S&P Gives Positive Rating to CMG MI Deal
One of the three biggest national ratings agencies has moved its outlook on CUNA Mutual Group's Mortgage Insurance pending sale to a subsidiary of Arch Capital from negative to positive.
Standard & Poors also reaffirmed its BBB- rating on the firms.
CMG and PMI jointly owned CMG MI since its founding in 1993 until the Arizona Department of Insurance took it into receivership in October 2011. PMI then went into bankruptcy, though the branch of the firm that owned CMG MI remained in receivership and was not part of the overall company’s bankruptcy.
“The outlook is positive,” the ratings agency wrote in an Oct. 2 statement about the change. “This reflects our opinion that the acquisition by Arch U.S. MI, the U.S.-based subsidiary of Arch Capital Group Ltd. (Arch), will be completed by early 2014, the company will be successfully integrated with its new parent, and its new strategy will sufficiently season within the outlook horizon of two years,” S&P said in its statement.
“As a result, we may attribute group support from Arch to CMG MI per our group rating methodology. We expect CMG MI to generate breakeven or modest operating profits in 2013 and for capital to remain relatively stable. We also expect delinquencies to continue declining through 2013 and 2014, and the loss ratio to keep improving.”
A company spokesman said the two firms are gaining approvals for the sale from Fannie Mae, Freddie Mac and the regulators in each state where it plans to do business.