"We've cut back in writing in Western Australia and Queensland," Genworth's chief executive Tom McInerney said in an interview in New York on Wednesday. He cited regulatory actions "and the fact that the Australian economy is more tied in a macro sense to China and commodities."

The US-based insurance group floated Genworth Mortgage Insurance Australia in a 2014 initial public offering, and still owns more than 50 per cent of the local business. Mortgage insurers cover losses for lenders when homeowners default and foreclosure fails to recoup lenders' costs.

McInerney made his comments as the American company is looking to its mortgage-insurance units in the US, Canada and Australia for growth, having been burned by long-term care policies that cover home health aides and nursing home stays. A possible increase in corporate defaults and soured home loans, particularly in the mining states of Queensland and WA, are shaping up to be the next challenge for Australia's largest lenders.

Genworth Mortgage Insurance Australia's shares traded for $2.56 as of 12:47pm Thursday, compared with $2.76 at the end of 2015. McInerney said he would consider selling more stock if the price rebounds and would probably use the money to pay down debt.

'Harder look'

"As long as the stock stays where it is, and it's sort of where it is because there's concern about the housing market, it's better to just take the dividends," McInerney said. "If the stock moved much closer to book value over time, we might take a harder look at, 'Does it make sense to sell down, balancing all the other things?"'

The loss ratio for the Australian business widened to 26 per cent in the first quarter, driven by increased losses in Queensland and WA, the CEO said last month.

Genworth Mortgage Insurance Australia posted a 5 per cent decline in underlying net profit for the year to December, saying in February it expected to write less new business as the property market is cooling.

Bloomberg