HAMILTON, Bermuda--(BUSINESS WIRE)--
Arch Capital Group Ltd. (Nasdaq:ACGL) (Arch) today announced that it has
entered into a definitive agreement to acquire United Guaranty
Corporation (UGC) and AIG United Guaranty Insurance (Asia) Limited from
their current owner, American International Group, Inc. (AIG). The
combination of Arch’s existing mortgage insurance business with UGC’s
established business will create the largest private mortgage insurer in
the world, based on insurance in-force, with a global footprint. At
closing, Arch will pay to AIG aggregate consideration of approximately
$3.4 billion, payable in a combination of cash and securities. Upon
closing, Arch or its subsidiaries will assume AIG’s quota share of UGC’s
mortgage insurance on a prospective basis. Subject to regulatory
approvals, the purchase price could be reduced by a special dividend of
up to $250 million from UGC to AIG prior to closing. It is anticipated
that the transaction will close late Fourth Quarter 2016 or early First
Quarter 2017, subject to approvals of the applicable regulators and
government-sponsored enterprises (GSEs), including the North Carolina
Department of Insurance, the Federal National Mortgage Association
(Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie
Mac), and the satisfaction of customary closing conditions.
Constantine (Dinos) Iordanou, Chairman and CEO of Arch, commented, “We
are extremely pleased to be able to expand our private mortgage
insurance business through the acquisition of United Guaranty. 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.”
“We are excited about the combination of Arch and United Guaranty
because these companies 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.”
Arch expects to retain a significant presence in North Carolina while
maintaining its existing mortgage insurance operations based in
California, and to combine the companies’ global operations in Europe,
Hong Kong and Australia.
“We are excited about this deal and what it means to AIG and the
talented professionals at UGC. It further streamlines AIG into a more
focused insurer and enhances our capital position, in keeping with
commitments AIG made to the market in early 2015 and restated earlier
this year,” said Peter Hancock, President and Chief Executive Officer of
AIG. “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. We are leaving UGC in the good hands of a forward looking
management team.”
“We expect to quickly integrate Arch’s existing California-based
mortgage insurance operations and the North Carolina-based operations of
United Guaranty while maintaining a strong presence in both locations,
thereby further developing our superior customer service with nationwide
and worldwide coverage,” said Mr. Iordanou. “We believe that the
expansion of our Mortgage Segment creates a better balanced company that
continues our history of creating long term value for shareholders by
producing strong underwriting returns.”
Credit Suisse is acting as sole financial advisor and Cahill Gordon &
Reindel LLP and Clyde & Co are acting as legal counsel to Arch.
Conference Call
Arch will hold a conference call for investors and analysts at 8:30 a.m.
Eastern Time on August 16, 2016. A live webcast of this call will be
available via the Investors section of Arch’s website at http://www.archcapgroup.com.
A telephone replay of the conference call also will be available
beginning on August 16, 2016 at 11:30 a.m. Eastern Time until August 23,
2016 at midnight Eastern Time. To access the replay, domestic callers
should dial 1-404-537-3406 (passcode 66809275), and international
callers should dial 1-855-859-2056 (passcode 66809275).
About Arch Capital Group Ltd.
Arch Capital Group Ltd., a Bermuda-based company with approximately
$7.60 billion in capital at June 30, 2016, provides insurance and
reinsurance on a worldwide basis through its wholly owned subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward−looking statements. This release or any other
written or oral statements made by or on behalf of Arch Capital Group
Ltd. and its subsidiaries may include forward−looking statements, which
reflect our current views with respect to future events and financial
performance. All statements other than statements of historical fact
included in or incorporated by reference in this release are
forward−looking statements.
Forward−looking statements can generally be identified by the use of
forward−looking terminology such as "may," "will," "expect," "intend,"
"estimate," "anticipate," "believe" or "continue" or their negative or
variations or similar terminology. Forward−looking statements involve
our current assessment of risks and uncertainties. Actual events and
results may differ materially from those expressed or implied in these
statements. A non-exclusive list of the important factors that could
cause actual results to differ materially from those in such
forward-looking statements includes the following: the risk Arch may be
unable to obtain governmental and regulatory approvals required for the
proposed transaction, or required governmental and regulatory approvals
may delay the proposed transaction, the occurrence of any event, change
or other circumstances that could give rise to the termination of the
acquisition agreement; or could otherwise cause the failure of the
acquisition to close, the risk that a condition to the closing of the
proposed transaction may not be satisfied, the failure to obtain any
financing necessary to complete the acquisition, the outcome of any
legal proceedings, regulatory proceedings or enforcement matters that
may be instituted against Arch and others relating to the acquisition
agreement, the timing to consummate the proposed transaction, the
diversion of management time and attention on the transaction; adversegeneral economic and market conditions;increased competition;pricing and policy term trends;fluctuations in the actions
of rating agencies and ourability to maintain and improve our
ratings; investment performance;the loss of key personnel;the
adequacy of our loss reserves,severity and/or frequency of
losses, greater than expected loss ratios and adverse development on
claim and/or claim expense liabilities;greater frequency or
severity of unpredictable natural and man-made catastrophic events; the
impact of acts of terrorism and acts of war; changes in regulations
and/or tax laws in the United States or elsewhere;our ability to
successfully integrate, establish and maintain operating procedures as
well as integrate the businesses we have acquired or may acquire into
the existing operations;changes in accounting principles or
policies;material differences between actual and expected
assessments for guaranty funds and mandatory pooling arrangements;availability
and cost to us of reinsurance to manage our gross and net exposures;the
failure of others to meet their obligations to us; andother
factors identified in our filings with the U.S. Securities and Exchange
Commission.
The foregoing review of important factors should not be construed as
exhaustive and should be read in conjunction with other cautionary
statements that are included herein or elsewhere. All subsequent written
and oral forward−looking statements attributable to us or persons acting
on our behalf are expressly qualified in their entirety by these
cautionary statements. We undertake no obligation to publicly update or
revise any forward−looking statement, whether as a result of new
information, future events or otherwise.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160815006164/en/
Arch Capital Group Ltd.
Mark D. Lyons, (441) 278-9250
Source: Arch Capital Group Ltd.