Freddie Mac Continues to Reduce Credit Risk With Largest ACIS(R) Insurance Policy to Date for a Combined $502.6 Million Limit
Freddie Mac Continues to Reduce Credit Risk With Largest ACIS(R) Insurance Policy to Date for a Combined 2.6 Million Limit
MCLEAN, VA–(Marketwired – Oct 26, 2015) – Freddie Mac (OTCQB: FMCC) announced today that it has obtained its largest insurance policy to date — more than half a billion dollars — under its successful Agency Credit Insurance Structure (ACIS®) program. Through ACIS, Freddie Mac obtains insurance policies that transfer to insurance and reinsurance companies around the globe, a portion of the credit risk associated with its Structured Agency Credit Risk (STACR®) debt note reference pools.
This new transaction transfers much of the remaining credit risk associated with the second actual loss STACR offering last June, STACR Series 2015 DNA2. This policy transfers up to a combined maximum limit of approximately $ 502.6 million of losses on a pool of Single-Family loans acquired from August to November 2014.
With this transaction Freddie Mac has acquired more than $ 1.5 billion in insurance coverage this year with seven ACIS transactions and more than $ 2.4 billion since the program’s inception.
“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, vice president of Freddie Mac’s Single-Family strategic credit costing and structuring.
Freddie Mac has led the market in introducing new risk-sharing initiatives with 15 STACR® offerings and now 11 ACIS transactions since mid-2013. Four of the ACIS transactions have provided coverage on a first loss and actual loss basis. Through STACR and ACIS, Freddie Mac has laid off a substantial portion of credit risk on more than $ 333 billion of UPB in single-family mortgages. Freddie Mac was the first agency to market credit risk transfer transactions with STACR and ACIS, and has since grown its investor base to more than 170 unique investors, including reinsurers.
Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.