Arch Capital Group Ltd. (ACGL) can move forward with its plans to expand its footprint in the private mortgage insurance industry with the announcement of the completion of the acquisition of United Guaranty Corporation (UCG) from American International Group Inc (AIG).
Based in Bermuda, ACGL reported approximately $8.24 billion in capital as of September 30, 2016. The acquisition allows Arch to further the diversification of its business profile and customer base and expand Arch’s existing private mortgage insurance operations by combining UCG’s position as a leader in the private mortgage insurance industry in the U.S. with the financial strength and history of innovation of ACGL, according to the announcement from ACGL.
The acquisition was originally announced in August and completed at the end of 2016. Arch agreed to pay AIG approximately $3.4 billion in a combination of cash and securities at closing.
“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,” said Constantine (Dinos) Iordanou, Chairman and CEO of ACGL. “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.”
According to ACGL, expanding its mortgage insurance sector in the U.S. complements the company’s critical specialty and insurance businesses. With the diversity across product lines furthered by the acquisition, ACGL will be able to deploy capital to the areas offering the best opportunity, according to the announcement.
ACGL’s U.S. primary mortgage insurance operations will be headquartered in North Carolina with significant operations in California and will be overseen by David Gansberg, President and CEO of Arch U.S. MI Holdings. Gansberg will report to Global Mortgage Group CEO Andrew Rippert, who will be responsible for ACGL’s global mortgage insurance and reinsurance operations, according to the announcement.
“We are gratified that Arch U.S. MI will be led by experienced professionals in Andrew Rippert and David Gansberg and welcome our new colleagues from UGC,” said Marc Grandisson, President and COO of ACGL. “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. 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.”