Genworth saw its high-ratio premiums slip in the second quarter compared to the year-ago period, driven by weakening demand and growth in low-loan-to-value activity.
The high loan-to-value component of new insurance written was $5.7 billion for the three months ending June 30, according to new financials released Tuesday and specifically focused on the Canadian market.
While that value represents an increase of 62 per cent over the previous period, it’s a year-over-year decline of 7 per cent.
The fall is “largely due to a smaller market for high loan-to-value mortgages as compared to the previous year,” read the quarterly financials.
Where the company did see an uptick in premiums was in so-called bulk insurance for the conventional mortgages of lenders looking to securitize those loans.
“Total new insurance written increased sequentially to $18.8 billion primarily due to $13.1 billion of portfolio insurance written on low loan-to-value mortgages,” says Genworth, quick to defend the growth. “The Company selectively participates in portfolio insurance under a clearly defined risk appetite and disciplined pricing approach. The Company believes that this selective participation results in profitable business and enhances overall lender relationships.”
Brokers, in fact, anticipated the spike following CMHC’s announcement this spring that it would restrict lender access to its own portfolio insurance fund – what many view as its first step to tightening up underwriting standards at mortgage lending institutions.
Genworth and Canada Guaranty have largely benefited from that move, with lenders turning to them to insure their conventional loans.