PMI Mortgage Insurance has faced turbulent times these past few years after the mortgage insurer was pulled into receivership and then a bankruptcy proceeding by its primary regulator, the Arizona Department of Insurance.
Now it looks like reinsurer Arch Capital Group is jumping into the U.S. mortgage insurance space by signing and agreement to acquire CMG Mortgage Insurance Co., a unit owned by PMI Mortgage Insurance Co.
Arch’s U.S. mortgage insurance unit and related subsidiaries also agreed to buy PMI’s mortgage insurance platform and related assets.
It's expected Arch's U.S. mortgage insurance unit and affiliates will pay approximately $300 million for PMI's assets. However, that figure could fluxuate based on the results of CMG MI’s pre-closing portfolio.
Arch Capital calls the move one that will allow it "to enter the rapidly improving U.S. mortgage insurance marketplace."
The company plans to hire PMI’s experienced senior management team and staff.
The transaction is expected to close in 12 months, pending the approval of the Arizona receivership court and regulators, including the government-sponsored enterprises.
"We are extremely pleased to be able to provide a strong source of private capital to a U.S. mortgage insurance market in great need of capacity, subject to obtaining all required approvals," said Constantine Iordanou, chairman and CEO of ACGL.
"We believe that this transaction, which is consistent with our strategy of moving into new specialty lines of business where we can hire experienced teams that fit our corporate culture, will allow us to capitalize on significant opportunities in the U.S. mortgage insurance marketplace."