More cautious mortgage lending a dampener for Genworth 06 August 2015 4:27PM John Kavanagh A reduction in the number of mortgages written at high loan-to-valuation ratios in recent times has put a brake on the business of Australia's leading lenders mortgage insurer Genworth.The company reported gross written premium of A$284.5 million for the six months to June - nine per cent down on the previous corresponding period. Genworth chief executive Ellie Comerford told analysts at a results briefing yesterday that the fall was largely due to a reduction in mortgage originations with loan-to-valuation ratios above 90 per cent.High LVR loans are good business for mortgage insurers because more of them are insured and the premium is higher.Among Genworth's customers the proportion of policies written on loans with LVRs above 90 per cent fell by seven per cent, compared with the previous corresponding period.A release from Genworth's premium reserve boosted net earned premium by 3.3 per cent to $225.7 million.The company made a net profit $113 million for the six months to June - down 25.4 per cent from the previous corresponding period.After adjusting for $19.9 million of unrealised mark-to-market losses in its investment portfolio, the underlying net profit was $132.9 million, compared with $133.1 million for the previous corresponding period.The company's return on equity (based on underlying earnings) was unchanged at 12 per cent.The number of claims paid fell from 881 in the six months to June last year to 568 in the latest half. The average claim paid fell from $62,900 to $49,100 over the same period. Total claims paid fell from $55.4 million to $27.9 million.With rising property values, fewer mortgagee sales required an insurance top-up.However, there was an increase in delinquencies in mining towns in Queensland and Western Australia during the half and the company's loss ratio (net claims as a proportion of net earned premium) rose from 19.6 per cent to 22.1 per cent.A reduction in high LVR loans was not the only bad news for the company during the half. In February Westpac gave notice that it would terminate its LMI agreement with Genworth. Westpac's LMI business accounted for 14 per cent of Genworth's gross written premium in 2014.However, in June National Australia Bank renewed its contract with Genworth for two years.