LMI making quick returns for QBE

QBE Insurance says trading conditions for its recently acquired lenders mortgage insurance business, QBE LMI, are better than when QBE agreed to buy the business from PMI in August 2008.

In commentary published yesterday with the QBE half year financial results, the insurer said QBE LMI was "well ahead of plan". QBE did not share much information on this profit.

However, the company said a year ago that it would target a return on equity of 20 per cent for this subsidiary and that it expected the LMI business would be earnings per share accretive in the first year.

A lift in new lending associated with the increased grant for first home owners - almost all loans for which will require insurance - as well as improving economic indicators generally suggest QBE will be satisfied with its acquisition.

In one slide in the results presentation QBE said the claims ratio was 32.8 per cent and the combined operating ratio was 54.8 per cent.

The 60 day delinquency rate on insured loans increased three basis points over six months to 52 bps.

QBE said gross earned premium for this first half was $140 million. Six months ago QBE said its target for the full year was $207 million.