Westpac to sell its Lender Mortgage Insurance (LMI) business to Arch Capital Group.

Westpac has announced that it will sell its Lender Mortgage Insurance (LMI) business to Arch Capital Group. The deal will however see Arch becoming Westpac’s exclusive provider of LMI on new mortgage originations for a decade. The transaction requires antitrust and regulatory approvals from APRA and from the Australian Competition and Consumer Commission. Arch which has provided reinsurance services to Westpac 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,” said Jason Yetton, chief executive, specialist businesses and group strategy at Westpac. “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.” Arch notes the company’s position as the only globally diversified insurer of mortgage credit risk. Arch has mortgage insurance and reinsurance operations in Bermuda, Europe and the United States. There are two major LMI providers in Australia, QBE and Genworth. LMI companies offer significantly different premiums for different types of loans (low doc or normal), types of borrowers (first home buyers or other borrowers), and LVRs (90%, 95% etc) and loan amounts.