Maryland-based insurance company Assured Guaranty (AGC) has signed an agreement to acquire Radian Asset Assurance for around $810m.
Radian Asset carries out financial guaranty insurance business of Radian Group. It provides private mortgage insurance and related risk mitigation products and services to mortgage lenders in the US.
AGC will merge with Radian Asset, after the completion of the deal.
Assured Guaranty president and CEO Dominic Frederico said: "The acquisition will strengthen Assured Guaranty’s franchise by adding a solid book of business that is consistent with our strategic objectives and will also increase AGC’s capital base and policyholders’ surplus.
"We expect the transaction to be accretive to Assured Guaranty’s earnings per share, operating shareholders’ equity and adjusted book value. Additionally, the acquisition should enhance the value and market liquidity of the bonds insured by Radian Asset."
Radian Asset had an insured portfolio of about $19.4bn of net par, as of 30 September 2014. It would bring AGC’s total net par outstanding to $68.3bn.
Radian Asset has around $1.3bn of statutory capital at present, while the transaction is expected to increase AGC’s statutory capital by $425m to $475m.
Subject to regulatory approval, both the acquisition and merger are expected to be completed in the first half of 2015.
AGC has been licensed to carry out financial guaranty insurance business in all 50 states of the US, the District of Columbia and Puerto Rico.
Image: Radian Group through its subsidiary Radian Asset offers private mortgage insurance and related risk mitigation products and services to mortgage lenders in the US. Photo: courtesy of Stuart Miles/ FreeDigitalPhotos.net.