In a statement, Westpac said it would sell Westpac Lenders Mortgage Insurance Limited to Arch Capital and enter into a 10-year exclusive supply agreement to provide lenders mortgage insurance to the group.
The bank said the sale price would be at book value and be confirmed at completion, however Westpac would record a loss on the sale in the 2021 financial year as a result of separation and transaction costs.
"Westpac is please 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," the bank's chief executive of specialist businesses and group strategy Jason Yetton said.
"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 said it would retain responsibility for "certain legacy matters" in the transaction, which was due to occur at the end of August.