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QBE Insurance has announced plans to float a minority stake of its Australian mortgage insurance business.
The insurance giant said the net tangible assets of the “highly profitable and well-positioned” LMI business were about $1.2 billion, and that it planned to hold the partial flotation in 2015.
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Chief executive John Neal said QBE LMI’s results have been “outstanding” and are expected to remain so for the foreseeable future.
“The capital intensity of this business led us to purchase additional reinsurance protection to support the business’ growth plans,” he said.
“However, with the longer term in mind, the introduction of third-party shareholders offers QBE LMI enhanced capital flexibility to support its growth ambition.”
Meanwhile, QBE has announced a net profit of $392 million for the six months to 30 June 2014, which was down 17.8 per cent on the previous year.
The result was affected by $827 million of one-off costs.
“Our LMI business grew strongly in the first four months of the year, but has subsequently slowed in line with the banks’ response to APRA’s desire to restrict lending where the loan-to-value ratio is greater than 90 per cent,” according to QBE.
[Related: QBE reveals why people use a bank or broker]
