Genworth MI obtains over $300m in its first mortgage insurance-linked securities deal

by Candyd Mendoza26 Nov 2019

Genworth Mortgage Insurance Corporation has announced the completion of its first mortgage insurance-linked securities transaction.

The company secured roughly $302.8 million of fully collateralized excess of loss reinsurance coverage from Triangle Re 2019-1 Ltd. on a portfolio of existing mortgage insurance policies written from January 2019 through September 2019.

Mortgage insurance-linked notes (ILN) are broadly defined as financial instruments that are linked to property losses due to natural catastrophes representing a unique asset class.

Triangle Re issued three classes of mortgage ILNs, each of which have a 10-year legal final maturity with a seven-year call option.

The Triangle RE mortgage ILN deal consist of the following three classes:

  • $134,574,000 Class M-1 Notes with a coupon equal to one-month LIBOR plus 190 basis points
  • $151,396,000 Class M-2 Notes with a coupon equal to one-month LIBOR plus 290 basis points
  • $16,821,000 Class B-1 Notes with a coupon equal to one-month LIBOR plus 415 basis points

Genworth MI CEO Rohit Gupta said that these kinds of capital market transactions provide both incremental diversification of capital sources and additional capacity at an “attractive cost” to the company.

“We are very pleased with the strong market response to our first ILN transaction,” Gupta said. “It’s an effective complement to our existing credit risk transfer program, which has now generated more than $1.6 billion of excess of loss reinsurance coverage over the course of the program’s first five years.”