Freddie Mac has obtained an insurance policy for more than half a billion dollars under its Agency Credit Insurance Structure (ACIS) program, bringing the total of insurance coverage the Enterprise has acquired this year to $1.5 billion through seven ACIS transactions, according to announcement from Freddie Mac.
The latest ACIS transaction transfers a combined maximum limit of approximately $502.6 million of losses on a pool of single-family loans acquired by Freddie Mac during a three-month period from August to November 2014. Through the ACIS program, Freddie Mac obtains insurance policies that transfer risk to insurance and reinsurance companies, which is a portion of the credit risk attached to the debt note reference pools in Freddie Mac’s Structured Agency Credit Risk (STACR) program.
The $502.6 million represents much of the remaining credit risk associated with Freddie Mac’s second actual loss STACR offering from June 2015, STACR Series 2015-DNA2.
“We are pleased to announce the execution of this latest ACIS policy. The size of this transaction reflects the continued significant interest from the industry and demonstrates that the insurance sector has strong, deep capacity for this risk,” said Kevin Palmer, VP of Freddie Mac's Single-Family strategic credit costing and structuring.
This ACIS transaction is the seventh of the year and 11th overall for Freddie Mac since the program’s inception. Through those 11 ACIS transactions, Freddie Mac has acquired more than $2.4 billion in insurance for single-family loans.
“The size of this transaction reflects the continued significant interest from the industry and demonstrates that the insurance sector has strong, deep capacity for this risk.”—Kevin Palmer
Freddie Mac just announced on Friday, October 23, the pricing of its 15th STACR offering, STACR Series 2015-DNA3, since the program began two years ago. It was priced at more than $1 billion, marking the seventh STACR debt notes offering this year of more than $1 billion by Freddie Mac.
Through the first 15 STACR offerings and 11 ACIS transactions, Freddie Mac has laid off a substantial portion of credit risk on more than $333 billion in unpaid principal balance (UPB) for single-family mortgages. Freddie Mac was the first agency to use STACR and ACIS to market credit risk transfer transactions; in just two years, the investor base has grown to include more than 170 unique investors, according to Freddie Mac.