Increased provisions against losses cut the underwriting profit of PMI Lenders Mortgage Insurance in 2006.Even so, revenue growth for PMI exceeded the rate of growth in housing lending in Australia and New Zealand.Financial statements filed with ASIC show underwriting profit fell 25 per cent to $102 million in the year to December 2006; investment profit fell 29 per cent to $50 million and net profit fell 32 per cent to $81 million.Premiums received, according to the statement of cash flow, increased 18 per cent to $269 million.Net claims incurred increased to $58 million in the year to December 2006 up from $5.5 million in 2005. Ian Graham, managing director of PMI said the increase in claims largely reflected increased provisions against default and did not represent claims paid out.PMI assumed for modelling purposes that house prices would fall by two per cent in 2007, another half a per cent in 2008 and then rise by three per cent in 2009.He said PMI adopted the additional provisions "to make sure we did not underestimate the downturn in the Sydney market in particular".He said the three increases in the level of interest rates in Australia last year had increased pressure on borrowers.Graham said the rising levels of provisions represented "a return to what I would call a much more normal level" and compared with the previously benign environment.He said the Australian market was quite regionalised and the downturn in Sydney was the first of significance in that market in almost 30 years.PMI's US-based owner kicked in $62 million of capital during the year to meet new capital adequacy standards.