Essent Group Ltd. Announces Closing of $557.9 Million Reinsurance Transaction and Related Mortgage Insurance-Linked Notes

Rhea-AI Summary

Essent Group Ltd. (NYSE: ESNT) has secured $557.9 million in fully collateralized excess of loss reinsurance coverage for mortgage insurance policies from Radnor Re 2021-1 Ltd., a new Bermuda special purpose insurer, covering policies written between August 2020 and March 2021.

This coverage is funded through five classes of mortgage insurance-linked notes with varying interest rates, targeting third-party capital markets investors. The notes are not registered under U.S. Securities Act, and this announcement does not constitute an offer or solicitation.

Positive

• Secured $557.9 million in fully collateralized reinsurance coverage.
• Radnor Re 2021-1 Ltd. diversifies funding through five classes of mortgage insurance-linked notes.

Negative

• None.

Essent Group Ltd. (NYSE: ESNT) announced today that its wholly-owned subsidiary, Essent Guaranty, Inc., has obtained $557.9 million of fully collateralized excess of loss reinsurance coverage on mortgage insurance policies written in August 2020 through March 2021 from Radnor Re 2021-1 Ltd., a newly formed Bermuda special purpose insurer. Radnor Re 2021-1 Ltd. is not a subsidiary or an affiliate of Essent Group Ltd.

Radnor Re 2021-1 Ltd. has funded its reinsurance obligations through the issuance of five classes of mortgage insurance-linked notes, with 12.5-year legal maturities, to eligible third party capital markets investors in an unregistered private offering.

The mortgage insurance-linked notes issued by Radnor Re 2021-1 Ltd. consist of the following five classes:

• $139,478,000 Class M-1A Notes with an initial interest rate of SOFR Rate plus 165 basis points;
• $132,504,000 Class M-1B Notes with an initial interest rate of SOFR Rate plus 170 basis points;
• $153,426,000 Class M-1C Notes with an initial interest rate of SOFR Rate plus 270 basis points;
• $97,634,000 Class M-2 Notes with an initial interest rate of SOFR Rate plus 315 basis points;
• $34,869,000 Class B-1 Notes with an initial interest rate of SOFR Rate plus 400 basis points;

The securities described herein have not been and will not be registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or a solicitation of an offer to buy any of the aforementioned securities and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which, or to any person to whom, such an offer, solicitation or sale would be unlawful.

Forward-Looking Statements

This press release may include “forward-looking statements” which are subject to known and unknown risks and uncertainties, many of which may be beyond our control. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," “should,” “expect,” "plan," "anticipate," "believe," “estimate,” “predict,” or "potential" or the negative thereof or variations thereon or similar terminology. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following: the impact of COVID-19 and related economic conditions; changes in or to Fannie Mae and Freddie Mac (the “GSEs”), whether through Federal legislation, restructurings or a shift in business practices; failure to continue to meet the mortgage insurer eligibility requirements of the GSEs; competition for customers; lenders or investors seeking alternatives to private mortgage insurance; an increase in the number of loans insured through Federal government mortgage insurance programs, including those offered by the Federal Housing Administration; decline in new insurance written and franchise value due to loss of a significant customer; decline in the volume of low down payment mortgage originations; the definition of "Qualified Mortgage" reducing the size of the mortgage origination market or creating incentives to use government mortgage insurance programs; the definition of "Qualified Residential Mortgage" reducing the number of low down payment loans or lenders and investors seeking alternatives to private mortgage insurance; the implementation of the Basel III Capital Accord discouraging the use of private mortgage insurance; a decrease in the length of time that insurance policies are in force; uncertainty of loss reserve estimates; deteriorating economic conditions; our non-U.S. operations becoming subject to U.S. Federal income taxation; becoming considered a passive foreign investment company for U.S. Federal income tax purposes; and other risks and factors described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on February 26, 2021, as subsequently updated through other reports we file with the Securities and Exchange Commission. Any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

About the Company:

Essent Group Ltd. (NYSE: ESNT) is a Bermuda-based holding company (collectively with its subsidiaries, “Essent”) which, through its wholly-owned subsidiary, Essent Guaranty, Inc., offers private mortgage insurance for single-family mortgage loans in the United States. Essent provides private capital to mitigate mortgage credit risk, allowing lenders to make additional mortgage financing available to prospective homeowners. Headquartered in Radnor, Pennsylvania, Essent Guaranty, Inc. is licensed to write mortgage insurance in all 50 states and the District of Columbia, and is approved by Fannie Mae and Freddie Mac. Essent also offers mortgage-related insurance, reinsurance and advisory services through its Bermuda-based subsidiary, Essent Reinsurance Ltd. Essent is committed to supporting environmental, social and governance (“ESG”) initiatives that are relevant to the company and align with the companywide dedication to responsible corporate citizenship that positively impacts the community and people served. Additional information regarding Essent may be found at www.essentgroup.com and www.essent.us.

Source: Essent Group Ltd.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210624005202/en/

FAQ

What is the amount of reinsurance coverage obtained by Essent Group Ltd.?

Essent Group Ltd. has obtained $557.9 million in fully collateralized excess of loss reinsurance coverage.

Who is the issuer of the reinsurance coverage for Essent's mortgage insurance?

The reinsurance coverage was obtained from Radnor Re 2021-1 Ltd., a newly formed Bermuda special purpose insurer.

What time period do the mortgage insurance policies cover for the reinsurance?

The reinsurance covers mortgage insurance policies written from August 2020 to March 2021.

What types of notes were issued to fund the reinsurance obligations?

Five classes of mortgage insurance-linked notes were issued to fund the reinsurance obligations.

Are the securities issued by Radnor Re registered under U.S. law?

No, the securities have not been and will not be registered under the U.S. Securities Act of 1933.