Assured Guaranty Corp. (AGC), a subsidiary of Assured Guaranty Ltd., is acquiring Radian Asset Assurance Inc., the financial guaranty business of Radian Group Inc., for $810 million.
The merger, which is still subject to regulatory approval, is expected to be complete in the first half of 2015. AGC will phase out the Radian Asset brand.
‘We are pleased to enter into this mutually beneficial transaction with Radian,’ says Dominic Frederico, president and CEO of Assured Guaranty, in a statement. ‘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,’ Frederico adds. ‘Additionally, the acquisition should enhance the value and market liquidity of the bonds insured by Radian Asset.’
As of Sept. 30, Radian Asset had an insured portfolio of $19.4 billion of net par, which will bring AGC's total net par outstanding to $68.3 billion.
Radian Asset has approximately $1.3 billion of statutory capital and Assured Guaranty currently estimates the transaction will increase AGC's statutory capital by $425 million to $475 million.
In a separate statement, S.A. Ibrahim, CEO of Radian, says, ‘While Radian Asset has been an important part of our history and our success, we are committed to streamlining our business and aligning our strategy toward the mortgage and real estate markets. This agreement marks an important milestone as we prepare for finalization of the proposed PMIERs in 2015. While we expect to fully comply, the sale of Radian Asset will help to accelerate our ability to do so.’
‘We look forward to simplifying Radian's focus on our core strengths, which we believe will pave the way for future top-line growth,’ Ibrahim adds.