American International Group Inc. (NYSEL AIG) agreed to sell mortgage insurer United Guaranty Corp. to Arch Capital Group Ltd. (Nasdaq:  ACGL) as chief executive officer Peter Hancock works to simplify his company and free up capital to return to shareholders.

The deal is valued at $3.4 billion including $2.2 billion in cash and the rest in Arch securities, New York-based AIG said in a statement. AIG will retain a portion of mortgage-insurance business originated from 2014 through 2016 through a previously disclosed intra-company risk transfer deal.

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