8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

May 31, 2013

Date of Report (Date of earliest event reported)

Arch Capital Group Ltd.

(Exact name of registrant as specified in its charter)

Bermuda	0-26456	N/A
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

Wessex House, 45 Reid Street, Hamilton HM 12, Bermuda

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code:(441) 278-9250

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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ITEM 1.01    Entry into a Material Definitive Agreement.

Background

Arch Capital Group Ltd. (together with its subsidiaries, the “Company”) previously announced that its U.S.-based subsidiaries (collectively, “Arch U.S. MI”) have entered into definitive agreements to acquire CMG Mortgage Insurance Company and certain of its affiliates (collectively, “CMG MI”) from its current owners, PMI Mortgage Insurance Co. in rehabilitation (“PMI”), which has been under the receivership of the Arizona Department of Insurance (the “Receiver”) since 2011, and CMFG Life Insurance Company (“CUNA Mutual”). Arch U.S. MI also agreed to acquire PMI's mortgage insurance operating platform and certain related assets from PMI. This transaction will allow the Company to enter the U.S. mortgage insurance marketplace and will broaden its existing mortgage insurance and reinsurance capabilities. The transaction is subject to approvals of the Arizona receivership court (the “Court”), applicable regulators and government-sponsored enterprises (“GSEs”), including the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), and the satisfaction of customary closing conditions. If the approvals are obtained, it is expected the transaction will close during the latter part of 2013.

In connection with the Court approval process, the Company has discussed the terms of the transaction with Fannie Mae and Freddie Mac in their capacities as the largest creditors of PMI. Following those discussions, the Company, PMI and CUNA Mutual agreed to revise certain terms of the transaction, the most significant of which are described below. As a result, Fannie Mae and Freddie Mac did not file an objection to the transaction with the Court. The objection period has now expired for all creditors, including the GSEs, and no objections to the transaction have been filed with the Court. The current hearing date with the Court is scheduled for June 19, 2013, but this date is subject to change.  The Company cannot predict the timing for any decision by the Court regarding the transaction since such timing will be driven by the Court process. On a parallel track, the Company is in the process of seeking the regulatory and other approvals required to complete the transaction and, accordingly, will continue its discussions with the GSEs in order to obtain their approval of Arch U.S. MI, through CMG MI, as an eligible insurance carrier in the U.S. mortgage insurance marketplace.

Description of Revised Terms

The most significant changes to the transaction terms are described below.

As provided in the original Stock Purchase Agreement, dated as of February 7, 2013 (the “CMG Stock Purchase Agreement”), among Arch U.S. MI, the Receiver, on behalf of PMI, CUNA Mutual and CMG MI, as aggregate consideration for the capital stock of CMG MI, the Company will pay to PMI and CUNA Mutual an amount at closing (the “Closing Date Payment”) equal to a percentage of the actual closing date book value of CMG MI as of the end of the month ending prior to closing, as determined in accordance with terms of the CMG Stock Purchase Agreement. Under the amendment to the CMG Stock Purchase Agreement, dated as of May 31, 2013 (the “SPA Amendment”), (1) the Company's initial payment at closing for the capital stock of CMG MI will be increased from 60% to 80% of CMG MI's closing date book value as determined under the CMG Stock Purchase Agreement; and (2) the Closing Date Payment will be based on the greater of $185 million and CMG MI's actual closing date book value. In addition to the Closing Date Payment, the original CMG Stock Purchase Agreement provides that PMI and CUNA Mutual are also entitled to certain deferred consideration payments, subject to an overall maximum purchase price. The earnout mechanism relating to these deferred consideration payments included in the original CMG Stock Purchase Agreement, which is dependent on the actual results of the pre-closing portfolio, remains unchanged and, therefore, will be based on CMG MI's actual book value as determined under the CMG Stock Purchase Agreement. Pursuant to the SPA Amendment, the overall maximum purchase price payable to PMI and CUNA Mutual was increased from 110% to 150% of actual closing date book value of CMG MI's pre-closing portfolio as calculated over the earnout period to the extent such book value growth emerges.

