JSMedia – Arch Capital Group has announced that it has completed the acquisition of Westpac Lenders Mortgage Insurance Limited (WLMI), an Australian Prudential Regulation Authority-authorized captive lender that provides LMI to the Westpac Group. As part of the transaction, WLMI will be merged with Arch LMI Pty Ltd, making it the exclusive provider of LMI to the Westernpac Group for the next 10 years.
The deal is worth AUD 350 million, and the companies expect to close on the transaction in the second half of 2019. The company expects to complete the merger later this year, pending regulatory approvals. This is Arch’s first acquisition of an Australian LMI company. However, it may be the last one. This transaction could also signal the end of the Westpac Lenders Mortgage Insurance Limited (WLMI) era.
Arch has been active in the Australian LMI market since 2011, and began providing support for the WLMI reinsurance treaty in 2017. The acquisition of WLMI will ensure the continued flow of LMI to the Westpac Bank in Australia. The company will also become the exclusive lender mortgage insurance provider to Westpac for the next decade. It is expected that this deal will further strengthen Arch’s position as the only globally diversified insurer of mortgage credit risk.
Arch Capital Group Acquires Westpac Lenders Mortgage Insurance Limited
Arch Capital Group Ltd. is a publicly listed Bermuda-exempt company with approximately $15.8 billion in capital at the end of the fiscal year 2020. It provides insurance and reinsurance services worldwide, including mortgage insurance. The deal includes a pro forma valuation for WLMI as of Dec. 31, 2020. It will also benefit Westpac from Arch’s longstanding relationship with WLMI.
The purchase is expected to help Arch Capital Group gain an upper-middle position in the Australian market. The new ownership of WLMI will benefit the company’s shareholders, which will gain access to its reinsurance market. The new owners of WLMI will also benefit from the merger, which will create a global lender mortgage insurance business. Its primary aim is to serve the Australian lender market.
The acquisition also adds to the group’s global footprint. WLMI, formerly known as Westpac Lenders Mortgage Insurance (WLMI), has been providing LMI in the Australian market since 2011. It is a publically listed Bermuda exempt company with approximately $16.7 billion in capital at June 30, 2021. Its subsidiaries provide insurance and reinsurance worldwide. This latest acquisition also makes the company the sole LMI provider in Australia.
The deal has the potential to significantly boost the group’s overall presence in Australia. The deal will allow it to remain the sole Lenders Mortgage Insurance provider for the Westpac Group. The new company will retain the existing risks of WLMI and its Australian counterparts. This acquisition is a major step towards strengthening Arch Lenders. The acquisition of WLMI will enable the firm to provide LMI to the entire Australian lender market.