Australia's Westpac To Sell Lenders Mortgage Insurance Unit To Arch Capital

(RTTNews) - Australia's Westpac Group (WBC.AX, WBK) said that it agreed to sell its Lenders Mortgage Insurance business to Arch Capital Group. The company also entered into a 10-year exclusive supply agreement for Arch to provide Lenders Mortgage Insurance (LMI) to the Group.

Westpac noted that the sale price will be at book value which will be determined at completion. The transaction also includes small, fixed annual payments to Westpac over the next 10 years.

Westpac noted that it will record a loss on sale in fiscal year 2021 from separation and transaction costs along with the A$84 million write down in goodwill. The transaction is expected to add about 7bps to Westpac's Common Equity Tier 1 capital ratio.

Westpac noted that it will retain responsibility for certain legacy matters and provide protection to Arch through a combination of customary warranties and indemnities.

Completion of the transaction is expected to occur by the end of August 2021.