Ellington Financial’s investment portfolio spans a wide range of financial assets, including residential and commercial mortgage loans, mortgage-backed securities, reverse mortgages, and other related investments. The company also holds consumer loans, asset-backed securities, collateralized loan obligations, and equity stakes in loan origination firms.
The securitization comes as yield-seeking insurance companies increasingly shift their focus from traditional mortgage-backed securities to buying whole loans outright.
This strategy offers better yields but comes with added complexities that require a certain level of expertise and capacity, which only larger firms like Apollo Global Management Inc. and KKR & Co. can typically manage.
Ellington Management Group reported that insurers boosted their residential mortgage loan holdings by about $20 billion last year, an increase of 45%. These loans typically don’t meet the standards required for securitization by government-sponsored entities like Fannie Mae or Freddie Mac, often making them riskier.
Read more: Insurers buy mortgages outright in new twist