The mortgage insurance market will stay “constrained” as lenders further tighten loan application criteria in response to regulatory requirements, according to Genworth Mortgage Insurance Australia.

CEO Georgette Nicholas says a 29.7% decline in net profit last year to $228 million and a 20% fall in gross written premium (GWP) to $507.6 million show the tough landscape.

Conditions remain difficult, as the group’s 13.9% drop in new business written to $6.2 billion in the first quarter will attest.

“We expect the high-loan-to-value market to continue to be constrained given the regulatory and lender risk appetite changes,” Ms Nicholas told the company’s AGM. “The current environment brings with it a number of challenges, but we are confident Genworth has a resilient business model, one that has and is able to navigate cyclical changes.”

Genworth will continue its strategy of optimising its capital structure, maintaining strong risk management discipline and targeting appropriate risk-adjusted returns to boost profitability.

“Our focus is on continuing to enhance the current business model and on innovating products and services to compete with any potential threat of disruption in the market,” Ms Nicholas said.

“We are working to strengthen customer relationships by continuing to support credit-worthy borrowers looking to get into the housing market, and by structuring products to meet the capital and risk management needs of our lenders.”

Ms Nicholas says Genworth has about 39% of the Australian lenders’ mortgage insurance market, based on new business written last year. It has more than 100 lender customers, and its three biggest clients accounted for 65% of its GWP last year.

First-quarter net profit of $67.3 million, down 24.8% on the corresponding period last year, is in line with the group’s outlook for the year.