Radian Announces Closing of $484 Million Mortgage Insurance-Linked Notes Transaction

Rhea-AI Summary

Radian Group Inc. (NYSE: RDN) announced that its subsidiary, Radian Guaranty Inc., secured $484 million in fully collateralized excess of loss reinsurance from Eagle Re 2021-2 Ltd. This coverage pertains to mortgage insurance policies written predominantly from January 1, 2021 to July 31, 2021. Eagle Re, a Bermuda-based insurer, issued five classes of mortgage insurance-linked notes to fund this reinsurance, with ratings assigned by Moody’s and DBRS, Inc.

Positive

• Secured $484 million in excess of loss reinsurance coverage
• Reinsurance enhances capital position for underwriting risks

Negative

• Potential reliance on external capital markets for funding

WAYNE, Pa.--(BUSINESS WIRE)-- Radian Group Inc. (NYSE: RDN) today announced that its wholly owned subsidiary, Radian Guaranty Inc. has obtained $484 million of fully collateralized excess of loss reinsurance coverage from Eagle Re 2021-2 Ltd. (Eagle Re). The excess of loss reinsurance covers eligible mortgage insurance policies written by Radian Guaranty predominantly from January 1, 2021 through and including July 31, 2021. Eagle Re is a newly formed Bermuda special purpose insurer and is not a subsidiary or affiliate of Radian Guaranty.

Eagle Re has funded its reinsurance obligations by issuing five classes of mortgage insurance-linked notes (ILNs) with a 12.5-year maturity and 7-year call option to eligible third-party capital markets investors in an unregistered private offering. The ILNs are non-recourse to Radian Group and its subsidiaries and affiliates.

The ILNs issued by Eagle Re consist of the following five classes:

• $118,341,000 Class M-1A Notes with a coupon equal to one-month SOFR plus 155 basis points
• $102,204,000 Class M-1B Notes with a coupon equal to one-month SOFR plus 205 basis points
• $145,236,000 Class M-1C Notes with a coupon equal to one-month SOFR plus 345 basis points
• $91,445,000 Class M-2 Notes with a coupon equal to one-month SOFR plus 425 basis points
• $26,896,000 Class B-1 Notes with a coupon equal to one-month SOFR plus 500 basis points

After closing, investors have the option to exchange their M-1C Notes for proportionate interests in Class M-1C-1 Notes, Class M-1C-2 Notes and Class M-1C-3 Notes (Exchangeable Notes), and the Exchangeable Notes may be exchanged for Class M-1C Notes with the same proportionate interest.

The Notes have been assigned ratings by Moody’s of Baa1 (sf) for Class M-1A; Baa3 (sf) for Class M-1B; Ba2 (sf) for Class M-1C and B2 (sf) for Class M-2. In addition, the Notes have been assigned ratings by DBRS, Inc. (DBRS Morningstar) of BBB (high) (sf) for Class M-1A; BBB (low) (sf) for Class M-1B; BB (sf) for Class M-1C; B (high) (sf) for class M-2 and B (sf) for Class B-1.

Additional information about the ILN reinsurance transaction may be found on the Investors section of Radian’s website at https://radian.com/who-we-are/for-investors/presentations.

About Radian

Radian Group Inc. (NYSE: RDN) is ensuring the American dream of homeownership responsibly and sustainably through products and services that include industry-leading mortgage insurance and a comprehensive suite of mortgage, risk, title, valuation, asset management and other real estate services. We are powered by technology, informed by data and driven to deliver new and better ways to transact and manage risk. Visit www.radian.com to learn more about how Radian is shaping the future of mortgage and real estate services.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211109006553/en/

For Investors

John Damian – Phone: 215.231.1383

Email: john.damian@radian.com



For the Media

Rashi Iyer – Phone: 215.231.1167

Email: rashi.iyer@radian.com

Source: Radian Group Inc.

FAQ

What did Radian Group announce regarding reinsurance on March 1, 2023?

Radian Group announced it secured $484 million in excess of loss reinsurance from Eagle Re for mortgage insurance policies.

What is the significance of the $484 million reinsurance coverage for RDN?

The coverage helps RDN enhance its capital position against underwriting risks.

What are the ratings of the mortgage insurance-linked notes issued by Eagle Re?

The notes received ratings from Moody’s and DBRS, ranging from Baa1 to B.

When does the reinsurance coverage from Eagle Re apply?

The coverage applies to mortgage insurance policies written from January 1, 2021, to July 31, 2021.

Who is the issuer of the $484 million reinsurance coverage for Radian?

The issuer is Eagle Re 2021-2 Ltd., a newly formed special purpose insurer.