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Exhibit 99.1
Contacts:
Amerin: Jonathan T. McGrain, 312.540.6908
CMAC: Emily Riley, 800.523.1988, ext. 3127
Amerin and CMAC to Merge
New Company Will Be #2 Mortgage Insurer with $78.0 Billion in
Insurance In Force and $1.3 Billion in Assets
Chicago, Ill., and Philadelphia, Pa., November 23, 1998 - Amerin
Corporation (NASDAQ: AMRN) and CMAC Investment Corporation (NYSE: CMT) today
announced a merger agreement to create the country's second largest mortgage
insurance company. The combined company will be headquartered in Philadelphia.
The transaction, which has been approved by the boards of directors of
both companies, calls for Amerin stockholders to receive .5333 shares of CMAC
common stock in a tax-free exchange for each share of Amerin common stock.
Consummation of the merger is subject to a number of conditions, including
approval by the stockholders of both companies, and by certain regulatory
agencies and state insurance commissions. The transaction is expected to close
in the first quarter of 1999 and to be accounted for on a pooling of interests
basis.
The new company will serve more than 3,500 lending customers, including 21
of the top 30 mortgage originators. However, with a few exceptions, there is
little client overlap. Amerin has successfully targeted a relatively small group
of top lenders, many looking to centralize their mortgage insurance decisions
and capitalize on cutting-edge structured finance solutions, such as captive
reinsurance. CMAC has a much broader group of lending partners and offers an
array of alternative products and sophisticated risk management services.
Following the merger, Frank P. Filipps, 51, president and chief executive
officer of CMAC, will be chairman and chief executive officer. Roy J. Kasmar,
42, president and chief operating officer of Amerin, will hold the same
positions with the new company. Gerald L. Friedman, 61, chairman and chief
executive officer of Amerin, will become chairman emeritus, and Herbert Wender,
61, chairman of CMAC, will become chairman of the executive committee of the
board of directors. The new board will initially be made up of members from
Amerin's and CMAC's boards consistent with the exchange ratio of the merger.
Commenting on the merger, Mr. Filipps said, "The merger is about
creativity, breaking the mold, and a commitment to delivering the
best-of-the-best. Our stockholders will be owners
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of a much larger, stronger, and more efficient company, which we believe will
offer greater prospects for growth and earnings. The new company will be a
powerful combination of the strong points of our two companies: innovation and
responsiveness."
Mr. Kasmar remarked, "Over the past few years, Amerin and CMAC have
redefined mortgage insurance, pioneering new risk and revenue sharing
arrangements to create profits for lenders and new products that make mortgage
insurance a better deal for borrowers. Our new company will lead the way in
delivering the types of breakthrough products and services that lenders need,
through its extensive branch network and field organization."
The merged company expects operating earnings accretion after the first
full quarter of combined operations. This is anticipated to result from
pro-forma annualized savings in operating expenses of $15 million in 1999.
Based on the unaudited results for Amerin and CMAC at September 30, 1998,
and for the nine-month period then ended, on a pro-forma basis, the combined
company would have produced a market share of 19.1% and held the number two spot
in the industry. The combined company would have had assets of $1.3 billion,
market capitalization of $1.6 billion (as of November 20, 1998), insurance in
force of $78.0 billion, new insurance written of $25.9 billion and net income of
$105.2 million. Estimated transaction costs of $20 million and write-downs of
$15 million are expected to be incurred immediately following the closing.
Amerin and CMAC plan to continue operating under their current names until
the merger closes, at which time a new name for the merged company will be
introduced.
Donaldson, Lufkin & Jenrette and Morgan Stanley & Co. Incorporated acted
as Amerin's financial advisors in this transaction and Schroder & Co. Inc. acted
as financial advisor for CMAC.
Amerin Corporation is the parent company of Amerin Guaranty Corporation.
CMAC Investment Corporation is the parent company of CMAC (Commonwealth Mortgage
Assurance Company). The companies provide private mortgage insurance and risk
management services to mortgage lending institutions nationwide. Private
mortgage insurance protects lenders from default-related losses on residential
first mortgage loans made to home buyers who make down payments of less than 20
percent of the home's value, and facilitates the sale of mortgage loans in the
secondary market.
The following is a "Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995:
The statements contained in this release that are not historical facts are
forward-looking statements. Actual results may differ materially from those
projected in the forward-looking statements. These forward-looking statements
involve risks and uncertainties including, but not limited to, the risk that
there is a substantial delay in the expected closing of the merger, that there
are unexpected costs in connection with combining the parties' operations, that
the
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combined company is unable to achieve anticipated savings in operating
expenses, that housing demand may decrease as a result of higher-than-expected
interest rates, adverse economic conditions, or other reasons; that seasonality
may be different than the historical pattern; that the market share of the
segment of the mortgage market served by the mortgage insurance industry may
decline as a result of competition from government programs or other substitute
products; and that Amerin's or CMAC's share of originations having private
mortgage insurance may decline as a result of competition or other factors.
Investors are also directed to other risks discussed in documents filed by
Amerin and CMAC with the Securities and Exchange Commission.
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