Letter: Mortgage Insurers Respond to SEC’s Proposed Rule 192

March 27, 2023

The U.S. private mortgage insurance industry submitted a comment letter to the Securities and Exchange Commission (SEC) in response to Proposed Rule 192, outlining concerns about the potential impact it could have on mortgage insurance-linked note (MILN) transactions that they have used to procure reinsurance through the capital markets since 2015. They write that “[a]mbiguities within the Proposed Rule could be interpreted to prohibit or limit the ability to source capital markets-based reinsurance through MILNs, which [the private MI] companies and insurance regulators consider to be prudent for the risk management of the industry.” The industry urges the SEC to clarify that MILNs are not synthetic asset-backed securities or conflicted transactions within the meaning of the Proposed Rule, and to make clear that MILNs will not be viewed as a circumvention of the prohibitions in paragraph (a)(1) of the Proposed Rule.