The end of Australia's mining boom is hitting the country's mortgage insurance industry.
Reporting a flat half year underlying profit, Genworth Mortgage Insurance says loan delinquencies increased 8.4 per cent on the corresponding period last year, driven by mining-related unemployment in Western Australia and Queensland.
That has pushed the firm's loss ratio up from 19.6 per cent to 22.1 per cent, although the effect on its bottom line was mitigated by expense reduction measures.
"When you look at those new delinquency developments, it's very much from those mining areas that are pressured in Queensland and Western Australia that we've been monitoring and watching the last year," chief financial officer Georgette Nicholas said.
"We've obviously talked about being cautious in those areas."
The insurer said the delinquencies were spread between owner-occupiers and property investors, but in all cases they were down to unemployment.
Unemployment in Western Australia rose from 3.5 per cent in June 2012 to 5.8 per cent in June 2015, and from 5.2 to 6.1 in Queensland over the same period.
"It's pretty significant year over year," Ms Nicholas said.
"We are seeing underemployment and a reduction in income, so we are seeing hardship and borrower sales activity."
Fast rising property prices in Sydney and Melbourne have insulated Genworth against claims in those cites because borrowers in difficulty can sell quickly and at a profit, but that isn't the case elsewhere.
Even so, chief executive officer Ellie Comerford said the company isn't overly exposed to the dangers posed by possible RBA rate rises, and has reduced the amount of high loan-to-valuation-ratio (LVR) insurance it covers.
Underlying profit of $132.9 million in the six months to June was almost unchanged from 12 months earlier.
Genworth shares closed steady at $3.51.
MINING FALL HITS MORTGAGE INSURER
* Net profit down 25 per cent at $113 million
* Underlying profit flat at $132.9 million
* Interim dividend of 12.5 cents and special dividend of 18.5 cents
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