Genworth smashed by $182m mortgage write-down

Australia’s biggest mortgage insurer, Genworth Mortgage Insurance Australia, yesterday announced to the ASX that it has taken a $182 million write-down in anticipation of a big surge in mortgage defaults on the back of rising unemployment and falling property prices:

Given Genworth provides cover to banks against the risk of customers defaulting, it will bear the first losses from any spike in mortgage defaults.

This puts Genworth in a fragile position given it is leveraged to the hilt, holding just $1.4 billion of capital against $308 billion of insurance in force.

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About the author

Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.