The deal which will see CUNA Mutual Group and the Arizona Department of Insurance sell their interest in CMG Mortgage Insurance is only part of a much larger deal which addresses how the assets of the now-bankrupt PMI are addressed, according to a CMG spokesman.
CMG – the credit union industry’s largest mortgage insurer – and PMI jointly owned CMG MI from its founding in 1993 until Arizona regulators took it into receivership in October 2011.
PMI then went into bankruptcy, though the branch of the firm which owned CMG MI remained in receivership and was not part of the overall company's bankruptcy.
CMG and the ADI announced an agreement last week to sell their interest in the company to a U.S. subsidiary of Bermuda-based Arch Capital Group Ltd.
Jim Buchheim, vice president for corporate communications at CUNA Mutual in Madison, Wis., said that while the firm was enthusiastic about its part of the overall deal, the other parts which also needed to be settled were effectively out of its hands.
“We don't control any of those,” he said Monday, and added that those additional elements were part of the reason the deal may take up to a year to clear the regulators and the courts.
Once the deal is approved, CMG employees will still provide the point of contact and sales to credit unions and the company will still have a 15% reinsurance stake in every mortgage insurance policy that the new CMG MI writes, Buchheim explained.
He said CMG decided to add its part of CMG MI to the deal in order to attract a strong financial partner like Arch Capital.