Bermuda-based global insurer Arch Capital Group has agreed to acquire the mortgage-insurance business of industry giant AIG for US$3.4 billion.
The two companies announced on Monday that Arch Capital will buy AIG’s 100% interest in United Guaranty Corporation for the said amount, which will be paid in a combination of cash and securities.
Arch Global said the transaction is expected to be closed in late fourth quarter of 2016 or early first quarter next year, subject to regulatory approvals.
The company, which has operations in the US, Europe, Hong Kong and Australia, said it will become the largest private mortgage insurer in the world with the acquisition of the AIG unit.
“We are extremely pleased to be able to expand our private mortgage insurance business through the acquisition of United Guaranty,” said Arch CEO and chairman Constatine Iordanou.
“Our mortgage insurance segment expands and complements our strengths in the specialty insurance and reinsurance businesses, which continue to be central to our global, diversified operations,” he added.
Iordanou said Arch and United Guaranty “have led the market in innovation through their risk based pricing models and focus on data analytics.”
“We believe that the companies’ complementary risk management cultures will further accelerate innovation and sound risk management and help us to maximize our best-in-class processes in the specialty insurance space,” Iordanou said.
For AIG, the deal streamlines the company into a “more focused insurer” while enhancing its capital position, according to president and CEO Peter Hancock.
“The transaction also maintains AIG’s presence in a profitable market through a stake in a market leader that shares our focus on risk-based pricing and analytics as the foundation for our industry’s future,” the insurer’s boss said.
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