Arch Capital Group is acquiring Westpac Lenders Mortgage Insurance Limited (WLMI) through a share purchase agreement. WLMI is a captive lenders mortgage insurance provider to Westpac and had shareholders’ equity of $AUD 285.7 million at the end of September 2020.
This acquisition secures Arch Capital’s (ACGL) Australian LMI flow of business from Westpac Bank. The transaction is expected to close later in 2021, subject to regulatory approvals.
Arch Capital’s CEO, Global Mortgage, David Gansberg, 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.”
Gansberg further added, “We look forward to continuing our long-standing 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.”
Arch Capital plans to combine operations of WLMI with its Australian LMI company, Arch LMI. Under the agreement, WLMI will become the exclusive provider of LMI on new mortgage originations to Westpac for a period of 10 years. (See Arch Capital stock analysis on TipRanks)
Recently, JMP Securities analyst Matthew Carletti upgraded the stock to Buy from Hold with a price target of $43 (14.4% upside potential). Carletti highlighted the stock’s “consistently strong operating results and proactive cycle management.”
Turning to the rest of the Street, the stock has a Moderate Buy consensus rating alongside an average analyst price target of $41.29 (9.8% upside potential), based on 5 Buys and 2 Holds. Shares have risen about 25.3% over the past year.
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