18 March 2021News

Arch Capital to acquire Westpac’s mortgage insurance business to strengthen its grip on Australian market

Arch Capital Group is set to acquire Westpac Lenders Mortgage Insurance (WLMI), an Australian Prudential Regulation Authority (APRA) authorised captive lenders mortgage insurance (LMI) provider to Westpac.

WLMI had shareholders’ equity of A$285.7 million as of September 30, 2020.

WLMI will retain its existing risk in force and become Westpac’s exclusive provider of LMI on new mortgage originations for 10 years. Arch will combine WLMI’s operations with those of its existing Australian LMI company, Arch LMI.

The acquisition secures Arch’s Australian LMI flow of business from Westpac Bank. Arch said the deal augments its position as the only globally diversified insurer of mortgage credit risk: it also has mortgage re/insurance operations in Bermuda, Europe and the US.

Arch has been active in the Australian LMI market since 2011, when it began providing support for WLMI’s reinsurance treaties. In 2019, Arch LMI was authorised as a lenders mortgage insurer by APRA.

The transaction is expected to close later this year pending antitrust and regulatory approvals from APRA and from the Australian Competition and Consumer Commission.

David Gansberg, chief executive officer of global mortgage for Arch Capital Group, emphasised the importance of the Australian market to Arch. “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,” he said.