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Genworth recorded $6.1 billion of new business volumes in the third quarter of 2016, down 28.2 per cent compared to the previous corresponding period (pcp). Gross written premiums (GWP) fell 25.8 per cent to $92.5 million over the period, 31.2 per cent lower than the pcp.
“This reflects a number of factors including reduced high-LVR penetration in the market, a lower LVR mix of business, as well as the full impact of the changes in customers in 2015,” the group said in a trading update earlier this month.
“The overall portfolio continues to be supported by strong performance in NSW and Victoria. However, the performance in Queensland and Western Australia is still challenging, reflecting increased delinquencies, particularly in regions exposed to the slowdown in the resources sector as the economy in those areas navigates through a period of transition.”
Genworth CEO and managing director Georgette Nicholas said the trends the LMI group saw develop in the first half of 2016 continued to impact its results for the third quarter.
“Overall, the high loan-to-value ratio (LVR) market is down and the mix of business in lower LVR bands is pressuring GWP,” Ms Nicholas said.
“Queensland and Western Australia continue to have elevated delinquency development from economic pressure, in particular in mining related regions,” she said.
“During this cycle our focus continues to be on maintaining our risk management discipline and helping our lenders support borrowers in hardship.”
Genworth announced this month that it would continue to be the exclusive provider of mortgage insurance to CBA, Australia’s largest mortgage lender. The bank, which represented 43 per cent of Genworth’s GWP in the first half of 2016, extended its contract with the LMI group until December 2019.
“We are very pleased to have renewed our long-standing agreement with CBA,” Ms Nicholas said.
“Our value proposition to our customers remains strong and we continue to redefine our core business model and find new ways to address our customers’ capital and risk management needs.”
[Related: Chinese group acquires mortgage insurer]