S&P Global Ratings has raised concerns over Helia Insurance’s future competitiveness following the loss of a major distribution agreement with the Commonwealth Bank of Australia (CBA).
The contract, set to expire on January 1, 2026, previously provided Helia with access to one of the largest mortgage origination channels in Australia. With the partnership coming to an end, the insurer will now rely more on smaller banks and nonbank lenders, in a market where Australia’s big four banks dominate.
While Helia is expected to retain around 21% of gross premiums written (GWP) after the CBA exit, the same as its domestic peers, S&P highlighted that the company’s ability to maintain its position as a key player in the lenders mortgage insurance sector will depend on its success in attracting new clients and strengthening existing relationships. S&P also noted that any decline in market share or operating performance could result in a downgrade within the next one to two years.
Despite the challenges, Helia’s earnings are anticipated to remain strong through fiscal 2025, bolstered by favorable macroeconomic conditions, including declining interest rates, rising property values, and low unemployment. Furthermore, due to the structure of its premium recognition model, the financial impact of losing the CBA agreement is expected to be minimal in the short term, as Helia recognizes revenue over a 15-year period.
S&P forecasts that Helia’s capital adequacy will remain well above the 99.95% confidence level over the next three years, despite reduced capital requirements stemming from portfolio runoff and a slowdown in new business. As a result, the insurer is likely to adjust its capital management strategy, potentially increasing dividend payouts and engaging in selective share buybacks.
Helia’s financial risk profile has been revised to “very strong” from “strong,” reflecting conservative reserving practices, disciplined asset-liability management, and a robust reinsurance program. However, S&P maintained a cautious outlook, noting the weakening business risk profile and placing it at the lower end of the dual-notch anchor.
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