PMI Selling Aussie MI Unit

As part of its efforts to concentrate on its core U.S. mortgage insurance business, The PMI Group Inc., Walnut Creek, Calif., is selling its Australian mortgage insurance subsidiary to QBE Insurance Group Ltd., that country's largest general insurance and reinsurance group. The purchase price is approximately 100% of the net tangible asset value of PMI Australia under U.S. generally accepted accounting principles as of June 30. The aggregate purchase price payable upon closing is approximately $920 million. The purchase price will be payable 80% in cash at closing and 20% in the form of an interest-bearing promissory note issued by QBE. PMI will also fund premiums of approximately $46.5 million to assist in procuring an excess of loss reinsurance coverage for PMI Australia. Steve Smith, chairman and chief executive of PMI Group, said the transaction "represents an important step in our five-point plan for progress, specifically maintaining our financial strength and focusing on our core U.S. mortgage insurance business." PMI and QBE have also reached an agreement in principle for the sale of PMI Asia, based in Hong Kong.