HVRRF - Mortgage ILS COVID-19 Dislocation To Elevate Reinsurance Costs: A.M. Best
The current dislocation of the mortgage insurance-linked securities ((ILS)) market due to the COVID-19 pandemic is likely to cause mortgage reinsurance rates to rise, impacting the originate to distribute model of many mortgage insurers.
Over the last few years, issuance of mortgage insurance-linked securities, or mortgage insurance linked notes ((ILN)), has become a significant source of capital markets backed mortgage reinsurance for the biggest U.S. mortgage underwriters.
Structured like a catastrophe bond, or 144a insurance-linked security, these mortgage ILS deals have become a key source of excess-of-loss reinsurance for the mortgage insurance market, enabling them