Genworth is on track to meet its full-year profit guidance after it grew its traditional lenders’ mortgage insurance (LMI) business in the first half despite tight credit and moderating market conditions.

First-half net profit was $88.1 million, including an after-tax unrealised $45.4 million investment portfolio gain.

Underlying net profit excluding the unrealised gain fell 14% to $43.1 million.

Gross written premium (GWP) fell 31% to $184.1 million, although excluding a bespoke transaction written by Genworth’s Bermudian insurance entity a year earlier GWP was up 6.4% year-on-year in the first half.

The result was in line with full-year guidance, says Genworth CEO Georgette Nicholas.

“We have … delivered growth in our traditional lenders mortgage insurance (LMI) business despite the prevailing tight credit and moderating market conditions,” Ms Nicholas said.

Economic growth continued to slow in the first half, reflecting subdued household consumption and income growth, tight credit conditions, cost of living pressures and uncertainty before the May federal election.

Metropolitan housing market conditions are now expected to stabilise, although Perth would likely continue to experience challenging market conditions, Genworth says.

Last week, ratings agency S&P lowered Genworth Australia’s rating one notch to A. Increased competition from bank LMI captives and a new entrant would place pressure on Genworth's market position and earnings, though profitability would likely stabilise at around current levels over the next one to two years, S&P says.