Lenders writing loans with lower deposits along with the benefits of a 2009 rise in premium rates explain the improved revenues and generous underwriting profits of the lenders mortgage insurance sector at a time of subdued activity in the Australian home loan market.Ian Graham, chief executive of QBE Lenders Mortgage Insurance, yesterday sketched out some of the drivers of the improving financial position of the firm, which is one of two that dominates its specialist insurance niche.The business of lenders mortgage insurance firms will come under more scrutiny this year as Genworth Financial considers its options for a planned sale - and listing on the ASX - of a 40 per cent stake in its Australian offshoot. A listing of its Australian subsidiary is likely by the middle of the year.Based on periodic data published by the Australian Prudential Regulation Authority, QBE LMI has more than doubled its underwriting profits, to A$302 million, over three years. Gross premium revenue has increased over the period since the GFC to $362 million in the year to December 2010, from $165 million in 2008.While home loan volumes subsided in the wake of the global financial crisis, suppliers of mortgage insurance lifted their pricing, a relatively rare event.And, while banks were for a time shy of loans with low deposits (that require mortgage insurance), their efforts to rekindle demand for loans has seen a lift in demand for insurance over the last year or two."Unlike general insurance, LMI is long term, cyclical business," Graham said of the trends in premiums."We price through the cycle. The last time we had a premium rate rise was in early 2009 coming out of the GFC. The drivers then were increased claims, increased reinsurance costs and lower investment returns."Graham said that at an industry level the 2009 price increase was 15 per cent.He said that having put those rates into the market three years ago there was little call for a review of premiums at present."Typically, an LMI only needs to change its rates again if Standard or Poor's, or a ratings agency or APRA increase the capital requirements for the business significantly and there's nothing on the horizon at the moment."Graham said that "while investment returns are below where we want them to be there is no competitive factor to look at premium rates."The conduct of banks is also helping to improve the quality of business and QBE LMI's financial profile."I give a lot of the credit to the way our customers have performed. I attribute 60 per cent of the improvement to the quality of the business our customers write and 40 per cent to new processes [such as new fraud detection tools]." Ownership of the firm changed in late 2008, with the sale of what was known as PMI Mortgage Insurance to QBE announced in August of that year, a month or so before the most serious phase of the financial crisis.Turning to the outlook for the housing sector and housing credit, Graham said he