Radian Group To Sell Financial Guaranty Insurance Unit To Assured Guaranty

(RTTNews) - Private mortgage insurance provider Radian Group, Inc. (RDN) announced Tuesday that its mortgage insurance subsidiary has entered into a stock purchase agreement to sell its financial guaranty insurance subsidiary to Assured Guaranty Ltd.'s (AGO) subsidiary for about $810 million in cash, which is payable on the closing date.

Radian Guaranty Inc. has agreed to sell Radian Asset Assurance Inc. to Assured Guaranty Corp.

Following the announcement. Radian shares are surging nearly eight percent in pre-market trading.

"While Radian Asset has been an important part of our history and our success, we are committed to streamlining our business and aligning our strategy toward the mortgage and real estate markets," Radian CEO S.A. Ibrahim said in a statement.

Radian noted that the sale will simplify focus on its core strengths that is expected to pave the way for future top-line growth.

Radian said the deal will see the complete transfer of Radian Asset's $19.4 billion in net par outstanding to Assured Guaranty Corp. as of September 30, 2014.

The company said it expects to complete the sale of Radian Asset in the first half of 2015, subject to satisfaction of customary closing conditions including regulatory approvals.

Goldman Sachs & Co. is acting as financial advisor on the sale of Radian Asset.

"This agreement marks an important milestone as we prepare for finalization of the proposed PMIERs in 2015. While we expect to fully comply, the sale of Radian Asset will help to accelerate our ability to do so," Ibrahim added.

Radian has been pursuing a plan to monetize Radian Asset, including a sale of the company, in order to increase Radian Guaranty's Available Assets and better position Radian Guaranty to comply with the financial requirements of the new Private Mortgage Insurer Eligibility Requirements or PMIERs announced by the Federal Housing Finance Agency.

The company said the sale of Radian Asset is expected to result in a GAAP and statutory loss in the fourth quarter of 2014. Following the closure of the deal, Radian Guaranty's Available Assets is expected to increase by about $790 million.

RDN closed Monday's regular trading session at $16.28, down $0.08 on a volume of 1.81 million shares, and AGO closed at $25.46, down $0.18 on a volume of 0.97 million shares.