US MORTGAGE RISK PASSES $5BN RE/INSURANCE TRANSFER MILESTONE

US mortgage credit business has reached the milestone of $5bn of risk transferred to the reinsurance market, broker Aon Benfield has reported. The $5bn milestone was passed through the inception of three new policies under Freddie Mac’s Agency Credit Insurance Structure. The three new policies provided a combined maximum limit of $788m of losses on single-family loans, representing the largest aggregate transaction to date. These transactions are transferring a significant portion of mortgage credit risk on approximately $75bn of unpaid principal balance (UPB) on single-family mortgages, Aon Benfield said. Freddie Mac has placed more than $5bn in re/insurance coverage through 20 ACIS transactions since the program’s inception in 2013. Eric Andersen, chief executive of Aon Benfield, said: “After initially generating awareness and understanding of U.S. mortgage credit business across the re/insurance industry, we continue to work with re/insurers across the globe to assist them to develop the skills and capabilities necessary to underwrite this type of risk. We believe that this sector represents a key opportunity for re/insurers, especially given that growth in many traditional business lines is becoming more difficult to achieve.”