A private investor group, in which Ontario Teachers' Pension Plan is the lead sponsor, has entered into a definitive agreement to acquire AIG’s Canadian mortgage insurance business, AIG United Guaranty Mortgage Insurance Company Canada.

Terms of the transaction were not disclosed.

United Guaranty Canada, headquartered in Toronto, is the second largest private mortgage insurance provider in Canada with assets of $274 million and total equity of $127 million as of September 30, 2009.

The transaction is subject to the fulfillment of customary closing conditions and receipt of regulatory approval.

Teachers' spokeswoman Deborah Allan said that AIG's United Guaranty Mortgage Insurance Company is primed to grow its market position, making the deal an attractive opportunity for the pension fund.

Teachers' is one of the world's largest private equity investors. With $87.4 billion in net assets at the end of last year, the pension fund is the largest single-profession pension plan in Canada, investing funds on behalf of Ontario's 284,000 active and retired teachers.