- Arch Capital Group will purchase the business
- Commonwealth Bank remains only major lender with its own general insurance business
- Sale is expected to be completed by August
The Westpac Group (ASX: WBC) has announced Arch Capital Group (Arch) will acquire the Group’s Lenders Mortgage Insurance business (WLMI).
WLMI currently provides residential lenders mortgage insurance – its sole product – to the Group.
As part of the deal, Arch will enter into an exclusive 10-year supply agreement, whereby it will provide Lenders Mortgage Insurance to Westpac.
Arch, a publicly listed Bermuda-based company, has purchased the business at book value which will be determined before the end of this financial year, with small, fixed annual payments over the next ten years to Westpac.
This divestment by Westpac means the Commonwealth Bank is the only major lender in Australia that still retains a general insurance business.
Westpac said the transaction will add approximately seven basis points to their Common Equity Tier 1 capital ratio.
Westpac Group’s Chief Executive Specialist for Business and Group Strategy, Jason Yetton, said the sale builds upon the strong relationship Westpac has established with Arch.
Arch has been providing reinsurance services to WLMI since 2011.
“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.”
Jason Yetton, Chief Executive Specialist Businesses & Group Strategy
Subject to regulatory approvals, completion of the sale is expected to occur before the end of August.