PMI Lead Investor in FGIC Deal

An investor group led by mortgage insurance giant The PMI Group has agreed to buy Financial Guaranty Insurance Co. from General Electric Capital for $2.16 billion.After the deal closes, PMI will own 42% of FGIC, a top player in the municipal bond market. The acquisition -- which has been in the works for several months -- will help further diversify PMI's operations. In the second quarter, PMI suffered a 14% decline in earnings due to rising claim payments on delinquent residential loans. The other co-investors in FGIC include: the Blackstone Group, the Cypress Group (each will own 23%), CIVC Partners (7%), and GE, which will maintain a 5% stake in the new company. FGIC, a triple-A rated company, will be run independently of PMI's other businesses. PMI expects net income per share from the investment to range between $0.20 and $0.30 in 2004, assuming the transaction closes by Dec. 31, 2003. PMI will be able to appoint five of FGIC's 14 directors, including the non-executive vice chairman slot, a position that will likely go to PMI chief executive Roger Haughton. PMI can be found on the Web at http://www.pmigroup.com.