Genworth float on hold as rise in mortgage defaults increase claims

Mortgage insurer Genworth Financial is unlikely to proceed with plans to list its Australian arm until late this year at the earliest, after a jump in payouts squeezed earnings last year.

Mortgage insurer Genworth Financial is unlikely to proceed with plans to list its Australian arm until late this year at the earliest, after a jump in payouts squeezed earnings last year.

The delay to the float plans, outlined in its latest financial accounts, came after the company suffered a jump in payouts in response to higher mortgage delinquencies, especially among self-employed borrowers.

US-listed Genworth, the country's largest provider of lenders mortgage insurance, first said it was planning to float 40 per cent of its Australian business in late 2011.

But the float, estimated to be worth about $800 million, has been repeatedly delayed. In April last year the initial public offering was pushed back to the first half of this year after a spike in claims caused it to post a loss in the first quarter.

Now the most recent financial statements, filed last week, say: "The ultimate parent anticipates selling up to 40 per cent of its holdings in the Australian business, and the partial sale is not expected to occur prior to late 2013, subject to market valuation and regulatory considerations."

Lenders mortgage insurance is designed to protect banks when borrowers default on their home loans, and is a requirement for many home-buyers without large deposits. In the year to December, Genworth's Australian gross revenue from premiums jumped by 37 per cent to $545 million, a trend it says was caused by increased activity in the housing market.

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