Insurer and reinsurer Arch Capital Group’s eased entry into the Australian market for mortgage re/insurance has impacted established reinsurance names, as the firm’s capabilities in the marketplace begin to be tested.
A recent article on macrobusiness.com.au via Banking Day, explores the entry of Arch Capital Group in the Australian mortgage risk market, describing the re/insurer as the “rising titan of the Australian capital market.”
According to the article Westpac and Macquarie Bank are the two banks that are transferring risks on home loans to Arch Capital, in the niche area of lenders’ mortgage insurance (LMI). By using the two banks’ shares of the underlying mortgage as a guide, the article explains that Arch has obtained a 25% share of the Australian LMI market in short order, which, has disrupted a market previously dominated by Genworth and QBE LMI.
Furthermore, “Arch’s Australian entry has also elbowed out established reinsurance names that responded to Macquarie’s request for an alternative to Genworth,” explains the article.
For Arch, the move into the Australian market for mortgage re/insurance risk provides a new, diversifying, and potentially stable return avenue, something that has perhaps been lacking in other business lines beset with ongoing rate declines.
