A newly launched mortgage insurance company has acquired an operating platform.
In an announcement today, Triad Guaranty Inc. said that it has reached an agreement to sell its information technology and operating platform.
The Winton-Salem, N.C.-based company halted new business at subsidiary Triad Guaranty Insurance Corp. in June 2008 and warned in April that its auditors, Ernst & Young LLP, issued a statement about its ability to continue as a going concern.
Today’s statement said Essent Guaranty Inc. will acquire Triad’s proprietary information technology and operating platform for up to $30 million in cash and Essent’s assumption of certain software contractual obligations. Half of the cash will be based on the volume of policies written by Essent during upcoming years.
The acquisition is expected to close during the current quarter.
The deal calls for Triad to retain liability for all existing policies as its in-force book of business runs off. Essent will provide ongoing information systems maintenance and services, customer service and policy administration support to Triad after the closing, while Triad will continue to directly manage loss mitigation and claim activity and retain its corporate, loss-management and quality-assurance staff.
Radnor, Pa.-based Essent, which will maintain the operations in Winston-Salem, announced in May that it had been launched by Bermuda-based Essent Group Ltd. and was in the process of obtaining the approvals necessary to offer private mortgage insurance on residential U.S. properties. The company raised $500 million “to establish the first private mortgage insurance company in the United States since the start of the current financial crisis.”
Among Essent’s investors are Pine Brook Road Partners, Goldman Sachs, J.P. Morgan, PartnerRe, and Renaissance Re.
“Along with new, private capital, Essent will offer lenders, mortgage investors and other market participants a risk-management approach tailored specifically to meet the challenges of today’s mortgage banking industry,” Mark A. Casale, president and chief executive officer of Essent, said in May’s news release.
In today’s statement, Casale noted the acquisition will enable Essent to provide mortgage insurance in the near future. He said the that the insurer has received approvals from 20 states so far and is “making excellent progress in the National Association of Insurance Commissioners’ expedited licensing pilot program.”
