8-K/AAcquisitions & DispositionsRegulation FDExhibits & Filings

ARCH CAPITAL GROUP LTD. 8-K/A Report, Acquisition Completed (Jan 10, 2017)

Filed January 10, 2017For Securities:ACGLACGLNACGLO

Summary

Arch Capital Group Ltd. (ACGL) has officially completed its acquisition of United Guaranty Corporation (UG Corp) through its wholly-owned subsidiary, Arch U.S. MI Holdings, Inc. The transaction, valued at approximately $3.26 billion, was comprised of $2.16 billion in cash and $1.1 billion in ACGL's convertible preference shares. This strategic acquisition significantly expands ACGL's presence in the mortgage insurance market. The company also notes that a related sale of UG Asia is anticipated to close in 2017, pending further regulatory approvals.

Key Highlights

  • 1Completion of the acquisition of United Guaranty Corporation (UG Corp) from AIG on December 31, 2016.
  • 2Total purchase price for UG Corp was approximately $3.26 billion.
  • 3Transaction mix included $2.16 billion in cash and $1.1 billion in ACGL's convertible preferred shares.
  • 4AIG received a $250 million dividend from UG Corp prior to closing.
  • 5The acquisition is subject to ongoing conditions from Fannie Mae and Freddie Mac, including maintaining minimum capital levels for ACGL's GSE-approved subsidiaries.
  • 6Historical financial statements and pro forma combined financial statements for UG Corp are incorporated by reference.
  • 7The sale of UG Asia is expected to close in 2017, contingent on regulatory approval.

Frequently Asked Questions

The total purchase price for United Guaranty Corporation was approximately $3.26 billion. This amount was composed of approximately $2.16 billion in cash and $1.1 billion in Arch Capital Group Ltd.'s convertible preferred shares.

The key entities are Arch Capital Group Ltd. (ACGL) as the parent acquirer, Arch U.S. MI Holdings, Inc. as the wholly-owned subsidiary completing the acquisition, United Guaranty Corporation (UG Corp) as the acquired entity, and American International Group, Inc. (AIG) as the seller.

Yes, the approvals from Fannie Mae and Freddie Mac are subject to certain conditions, primarily related to maintaining minimum capital levels. Additionally, the sale of UG Asia, a related entity, is expected to close in 2017 pending further regulatory approval.

Detailed historical financial statements of UG Corp and preliminary unaudited pro forma combined financial statements of ACGL, giving effect to the acquisition, are incorporated by reference in this filing (Exhibits 99.1, 99.2, and 99.3) and other referenced filings.