QBE spikes LMI listing

From The Australian:

QBE insurance has put a planned float of its Lenders Mortgage Insurance on hold saying the proceeds are not needed following a major capital overhaul at the international insurer.

QBE managed a $1bn profit turnaround in the year to December 31, reporting a $742m net profit following a year of restructuring, asset sales and capital raisings.

Chief executive John Neal said the partial float of the LMI business, one of two major underwriters of riskier mortgages in Australia, “always represented the icing on the cake” of the company’s capital restructure.
The benefits of a sale are now “not need at all in this market,” he told analysts and investors on a call this morning.
One guesses that this has a lot more to do with the contract risk piling in on the LMI sector right now that anything else given the Westpac move to offshore its LMI needs.
APRA will not be pleased, or ought not to be. Without access to market capital, in a shakeout these dominoes will fall very fast.
Then again, who knows, by then the entire sector may have shifted to Bermuda.
David Llewellyn-Smith
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