Fitch says the stable rating outlook of Genworth Mortgage Insurance is supported by an agreement from the Commonwealth Bank to renew a contract after it insisted for the first time that the Lenders Mortgage Insurance (LMI) specialist submit a new proposal.

The exclusive contract for the provision of LMI to Commonwealth home loan customers, worth around $320 million a year, has been held since 2006 and in the past automatically rolled over every few years.

Shares in Genworth jumped 14% on Thursday after it said a new three-year contract is now expected to be agreed from the start of next year, subject to agreeing terms.

Fitch says the renewal with its largest lender customer supports a stable outlook for the A rating of Genworth Financial Mortgage Insurance and its rating "factors in the LMI provider’s high reliance on CBA, despite maintaining relationships with over 50 lenders across Australia”.

NAB ended its LMI relationship – worth around 12% of Genworth’s GWP – in November, moving to an exclusive deal with QBE. Westpac stopped doing business with Genworth in 2015.

“The loss or gain of a lender relationship can have a large effect on business volume, and remains a key sensitivity for GFMI’s rating,” Fitch said.

Fitch ranks Genworth’s business profile as 'favourable' against that of other LMI providers in Australia, considering its position as the largest LMI provider in the country, accounting for around half of the industry’s gross written premiums in 2020.

Genworth has agreements with major and regional banks, building societies, credit unions and nonbank mortgage originators.

Genworth’s full year results are due on February 25. It posted an underwriting profit of $88 million in the first half, up from $53 million a year earlier, as mortgage repayment deferrals, customer repossession moratoriums and a 12% rise in national home values all boosted its performance.