MGIC CLOSES NOTES AGREEMENT FOR $318 MILLION
This transaction will expand capital sources while also providing a layer of protection against adverse credit losses.
Today MGIC issued a statement in SEC 10Q ending September 30, 2018 stating, that on October 30, 2018 it closed a deal for $318 MILLION collateralized by MORTGAGE linked notes.
"Note 16. Subsequent Events
On October 30, 2018, MGIC entered into a fully collateralized reinsurance agreement with Home Re 2018-1 Ltd. (“Home Re”), an
unaffiliated special purpose insurer domiciled in Bermuda, that provides for up to $318.6 million of aggregate excess-of-loss reinsurance coverage as of August 1, 2018 on a portfolio of mortgage insurance policies having an insurance coverage in force date on or after July 1, 2016 and before January 1, 2018.
For the reinsurance coverage period, MGIC will retain the first layer of $168.7 million of aggregate losses, and Home Re will then provide second layer coverage up to the outstanding reinsurance coverage amount.
The reinsurance coverage premium due to Home Re is calculated by multiplying the outstanding reinsurance coverage amount at the beginning of a period by a coupon rate, which is the sum of one-month LIBOR plus a spread for each class of notes, and then subtracting actual investment income collected on the assets in the reinsurance trust during that period.
The aggregate excess of loss reinsurance coverage decreases over a ten-year period, subject to certain conditions, as the
underlying covered mortgages amortize, principal is prepaid, or mortgage insurance losses are paid. MGIC has rights to terminate the reinsurance agreement, which includes an option to terminate after seven years from the closing date.
Home Re financed the coverage by issuing mortgage insurance-linked notes in an aggregate amount of $318.6 million to unaffiliated investors.
The notes have ten-year legal maturities and are non-recourse to any assets of MGIC or its affiliates.
The proceeds of the notes were deposited into a reinsurance trust for the benefit of MGIC that will be the source of reinsurance claim payments to MGIC and
principal repayments on the mortgage insurance-linked notes."
Page 36 SEC 10Q SEPT 2018
