A unit of Arch Capital Group Ltd has agreed to acquire Australia’s Westpac Lenders Mortgage Insurance Ltd.

The Global Mortgage Group of Bermudian-based Arch has entered into a share purchase agreement with the Westpac Group to make the acquisition.

David Gansberg, chief executive officer, Global Mortgage, for Arch Capital Group Ltd, 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 longstanding 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 transaction is expected to close later this year pending antitrust and regulatory approvals from APRA and from the Australian Competition and Consumer Commission.

Westpac Lenders Mortgage Insurance Ltd is an Australian Prudential Regulation Authority authorised captive lenders mortgage insurance provider to Westpac. It had shareholders’ equity of $285.7 million (Australian) as of September 30, 2020, according to Arch.

As part of the agreement, WLMI will retain its existing risk in force and become Westpac’s exclusive provider of LMI on new mortgage originations for a period of 10 years. Upon completion of the transaction, Arch said it intends to combine the operations of WLMI and its existing Australian LMI company, Arch LMI Pty Ltd.

Arch has been active in the Australian LMI market since 2011, when it began providing support for WLMI’s reinsurance treaties.

The company said the acquisition of WLMI will secure Arch’s Australian LMI flow of business from Westpac Bank and augment the company’s position as the only globally diversified insurer of mortgage credit risk.

In addition to Australia, Arch has mortgage insurance and reinsurance operations in Bermuda, Europe and the United States.