Genworth loses major bank contract

Westpac has provided 90 days' written notice that the bank is terminating its agreement for the provision of lender's mortgage insurance with Genworth Financial Mortgage Insurance Pty Ltd, a subsidiary of Genworth Mortgage Insurance Australia Ltd.

The major bank has advised Genworth that it has completed a strategic review of all of its lenders' LMI arrangements for all new residential mortgage loans with a loan to value ratio (LVR) of greater than 90 per cent.

The LMI business underwritten under this contract represented 9.5 per cent of Genworth’s’s new insurance written in 2014 and accounted for 14.0 per cent of gross written premium in 2014.

While the loss of the Westpac contract does not currently change the net earned premium (NEP) or full-year loss ratio guidance provided by Genworth on February 11, the group admitted that the “full effect” on NEP will likely be felt in the 2016 financial year and beyond.

On February 11, Genworth posted an underlying NPAT for 2013/2014 of $279.4 million, up 26.5 per cent on the previous corresponding period.