A Bermuda-based insurance and reinsurance company has agreed tobuy CMG Mortgage Insurance Co. from joint owners CUNA Mutual Groupand Arizona-based PMI Mortgage Insurance Co. and operate it in adistribution and reinsurance agreement with CMG MI.

The deal with Arch Capital Group Ltd.'s U.S. subsidiary, ArchU.S. MI, was announced Friday by the Arizona Department ofInsurance, in its role as receiver for PMI, and by CUNA MutualGroup in Madison, Wis.

PMI filed for bankruptcy in November 2011 after it was seized by Arizona regulators and hadbegun paying only 50% of its claims. CMG and PMI each owned 50% of the company.During the receivership process, PMI was ordered to quit issuing new mortgage insurance commitments.

Arch U.S. MI will now acquire all equity interests in CMG MI andexpects to close the purchase within 12 months, subject toregulatory approvals and approval from the Arizona receivershipprocess.

The deal will “support the future growth of CMG MortgageInsurance Company” while allowing the company to continue servingexisting credit union customers and their members, the companiessaid Friday in a statement.

“Our goals have been consistent from the start of this process:Protect policyholders, deliver strong service to customers, and aimfor a long-term, viable solution for credit unions to have aprivate mortgage insurer that is sensitive to and understands theirunique mission,” CUNA Mutual President/CEO Jeff Post said in thestatement.

“We are confident that, following the purchase of CMG MI byArch, CMG MI will continue to provide the customer-focused productsand services that have made CMG MI the long-standing market leaderin meeting the mortgage insurance needs of credit unions,” Postsaid.

The distribution arrangement calls for CUNA Mutual sales staffto continue to serve credit union customers, supported by PMI'sinformation technology platform and systems. Arch agreed to pay$300 million for PMI, CMG MI and the supporting technology.

Arizona DOI Director Germaine Marks credited CUNA Mutual's workwith PMI and the receivers in executing the deal.

“The petition being filed for court approval of this agreementis a significant milestone and positive step in the PMIreceivership,” Marks said. “The acquisition of CMG MI is animportant component of the overall transaction with Arch and is acornerstone of their commitment to the private mortgage insurancemarket.”

Sean Dilweg, CUNA Mutual Group vice president and productexecutive for CMG MI, said, “Similar to our successful partnerships withLiberty Mutual and State National Companies, CUNA Mutual Group willuse its marketplace knowledge and distribution strengths, combinedwith Arch's financial strength and commitment to mortgageinsurance, to bring a stronger product solution to its credit unioncustomers. We look forward to a strong partnership with Arch.”

The statement said Arch Capital Group Ltd. Can now enter therapidly improving U.S. mortgage insurance marketplace and broadenits existing mortgage insurance and reinsurance capabilities.

“We are very gratified that PMI's exceptionally strongmanagement team and staff will be joining Arch. Together withour senior executives, they will form an industry-leading team withbroad capabilities to meet our clients' needs over the long term,”said Marc Grandisson, chairman/CEO of the $5.75 billion ArchWorldwide Reinsurance Group

“We are also extremely pleased to partner with CUNA Mutual Groupon an ongoing basis. Their access to the credit unionmarketplace and brand reputation should allow us to secure a strongflow of credit union business,” Grandisson said.