The regulatory crackdown on home lending continues to erode the business performance of Genworth, with the company unveiling a sharp slide in first half earnings.The country's largest provider of lender's mortgage insurance suffered a 53 per cent slide in interim profit to A$41.9 million as the prudential regulator's two-year clampdown on high LVR lending savaged the company's revenue line.However, Genworth's locally listed scrip rallied after the result was announced to the ASX because disclosures in the half-year accounts indicated that insurance volumes began to recover in the June quarter.While new insurance written in the half was 21 per cent down on the same period last year, Genworth wrote $6 billion worth of new policies in the June quarter compared to $4.3 billion in the three months to the end of March.That disclosure appeared to underpin a 4.5 per cent surge in the share price to $2.81 on higher than average turnover.APRA's macro-prudential policies have crunched high LVR lending levels among ADI lenders, which has undercut demand for lender's mortgage cover.While Genworth is the market leader in LMI with servicing ties to more than 100 lenders, the business was also hurt by the loss last year of its second largest client, Westpac.Westpac's LMI is now provided through Arch Capital Group, a Bermudan-based insurer that has introduced margin pressure on Genworth and the other dominant mortgage insurance provider, QBE.Westpac had been the insurer's second largest client for many years and accounted for almost 10 per cent of Genworth's LMI book.In the last 18 months the company has been diversifying its insurance offerings as part of a strategy to counter the revenue impact of its declining traditional business.Chief executive Georgette Nicholas said the first half result was in line with earnings guidance and reflected the company's strategic transition."We have implemented a number of new initiatives that complement our traditional LMI offering and are designed to position Genworth as the leading provider of customer-focused capital and risk management solutions," she said."These new offerings included a bespoke risk management solution via a newly established Bermudan insurance entity, micro markets LMI and excess of loss cover."Genworth is investing heavily in technology to harvest cost savings across its business.In the last 12 months the company has been developing a new automated underwriting decision engine that is earmarked for launch towards the end of the year.Despite the recovery in insurance volumes reported for the June quarter, the company did not amend previous guidance given to the market for its full year earnings."We reiterate that 2018 will be a transitionary year for our business given the impact of the 2017 earnings curve review and the fact that we are in the process of implementing a number of strategic initiatives designed to redefine our core business model and diversify our revenue streams," Nicholas said.