Westpac reportedly ditch the LMI duopoly for Bermudan reinsurer
The Banking Day website reports Westpac has "kicked Genworth, and maybe also QBE, off its reinsurance panel" with others moving to fill the void.
Banking analysts cited by Banking Day suggest Westpac would "effect a capital arbitrage with a Bermudan reinsurer whereby they can extract more (profit) commission for ceding the business than they could by keeping it in Australia".
Genworth shares tumbled after getting three months notice that Westpac had ditched the LVR lender mortgage insurance arrangements for 90% plus loan to value ratios (LVRs).
The Banking Day report says a UBS briefing noted "we understand QBE LMI received similar notification".
Loans in the less risky 80 to 90% LVR range will continue to be supported by Westpac’s own insurance arm.
Fairfax Media have identified it as Arch Capital Group of Bermuda.