Lenders’ mortgage insurer (LMI) Genworth Australia expects the buoyant housing market to help it increase premium income and profit this financial year, but warns its ability to raise rates further is limited.

Its prospectus for a public offer of 30-40% of the company’s shares says Genworth expects an 11% rise in gross written premium to $663.2 million and a 15% increase in underwriting profit to $185.7 million. Net profit is expected to gain 5% to $231.1 million.

The forecasts assume no premium rate increases and that the Reserve Bank will not raise interest rates during the year. Genworth expects mortgage originations to grow about 10%.

The prospectus says Australia’s LMI industry “has been consistently profitable” over 10 years. It forecasts a combined operating ratio of 57.8%, compared with 59.5% last financial year and 98.9% in 2011/12.

Genworth has increased rates in recent years, and says its ability to raise them further is limited.

A bookbuild will determine the final share price, but the shares are likely to cost $2.20-$2.90, raising $429-$754 million for US parent Genworth Financial, which will retain a stake of about 60%.

This would give the company a price-earnings ratio of 6.2-8.2 on this year’s forecast earnings. It is offering a franked dividend of 6.7-8.9%.

Genworth Australia had $300 billion of insurance in force at December 31, and about 45% of new LMI written.

Although it writes for more than 100 lenders, about 66% of its business comes from Westpac, Commonwealth Bank and NAB, with contracts that expire next year and in 2016.

The offer to retail investors opens on May 2 and closes on May 15, with share trading to start on May 23.