Arch Capital to acquire Westpac Lenders Mortgage Insurance in Australia

Bermuda-based insurance company Arch Capital Group has agreed to acquire Westpac Lenders Mortgage Insurance Limited (WLMI) from Westpac Group for an undisclosed price.

The acquisition is being carried out by Arch Capital’s Global Mortgage Group.

Westpac Lenders Mortgage Insurance is a captive lenders mortgage insurance (LMI) provider to Westpac. It is authorized by the Australian Prudential Regulation Authority (APRA).

The company had shareholders’ equity of AUD 285.7 million as of 30 September 2020.

As part of the deal, Westpac Lenders Mortgage Insurance will retain its existing risk in force. It will become the exclusive provider of lenders mortgage insurance to Westpac on new mortgage originations for a 10-year period.

Jason Yetton – Westpac Group Chief Executive Specialist Businesses & Group Strategy said: “Westpac is pleased to be entering into a long-term partnership with Arch as LMI is an important product that helps the Group make home ownership more accessible for more Australians.

“The sale continues the simplification of our business and builds on our progress in becoming a simpler, stronger bank focussed on consumer, business and institutional banking.”

Upon closing of the deal, Arch Capital will look to combine the operations of Westpac Lenders Mortgage Insurance and Arch LMI, its existing Australian lenders mortgage insurance company.

Since 2011, Arch Capital has been actively taking part in the Australian LMI market, having started by giving support for Westpac Lenders Mortgage Insurance’s reinsurance treaties.

In 2019, Arch LMI was authorized as a lenders mortgage insurer by APRA.

Arch Capital said that the acquisition of Westpac Lenders Mortgage Insurance will secure its Australian LMI flow of business from Westpac Bank. Besides, it will supplement its position as a globally diversified insurer of mortgage credit risk.

Apart from Australia, Arch Capital has mortgage insurance and reinsurance operations in Bermuda, the US, and Europe.

David Gansberg – CEO of Global Mortgage for Arch Capital Group said: “Australia has been and continues to be an important market for our mortgage insurance business. This acquisition reinforces our commitment to both the market and our clients and enhances Arch’s position as a leading provider of LMI in Australia.

“We look forward to continuing our long-standing partnership with Westpac by being their exclusive provider of LMI and will remain focused on providing innovative solutions and excellent service to clients across Australia.”

The deal, which is subject to antitrust and regulatory approvals from APRA and from the Australian Competition and Consumer Commission, is likely to be completed later this year.