Helia Reaffirms Commitment to Australian Lenders Mortgage Insurance Market
Despite losing new business to competitor Arch, lenders mortgage insurer Helia remains committed to the Australian Lenders Mortgage Insurance (LMI) market. This comes as part of the company’s strategy to progressively return more surplus capital. The company’s commitment is a beacon of hope for an industry that has seen significant changes over the recent years, notably with the introduction of the federal government’s 5% Deposit Scheme.
Helia’s Position Amidst Market Shifts
Within the last year, both Commonwealth Bank and ING have shifted their LMI business from Helia to Arch. Arch, a relatively new player in the Australian market, has also won Westpac’s LMI business, securing more than half of the market share. This shift is even more significant considering the federal government’s 5% Deposit Scheme, which is expected to drastically reduce the demand for LMI, especially from first home buyers. Despite these challenges, Helia reaffirms its dedication to the market.
Helia’s Strategy Moving Forward
Helia’s board has conducted a comprehensive review, assessing alternative strategies and ultimately pledging its ongoing commitment to the Australian LMI market. “Helia is focused on continuing to evolve to meet the changing market, building on its 60-year heritage of supporting Australians to buy, invest and upgrade their homes”, says Leona Murphy, Helia’s chair.
Growth Strategies and Cost Management
Helia plans to grow its gross written premium through a combination of leveraging existing customers and winning new ones. This strategy capitalizes on the company’s expertise in high Loan-to-Value Ratio (LVR) lending, which has helped secure its current leading position with a 51% share of the LMI industry in-force. The company is also actively managing its cost base to reflect the smaller market. This has included reducing its recurring cost base by $15 million in FY2025 and focusing on further efficiencies through systems and process automation in the coming years.
Returning Excess Capital and Future Opportunities
Alongside its growth strategies, Helia’s board has declared intent to explore options to return excess capital to shareholders in an efficient and effective manner. The company’s target capital range of 1.40 to 1.60 times APRA’s Prescribed Capital Amount (PCA) remains unchanged. As for new business opportunities, the most obvious one lies with NAB’s LMI business, currently provided by QBE LMI.
Despite the changing landscape of the Australian LMI market, Helia’s reaffirmed commitment and strategic planning demonstrate its resilience and adaptability. By leveraging its strong market position and focusing on cost management, Helia is well-positioned to navigate the challenges and seize the opportunities that lie ahead.
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