Leading LMI provider, Genworth Mortgage Insurance is set to suffer a 14% decline in gross written premiums after a major bank terminated its agreement with the insurer.
Westpac has given Genworth 90 days written notice that they are terminating the agreement for the provision of LMI with the insurer.
This came after the major bank said they have completed a strategic review of all their LMI arrangements for all new residential mortgage loans with an LVR of greater than 90%.
The LMI business underwritten under this contract represented 9.5% of Genworth’s new insurance written in 2014. It also accounted for 14% of Genworth’s gross written premiums in 2014, which totalled $634.2 million.
The full effect of this termination is more likely to be felt in the 2016 year and beyond, the insurer advised.
Westpac has not indicated if they will insure the loans with LVRs over 90%, take the additional risk itself or switch to rival insurer, QBE.