By Mike Stone
Wed Dec 10, 2014 7:54pm EST
Dec 10 (Reuters) - The biggest U.S. private mortgage insurer, Radian Group Inc, is close to a sale of its financial guaranty business to Assured Guaranty Ltd for around $800 million, according to people familiar with the matter.
A deal could be announced in the next few days, the people said on Wednesday, asking not to be identified because the negotiations are confidential. Representatives for Radian and Assured Guaranty did not respond to requests for comment.
Radian's financial guaranty business provides insurance and reinsurance of municipal bonds, structured finance transactions and other credit-based risks.
Radian has stopped underwriting new business in the unit, and has been working with investment bank Goldman Sachs Group Inc to explore its sale since last summer.
Bermuda-based Assured Guaranty, a direct competitor in the financial guarantee business, has long been a favorite to win the business, the sources said.
Mortgage insurers such as Philadelphia-based Radian, MGIC Investment Corp and Genworth Financial Inc cover losses when homeowners default and foreclosures fail to recoup costs.
These companies have finally turned the corner after struggling for years with large claims on unpaid home loans after the housing bubble burst in 2008.
A recovery in the U.S. housing market, an increase in timely repayments and fewer defaults are helping mortgage insurers recover losses.
Assured Guaranty is a holding company with business units which insure municipal bonds, structured finance as well as provide reinsurance to other insurers. Assured Guaranty has a market capitalization of $4.2 billion. Radian Group has a market capitalization of $3.3 billion.
S.A. Ibrahim, Radian's CEO, spoke earlier on Wednesday at the Goldman Sachs financial services conference. He said the financial guaranty business received a lot of interest from prospective bidders, but he did not divulge the outcome of the auction.
In July Radian completed its purchase of loan review firm Clayton Holdings LLC for $305 million to boost its presence in the industry. (Reporting by Mike Stone in New York; Editing by Lisa Shumaker)
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