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Under the revised terms, effective as of the closing date, the parties also will enter into a new quota share reinsurance agreement, on a funds-withheld basis, pursuant to which CMG MI - which will then be owned by Arch U.S. MI - will cede a 20% quota share of all new primary flow mortgage insurance business (including credit union and non-credit union business) to PMI Insurance Co. (“PIC”) on the first $25 billion in original loan amounts on new policies written by CMG MI following the closing. Such quota share reinsurance agreement will automatically terminate on the seven-year anniversary of the closing date on a cut-off basis. Furthermore, as part of the revised terms, the amount of business proposed to be ceded by CMG MI to an affiliate of CUNA Mutual under a post-closing quota share reinsurance agreement contemplated by the original CMG Stock Purchase Agreement was reduced.

In addition, Arch U.S. MI and the Receiver, on behalf of PMI, agreed to amend the Asset Purchase Agreement, dated as of February 7, 2013 (the “Asset Purchase Agreement”), between Arch U.S. MI and the Receiver, on behalf of PMI. Such amendment to the Asset Purchase Agreement, dated as of May 31, 2013, provides for certain adjustments to the terms of the form of Services Agreement to be entered into between Arch U.S. MI and PMI upon closing.

The foregoing descriptions of the CMG Stock Purchase Agreement, the Asset Purchase Agreement and the respective amendments to such agreements (together, the “Agreements” and, individually, an “Agreement”) do not purport to be complete and are subject to, and are qualified in their entirety by, reference to the full and complete terms of the Agreements that are included as Exhibits 10.1 through 10.4 hereto to this Current Report on Form 8-K and which are incorporated into this Item 1.01 by reference.

Each Agreement has been included to provide security holders with information regarding its terms. The Agreements are not intended to provide any other factual information about the Company and its affiliates or PMI or CUNA Mutual and their respective affiliates. The Agreements contain representations and warranties by each of the parties to the Agreements. These representations and warranties were made solely for the benefit of the other parties to the Agreements and (i) were not intended to be treated as categorical statements of fact, but rather as a way of allocating risk among the parties if those statements prove to be inaccurate, (ii) may have been qualified in the Agreements by disclosures that were made to the other parties in connection with the negotiation of the applicable agreement, (iii) may be subject to standards of materiality applicable to the parties that differ from what might be viewed as material to security holders and (iv) were made only as of the date of the Agreements or such other date or dates as may be specified in the Agreements. Security holders should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company and its affiliates or PMI or CUNA Mutual and their respective affiliates.

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ITEM 9.01    FINANCIAL STATEMENTS AND EXHIBITS.

(d)    Exhibits

Exhibit No.	Description
10.1	Amendment No. 1, dated as of May 31, 2013, to Asset Purchase Agreement, dated as of February 7, 2013, by and among the Receiver of PMI Mortgage Insurance Co. in Rehabilitation on behalf of PMI Mortgage Insurance Co., Arch U.S. MI Services, Inc. and Arch Capital Group (U.S.) Inc. (filed herewith)
10.2	Amendment No. 1, dated as of May 31, 2013, to Stock Purchase Agreement, dated as of February 7, 2013, by and among the Receiver of PMI Mortgage Insurance Co. in Rehabilitation on behalf of PMI Mortgage Insurance Co., CMFG Life Insurance Company, CMG Mortgage Insurance Company, Arch U.S. MI Services, Inc. and Arch Capital Group (U.S.) Inc. (filed herewith)
10.3	Asset Purchase Agreement, dated as of February 7, 2013, by and among the Receiver of PMI Mortgage Insurance Co. in Rehabilitation on behalf of PMI Mortgage Insurance Co., Arch U.S. MI Holdings Inc. and Arch Capital Group (U.S.) Inc. (filed as an exhibit to the Company's Form 8-K, as filed with the Securities and Exchange Commission (“SEC”) on February 8, 2013, and incorporated by reference)
10.4	Stock Purchase Agreement, dated as of February 7, 2013, by and among the Receiver of PMI Mortgage Insurance Co. in Rehabilitation on behalf of PMI Mortgage Insurance Co., CMFG Life Insurance Company, CMG Mortgage Insurance Company, Arch U.S. MI Services Inc. and Arch Capital Group (U.S.) Inc. (filed as an exhibit to the Company's Form 8-K, as filed with the SEC on February 8, 2013, and incorporated by reference)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned.

