QBE buys PMI's Australian operations

The PMI Group, Inc. agreed to sell its Australian mortgage insurance subsidiary and related Australian holding company to QBE Insurance Group, Australia's biggest international general insurance and reinsurance group.

The business was sold for around $920m.

In connection with the transaction, PMI will also fund premiums of approximately $46.5m to assist in procuring an excess of loss reinsurance cover for PMI Australia.

The agreement provides for reinsurance profit-sharing for one-half of the reinsurance premiums at the end of the three-year policy life, subject to certain conditions.

"This transaction is a strategic move that will benefit both companies," said Steve Smith, chairman and chief executive of PMI.

‘[It] also represents an important step in our five-point plan for progress, specifically maintaining our financial strength and focusing on our core US mortgage insurance business.’

PMI and QBE have also reached an agreement in principle for the sale of PMI Asia, based in Hong Kong. The net assets of PMI Asia as of June 30, 2008 were approximately $55m. Details of this transaction were not announced.