Westpac has completed the sale of its lender mortgage insurance business to Arch Capital Group and entered into an exclusive ten-year supply agreement with the $16.7 billion Bermuda-based insurance and reinsurance giant.
As previously reported, the sale was at book value, expected to be approximately $350 million, and adds seven basis points to Westpac’s common equity tier one capital ratio.
Jason Yetton, head of the bank's specialist businesses and group strategy said Arch was a global insurance company with deep local market expertise.
"The transaction further simplifies Westpac Group’s business portfolio and enables us to help more customers into homeownership with lender mortgage insurance to be seamlessly integrated into our digital customer journey with a partner that has a longstanding relationship with Westpac," he said.
Westpac has been a provider of lender mortgage insurance in the Australian market since 2011, Arch said in a statement. This acquisition cements Arch’s position as the only globally diversified insurer of mortgage credit risk.
In addition to Australia, Arch has mortgage insurance and reinsurance operations in Bermuda, Europe, and the United States.
With the transaction complete, Arch will start combining the Westpac operations with its existing Australian LMI company.
“I want to thank both the Westpac and Arch teams for helping complete this transaction,” said David Gansberg, chief executive of global mortgage for Arch Capital.
“We look forward to continuing our partnership with Westpac and leveraging this acquisition to further establish Arch as a market leader that provides innovative solutions and excellent service to clients across Australia.”