Fannie Mae and Freddie Mac, in their capacity as the largest creditors of PMI Mortgage Insurance Co., did not make an objection in the Arizona receivership court to
According to the filing, which was obtained through DisclosureNet.com, the three parties involved in the transaction—Arch, PMI and PMI’s partner in CMG, CUNA Mutual—did agree to modify some of the terms of the transaction. PMI has been operating under a receivership order from the Arizona Department of Insurance since 2011.
No other objections to the deal have been filed with the court and a hearing is scheduled for June 19.
Besides court approval, Arch U.S. MI is working on the regulatory, secondary market and other approvals needed to complete the transaction. The transaction is expected to take place in the latter part of this year.
Among the revisions to the deal, Arch will now pay 80% of CMG’s capital stock book value at the time of closing; originally it had been 60%. Plus the closing date payment will be based on the greater of $185 million and CMG’s actual closing date book value.
The overall maximum purchase price payable to PMI and CUNA Mutual (because of earn-out provisions) has been increased to 150% from 110% of closing date book value.
Furthermore, the revised terms call on the parties to enter into a new quota share reinsurance agreement. Under Arch’s ownership, CMG will cede a 20% quota share of all primary flow insurance written for both credit unions and non-credit unions to PMI Insurance Co. on the first $25 billion in new policies written after the deal closes.
The quota share agreement automatically terminates on the seven-year anniversary of the deal closing.
The amount of business to be ceded to an affiliate of CUNA Mutual on a quota share reinsurance arrangement was reduced, the 8-K filing added.
