23 March 2018USA analysis

Essent Guaranty closes reinsurance deal

Essent Group subsidiary Essent Guaranty has obtained $424.4 million of fully collateralised excess of loss reinsurance coverage on mortgage insurance policies written by Essent in 2017 from Radnor Re 2018-1, a newly formed Bermuda special purpose insurer.

Radnor Re 2018-1 has funded its reinsurance obligations through the issuance of three classes of mortgage insurance-linked notes with 10-year legal maturities, to eligible third party capital markets investors in an unregistered private offering. The senior M-1 class notes have received a rating of BBB from Morningstar Credit Ratings. Radnor Re is not a subsidiary or an affiliate of Essent Group.

“We are very excited to announce the closing of our inaugural credit risk transfer transaction,” said Mark Casale, chairman and chief executive officer. “This transaction is a significant milestone for our company, as it expands our capital sources while also providing a layer of protection against adverse credit losses. Additionally, we believe that a transaction like this strengthens our mortgage insurance franchise and enhances the role that Essent plays in supporting a strong and robust US housing finance system.”