Arch Mortgage Insurance Company entered into a definitive agreement to acquire United Guaranty Corporation and AIG United Guaranty Insurance (Asia) Limited from American International Group, Inc. (NYSE:AIG) for $3.4 billion in cash and preferred stock on August 15, 2016. The total consideration is $3.4 billion, consisting of $2.2 billion of cash, $250 million of newly issued Arch Capital's perpetual preferred stock, and $975 million of newly issued Arch convertible non-voting common-equivalent preferred stock. The convertible non-voting common-equivalent preference shares are subject to a formula and a collar and an estimated fair value, subject to adjustment and subject to certain restrictions on transfer within the first 18 months. Each Series D preferred share converts to 10 shares of ARCH CAPITAL fully paid non-assessable common stock. In lieu of receiving the perpetual preferred stock, American International Group may elect to receive up to $250 million in pre-closing dividends from United Guaranty Corporation, subject to regulatory approval, or Arch Capital Group may provide additional cash consideration. In addition, American International Group will retain all mortgage insurance business ceded under an existing 50% quota share agreement between United Guaranty Corporation and American International Group subsidiaries for business originated from 2014 through 2016. The transaction will be financed from proceeds of $450 million from the offering of depository shares by Arch Capital Group. In case of termination of the agreement by Arch Mortgage Insurance Company, Arch has agreed to pay American International Group a fee of $150 million. Post acquisition Tak Ming Chung will continue as chief executive officer and country manager for Arch Mortgage Insurance Asia. The deal is subject to approvals of the applicable regulators and government-sponsored enterprises (GSEs), including the North Carolina Department of Insurance, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), Federal Reserve, ancillary agreements, shares of acquirer common stock underlying the Convertible Preferred Stock Consideration shall have been listed on the NASDAQ and the satisfaction of customary closing conditions including antitrust clearance. As on September 26, 2016, the transaction has received early termination notice from Federal Trade Commission. The transaction is expected to close in late fourth quarter 2016 or early first quarter 2017. As on December 31, 2016, Arch Mortgage Insurance Company completed the acquisition of United Guaranty Corporation from American International Group, Inc. (NYSE:AIG). The aggregate purchase price paid by Arch Capital for United Guaranty Corporation was approximately $3.26 billion, consisting of cash consideration of approximately $2.16 billion and 1.28 million shares of Arch Capital’s convertible Class D non-voting common-equivalent preference shares with a market value as of December 30, 2016 of approximately $1.1 billion. Additionally, American International received a dividend from United Guaranty Corporation in an amount equal to $250 million prior to the closing date as per terms of the agreement. The approvals received by ARCH CAPITAL from Fannie Mae and Freddie Mac (GSEs), with respect to the acquisition are subject to a number of conditions, including the maintenance of a minimum capital level for ARCH CAPITAL’s subsidiaries that are GSE approved entities based on a combination of time and ARCH CAPITAL financial leverage. The related sale of AIG United Guaranty Insurance (Asia) Limited is expected to close in 2017, pending additional regulatory approval. J.P. Morgan Securities LLC and Eric Bischof of Morgan Stanley & Co. LLC acted as financial advisors and Robert G. DeLaMater, Jared M. Fishman, Kathryn L. Freund, Adam M. Josephs, Philip A. Mercadante, Michael David Williams, S. Eric Wang, Alexander P. Apostolopoulos, Jameson S. Lloyd, Michelle H. Lu, Heather L. Coleman, Stephen T. Wilson, John E. Estes, Joyce Y. Kwok, Michael M. Wiseman, C. Andrew Gerlach, Jason J. Cabral, Robert M. Fettman, Stephen H. Lam, Spencer F. Simon, Samuel Hollander, Juan Rodriguez, Eric H. Queen, Joseph J. Matelis and Michael R. Engel of Sullivan & Cromwell LLP and Conyers Dill & Pearman Limited acted as the legal advisors for American International Group, Inc. Damien R. Zoubek and Craig F. Arcella of Cravath represented Alejandro Przygoda and Carlos Marque of Credit Suisse Securities (USA) LLC as financial advisors to Arch Capital Group Ltd. John Schuster of Cahill Gordon & Reindel LLP and Clyde & Co and Conyers Dill & Pearman Limited acted as legal advisors for Arch Mortgage Insurance Company. Andrew L. Bab, Nicholas F. Potter, Michael G. Stern and AnHa D. Vo. of Debevoise & Plimpton LLP acted as legal advisor to J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC.
© S&P Capital IQ - 2016| Transcript : American International Group, Inc. Presents at 2024 KBW Insurance Conference, Sep-04-2024 04:20 PM | Sep. 04 | |
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| Goldman Sachs Adjusts Price Target on American International Group to $82 From $85, Maintains Buy Rating | Aug. 09 | MT |
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American International Group, Inc. is the world's leading insurer. Revenues break down by activity as follows: - insurance (98.5%): sales of non-life insurance products (56.7% of revenues), and life and retirement insurance products (43.3%). The group is the American leader in commercial and industrial insurance; - other (1.5%): mainly financial services and asset management. North America accounts for 71.7% of revenues.
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