Enact returns for $248m Triangle Re 2023-1 mortgage ILS deal

Enact Mortgage Insurance returned to the insurance-linked securities (ILS) market for the first time in more than two years, seeking just under $248 million in guaranteed mortgage reinsurance protection through the issuance of Triangle Re 2023-1 Ltd. notes related to mortgage insurance.

promulgate-mortgage-insurance-logoIt’s the sixth issuance of Triangle Re’s mortgage insurance-linked securities (ILS) for Enact Mortgage Insurance Corporationformerly known as Genworth Mortgage Insurance.

Genworth had sponsored five issues of Triangle Re mortgage insurance-linked notes to secure guaranteed mortgage reinsurance until September 2021, after which it was renamed Enact.

But since then, like other major U.S. mortgage insurers, Enact has stayed out of the mortgage ILS market and is only returning to it now, at a time when market conditions have improved and ILS issuance mortgages have resumed.

Enact has registered a new Bermuda domiciled entity for the issuance of its sixth ILS mortgage transaction, Triangle Re 2023-1 Ltd. (TMIR 2023-1), which is managed by Aon Insurance Managers (Bermuda) Ltd.

Triangle Re 2023-1 Ltd. will issue four classes of notes which will be sold to investors and the proceeds will be used to secure a source of mortgage indemnity reinsurance for Enact.

The goal is to obtain nearly $248 million in mortgage reinsurance through this issuance, with the four categories of notes all having a ten-year term.

The transaction is divided into the following tranches, accompanied by their provisional ratings from DBRS Morningstar:

  • $105.7 million Class M-1A to BB (high) (sf)
  • $69.2 million Class M-1B to BB (low) (sf)
  • $54.7 million Class M-2 to B (high) (sf)
  • $18.2 million Class B-1 to B (sf)

Each tranche of notes will be backed by reinsurance premiums, eligible investments and investment income from associated accounts, and will correspond to a pool of mortgage insurance policies underwritten by Enact Mortgage Insurance that are linked to residential loans.

Bondholders will be exposed to risk arising from losses that the ceding insurer Enact must pay to settle claims on the underlying mortgage insurance policies.

The transaction will provide Enact with capital market-backed reinsurance on a pool of insured mortgages consisting of 148,603 fully amortizing fixed and variable rate first mortgages, through a reinsurance agreement that the issuer Triangle Re 2023-1 will conclude with Enact on completion.

Enact is the latest to return to the capital markets to sponsor an ILS mortgage deal after a hiatus of around two years.

The resurgence of activity in the mortgage ILS space was seen following a calming in some capital markets following a period of volatility, as well as recent mortgage ILS transactions being priced higher and increasing, helping to once again generate interest among sponsors, as the gap to pay for capital markets-backed mortgage reinsurance appears to have narrowed somewhat.

As our chart shows, issuance of mortgage insurance-linked securities (ILS) has now reached just over $1.15 billion in 2023. so far, and once this new agreement with Enact is concluded, it will be ahead of the previous year.

You can read everything on Triangle Re 2023-1 Ltd. mortgage insurance related securities transaction and all other mortgage ILS transactions in our specific directory of ILS mortgage offersas well as in our global Directory of Artemis offers.

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