Genworth Mortgage Insurance expects under-employment and subdued wage growth to lead to increased delinquencies in regional Australia this year.
The insurer's 2016 full-year profit slipped 10.9 per cent to $203.1 million as its loss ratio - the ratio of claims to net earned premium - rose from 24.0 to 35.1 per cent on an increase in delinquencies, most notably in mining regions.
Chief executive Georgette Nicholas on Friday warned that the 2017 full-year loss ratio is expected to widen to 40-50 per cent.
"The under-employment rate remains elevated and at near-record highs, implying a greater degree of spare capacity in the economy than indicated by the unemployment rate alone," Ms Nicholas said.
"Labour market dynamics are increasing the instance of mortgage stress in certain regional economies and Genworth expects these trends to drive elevated mortgage delinquencies in these regions."
Genworth's net earned premium for the 12 months to December 31 fell 3.6 per cent to $452.9 million.
Ms Nicholas said it was likely to drop by another 10 to 15 per cent in 2017.
GENWORTH'S FY RESULTS
* Net profit down 10.9pct to $203.1m
* Net earned premium down 3.6pct to $452.9m
* Final dividend flat at 14 cents, fully franked
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