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Genworth CBA contract up for renewal

Genworth will be making the case for Commonwealth Bank to extend its LMI contract, after the end of its mandate with NAB in November.

Genworth Mortgage Insurance Australia has signalled its exclusivity arrangement with CBA to provide lender’s mortgage insurance (LMI) services will expire at the end of the 2022 year.

The company has provided LMI to the big four bank for more than 50 years, including the latest contract that has run since 2006 and was extended for a further three years form 2019.

The LMI business underwritten under the current contract represented approximately 57 per cent of Genworth’s gross written premium in the 2020 financial year – $320.1 million worth. Genworth’s gross written premium had been $561.7 million in FY20.

CBA has nudged Genworth, indicating an upcoming request for proposal.

Pauline Blight-Johnston, chief executive and managing director of Genworth, commented: “We welcome the opportunity to submit a proposal to CBA to extend our agreement for the supply of LMI beyond 2022, building on the strong foundations of our longstanding relationship.

“A core part of our strategy is to work with our lender customers to improve the efficiency and competitiveness of LMI as we look to reimagine LMI for a new generation of home buyers.”

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Genworth has reported it now has relationships with more than 50 lender customers – a drastic change from May 2020, when it said it was working with around 100 lenders.

November marked the end of Genworth’s contract with NAB, with the big four bank deciding to not renew and to move forward with QBE as its sole LMI provider.

NAB’s contract had represented approximately 12 per cent of the gross written premium (GWP) in the 2019 financial year.

Genworth’s profits took a dive amid the COVID crisis, with the group posting a statutory net loss after tax of $107.6 million for FY20.

The loss came despite a 29.7 per cent rise in GWP, attributed to higher LMI flow volumes across lender customers over the second half of 2020.

More recently, Genworth partnered with Gateway Bank to launch a new LMI offering, allowing borrowers the option of paying the cost of LMI in a monthly premium rather than as an upfront fee or cost that is capitalised into the home loan and paid off with interest.

Gateway Bank stated the offering could help those with low deposits access a mortgage sooner.

[Related: Aspiring home owners in the dark on terminology: UBank]

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