Genworth Financial has forecast a 5% increase in net profit to $231.1 million for its Australian lenders’ mortgage insurance (LMI) business this year, as it prepares to sell up to 40% of Genworth LMI.

US-based Genworth says an initial public offering (IPO) is a “strategic priority for 2014” and it wants to complete it in the first half of the year.

The float has been proposed and postponed since 2010.

Genworth Australia is forecast to record gross earned premium of $516 million, up 10%, and a loss ratio of 30.2%, compared with 32.1% last year.

The forecasts assume no premium rate increases and that the Reserve Bank will hold the official cash rate at 2.5% for the year. 

A price-earnings ratio of 12 would value the company at $2.7 billion but values of between $1.5 billion and $2.2 billion have been suggested after lead managers to the IPO last week began canvassing interest from fund managers.

Documents lodged with the US Securities and Exchange Commission say Genworth holds 45% of the local LMI market.

Its top three lender customers accounted for 55% of gross written premium last year, with the largest one contributing 43%.

All the funds raised will go the US parent company.

US class action specialist the Shareholders Foundation this month launched an action against Genworth Financial alleging false and misleading statements were made in 2012 about the stability and outlook of the Australian business. The action is unlikely to affect the IPO.