	ARCH CAPITAL GROUP LTD.
Date: June 5, 2013	By:	/s/ Marc Grandisson
		Name:	Marc Grandisson
		Title:	Chairman and Chief Executive Officer of Arch Worldwide Reinsurance Group

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EXHIBIT INDEX

Exhibit No.	Description
10.1	Amendment No. 1, dated as of May 31, 2013, to Asset Purchase Agreement, dated as of February 7, 2013, by and among the Receiver of PMI Mortgage Insurance Co. in Rehabilitation on behalf of PMI Mortgage Insurance Co., Arch U.S. MI Services, Inc. and Arch Capital Group (U.S.) Inc. (filed herewith)
10.2	Amendment No. 1, dated as of May 31, 2013, to Stock Purchase Agreement, dated as of February 7, 2013, by and among the Receiver of PMI Mortgage Insurance Co. in Rehabilitation on behalf of PMI Mortgage Insurance Co., CMFG Life Insurance Company, CMG Mortgage Insurance Company, Arch U.S. MI Services, Inc. and Arch Capital Group (U.S.) Inc. (filed herewith)
10.3	Asset Purchase Agreement, dated as of February 7, 2013, by and among the Receiver of PMI Mortgage Insurance Co. in Rehabilitation on behalf of PMI Mortgage Insurance Co., Arch U.S. MI Holdings Inc. and Arch Capital Group (U.S.) Inc. (filed as an exhibit to the Company's Form 8-K, as filed with the SEC on February 8, 2013, and incorporated by reference)
10.4	Stock Purchase Agreement, dated as of February 7, 2013, by and among the Receiver of PMI Mortgage Insurance Co. in Rehabilitation on behalf of PMI Mortgage Insurance Co., CMFG Life Insurance Company, CMG Mortgage Insurance Company, Arch U.S. MI Services Inc. and Arch Capital Group (U.S.) Inc. (filed as an exhibit to the Company's Form 8-K, as filed with the SEC on February 8, 2013, and incorporated by reference)

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EX-10.1

Exhibit 10.1

EXECUTION COPY

AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT

This Amendment No. 1 to Asset Purchase Agreement (this “Amendment”) is made as of May 31, 2013, by and among the RECEIVER OF PMI MORTGAGE INSURANCE CO. IN REHABILITATION on behalf of PMI MORTGAGE INSURANCE CO., an Arizona stock insurance corporation (“PMI”), ARCH U.S. MI SERVICES INC., a Delaware corporation (the “Purchaser”), and, solely for the purposes expressly set forth in the Purchase Agreement as amended hereby, ARCH CAPITAL GROUP (US) INC., a Delaware corporation (the “Purchaser Parent”). PMI, the Purchaser and, solely for the purposes expressly set forth in the Purchase Agreement as amended hereby, the Purchaser Parent shall be referred to herein from time to time collectively as the “Parties” and individually as a “Party.” Capitalized terms used but not defined herein have the meanings given to them in the Purchase Agreement.

RECITALS

WHEREAS, the Parties entered into a Asset Purchase Agreement, dated as of February 7, 2013 (including the exhibits and schedules thereto, the “Purchase Agreement”);

WHEREAS, Section 13.8 of the Purchase Agreement provides that no amendment or waiver of any provision of the Purchase Agreement shall be valid unless in writing and signed by the Party to be charged with such amendment or waiver; and

WHEREAS, the Parties desire to amend, modify and supplement the Purchase Agreement as described in this Amendment.

NOW, THEREFORE, for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:

1.Replacement of Exhibit B to the Purchase Agreement. Exhibit B to the Purchase Agreement is hereby deleted in its entirety and replaced with Exhibit B attached hereto.

1.    References in the Purchase Agreement. All references in the Purchase Agreement to “this Agreement” shall mean the Purchase Agreement as amended by this Amendment.

2.    Limitation of Amendment. Except as expressly provided herein, this Amendment shall not be deemed to be a waiver or modification of any term, condition or covenant of the Purchase Agreement. Any conflict between the terms herein and in the Purchase Agreement shall be governed by the terms of this Amendment. Except as expressly amended hereby, all terms and conditions set forth in the Purchase Agreement are hereby affirmed by the Parties and shall remain in full force and effect.

3.    Severability. The determination of any court that any provision of this Amendment is invalid or unenforceable shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity of the offending term or provision in any other situation or in any other jurisdiction. Upon such a determination, the Parties shall negotiate in good faith to modify this Amendment so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

4.    Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ARIZONA WITHOUT REGARD TO RULES GOVERNING CONFLICT OF LAWS THEREIN.

5.    Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. Original signatures hereto may be delivered by facsimile or .pdf which shall be deemed originals.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the date first written above.

