There is one question which could mean that the price could be higher in the future. What do you guys think ??
During the quarter after an extensive due diligence process, we enter into a definitive agreements with CUNA Mutual and PMI for the purchase of CMG MI and the operating assets and infrastructure of PMI.
The transaction is expected to close in the latter part of this year as it is subject to obtaining approvals from insurance regulators, the Arizona receivership court, and the GSEs, as well as customary closing conditions. This transaction will provide us with an approved operating platform and nationwide licenses that would allow us to participate in the mortgage insurance space on a direct basis.
This new operation will complement our existing reinsurance capabilities and our European-based mortgage capabilities. We expect to continue to support our value customers in the mortgage insurance space as a stable long-term reinsurer. And of course, we would enter the mortgage insurance business on a direct basis in the United States following the closing of the transaction. We’re looking forward to partnering with CUNA Mutual, who will continue to service their credit union customers on our behalf. We’re also pleased with the opportunity to hire the existing employee workforce of PMI. We intend to create a stable employment environment for them for many years to come. We believe that the combination of Arch executive management and PMI’s senior management together with a strong capital position and disciplined approach to underwriting will create an enduring enterprise in the mortgage insurance space.
Although, the transaction is not expected to be accretive to earnings for the first two years subsequent to closing, we believe that the mortgage insurance business will be profitable over the long-term, and we expect that this transaction will meet or exceed our target return levels, and we’ll create long-term value to our shareholders.
---------------
Amit Kumar - Macquarie Capital (USA), Inc. Just a couple of follow-ups on the prior discussion; on the USMI business, if you factor and own out, what would the deal equate on a price to book basis?
Constantine P. Iordanou - Chairman, President and Chief Executive Officer Well, we want to pay a true book value, so the earn-out will give a fair price, based on how the book evolves over the next two, three years. And that’s what we negotiate it.
Mark Donald Lyons - Chief Financial Officer and Executive Vice President Yeah. And that has to – the pudding on that as the in force business is tracked over that period of time. It will indicate an additional payment or no…?
Constantine P. Iordanou - Chairman, President and Chief Executive Officer It could be a lot more, it could be a lot less, but we’ll let the book evolve. And if it’s more way, we don’t mind paying it. At the end of the day we’re getting the value out of it.
Market Data 
Markets 
AI
