Westpac Group has announced it will sell its Westpac Lenders Mortgage Insurance Limited (WLMI) business to Arch Capital Group (Arch).
Westpac stated that the sale price will be at book value, determined at completion. Completion of the transaction, which will add around 7bps to Westpac’s Common Equity Tier 1 capital ratio, is subject to various regulatory approvals and is expected to occur at the end of August 2021.
The transaction also includes small, fixed annual payments to Westpac over the next 10 years – building on its existing relationship with Arch, which has provided 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,” said Jason Yetton, Westpac Group chief executive specialist for businesses & group strategy.
“The sale continues the simplification of our business and builds on our progress in becoming a simpler, stronger bank focused on consumer, business, and institutional banking.”
Westpac is still responsible for certain legacy matters and will provide protection to Arch through a combination of customary warranties and indemnities. It will also record a loss on sale in full-year 2021 from separation and transaction costs, along with the $84 million write down in goodwill that was announced with its first-quarter 2021 update on February 17, 2021.
