Genworth Mortgage Insurance Australia has reported a 22.4% decline in first-quarter net profit to $52.2 million, as tighter regulations hit the residential housing market.

The lenders’ mortgage insurer has also announced it has submitted a contract renewal proposal to client NAB.

“Australian regulators have taken further steps recently to reinforce sound housing lending practices, with a particular focus on slowing the growth in investor lending and limiting the flow of new interest-only lending,” CEO Georgette Nicholas said.

“We are supportive of regulatory measures that promote prudent mortgage lending standards and ultimately foster long-term sustainable credit growth.

“We have strategic initiatives under way to redefine our core business model, with a particular focus on improving our underwriting efficiency, enhancing our product offerings and, where appropriate, leveraging our data and partnerships along the mortgage value chain.”

Genworth’s combined operating ratio worsened to 60.1% in the March quarter from 50.5% in the corresponding period last year.

The loss ratio deteriorated to 34.8% from 27% as loan delinquencies increased.

Gross written premium (GWP) grew 3.8% to $88.2 million and new business written increased 9.7% to $6.8 billion.

Genworth lost its second-biggest client when Macquarie Bank decided not to renew its contract, effective last month.

In November it renewed its contract with main customer Commonwealth Bank until December 31 2019. The contract represented about 47% of GWP last year.