Freddie Mac has obtained another three new insurance policies under its Agency Credit Insurance Structure program, representing the largest aggregate transaction to date.
Together, they provide up to a combined maximum limit of approximately $788 million of losses on single-family loans and transfer much of the remaining credit risk associated with three of the Structured Agency Credit Risk debt issuances this year.
The STACR program is the primary way that Freddie Mac transfers some of risk of credit losses on mortgages that it ensures. These notes are general obligations of Freddie Mac, but their performance is linked to a pool of reference mortgages. Freddie uses ACIS to transfer additional risk on pools of mortgages reinsured via STACR.
In three ACIS transactions the company just completed transfer much of the remaining risk on STACR 2016-DNA2, STACR 2016-HQA2, and STACR 2016-DNA3, which themselves transferred a significant portion of mortgage credit risk on approximately $75 billion of unpaid principal balance on single-family mortgages.
For the first time, Freddie named one of the reinsurers that participated in the ACIS transactions: Aon Benfield.
Freddie Mac has placed over $5 billion in insurance coverage through 20 ACIS transactions since the program's inception in 2013.
In that time, it has transferred a substantial portion of credit risk on more than $525 billion of UPB on single-family mortgages via all of its reinsurance programs, including STACR, ACIS and other programs.
"We are pleased to have reached another significant issuance milestone in our single-family credit risk transfer program," said Kevin Palmer, senior vice president of single-family credit risk transfer for Freddie Mac said in a press release.
"Our evolving and maturing ACIS program continues to attract a growing amount of capital from domestic and foreign insurers and reinsurers, as evidenced by the record number of counterparties who helped to make today's announcement possible. We continue to work to strengthen our credit risk transfer programs to shift additional mortgage credit risk away from taxpayers and provide new opportunities for investors."