Helia Group’s half-year profit fell 25% to $100 million, hit by lower premiums and investment income. The insurer declared a combined 43 cents per share dividend and launched a $75 million share buy-back.
- Net profit after tax down 25% to $100 million
- Gross written premium declines after CBA contract expiry
- New four-year exclusive LMI deal secured with ING
- Interim and special dividends total 43 cents per share
- Announced $75 million on-market share buy-back program
Profit Decline Driven by Premium and Investment Revenue Drops
Helia Group Limited (ASX:HLI) reported a 25.2% drop in net profit after tax to $100 million for the half-year ended 30 June 2026, down from $133.7 million a year earlier. The decline was primarily due to a 24.8% fall in revenue to $215.6 million, reflecting lower insurance revenue and investment income.
Insurance revenue slid to $170.6 million from $182.2 million, impacted by a significant 44% fall in gross written premiums (GWP). This was largely attributed to the expiry of Helia’s exclusive lenders mortgage insurance (LMI) contract with Commonwealth Bank of Australia (CBA) at the end of 2025 and the ongoing effect of the Australian Government’s 5% Deposit Scheme, which has reduced demand for mortgage insurance among first home buyers.
Investment Income Halves Amid Absence of Prior Gains
Investment revenue also halved to $45 million from $104.4 million in the prior period. The previous half-year benefitted from large fair value gains on financial instruments that did not recur in 1H26, weighing on overall returns.
Despite these headwinds, Helia’s insurance claims environment remained favourable, with claims incurred staying negative, although the benefit was less pronounced than in the prior period. Insurance service expenses rose to $32.5 million, up from $25.2 million, reflecting a lower claims benefit and increased operating costs.
New ING Contract Secures 22% of Premiums
In a positive development, Helia secured a new four-year exclusive LMI contract with ING Bank Australia starting 1 July 2026, after the previous agreement expired on 30 June. ING accounted for 22% of Helia’s GWP in the first half of 2026, marking a critical revenue stream for the insurer. This renewal underscores Helia’s strategic focus on maintaining key customer relationships amid a challenging market.
Capital Position Remains Robust with Planned Buy-Back
Helia’s regulatory capital remains strong, with a Prescribed Capital Amount (PCA) coverage ratio of 2.07 times, comfortably above the Board’s target range of 1.40 to 1.60 times. The Common Equity Tier 1 (CET1) ratio also stands at 2.07 times, reflecting the company’s solid capital base.
Following the reporting period, Helia announced an on-market share buy-back program of up to $75 million, to be executed by 31 December 2026, subject to market conditions. This move aims to return surplus capital to shareholders alongside dividend payments.
Dividend Payouts Include Fully Franked and Unfranked Components
The Board declared an interim dividend of 16.0 cents per share, fully franked, and a special dividend of 27.0 cents per share, unfranked, payable on 4 September 2026. Combined, the 43 cents per share distribution reflects Helia’s commitment to returning value despite the profit contraction.
Net tangible assets per share decreased to $3.22 from $3.72 a year earlier, consistent with the decline in earnings and capital distributions.
Cost Management and Market Conditions
Helia’s cost base benefited from management actions, with a 39% reduction in expenditure incurred compared to the prior corresponding period. The company reduced its full-time equivalent staff to 151 and is on track to achieve a $12 million reduction in recurring costs by the end of the financial year.
The macroeconomic environment remains mixed, with a 75 basis point rise in the Reserve Bank of Australia’s cash rate to 4.35%, modest dwelling value growth, and an unemployment rate of 4.4%. These factors influence mortgage serviceability and, by extension, the demand for LMI.
What Lies Ahead for Helia
Looking forward, Helia expects FY26 insurance revenue to range between $330 million and $360 million, reflecting ongoing market challenges and the impact of government schemes. Total incurred claims are anticipated to remain well below through-the-cycle averages, supporting profitability.
Investors will be watching how Helia navigates the evolving mortgage lending landscape, particularly the balance between investment and owner-occupied lending, and the effectiveness of cost management initiatives. The execution of the $75 million buy-back and the performance under the renewed ING contract will also be key metrics to monitor.
Bottom Line?
Helia’s half-year results reveal a company adapting to a tougher LMI market with lower premiums and investment returns, yet leveraging key contract renewals and capital management to sustain shareholder returns.
Questions in the middle?
- How will Helia offset the loss of CBA premiums in the medium term?
- What impact will rising interest rates and housing market conditions have on future claims and premiums?
- Will the $75 million buy-back signal confidence in Helia’s valuation or a lack of organic growth avenues?