Arch U.S. MI's acquisition of United Guaranty Corp. will make one of the smallest private mortgage insurers the sector's new market leader. While the move is likely to ease pricing competition among the six remaining players, it's not expected to set off a wave of further consolidation.

"I think if you have fewer competitors there is less pressure on pricing," said Fitch Ratings analyst Donald Thorpe. That being said, a company could still decide to cut price to get market share.

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