JSMedia – Arch Capital Group Ltd has completed the acquisition of Westpac Lenders Mortgage Insurance Limited. This Australian Prudential Regulation Authority-authorised captive lender provides LMI to the Westpac Group. The combined company will continue to provide LMI to the Westpac Group and become its exclusive provider for new mortgage originations for at least 10 years. In addition to the transaction, Arch is also integrating the existing WLMI operation and is announcing the sale of its general insurance business.
In addition to the sale, Arch also completed a 10-year supply agreement with WLMI. The transaction resulted in a higher Tier 1 capital ratio for the Westpac Group. It is a good sign for the Australian housing market, where mortgage lending continues to remain one of the most important industries. It’s also an opportunity to improve Westpac’s competitiveness by expanding its insurance offerings and enhancing its position in the Australian market.
The acquisition of WLMI by Arch Capital is a step in the right direction for the bank. It is the first time a major Australian financial institution has taken the lead in acquiring a captive lender. WLMI will remain an independent and APRA-authorized company and will become Westpac’s sole provider of LMI for a decade. This acquisition should strengthen Arch Capital’s position in the Australian market.
Arch Acquires Westpac Lenders Mortgage Insurance Limited
The transaction involves the acquisition of Westpac Lenders Mortgage Insurance Limited by Arch Capital Group. Arch plans to merge WLMI’s operations with Arch LMI Pty Ltd. WLMI will continue to provide LMI to the Westpac Group and will continue to be the sole provider of lenders mortgage insurance for the next ten years. By acquiring WLMI, Arch will maintain the existing risk and continue to support its existing reinsurance treaties with the Australian Prudential Regulation Authority.
The acquisition of WLMI by Arch Capital Group is a major step for the banking industry. It will provide an exclusive LMI provider for the Westpac Group for ten years. It will retain its existing risk and remain independent of the other lender. The new partnership will combine the two entities’ operations. It will also make Arch a lender mortgage insurer. The deal is expected to have a positive impact on both parties.
Arch has been active in the Australian LMI market since 2011. It was previously authorized as a lenders mortgage insurer by APRA in 2019. The acquisition will result in the combination of Arch LMI Pty Ltd. and WLMI. While the merger is a significant step for the Australian LMI industry, the deal also creates a more competitive landscape for both parties. If the merger goes through, the Arch LMI Pty Ltd. will retain its reinsurance policies and operations.
Arch’s proposed acquisition of Westpac Lenders Mortgage Insurance Limited is expected to benefit the Australian LMI market. This transaction is subject to regulatory approval and antitrust considerations, including the merger with Arch LMI Pty Ltd. The deal will be completed on August 31, 2021. In addition, Arch expects to add about 7bps to its Common Equity Tier 1 capital ratio. This deal is expected to improve the company’s profitability.
The transaction is a reinsurance transaction between Arch and the Westpac Group. The two companies will provide LMI to the Westpac Group. The deal will result in small annual payments for both companies. Further, the new agreement will help Westpac make home ownership more affordable for all Australians. There are a number of advantages for the merger between the two companies. As a result of the reinsurance transaction, the transaction will benefit APRA’s customers as well as the banks.
Through this transaction, the companies will provide each other with LMI. In the past, WLMI provided LMI to the Westpac Group’s residential mortgage portfolio. By joining forces with Arch, it will be possible to provide LMI to both the Westpac Group and Arch customers. The deal is subject to various regulatory approvals. The new owners will have a new LMI product, while Arch will retain the responsibility of legacy issues.