Genworth Mortgage Insurance Australia third-quarter claims activity was lower than expected due to pandemic-linked government and lender support packages, but the group has increased reserving as the measures also cloud future visibility.

Net profit for the September quarter fell to $24.6 million from $25.1 million, with net claims incurred rising to $50.6 million from $40.3 million. The result was also impacted by reduced investment income.

Gross written premium rose 25.5% to $143.8 million reflecting strong volumes from lender customers as the housing market held up better-than expected, particularly in the owner-occupier segment.

The quarter result took the nine-month loss to $65.4 million, which includes a write-down in the first half. A profit of $113.2 million was reported in the previous year-to-date corresponding period.

CEO Pauline Blight-Johnston says the company supports loan repayment deferral programs, government job support packages and legal moratoriums that are assisting people during the pandemic.

“They are delaying the development and progressing of delinquencies and claims, providing Australians with some respite and time to recover,” she said. “They do, however, reduce our visibility of anticipated future claims outcomes.”

The company increased claims reserving by $47.1 million, resulting in the loss ratio deteriorating to 63.5%, compared to 52.9% a year earlier. The ratio improved from 86.9% in the second quarter when it announced a $35.5 million increase in loss reserving.

Ms Blight-Johnston says an expected uneven economic recovery is also creating uncertainty and Victoria’s lockdown and border closures in some states show the pandemic impact still has a while to play out.

Genworth says it has maintained strict underwriting standards and its business is skewed away from the big banks, which have higher loan deferral rates on average than the rest of the market.

Active deferrals have fallen to 31,139, representing 3% of insured loans in-force, after reaching a high of 50,302 in May.