Shares in Genworth Mortgage Insurance rocketed 14% today after the Commonwealth Bank agreed to renew an exclusive agreement for the provision of Lenders Mortgage Insurance (LMI) to its home loan customers.

In July, Genworth revealed it was required to submit a new proposal to the Commonwealth Bank, its biggest customer, ahead of the expiry of the current exclusive LMI supply agreement, worth around $320 million a year, at the end of 2022.

A new three-year contract is now expected to be agreed from the start of next year, providing LMI to a minimum proportion of the bank’s new high Loan to Value Ratio residential mortgage loans.

“Genworth and CBA have entered into exclusive negotiations on the terms of a new contract,” the LMI specialist said today.

The Commonwealth Bank contract made up 57% of Genworth’s $561.7 million gross written premium (GWP) in 2020. Held by Genworth since 2006, it has in the past automatically rolled over.

NAB ended its LMI relationship – worth around 12% of Genworth’s GWP – in November, moving to an exclusive deal with QBE. Westpac stopped doing business with Genworth in 2015.

Genworth has agreements with over 50 lender customers across Australia, including major and regional banks, building societies, credit unions and nonbank mortgage originators.

“We are delighted to continue our relationship, supporting CBA and its borrowers,” CEO and MD Pauline Blight-Johnston said in a statement to the ASX.

Australia’s leading provider of LMI, Genworth saw its GWP surge 21% to $289.7 million in the first six months of 2021 while its adjusted combined ratio was 62.5% excluding a large write down. Strong economic recovery led to lower than usual paid claims and Genworth’s net claims incurred plunged 51%.

Genworth’s full year results are due on February 25. It posted an underwriting profit of $88 million in the first half, up from $53 million a year earlier, as mortgage repayment deferrals, customer repossession moratoriums and a 12% rise in national home values all boosted its performance.