-1 Notes with a coupon equivalent to one-month SOFR plus 575 basis points
$ 27,652,000 Class B-2 Notes with a coupon equal to one-month SOFR plus 625 basis points

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