Radian Announces Closing of $498 Million Mortgage Insurance-Linked Notes Transaction

Rhea-AI Summary

Radian Group Inc. (NYSE: RDN) announced $498 million in fully collateralized excess of loss reinsurance from its subsidiary, Radian Guaranty Inc., to cover mortgage insurance policies from August to December 2020. Funded by issuing six classes of mortgage insurance-linked notes (ILNs) from Eagle Re, a new Bermuda insurer, the transaction involves non-recourse agreements for Radian. Notably, Radian purchased $17.7 million in B-1 tranche and the entire B-2 tranche. Moody's rated the ILNs between A3 and B3, confirming their credit quality.

Positive

• Radian secured $498 million in reinsurance coverage, strengthening its financial position.
• The transaction is fully collateralized, reducing risk exposure.
• Radian's investment in the B-1 and B-2 tranches indicates confidence in the reinsurance structure.

Negative

• None.

Radian Group Inc. (NYSE: RDN) today announced that its wholly owned subsidiary, Radian Guaranty Inc., has obtained $498 million of fully collateralized excess of loss reinsurance coverage from Eagle Re 2021-1 Ltd. (Eagle Re). The excess of loss reinsurance covers eligible mortgage insurance policies written by Radian Guaranty in August 2020 through December 2020. 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 six 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 six classes:

• $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 215 basis points
• $165,912,000 Class M-1C Notes with a coupon equal to one-month SOFR plus 270 basis points
• $110,607,000 Class M-2 Notes with a coupon equal to one-month SOFR plus 445 basis points
• $27,652,000 Class B-1 Notes with a coupon equal to one-month SOFR plus 575 basis points
• $27,652,000 Class B-2 Notes with a coupon equal to one-month SOFR plus 625 basis points

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 have the option to exchange their M-2 Notes for proportionate interests in Class M-2A Notes, Class M-2B Notes and Class M-2C Notes (Exchangeable Notes), and the Exchangeable Notes may be exchanged for Class 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. In addition, the Notes for Class M-1A were rated BBB (sf), and BBB (low) (sf) for Class M-1B by DBRS, Inc. (DBRS Morningstar).

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/20210422005950/en/

FAQ

What is the recent reinsurance announcement by Radian Group (RDN)?

Radian Group announced a $498 million excess of loss reinsurance coverage obtained by its subsidiary, Radian Guaranty, from Eagle Re.

What types of notes were issued in Radian's reinsurance transaction?

Eagle Re issued six classes of mortgage insurance-linked notes (ILNs) in a private offering.

How much did Radian invest in the reinsurance-linked notes?

Radian Group purchased $17.7 million of the B-1 tranche and the entire B-2 tranche of the issued notes.

What ratings did Moody's assign to Radian's mortgage insurance-linked notes?

Moody's assigned ratings from A3 to B3 for the six classes of mortgage insurance-linked notes.

When are the covered mortgage insurance policies from Radian applicable?

The reinsurance covers eligible mortgage insurance policies written by Radian Guaranty between August 2020 and December 2020.