Consolidation in the mortgage industry struck a new tone Tuesday, as monoline insurers MGIC Investment Corporation and Radian Group Inc. announced that the two companies have agreed to merge, in a $10 billion deal that will form one of the nation's largest mortgage and credit risk insurance conglomerates.
The new company, to be called MGIC Radian Financial Group Inc., will have nearly $15 billion in total assets, more than $290 billion of primary mortgage insurance in force and a financial guaranty portfolio approximating $104 billion of net par outstanding.
Radian's financial record has been better than MGIC's in recent months, with Radian reporting record profits of $582 million during 2006, an 11.3 increase from 2005's profit numbers. MGIC reported that net income fell in 2006 to $564.7 million, down 9.9 percent from $626.9 million one year ago.
Curt S. Culver, current chairman and CEO of MGIC, will serve as chairman and chief executive officer of the combined company. S.A. Ibrahim, current chief executive officer of Radian, will serve as the president and chief operating officer of the combined company. Ibrahim will then succeed Culver as chief executive officer of MGIC Radian Financial Group Inc. in 2009 and as chairman in 2010, the companies said.
The combined company's headquarters will be located in Milwaukee, Wisconsin, and have operations in New York, Philadelphia, and internationally..
"Radian shares MGIC's passion for delivering superior customer service, and the combined company will be in an excellent position to raise these service standards even higher," said Culver. "Our companies have similar goals and shared values regarding increasing shareholder value. We will take a deliberate, methodical approach to integrating our companies, making certain that customers continue to receive high quality service and that our shareholders realize the potential benefits of this merger."
"Our businesses complement each other in many ways, and, led by one of the most experienced management teams in the business, we will have an even greater ability to meet the credit enhancement needs of capital markets worldwide," said Ibrahim. "The appeal of this merger is compelling by any measure -- strategically, financially and operationally."
Both companies said the transaction has been unanimously approved by each company's board of directors and is expected to be completed in the fourth quarter of 2007, subject to regulatory and shareholder approvals.
For more information, visit http://www.radian.biz