AIG announced today it has launched a new business unit called Connective Mortgage Advisory Company (Connective). The new company, which recently facilitated AIG’s first correspondent mortgage purchase, draws upon AIG’s investment expertise and the experience of its mortgage insurance subsidiary, United Guaranty Corporation (United Guaranty), to identify and buy residential whole loan mortgages as investments. Connective is focused on identifying residential first mortgage loans to be purchased as long-term investments for AIG. For loans purchased as investments, AIG will manage the loan-servicing component.
William Dooley, AIG Executive Vice President, Investments and Financial Services, said, “Direct investment in residential mortgage loans offers attractive investment returns and enables a proactive approach to managing mortgage risk.”
Over the past several years, United Guaranty has been using a multivariate risk-assessment model to determine the quality of individual loans in the pricing of its mortgage insurance. United Guaranty is contributing deep knowledge of the residential mortgage landscape to the Connective project. “With the support of AIG, United Guaranty became the mortgage insurance market-share leader with risk-based pricing products,” said Donna DeMaio, United Guaranty’s Chief Executive Officer. “United Guaranty’s understanding of residential mortgage markets combined with AIG’s investment expertise creates unique new investment opportunities for AIG.”
Connective will establish correspondent relationships with lenders, underwrite loans, and provide support throughout the loan purchase process.
All purchases will be subject to rigorous underwriting and risk management standards. Closed loans will be purchased on a correspondent basis by the AIG companies. There are no plans for Connective to conduct any direct lending or securitization.
American International Group, Inc. (AIG) is a leading international insurance organization serving customers in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional, and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services in the United States. AIG common stock is listed on the New York Stock Exchange and the Tokyo Stock Exchange.