The two leading mortgage insurers in the United States have agreed to merge to form a mortgage and credit risk insurance company with total assets of nearly $15 billion, it was announced today.

MGIC Investment Corp. said it would buy rival Radian Group Inc. for $4.9 billion in stock. The new company will be called MGIC Radian Financial Group Inc.

Fitch Ratings placed the ratings of the two MGIC units on a negative watch.

But the agency took no such action on the Radian units, maintaining their current outlooks.

Given the competitive pressures impacting the mortgage insurance industry, Fitch said the merger makes strategic sense. “If consummated, the new entity will solidify its position as the premier mortgage insurer in the U.S.,” Fitch said in a statement.

The MGIC-Radian entity will probably benefit from an enhanced distribution platform in the mortgage insurance sector as well as efficiencies gained from greater economies of scale, Fitch said.

The new entity is expected to conduct operations using the mortgage insurance platform of MGIC, the capital markets platform of Radian Guaranty, and the financial guaranty platforms of Radian Asset Assurance Ltd. and Radian Asset Assurance Inc.

Special Reports /

Top Two Mortgage Insurers Merge

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