American International Group officially closed the sale of its mortgage-guaranty unit United Guaranty to Arch Capital Group on Dec. 31, 2016, the companies announced Tuesday morning.
The sale, which was previously announced in August, represented a change in plan for AIG.
In a release, AIG President and CEO Peter Hancock said the company is “pleased” to finalize the sale of United Guaranty.
“With this transaction, AIG has taken another step in simplifying our organization to become a leaner, more focused insurance company committed to our vision of being our clients’ most valued insurer,” Hancock said. “We believe UGC and the outstanding professionals who work there have gained a strong partner in Arch to continue to grow and facilitate home ownership for consumers and provide valuable and necessary protection to mortgage lenders.”
Initial reports of the deal placed the sale price of United Guaranty at approximately $3.4 billion, but the companies did not disclose a final sale price.
According to Arch Capital Group, the acquisition of United Guaranty will significantly boost its mortgage insurance business, as details provided by AIG state that United Guaranty is the “leading private mortgage insurance company” in the country.
Per AIG, United Guaranty has $186.4 billion of first-lien primary mortgage insurance in force as of Sept. 30, 2016.
“The acquisition of United Guaranty expands the scale of Arch’s existing mortgage insurance businesses by combining United Guaranty’s position as the market leader in the U.S. private mortgage insurance industry with Arch’s financial strength and history of innovation, further diversifying our business profile and customer base,” Arch Capital Group said in a release.
The company added that the expansion of its mortgage insurance business “complements our strengths in the specialty insurance and reinsurance businesses, which continue to be central to our global operations.”
Constantine Iordanou, the chairman and CEO of Arch Capital Group, said that the deal puts the company in a strong position.
“We are extremely pleased to complete this transaction, which will enable our company to continue to provide a strong and diversified source of private capital to the U.S. mortgage insurance and housing finance markets,” Iordanou said.” We believe the impressive operational, managerial and risk management expertise of Arch, together with the talented professionals joining us from UGC, will enable us to provide our clients with the best products and services available anywhere in the industry.”
Marc Grandisson, the president and chief operating officer of Arch Capital, said that the companies have been working together since the deal was announced to ensure a smooth transition.
“Over the past several months, teams at Arch and UGC have been working together to ensure a successful integration of our combined operations and a seamless transition for our clients,” Grandisson said. “Our combined mortgage group looks forward to further strengthening its leadership position in the development of innovative products and services to meet the ever evolving needs of our clients and the housing finance system.”