Mortgage insurance group NMI Holdings, Inc. has now successfully secured $364 million of collateralised mortgage reinsurance protection from the capital markets with the Oaktown Re VII Ltd. transaction, which is its second mortgage insurance-linked notes issuance of the year.
As we explained earlier this month, NMI was back in the capital market with a newly registered Bermuda domiciled special purpose insurer, Oaktown Re VII Ltd., seeking to issue five tranches of mortgage insurance-linked securities (ILS) notes, to add almost $364 million of additional mortgage reinsurance protection.
Now, the deal has completed and NMI was successful again in this issuance, which follows on from a $367 million Oaktown Re VI Ltd. deal earlier in 2021.
NMI has been sourcing capital market investor backed fully-collateralized mortgage reinsurance protection for its wholly owned subsidiary National Mortgage Insurance Corporation through these Oaktown Re transactions.
Yesterday, NMI reported the completion of the new Oaktown Re VII transaction, saying that the $364 million mortgage insurance-linked notes offering by Oaktown Re VII Ltd. was now closed.
The $364 million of mortgage insurance-linked notes issued by Oaktown Re VII have a 12.5-year legal maturity and consist of the following five classes:
- $126,468,000 Class M-1A Notes with an initial interest rate of one-month SOFR plus 1.60%
- $110,660,000 Class M-1B Notes with an initial interest rate of one-month SOFR plus 2.90%
- $55,329,000 Class M-1C Notes with an initial interest rate of one-month SOFR plus 3.35%
- $51,378,000 Class M-2 Notes with an initial interest rate of one-month SOFR plus 3.70%
- $19,761,000 Class B-1 Notes with an initial interest rate of one-month SOFR plus 4.40%
NMI explained that the issuance of notes will provide its subsidiary National Mortgage Insurance Corporation (National MI) with $364 million of fully collateralized excess of loss reinsurance protection, covering an existing portfolio of mortgage insurance policies written primarily from April 1, 2021 through September 30, 2021.
The new excess of loss reinsurance coverage provides National MI protection for aggregate insured losses across the subject portfolio loans, beginning at a 1.85% cumulative claim rate threshold and continuing up to an eventual 7.45% aggregate detachment level, the company said.
As we explained previously, the mortgage ILS deal covers residential mortgage insurance policies, across a pool of 122,629 prime, fixed- and adjustable-rate, one-to-four-unit, mortgage loans with a total insured loan balance of approximately $40 billion.
You can read all about this new Oaktown Re VII Ltd. mortgage ILS transaction from NMI Holdings and every other mortgage ILS deal our comprehensive catastrophe bond and insurance-linked security Deal Directory.