GE Capital Services has agreed to buy Housing Loans Insurance Corp. Ltd., Australia's largest mortgage insurer, from the Australian government.

It would be third foreign operation for GE Capital Mortgage Insurance, a subsidiary of GE Capital Services. The Raleigh, N.C., company already owns mortgage insurers in Canada and the United Kingdom.

"Strategically, we are looking to diversify our risk around the world," said Mark Steinman, vice president of business development for GE Capital Mortgage Insurance.

Terms of the deal were not disclosed.

GE Capital Mortgage Insurance is buying Housing Loans Insurance's facilities and taking over its payroll but not its book of business. GE will manage old business for the Australian government but will assume risk only on new policies.

"The old insurance risks stay with government. We are essentially buying a new company with a fresh balance sheet," Mr. Steinman said.

The Australian mortgage insurance market is similar to the United States, in that insurance premiums are generally paid by the borrower.

However, mortgage insurance in Australia benefits lenders only. There are no agencies in Australia analogous to Fannie Mae and Freddie Mac, the U.S. government-sponsored enterprises that purchase and guarantee mortgage loans. Fannie and Freddie will not buy low-down-payment loans unless they are insured.

But there is a growing secondary market for securitized mortgages in Australia, Mr. Steinman said.

GE Capital Mortgage Insurance is the second-largest mortgage insurance company in the United States and the only one so far to expand internationally. But other mortgage insurers may soon follow.

Mortgage insurance has been highly profitable in recent years, and lenders are pressuring insurers to share profits. An international acquisition might be a good way for insurers to spend excess capital.

"I suspect you'll see more international expansion going on. The industry is just flooded with money," said Edwin Ciskowski, an analyst with Equitable Securities, Nashville.

Other insurers are exploring international opportunities. MGIC Investment Corp., the largest mortgage insurance company, and PMI Group, the third largest, had representatives at the Mortgage Bankers Association of America's international conference in September.

And this is not the first time an American mortgage insurance company has ventured into Australia. MGIC, when it operated as Wisconsin Mortgage Assurance Corp., had a mortgage insurance subsidiary in Australia in the 1970s and 1980s. The unit was sold in the mid-1980s, according to an MGIC spokesman.

Housing Loans Insurance competes with three Australian mortgage insurance companies that are not affiliated with the government.

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