MGIC targets $323.5m Home Re 2026-1 mortgage insurance-linked notes issuance

MGIC Investment Corporation is back in the capital markets seeking approximately $323.5 million of mortgage reinsurance through a Home Re 2026-1 Ltd. mortgage insurance-linked securities (ILS) transaction.

This is the first issuance of mortgage insurance-linked notes to support the firm’s Mortgage Guaranty Insurance Corporation unit since October 2023.

The Home Re series of mortgage insurance-linked notes deals has been in effect since 2018 with this new Home Re 2026-1 now being the eighth rated issuance in the series.

MGIC had been consistently using these catastrophe bond-like structures to secure mortgage reinsurance from capital market investors between 2018 and 2023 and now after a more than two year break, the company is back to add more mortgage ILS backed reinsurance protection to its business.

As we’ve explained before, use of mortgage insurance-linked securities to support mortgage insures’ reinsurance capital slowed dramatically after 2023, since when many outstanding deals have continued to be redeemed early as well.

It had become more efficient to close out vintage deals rather than continue to service them, while mortgage insurer required capital levels had also been adjusting to the rules and cost-of-capital, resulting in adjustments to their need for reinsurance.

Interest rate developments and spread levels had also been a driver, keeping the mortgage insurers away from the securitized market.

But Arch Capital reopened the mortgage insurance-linked notes market back in November 2025, securing $199.3 million from a Bellemeade Re 2025-1 Ltd. issuance and MGIC is next, while we understand there could be more of these mortgage ILS deals in 2026.

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 MGIC.

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.”

It’s good to see another of the large mortgage insurance carriers coming back to the capital markets to source collateralized reinsurance protection for the mortgage insurance losses on this portfolio.

It’s worth reiterating again that catastrophe bonds are the main focus of the data we collect, but we also have some charts on the mortgage ILS market here.

We do not include mortgage ILS in any other charts than those two that are specific to that market, and we do not include mortgage ILS in our market issuance and outstanding figures, they include 144A and private catastrophe bonds only.

These are very different instruments in terms of their risk profile and potential for correlation with broader financial markets, but they are still insurance-linked and appealing to many fixed income investors that also allocate to catastrophe ILS, in offering some level of diversification to their portfolios.

You can read all about the Home Re 2026-1 Ltd. mortgage insurance-linked securities transaction and every other mortgage ILS deal by filtering our extensive Artemis Deal Directory.