$140 million divestment deal includes transfer of substantial risk in force portfolio
Old Republic International, a Fortune 500 insurance company, has decided to divest its run-off mortgage insurance business to Arch Capital Group for $140 million.
The definitive agreement involves Arch MI acquiring all the capital stock of RMIC Companies, a wholly-owned subsidiary of Old Republic, including its subsidiaries.
The sale is valued at around $140 million, and Old Republic anticipates receiving an additional $25 million as a final dividend for the fourth quarter. The transaction's closure, subject to regulatory approval, is expected in the first half of 2024.
Old Republic President and CEO Craig Smiddy commented on the divestment, "We are pleased to announce this definitive exit from the mortgage insurance business. Since placing this business in run-off in 2011, we have been able to preserve significant value for shareholders."
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Smiddy also mentioned the favorable development of run-off reserves over the past five years, resulting in dividends exceeding $398 million, including the expected fourth-quarter amount.
Upon finalization, RMIC's $1 billion risk in force (RIF) portfolio will become part of Arch MI's US primary mortgage portfolio, which reported a RIF of $75.9 billion as of Sept. 30, 2023.
"Our ability to leverage the scale of our platform to gain significant expense and capital synergies makes this an attractive financial transaction for Arch," David Gansberg, CEO of Arch's Global Mortgage Group, said in a statement. "Our teams are experienced and proficient at acquiring and integrating mortgage insurance companies, which we expect will help us quickly maximize the value of this acquisition."
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