US-based Genworth is “optimistic” market conditions will allow it to proceed this year with an initial public offering (IPO) on up to 40% of its Australian mortgage insurance business.

“The Australian mortgage insurance business has been performing well, with improving loss experience, and is delivering solid returns and dividends,” Genworth President and CEO Tom McInerney told an earnings conference call.

“Additionally, Australian IPO market activity has increased over the past year.”

The IPO date will depend on market conditions, valuation considerations, performance of the business and regulatory approvals, he says.

Moody’s Investors Service says the planned partial float could affect the Australian mortgage business’ credit profile.

“If successful, it would further improve its financial flexibility, by providing direct access to equity capital markets, but could somewhat weaken its links with, and potential for support from, the broader Genworth group,” Moody’s says in a report.

Genworth reported a 6% rise in earnings from the Australian mortgage insurance business in the fourth quarter last year, despite an adverse impact from the exchange rate.

Net operating income grew to $US66 million ($74 million) from $US62 million ($70 million) in the corresponding period of 2012.

The loss ratio fell to 21%, down 15 points on the 2012 corresponding period and 10 points on the third quarter.

Loss and tax improvements of $US8 million ($9 million) were partially offset by a $US4 million ($4.5 million) charge related to a customer contract, while the foreign exchange rate had a $US6 million ($6.7 million) adverse effect compared with a year earlier.

For the year, Australian mortgage insurance operating earnings increased to $US228 million ($256 million) from $US142 million ($159 million).

Genworth’s overall net income last year grew to $US560 million ($629 million) from $US325 million ($364 million), while fourth-quarter earnings increased to $US208 million ($233 million) from $US168 million ($189 million).

“Our fourth-quarter… results were strong and we’re particularly pleased with the progress in improving our long-term care insurance business and with the good operational performance in the global mortgage insurance division,” Mr McInerney said.