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Arch Capital Group Ltd. To Enter U.S. Mortgage Insurance Market Through Acquisition Of CMG Mortgage Insurance Company And The Operating Platform Of PMI Mortgage Insurance Co.

Arch Capital Group Ltd. [Nasdaq: ACGL] today announced that its U.S.-based subsidiaries (Arch U.S. MI) have entered into a definitive agreement to acquire CMG Mortgage Insurance Company (CMG MI) from its current owners, PMI Mortgage Insurance Co. (PMI), which has been in rehabilitation under the receivership of the Arizona Department of Insurance since 2011, and CMFG Life Insurance Company (CUNA Mutual). Arch U.S. MI also agreed to acquire PMI’s mortgage insurance operating platform and related assets from PMI. This transaction will allow ACGL to enter the rapidly improving U.S. mortgage insurance marketplace and will broaden its existing mortgage insurance and reinsurance capabilities. Arch U.S. MI expects to hire the current experienced senior management team and staff of PMI. ACGL’s global mortgage insurance and reinsurance operations will report to Marc Grandisson, Chairman and CEO of Arch Worldwide Reinsurance Group.

The transaction will provide Arch U.S. MI with nationwide mortgage insurance licenses and a comprehensive mortgage insurance operating platform. Additionally, Arch U.S. MI expects to enter into distribution and reinsurance agreements with CUNA Mutual, which will continue to serve credit union customers on behalf of Arch U.S. MI. With these proposed arrangements, Arch U.S. MI will gain significant access to the credit union marketplace immediately upon closing.

It is anticipated that the transaction will close within 12 months, subject to approvals of the Arizona receivership court, applicable regulators and government-sponsored enterprises (GSEs), including the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), and the satisfaction of customary closing conditions. Additional transaction highlights are included below.

Constantine (Dinos) Iordanou, Chairman and CEO of ACGL, commented, “We are extremely pleased to be able to provide a strong source of private capital to a U.S. mortgage insurance market in great need of capacity, subject to obtaining all required approvals. We believe that this transaction, which is consistent with our strategy of moving into new specialty lines of business where we can hire experienced teams that fit our corporate culture, will allow us to capitalize on significant opportunities in the U.S. mortgage insurance marketplace. 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.”

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