Eagle Re issues $498m in ILNs to finance Radian reinsurance cover

23-04-2021

Radian Guaranty, the wholly owned subsidiary of Radian Group, has obtained $498 million of fully collateralised excess of loss reinsurance coverage from Eagle Re 2021-1, the newly formed Bermudian special purpose insurer.  

The excess of loss reinsurance covers eligible mortgage insurance policies written by Radian Guaranty in August 2020 through December 2020. 

Eagle Re financed the deal via six classes of mortgage insurance-linked notes (ILNs) with a 12.5-year maturity and seven year call option in an unregistered private offering. The ILNs are non-recourse to Radian Group and its subsidiaries and affiliates.

The ILNs consist of $82,956,000 class M-1A notes with a coupon equal to one-month SOFR plus 170 basis points; $82,956,000 class M-1B notes with a coupon equal to one-month SOFR plus 215bps; $165,912,000 class M-1C notes with a coupon equal to one-month SOFR plus 270bps; $110,607,000 class M-2 notes with a coupon equal to one-month SOFR plus 445 bps; $27,652,000 class B-1 notes with a coupon equal to one-month SOFR plus 575bps; and $27,652,000 class B-2 notes with a coupon equal to one-month SOFR plus 625bps.

Radian Group, an affiliate of Radian Guaranty, purchased $17.7 million of the B-1 tranche and the entire B-2 tranche.

After closing, investors can exchange their M-2 notes for proportionate interests in M-2A notes, M-2B notes and M-2C notes (exchangeable notes). The exchangeable notes may be exchanged for M-2 notes with the same proportionate interest.

The notes have been assigned ratings by Moody’s of A3 (sf) for class M-1A; Baa1 (sf) for class M-1B; Baa3 (sf) for class M-1C; Ba3 (sf) for class M-2; B2 (sf) for class B-1 and B3 (sf) for class B-2. The class M-1A notes were also rated BBB (sf), and BBB (low) (sf) for class M-1B by DBRS. 

Eagle Re is not a subsidiary or affiliate of Radian Guaranty.

Eagle Re, Radian Guaranty, Moody's, DBRS

Bermuda Re