Moody’s has maintained mid-A ratings on four lenders’ mortgage insurance (LMI) providers, noting their financial strength and conservative underwriting practices.

Genworth Australia (rated A3), QBE LMI (A2), Westpac LMI (Aa3) and Genworth Indemnity (A3) account for 90% of total LMI premium, with the first two alone taking 80%.

Genworth Australia’s impending float of 30-40% of the company has no immediate ratings impact.

Moody’s Senior Credit Officer Ilya Serov says the offer is considered a “a mild positive”, raising the company’s visibility in broader capital markets but also perhaps weakening its links with its US parent when support is needed.

The four LMI providers’ capital levels are healthy and their loss ratios – low at about 30% – are expected to remain benign.

However, challenges could arise from increases in interest rates, which have been low for some time.

“There’s a lot of uncertainty around if and when interest rates will go up,” Mr Serov told insuranceNEWS.com.au.

While property prices have increased in the past year, home loan growth and underwriting standards remained broadly stable.

Another risk is Australian LMI providers’ largely domestic coverage, which limits their geographic and client diversification.

“As a result [they] are exposed to potentially higher volatility in revenues and claims in Australia’s moderately sized economy.”

The move away from a resources base in the nation’s economy is also a threat.

“Although a low probability event, higher delinquencies and losses in a severe downturn may exert pressure on capital levels,” Mr Serov said.