NEW YORK - Mortgage-insurer Radian Group is purchasing Municipal and Infrastructure Assurance Corp., the muni-bond insurer shell company that Macquarie Group has struggled to launch since late 2008.
Radian Group announced the $82 million acquisition plan Thursday. The Philadelphia-based company is the parent of municipal bond insurer Radian Asset Assurance Inc., which is no longer writing new insurance.
Radian, the second-largest mortgage insurer in the U.S, disclosed in a filing to the Securities and Exchange Commission that its bond insurer subsidiary signed an agreement on Feb. 1 to purchase MIAC for $82 million, or $7 million above the shell company’s capital base. The acquisition remains subject to regulatory approval.
Radian said it was exploring potential uses for MIAC, which include writing new insurance policies and reinsuring its existing book. The “ultimate goal” is to reduce its financial guaranty exposure, according to Radian.
The acquisition “provides Radian Asset with the flexibility to consider using MIAC to pursue strategic alternatives in the public finance market, including possibly partnering with third-party investors to write new public finance insurance and-or reinsuring all or a portion of Radian Asset’s existing public finance business,” Radian told the SEC.
MIAC has held $75 million of cash, cash equivalents and Treasury securities since receiving approval from the New York Insurance Department to operate in October 2008. It never succeeded in obtaining ratings or writing business, but received licenses to operate in 36 states and the District of Columbia, according to Radian.
Radian Asset listed around $1 billion in statutory surplus with an additional $1.4 billion in claims-paying resources in the fourth-quarter earnings statement it filed Thursday. Its public finance portfolio includes $15.7 billion net par outstanding, plus $21.9 billion of public finance reinsurance. It also insures $39.3 billion of structured finance products and $1.8 billion of structured reinsurance.
A spokesman from Macquarie, an Australian investment firm, declined to offer additional comment.
A source at Macquarie disclosed in mid-October that it was “pursuing various options for the MIAC business, including an exit or sale of the business.”
