How Will Helia Navigate Major Contract Losses After a Record Profit?
Helia Group Limited reported a strong first half of 2025 with a 37.8% jump in net profit, driven by investment gains and low claims, but faces significant challenges as major contracts with Commonwealth Bank and ING Bank are set to end in 2026.
- Net profit after tax rises 37.8% to $133.7 million
- Investment revenue surges to $104.4 million
- Loss of 61% of premiums from CBA and ING contracts starting 2026
- Interim dividend of 16 cents fully franked and 27 cents special dividend unfranked declared
- Strong regulatory capital position with capital ratio well above target
Strong Financial Performance
Helia Group Limited has delivered a notably strong financial performance for the half year ended 30 June 2025, with net profit after tax climbing 37.8% to $133.7 million compared to the prior corresponding period. This growth was primarily fueled by a significant increase in investment revenue, which more than doubled to $104.4 million, reflecting favourable market conditions and realised gains on bonds and equities. Meanwhile, the company benefited from a continued benign claims environment, which kept insurance service expenses low.
Revenue and Premiums Dynamics
Despite a slight decline in insurance revenue to $182.2 million, premiums received rose to $120.6 million, driven by increased new housing loans above an 80% loan-to-value ratio. However, gross written premiums remain under pressure from the Federal Government’s Home Guarantee Scheme and rising lender self-insurance, which have dampened growth prospects in the core lenders mortgage insurance business.
Major Contract Losses on the Horizon
Looking ahead, Helia faces a significant operational challenge with the announced non-renewal of its supply and service contract with Commonwealth Bank of Australia (CBA) effective 31 December 2025, and ING Bank Australia’s decision to negotiate with an alternative provider following a recent Request for Proposal process. Together, these contracts accounted for approximately 61% of Helia’s premiums in the first half of 2025. While Helia will continue to service existing policies over the coming years, the cessation of new business from these key customers will gradually impact revenue and profitability.
Strategic Response and Capital Strength
In response, Helia’s Board has initiated a comprehensive business review to explore strategic options and reposition the company amid these headwinds and the evolving landscape shaped by changes to the Government’s Home Guarantee Scheme. On the capital front, Helia maintains a robust regulatory capital position, with a capital ratio of 2.30 times the Prescribed Capital Amount, well above the Board’s target range, providing a solid buffer to manage future uncertainties.
Shareholder Returns and Corporate Actions
Helia declared an interim dividend of 16 cents per share, fully franked, alongside a 27 cents per share special dividend, which is unfranked. The special dividend replaces further on-market share buy-back activity, which continues under an extended program through to the end of 2025. Additionally, the company redeemed its Tier 2 subordinated notes in July 2025 following APRA approval, further strengthening its balance sheet.
Outlook
While the half-year results underscore Helia’s operational resilience and capital strength, the impending loss of major contracts and shifts in government policy present material challenges. The outcomes of the ongoing business review will be critical in shaping the company’s trajectory and shareholder value in the medium term.
Bottom Line?
Helia’s strong half-year profit masks looming revenue risks as major contracts exit, setting the stage for a pivotal strategic reset.
Questions in the middle?
- What strategic alternatives will Helia pursue to offset the loss of CBA and ING contracts?
- How will changes to the Home Guarantee Scheme affect Helia’s future premium growth?
- What is the timeline and expected financial impact of the business review outcomes?
