Essent seeks its largest mortgage ILS yet, with $558m Radnor Re 2021-1

Essent seeks its largest mortgage ILS yet, with $558m Radnor Re 2021-1

Essent Guaranty is back in search of more capital markets backed reinsurance defense with its newest and sixth mortgage insurance-linked securities (ILS) transaction, which will be its largest yet if the practically $558 million Radnor Re 2021-1 Ltd. issuance is successful.This Radnor Re 2021-1 issuance of home loan insurance-linked securities (ILS) is Essent Guarantys 6th home mortgage insurance-linked notes deal and its first of 2021.
When finished and if settled at the target size, Essent Guaranty will have protected some $2.69 billion of home loan reinsurance from the capital markets using a disaster bond like structure across the six Radnor Re offers.
Essent has signed up a brand-new Bermuda domiciled unique function insurance company (SPI) for the purposes of this home loan ILS issuance, Radnor Re 2021-1 Ltd
. Radnor Re 2021-1 Ltd. intends to issue 5 tranches of home mortgage insurance-linked notes, which will be provided and sold to investors, with the proceeds used to collateralize underlying excess of loss mortgage reinsurance contracts between thee SPI and the sponsor Essent Guaranty.
Each class of mortgage insurance-linked notes have 12.5-year legal maturities and will be offered to qualified 3rd celebration capital markets investors.
Moodys ranked 4 out of the five classes of notes being issued:

$ 139.5 m Class M-1A notes, ranked Baa3 (sf).
$ 132.5 m Class M-1B notes, ranked Baa3 (sf).
$ 153.4 m Class M-1C notes, ranked Ba3 (sf).
$ 97.6 m Class M-2 notes, ranked B3 (sf).
$ 34.9 m Class B-1 notes (not ranked).

Each tranche of notes will offer Essent Guaranty with 100% of reinsurance coverage, minus any existing quota share reinsurance through unaffiliated insurers, Moodys explained.
Describing the subject service, Moodys explained:.
The referral pool includes 227,086 prime, fixed- and adjustable-rate, one- to four-unit, first-lien fully-amortizing, primarily adhering home loan with a total insured loan balance of roughly $68 billion. All loans in the recommendation pool had a loan-to-value (LTV) ratio at origination that was higher than 80%, with a weighted average of 90.8%. The debtors in the swimming pool have a weighted typical FICO score of 748, a weighted average debt-to-income ratio of 36.0% and a weighted typical mortgage rate of 3.0%. The weighted typical risk in force (MI protection percentage net of existing reinsurance coverage) is approximately 20.4% of the reference swimming pool overdue primary balance. The aggregate exposed primary balance is the part of the swimming pools threat in force that is not covered by existing quota share reinsurance through unaffiliated parties.
Home loan ILS issuance year-to-date is accelerating with two brand-new offers now in the market, including the current from Arch Capital that we covered the other day.
2021 issuance of home mortgage ILS for the first-half will increase to above $3.7 billion if these 2 June home mortgage insurance-linked securities deals are both successfully provided at target sizes.
You can read all about this Radnor Re 2021-1 Ltd. home mortgage insurance coverage ILS deal from Essent Guaranty in the Artemis Deal Directory.

The referral pool consists of 227,086 prime, fixed- and adjustable-rate, one- to four-unit, first-lien fully-amortizing, mainly adhering mortgage loans with an overall insured loan balance of roughly $68 billion. The debtors in the pool have a weighted average FICO rating of 748, a weighted typical debt-to-income ratio of 36.0% and a weighted typical home loan rate of 3.0%. The weighted typical danger in force (MI coverage percentage net of existing reinsurance protection) is roughly 20.4% of the reference pool unpaid primary balance. The aggregate exposed principal balance is the part of the pools risk in force that is not covered by existing quota share reinsurance through unaffiliated celebrations.

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