Essent Guaranty, a wholly owned subsidiary of Essent Group, has announced the successful closing of its ninth mortgage insurance-linked securities (ILS) transaction, Radnor Re 2023-1 Ltd., which provides the firm with $281.5 million of fully collateralized excess of loss reinsurance coverage.
We wrote previously that Essent Guaranty was looking to be the first to reopen the mortgage ILS market since the last deal was issued back in September 2022.
At this time, Essent Guaranty was looking to obtain $253.2 million of reinsurance protection on mortgage insurance policies written in August 2022 through June 2023. However, the firm has confirmed that the transaction successfully upsized to secure $281.5 million of mortgage reinsurance with this latest Radnor Re issuance.
Radnor Re 2023-1 Ltd. has funded its reinsurance obligations via the issuance of four classes of mortgage insurance-linked notes, each with 10-year legal maturities, to eligible third party capital markets investors in an unregistered private offering.
With this placement, all four classes of notes have upsized, and now consist of the following:
- $99.594 million Class M-1A notes with an initial interest rate of SOFR Rate plus 270 basis points
- $82.274 million Class M-1B notes with an initial interest rate of SOFR Rate plus 435 basis points
- $77.943 million Class M-2 notes with an initial interest rate of SOFR Rate plus 585 basis points
- $21.651 million Class B-1 notes with an initial interest rate of SOFR Rate plus 725 basis points
The notes issued cover some of the insurance risk across a pool of insured mortgage loans consisting of 133,879 fully amortizing first-lien fixed- and variable-rate mortgages.
Essent Guaranty is the second most prolific sponsor of mortgage ILS transactions after Arch Capital Group, with the latest transaction taking the total size of these deals to a combined more than $3.6 billion.