THE RECEIVER OF PMI MORTGAGE INSURANCE CO., IN REHABILITATION, ON BEHALF OF PMI MORTGAGE INSURANCE CO.

By: /s/ Truitte D. Todd    

Print name: Truitte D. Todd

Title: Special Deputy Receiver

[Amendment No. 1 to Asset Purchase Agreement]

ARCH U.S. MI HOLDINGS INC.

By: /s/ David Gansberg    

Print name: David Gansberg

Title: President & CEO

SOLELY FOR THE LIMITED PURPOSES SET FORTH IN THE PURCHASE AGREEMENT AS AMENDED HEREBY

ARCH CAPITAL GROUP (US) INC.

By: /s/ Joseph S. Labell    

Print name: Joseph S. Labell

Title: Vice President & Deputy General Counsel

[Amendment No. 1 to Asset Purchase Agreement]

EX-10.2

Exhibit 10.2

EXECUTION COPY

AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT

This Amendment No. 1 to Stock Purchase Agreement (this “Amendment”) is made as of May 31, 2013, by and among the RECEIVER OF PMI MORTGAGE INSURANCE CO. IN REHABILITATION on behalf of PMI MORTGAGE INSURANCE CO., an Arizona stock insurance corporation (“PMI”), CMFG LIFE INSURANCE COMPANY, formerly known as CUNA Mutual Insurance Society, an Iowa corporation (“CUNA Mutual”), solely for the purposes expressly set forth in the Purchase Agreement (as defined below) as amended hereby, CMG MORTGAGE INSURANCE COMPANY, a Wisconsin insurance company (“CMG MI”), ARCH U.S. MI HOLDINGS INC., a Delaware corporation (the “Purchaser”), and, solely for the purposes expressly set forth in the Purchase Agreement as amended hereby, ARCH CAPITAL GROUP (US) INC., a Delaware corporation (the “Purchaser Parent”). PMI, CUNA Mutual, the Purchaser and, solely for the purposes expressly set forth in the Purchase Agreement as amended hereby, CMG MI and the Purchaser Parent shall be referred to herein from time to time collectively as the “Parties” and individually as a “Party.” Capitalized terms used but not defined herein have the meanings given to them in the Purchase Agreement.

RECITALS

WHEREAS, the Parties entered into a Stock Purchase Agreement, dated as of February 7, 2013 (including the exhibits and schedules thereto, the “Purchase Agreement”);

WHEREAS, Section 14.8 of the Purchase Agreement provides that no amendment or waiver of any provision of the Purchase Agreement shall be valid unless in writing and signed by the Party to be charged with such amendment or waiver; and

WHEREAS, the Parties desire to amend, modify and supplement the Purchase Agreement as described in this Amendment.

NOW, THEREFORE, for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:

1.Amendments to Section 1.1 of the Purchase Agreement.

(a)    The definition of “Transaction Documents” is hereby deleted in its entirety from Section 1.1 of the Purchase Agreement and replaced with the following:

““Transaction Documents” means, collectively (i) this Agreement, (ii) the Distribution Services Agreement, between CUNA Mutual, CMG MI and Arch Capital Group Ltd., in the form and substance attached as Exhibit D hereto (the “Distribution Services Agreement”), (iii) the Indemnification Escrow Agreement, (iv) the CMG MI Quota Share Reinsurance Agreement, (v) the Quota Share Reinsurance Agreement, between CMG MI and an Affiliate of CUNA Mutual, in the form and substance attached as Exhibit E hereto (the “CUNA Mutual Quota Share Reinsurance Agreement”), (vi) a Trademark License Agreement, between CUNA Mutual and the CMG Companies, which shall be in the form and substance attached as Exhibit F hereto, (vii) the Flow of Funds Memorandum, (viii) the Guaranty, from CUNA Mutual to CMG MI, which shall be in the form and substance attached as Exhibit A to the CUNA Mutual Quota Share Reinsurance Agreement (the “Guaranty”), (ix) that certain letter agreement between CUNA Mutual and the Purchaser dated as of the date hereof, (x) a Quota Share Reinsurance Agreement, between CMG MI and PMI Insurance Co., an Arizona corporation and wholly owned subsidiary of PMI, in the form and substance attached as Exhibit K hereto (the “PIC Quota Share Reinsurance Agreement”) and (xi) any other Contracts delivered by any Party hereto at or prior to the Closing pursuant to or in furtherance of the transactions

contemplated by this Agreement (including, in each case, any and all exhibits, schedules and attachments to any such documents and any other documents executed or delivered in connection therewith) in each case, as the same may be amended, restated, supplemented or otherwise modified from time to time."

