MADISON, Wis. (2/11/13)--CUNA Mutual Group and PMI Mortgage Insurance announced Friday they have agreed to sell CMG Mortgage Insurance Co. (CMB MI) to a U.S. subsidiary of Arch Capital Ltd., a Bermuda-based insurance and reinsurance company.
Arch U.S. MI will acquire all outstanding equity interests in the private mortgage insurance company from PMI and Madison, Wis.-based CUNA Mutual Group.
"This is a win-win for credit unions and CUNA Mutual. This ensures credit unions will continue to have a high-quality, low-cost PMI option, with no interruption of service," said CUNA Mutual CEO Jeff Post Friday.
CUNA Mutual will enter into distribution and reinsurance agreements with CMG MI.
Arch U.S. MI will also purchase PMI's information technology platform and systems and, as a result, CMG MI is expected to provide uninterrupted delivery of technology support for its operations. With the proposed distribution arrangement, CUNA Mutual Group mortgage insurance sales staff will continue to serve credit union customers on behalf of CMG MI.
Post stressed that the regulatory approval process, which spans about nine months, must happen first before the deal can be closed.
He also noted that due to the shrinking number of private mortgage insurance providers in the marketplace, for many credit unions it would not be easy to find a new provider. "We wanted to be sure that gap didn't develop and our credit unions continue to be served with PMI," Post said. "Our goal is for this to be seamless."
PMI was placed into receivership in 2011. PMI owns a 50% stake in CMG MI, with the other 50% owned by CUNA Mutual Group. CMG MI is a stand-alone, incorporated entity with its own capital and dedicated staffing from its shareholders.