Helia Insurance, one of Australia’s largest lenders’ mortgage insurance providers, continues to demonstrate strong financial resilience, according to Fitch Ratings.
The rating agency highlighted Helia’s robust capitalisation and conservative risk management strategies as key factors underpinning its stability in a challenging economic environment.
Fitch noted that Helia’s performance metrics, including a three-year average return on equity of 20% and a combined ratio averaging 26% over the same period, remain well above the criteria for ‘A’ rated mortgage insurers. These figures reflect the company’s solid financial standing.
The insurer’s underwriting results have been positively influenced by sustained negative net incurred claims, driven by strong housing market prices, favorable delinquency trends, and adjustments in its reserving basis. Additionally, Helia’s overall earnings have been bolstered by strong investment returns. However, the company’s combined ratio rose to 25% in 2024, reflecting a lower benefit from negative claims. In the same year, Helia reported a net profit of AU$232 million (US$146.05 million).
Fitch anticipates that Helia’s business growth will remain subdued, as government housing support programs decrease the demand for mortgage insurance and lenders take on more risk. A potential downturn in the housing market could also lead to an increase in claims, potentially putting pressure on profitability.
Despite these challenges, Fitch remains confident in Helia’s ability to navigate potential headwinds, with its capital buffer providing a strong safeguard against economic uncertainties.
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