(b)    The following defined term is hereby added to Section 1.1 of the Purchase Agreement immediately following the term “Pollutants”:

““Post-Closing Reinsurance Agreements” means, collectively, the PIC Quota Share Reinsurance Agreement and the CUNA Mutual Quota Share Reinsurance Agreement.”

2.    Amendment to Section 1.2 of the Purchase Agreement. Section 1.2 of the Purchase Agreement is hereby amended by adding a reference to “PIC Quota Share Agreement” in alphabetical order in the table therein and a corresponding cross-reference to the definition of “Transaction Documents”.

3.    Amendment to Section 2.2(a) of the Purchase Agreement. Section 2.2(a) of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

“(a)    Upon the terms and subject to the conditions of this Agreement, including Section 2.3, as aggregate consideration for the Shares, on the Closing Date, the Purchaser will pay to the Sellers an amount (the “Closing Date Payment”) equal to the sum of (i) eighty percent (80%) of the difference of (x) the greater of (1) the Estimated Closing Date Book Value determined in accordance with Section 2.2(b) and (2) one hundred eighty-five million dollars ($185,000,000) minus (y) an amount equal to the Seller Capital Contributions, such amount not to exceed $10,000,000 in the aggregate minus (z) the Estimated Current Affiliate Obligations, to the extent not previously accrued and reflected in the Estimated Closing Date Book Value, plus (ii) 100% of the aggregate amount of any Seller Capital Contributions, up to $10,000,000. Such Closing Date Payment shall be subject to adjustment following Closing in accordance with Section 2.6.”

4.    Amendment to Section 2.7(b) of the Purchase Agreement: Section 2.7(b) of the Purchase Agreement is hereby amended by deleting reference to “one hundred ten percent (110%)” therein and replacing the same with “one hundred fifty percent (150%)”.

5.    Amendment to Section 9.2(b) of the Purchase Agreement: Section 9.2(b) of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

“(b)    Agreements and Covenants. Each Seller shall have performed in all material respects all obligations and complied in all material respects with all agreements or covenants to be performed or complied with by such Seller pursuant to this Agreement, other than Section 7.2, at or prior to the Closing Date, and the Purchaser shall have received a certificate, dated as of the Closing Date, in form and substance reasonably acceptable to the Purchaser, to such effect signed by an officer of such Seller. For the avoidance of doubt, the execution and delivery of the Post-Closing Reinsurance Agreements (including effectiveness of the Guaranty) by the parties thereto shall be a condition to the Purchaser Parties’ obligations under this Agreement unless the parties thereto have not obtained approval from Fannie Mae and Freddie Mac or any other Governmental Approval required for such Post-Closing Reinsurance Agreements at or prior to the Closing. In the event that such Governmental Approvals required for the CUNA Mutual Quota Share Reinsurance Agreement are not obtained on or prior to the date on which all other conditions to Closing have otherwise been satisfied (other than those conditions that by their nature are to be satisfied at Closing), then the execution and delivery of the CUNA Mutual Quota Share Reinsurance Agreement by the parties thereto shall not

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be a condition to Closing. In the event that such Governmental Approvals required for the PIC Quota Share Reinsurance Agreement are not obtained on or prior to the date on which all other conditions to Closing have otherwise been satisfied (other than those conditions that by their nature are to be satisfied at Closing), then the execution and delivery of the PIC Quota Share Reinsurance Agreement by the parties thereto shall not be a condition to Closing.”

6.    Amendment to Section 9.3(b) of the Purchase Agreement: Section 9.3(b) of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

