Arch displaces QBE LMI at Westpac

The planned initial public offering of QBE Group's lenders mortgage insurance arm may be abandoned, with details seeping out on the loss of business from one of its major customers, Westpac.

Westpac confirmed yesterday that Arch Capital, a recently formed Australian entity, would be its "new LMI partner."

The bank had previously listed Arch as one of six reinsurers used by the bank in place of Genworth (and, though not made public, QBE LMI).

The other three are Tokio Millennium Re, Everest Re, Endurance Re, Trans Re and AWAC.

Westpac advised mortgage brokers yesterday that "effective 18 May 2015, all new Westpac originated loans with a base or total LVR above 90 per cent will have their mortgage insurance through Westpac Lenders Mortgage Insurance (in place of QBE Insurance).

"WLMI is reinsured by Arch Capital, our new LMI partner," the bank said.

Westpac Lenders Mortgage Insurance is already the insurer for loans with LVRs of less than 90 per cent. QBE outlined the proposed float of QBE Lenders Mortgage Insurance in August last year.

Westpac is thought to have accounted for more than 20 per cent of premium income.

Arch Capital is a Bermuda-based insurer formed only in 2000.