Genworth Mortgage Insurance Australia plans to reduce its capital with a payment of around A$200 million to shareholders and, at the same time, consolidate its share base.Genworth announced yesterday that it would put the proposal to shareholders at its annual general meeting on May 5.The $202 million capital reduction involves a distribution of 34 cents a share. Genworth has obtained Australian Prudential Regulation Authority approval for the capital reduction and it is seeking a ruling from the Australian Taxation Office that no part of the proceeds to Australian resident shareholders will be a dividend for income tax purposes.The share consolidation will reduce the number of shares by 14.5 per cent.Genworth chief executive Georgette Nicholas told investors at the company's 2015 results briefing that the company was "capital heavy" and with the number of high loan-to-valuation ratio loans falling sharply the company was doing less underwriting. Genworth suffered a 20 per cent fall in gross written premium during the year to December and has forecast that GWP could fall by the same amount in 2016.Early last year Westpac terminated its LMI agreement with Genworth. The loss of the Westpac business accounted for about half the fall and will continue to have an impact this year.The other factor leading to lower GWP was the move by lenders to reduce their volumes of high LVR lending. The ratio of high LVR loans to total new insurance written by Genworth fell from 36 per cent in 2013 to 21 per cent last year. At the end of 2015 the company had a pro forma regulatory capital solvency ratio of 1.59 times the prescribed amount, which was above the Genworth board's target range of 1.3 times to 1.4 times.A $202 million capital reduction would take the ratio to 1.46 times the prescribed amount. Genworth's major shareholder, Genworth Financial Inc, has indicated that it will vote in favour of both proposals.