Fitch Ratings has affirmed Westpac Lenders Mortgage Insurance’s (LMI) insurer financial strength rating at AA- with a stable outlook, noting its robust capital position and conservative investment approach.

It says Westpac LMI has low loss ratios, “although absolute levels of profit have fallen on lower levels of risk retention and net written premiums”.

Although Queensland’s weaker economy and lower underwriting standards in 2008 and 2009 have affected claims, Fitch says tighter standards from mid-2009 and the current strength of the housing market nationally support an improvement.

The ratings agency says Westpac LMI generates significant levels of surplus capital and could withstand a range of severe downturn scenarios.