Helia Group Posts Strong 1Q25 Growth Amid Policy Uncertainty Over Home Guarantee Scheme

Robust Financial Performance in 1Q25

Helia Group Limited (ASX: HLI) has submitted its 1Q25 data to the Australian Prudential Regulation Authority (APRA), showcasing a notable uplift in key financial metrics compared to the same period last year. Gross written premium (GWP) surged 33% to $51 million, reflecting increased new housing loans above 80% loan-to-value ratio (LVR) and a gain in market share. This growth is particularly significant given the ongoing headwinds from the Home Guarantee Scheme (HGS) and rising lender self-insurance, which have historically weighed on premium volumes.

Despite a slight dip in insurance revenue to $92.6 million, down from $93.5 million in 1Q24, Helia’s statutory net profit after tax (NPAT) climbed impressively to $68.2 million, up from $53 million. This improvement was underpinned by a negative total incurred claims figure of $14.4 million, a result of low paid claims and a reduction in reserves, signaling favourable claims experience and effective risk management.

Claims and Investment Income Dynamics

The negative incurred claims outcome is particularly noteworthy, as it reflects a substantial benefit from changes to liabilities for prior claims, combining both good experience and basis changes. Net investment revenue remained stable year-on-year, indicating a steady net running yield and modest capital appreciation despite market fluctuations. However, the net financial result, which factors in insurance finance income and expense, declined to $21.7 million from $41.6 million, influenced by interest rate movements affecting insurance contract liabilities.

Helia’s regulatory capital position remains robust, with a Prescribed Capital Amount (PCA) coverage ratio improving slightly to 1.91x, well above the minimum requirement. The capital base, however, saw a reduction since December 2024, primarily due to the payment of the final dividend, partially offset by organic capital generation.

Strategic Concerns Over Home Guarantee Scheme Reforms

Beyond the numbers, Helia has flagged significant strategic risks stemming from proposed policy changes to the Home Guarantee Scheme by both major political parties amid the current federal election campaign. The proposed reforms aim to expand eligibility by altering income caps, property price limits, and removing caps on the number of places available, potentially increasing the volume of first home buyers (FHB) accessing the scheme.

Helia and the Insurance Council of Australia (ICA) have expressed concerns that these changes could undermine the stability of the financial sector and reduce accessibility to home ownership by introducing heightened risk. The company highlights that FHBs accounted for approximately 25-30% of its GWP in 2024, underscoring the material impact such policy shifts could have on its business model.

In response, Helia plans to actively engage with the government during the consultation process to advocate for modifications that preserve a vibrant lender mortgage insurance (LMI) industry capable of supporting sustainable home ownership in Australia. The company remains committed to delivering market-leading LMI services and exploring partnership opportunities with both new and existing lenders.

Looking Ahead

While Helia’s 1Q25 results demonstrate operational strength and resilience, the evolving policy landscape introduces a layer of uncertainty that investors will be watching closely. The company’s proactive stance on government engagement signals its intent to shape outcomes favorably, but the ultimate impact of HGS reforms on premium volumes, risk profiles, and profitability remains to be seen.