Westpac dump Genworth's LVR insurance agreement

Westpac dump Genworth's LVR insurance agreement
Jonathan ChancellorFebruary 17, 2015

Westpac Banking Corp has told Genworth Mortgage Insurance Australia that it will be cutting short its lenders mortgage insurance (LMI) agreement with Genworth.

It provided 90 days written notice yesterday. The company’s shares are down today more than 20% to around $3.34.

The termination provisions of the agreement were set out in the IPO Prospectus of the recently listed company.

WBC recently completed a strategic review of residential mortgage loans with a Loan to Value Ratio (‘LVR’) of greater than 90%.

The LMI business underwritten under this contract represented 9.5% of Genworth’s New Insurance Written in 2014. Genworth suggests a 14% fall in gross written premiums, which totalled $634.2 million in 2014.

The full effect is more likely to be felt in the 2016 financial year and beyond, the company advised. 

Westpac have not indicated if they will insure the loans with LVRs over 90% or take the additional risk itself,or go to the rival, QBA.

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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