“(b)    Agreements and Covenants. Each of the Purchaser Parties shall have performed in all material respects all obligations and complied in all material respects with all agreements or covenants to be performed or complied with by it pursuant to this Agreement at or prior to the Closing Date, and the Sellers shall have received a certificate, dated as of the Closing Date, in form and substance reasonably acceptable to the Sellers, to such effect signed by an officer of the Purchaser. For the avoidance of doubt, the execution and delivery of the Post-Closing Reinsurance Agreements (including effectiveness of the Guaranty) by the parties thereto shall be a condition to the Sellers’ obligations under this Agreement unless the parties thereto have not obtained approval from Fannie Mae and Freddie Mac or any other Governmental Approval required for such Post-Closing Reinsurance Agreements at or prior to the Closing. In the event that such Governmental Approvals required for the CUNA Mutual Quota Share Reinsurance Agreement are not obtained on or prior to the date on which all other conditions to Closing have otherwise been satisfied (other than those conditions that by their nature are to be satisfied at Closing), then the execution and delivery of the CUNA Mutual Quota Share Reinsurance Agreement by the parties thereto shall not be a condition to Closing. In the event that such Governmental Approvals required for the PIC Quota Share Reinsurance Agreement are not obtained on or prior to the date on which all other conditions to Closing have otherwise been satisfied (other than those conditions that by their nature are to be satisfied at Closing), then the execution and delivery of the PIC Quota Share Reinsurance Agreement by the parties thereto shall not be a condition to Closing.”

7.    Replacement of Exhibit E to the Purchase Agreement. Exhibit E to the Purchase Agreement is hereby deleted in its entirety and replaced with Exhibit E attached hereto.

8.    Addition of Exhibit K to the Purchase Agreement. The Purchase Agreement is hereby amended by adding Exhibit K attached hereto as a new Exhibit K thereto immediately after Exhibit J thereto.

9.    Amendments to Schedules to Purchase Agreement. The Schedules to the Purchase Agreement are hereby amended as follows:

(a)    Schedule 1.1(d) to the Purchase Agreement is hereby amended by adding the following thereto after item 3 thereon:

“4.    Approval, if required, from Fannie Mae and/or Freddie Mac for the PIC Quota Share Reinsurance Agreement.”

(b)    Schedule 1.1(f) to the Purchase Agreement is hereby amended by adding the following thereto after item 7 thereon:

“8.    Approval, if required, from Fannie Mae and/or Freddie Mac for the PIC Quota Share Reinsurance Agreement.”

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10.    References in the Purchase Agreement. All references in the Purchase Agreement to “this Agreement” shall mean the Purchase Agreement as amended by this Amendment.

11.    Limitation of Amendment. Except as expressly provided herein, this Amendment shall not be deemed to be a waiver or modification of any term, condition or covenant of the Purchase Agreement. Any conflict between the terms herein and in the Purchase Agreement shall be governed by the terms of this Amendment. Except as expressly amended hereby, all terms and conditions set forth in the Purchase Agreement are hereby affirmed by the Parties and shall remain in full force and effect.

12.    Severability. The determination of any court that any provision of this Amendment is invalid or unenforceable shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity of the offending term or provision in any other situation or in any other jurisdiction. Upon such a determination, the Parties shall negotiate in good faith to modify this Amendment so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

13.    Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ARIZONA WITHOUT REGARD TO RULES GOVERNING CONFLICT OF LAWS THEREIN.

14.    Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. Original signatures hereto may be delivered by facsimile or .pdf which shall be deemed originals.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the date first written above.

THE RECEIVER OF PMI MORTGAGE INSURANCE CO., IN REHABILITATION, ON BEHALF OF PMI MORTGAGE INSURANCE CO.

By: /s/ Truitte D. Todd    

Print name: Truitte D. Todd

Title: Special Deputy Receiver

CMFG LIFE INSURANCE COMPANY

By: /s/ Jeff Post        

Print name: Jeff Post

Title: President and Chief Executive Officer

SOLELY FOR THE LIMITED PURPOSES SET FORTH IN THE PURCHASE AGREEMENT AS AMENDED HEREBY

CMG MORTGAGE INSURANCE COMPANY

By: /s/ Sean Dilweg    

Print name: Jeff Post

Title: President

By: /s/ Thomas H. Jeter     

Print name: Thomas H. Jeter

Title: Chairman & Asst. Treasurer

[Amendment No. 1 to Stock Purchase Agreement]

ARCH U.S. MI HOLDINGS INC.

By: /s/ David Gansberg    

Print name: David Gansberg

Title: President & CEO

SOLELY FOR THE LIMITED PURPOSES SET FORTH IN THE PURCHASE AGREEMENT AS AMENDED HEREBY

ARCH CAPITAL GROUP (US) INC.

By: /s/ Joseph S. Labell    

Print name: Joseph S. Labell

Title: Vice President & Deputy General Counsel

[Amendment No. 1 to Stock Purchase Agreement]