Fitch expects Helia Insurance capital buffer sufficient against downturn

The insurer is one of Australia’s largest lenders' mortgage insurance provider.

Helia Insurance continues to demonstrate financial resilience despite a challenging economic environment, according to Fitch Ratings.

The agency cited the insurer’s strong capitalisation and prudent risk management as key factors supporting its stability.

Fitch said that HLI’s performance metrics, such as return on equity with a three-year average of 20%, and combined ration with a three-year average of 26%, continue to compare well against its criteria guidelines for IFS 'A' rated mortgage insurers.

The group’s underwriting results have been boosted by continued negative net incurred claims on strong house prices, favourable delinquency experience and reserving basis changes, whilst overall earnings have been supported by strong investment returns. HLI's combined ratio rose to 25% in 2024  on a lower benefit from negative claims. It recorded a net profit of $146.05m (AU$232m) in 2024.

Fitch expects Helia’s business growth to remain subdued, as government housing support programmes reduce the need for mortgage insurance and lenders retain more risk. Separately, a housing market downturn could lead to higher claims, putting pressure on profitability.

Even so, Fitch expects Helia to remain well-positioned, with its capital buffer offering a strong line of defence against potential headwinds.