General insurer QBE will make an initial public offering of its lenders' mortgage insurance business QBE LMI, with plans to list the business on the Australian Securities Exchange next year.QBE said it would retain "a material exposure" to the business, which it described as "highly profitable".The LMI IPO is part of a capital plan the company outlined with the release of its 2013/14 financial report yesterday. Its capital initiatives are intended to  "significantly improve the group's capital strength and balance sheet resilience."QBE said: "The IPO will provide QBE LMI with a broader shareholder base and funding flexibility more suitable for a business with ongoing and strong growth ambition."There was little disclosure about the LMI business in the financial report. At June 30 it had net tangible assets of A$1.2 billion.LMI premium income "grew strongly in the first four months of the year but has subsequently slowed in line with the banks' response to APRA's desire to restrict lending where the loan-to-valuation ratio is greater than 90 per cent."While the company was bullish about QBE LMI's prospects in its very brief comments yesterday, it was telling a different story in its submission to the Financial System Inquiry earlier this year.It complained that lenders using the advanced methodology for calculating capital requirements for credit risk (the big banks) received no capital benefit for the use of LMI, despite the fact that the LMI providers were required to hold significant capital for the risk that was transferred.And it warned that an emerging trend in Australia was the selective charging of a high LVR fee in lieu of LMI by some lenders.