Item 8.01 Other Events

As previously disclosed, National Mortgage Insurance Corporation (NMIC) entered into excess-of-loss reinsurance agreements with Oaktown Re Ltd., Oaktown Re II Ltd. and Oaktown Re III Ltd. (special purpose reinsurance entities collectively referred to as the Oaktown Re Vehicles) effective May 2, 2017, July 25, 2018 and July 30, 2019, respectively. We refer to NMIC's reinsurance agreements with and the insurance-linked note issuances by the Oaktown Re Vehicles individually as the 2017 ILN Transaction, 2018 ILN Transaction and 2019 ILN Transaction, and collectively as the ILN Transactions. Each ILN Transaction provides NMIC with aggregate excess-of-loss reinsurance coverage on a defined portfolio of mortgage insurance policies written during a discrete period. The Oaktown Re Vehicles are required to fully collateralize their outstanding reinsurance coverage amount to NMIC with funds deposited into segregated reinsurance trust accounts.

Based on delinquency information currently reported to NMIC, the 2018 ILN Transaction and the 2019 ILN Transaction will be subject to a delinquency trigger event that is being reported to ILN investors on June 25, 2020. A delinquency trigger event is defined to occur if, among other things, the sixty-plus delinquency percentage for the applicable pool of mortgage insurance policies is greater than or equal to 4.0%. The sixty-plus delinquency percentage is calculated based on the percentage of mortgage loans in the applicable pool, based on their adjusted risk in force, that are reported to be 60 or more days delinquent in payment of principal and interest, including (without duplication) mortgage loans as to which the related properties are subject to foreclosure proceedings, mortgage loans as to which the related mortgagors are subject to bankruptcy proceedings and mortgage loans as to which claims are pending.

In addition, the 2017 ILN Transaction will be subject to a credit enhancement trigger event that is being reported to ILN investors on June 25, 2020, which is triggered when the credit enhancement of the reinsurance coverage falls below a pre-agreed target percentage and the sixty-plus delinquency percentage for the applicable pool of mortgage insurance policies is greater than or equal to 2.0%.

The amortization of principal for all three of the ILN Transactions will be suspended upon the occurrence and during the continuation of a trigger event and, consequently, during such period capital will be preserved in the applicable reinsurance trust account to collateralize the reinsurance coverage to NMIC.

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