Home Re 2026-1 Ltd.

This will be the eighth issuance of mortgage insurance-linked notes under the Home Re name from MGIC Investment Corporation, as it seeks mortgage reinsurance from the capital markets on behalf of its mortgage insurer unit, Mortgage Guaranty Insurance Corporation.

It is the first issuance of mortgage insurance-linked securities (ILS) for MGIC since October 2023.

Home Re 2026-1 Ltd. (HMIR 2026-1) has been established in Bermuda to be registered as a special purpose insurer (SPI) for the issuance of insurance-linked securities (ILS) linked to mortgage insurance risk.

Aon Insurance Managers (Bermuda) Ltd. is managing the structure for the sponsor.

The ceding company is Mortgage Guaranty Insurance Corporation, which will be the beneficiary of the capital markets backed reinsurance protection.

Home Re 2026-1 Ltd. (HMIR 2026-1) is looking to issue five tranches of rated mortgage insurance linked notes, that will be sold to investors and the proceeds used to collateralize reinsurance agreements for MGIC.

Across the five rated tranches, $323.5 million of notes are targeted to be issued, with all five tranches set to have 100% funding rates for their corresponding reinsurance coverage levels.

The notes will provide MGIC’s mortgage insurance entity with multi-year and amortising mortgage reinsurance sourced from the capital markets.

As with all mortgage ILS, the notes will be exposed to the risk of losses the ceding insurer pays to settle claims on the underlying mortgage insurance policies, so the sale of the notes will provide the collateral to cover that risk with reinsurance.

Details of the five tranches of mortgage insurance-linked notes being offered, which all have a 10-year term, and their corresponding Morningstar DBRS ratings can be seen below:

• $72.4 million Class M-1A – (P) BBB (low) (sf)
• $96.6 million Class M-1B – (P) BB (high) (sf)
• $72.4 million Class M-1C – (P) BB (low) (sf)
• $57.9 million Class M-2 – (P) B (high) (sf)
• $24.1 million Class B-1 – (P) B (sf)

Commenting on the notes coverage, Morningstar DBRS explained, “As of the Cut-Off Date, the pool of insured mortgage loans consists of 272,162 fully amortizing first-lien fixed- and variable-rate mortgages. They all have been underwritten to a full documentation standard, all loans have original loan-to-value ratios (LTVs) less than or equal to 100.0%, and have never been reported to the Ceding Insurer as two payment loan default. As of the Cut-Off Date, these loans have not been reported to be in payment forbearance plan. The mortgage loans have MI policies in-force in or after January 2022 and in or before March 2025.

“Approximately 3.9% (by balance) of the underlying insured mortgage loans in this transaction are not eligible to be acquired by Freddie Mac and Fannie Mae (GSEs or agencies).

“All but 10 loans are insured under the new master policy, that was introduced on March 1, 2020, to conform to government-sponsored enterprises’ revised rescission relief principles under the Private Mortgage Insurer Eligibility Requirements (PMIERs) guidelines.”