Arch Capital to enter U.S. mortgage insurance market
(Reuters) - Reinsurer Arch Capital Group Ltd (ACGL.O) said it would acquire CMG Mortgage Insurance Co and the operating platform of PMI Mortgage Insurance Co for about $300 million to enter a resurgent U.S. mortgage insurance market.
The mortgage insurance industry, which has booked huge losses after the housing bubble burst and foreclosures soared, is set to rebound, following a recovery in the U.S. housing market and a shakeout in the industry.
Reinsurers are sitting on a pile of cash and the business of insuring mortgages is emerging as an attractive option to a number of them, given its high profits.
"The new operation will complement our existing European Union-based mortgage insurance and global reinsurance operations, providing us with a platform to participate in mortgage insurance and reinsurance business on a worldwide basis," Arch Capital Chief Executive Constantine Iordanou said in a statement.
CMG Mortgage Insurance Co is jointly owned by PMI Mortgage Insurance Co, which was seized by Arizona insurance regulators in October 2011, and CMFG Life Insurance Co.
Arch Capital said the deal will give its U.S. subsidiary, Arch U.S. MI, access to nationwide mortgage insurance licenses and a comprehensive mortgage insurance operating platform.
The transaction is expected to close in 12 months, subject to regulatory approvals, Arch Capital said.
Shares of Bermuda-based Arch Capital closed at $47.51 on Thursday on the Nasdaq.
(Reporting by Avik Das and Anil D'Silva in Bangalore; Editing by Saumyadeb Chakrabarty)