The Global Mortgage Group of Arch Capital Group (ACGL) has signed an agreement with Westpac Group to acquire Westpac Lenders Mortgage Insurance Limited (WLMI).

WLMI is an Australian Prudential Regulation Authority- (APRA) authorised captive lenders mortgage insurance (LMI) provider to Westpac.

As of 30 September 2020, WLMI had shareholders’ equity of $222.9m (A$285.7m).

Under the terms of the agreement, WLMI will retain its current risk in force and become Westpac’s sole provider of LMI on new mortgage originations for 10 years.

Following completion of the deal, Arch plans to merge the operations of WLMI and Arch LMI, its current Australian LMI company.

Since 2011, Arch has had a presence in the Australian LMI market and has been providing support for WLMI’s reinsurance treaties.

APRA authorised Arch LMI as a lenders mortgage insurer in 2019.

The WLMI acquisition will secure Arch’s Australian LMI flow of business from Westpac Bank and boost its position as a diversified insurer of mortgage credit risk.

Besides Australia, Arch has mortgage insurance and reinsurance operations in Bermuda, Europe and the US.

Arch Capital Group global mortgage CEO David Gansberg said: “Australia has been and continues to be an important market for our mortgage insurance business. 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.

“We look forward to continuing our long-standing partnership with Westpac by being their exclusive provider of LMI and will remain focused on providing innovative solutions and excellent service to clients across Australia.”

The deal is expected to complete later this year following antitrust and regulatory approvals from APRA and from the Australian Competition and Consumer Commission.