American International Group's mortgage insurance business has secured indemnity reinsurance coverage for a portfolio of policies from 2008 and earlier.
The reinsurance covers $298.6 million of first-lien U.S. mortgage insurance portfolio of policies issued in 2008 and prior by United Guaranty Corp. and will come from special purpose insurer Bellemeade Re II Ltd, AIG announced on Monday.
Bellemeade plans to fund the reinsurance obligations by issuing three classes of amortizing notes that carry 10-year legal final maturities. These securities will provide United Guaranty with coverage for potential losses on its legacy MI portfolio.
"We believe this marks the first time a mortgage insurer has accessed the capital markets for a risk transfer involving a mortgage insurance portfolio made up of policies issued in 2008 and earlier years," United Guaranty Chief Executive and President Donna DeMaio said in a news release.
"The transaction not only helps United Guaranty manage risk, but also demonstrates that investors are willing to assign value to this type of portfolio from the 2008 and earlier period."
Last August, United Guaranty secured $300 million of indemnity reinsurance from Bellemeade on a portfolio of MI policies dated between 2009 and the first quarter of 2013.
