Helia Insurance sees claims normalising soon: Fitch Ratings

It holds a 34% market share in lenders' mortgage insurance (LMI) as of 1H’23.

Australia-based Helia Insurance’s (HLI) business volume is projected to stay affected by slower loan growth in mortgages with high loan/value rations, higher mortgage rates, higher lender risk retention as well as the federal First-Home Guarantee Scheme, said Fitch Ratings.

Despite a drop in gross written premiums in 2023, the impact on insurance revenue was less pronounced due to the longer earnings pattern of the in-force book.

Fitch also expects HLI's performance to normalise over the medium term, with claims experience returning to normal levels. 

However, severe underwriting stress is not expected due to likely benign unemployment levels and strong house price growth.

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HLI is the largest lenders' mortgage insurance (LMI) provider in Australia, holding a market share of 34% in 1H’23. Fitch ranks HLI's business profile as 'favourable' compared to other LMI providers in Australia.

Although HLI's portfolio is diversified across states, it maintains a high concentration with its largest lender customer, Commonwealth Bank of Australia.

HLI's performance significantly improved in recent years, driven by claim reserve releases due to lower delinquencies following pandemic support measures. 

Net profit rose in 2023, along with a turnaround in investment revenue.