S&P Global Ratings has revised its outlook on Helia Insurance Pty Ltd – Helia Group Ltd’s primary operating subsidiary – to negative, maintaining its “A” ratings but signalling concern over the potential impact of losing Commonwealth Bank of Australia (CBA) as a client.
The rating action affects both Helia’s long-term financial strength and issuer credit ratings, as well as the “BBB+” rating on its subordinated debt.
The agency pointed to competitive pressures expected to intensify once Helia’s contract with CBA, its largest customer, expires on Dec. 31, 2025.
According to S&P, the expected loss of the CBA distribution arrangement may reduce Helia’s access to new mortgage insurance business, given the dominance of Australia’s four major banks in the sector.
The agency said future performance will depend heavily on Helia’s ability to retain existing lender clients and secure new partnerships.
“The loss of CBA as customer is unlikely to materially affect the insurer’s earnings for at least three years. This is because the insurer recognises upfront premiums over a 15-year period,” S&P said.
The agency noted that while Helia continues to serve a diverse range of smaller banks and nonbank lenders, its future competitive position is uncertain.
Fitch Ratings took a similar view in March, lowering its outlook on Helia while affirming its “A” Insurer Financial Strength Rating.
Fitch cited internal estimates that Helia’s market share in gross written premium (GWP) could drop from 38% to 21% should the CBA contract not be renewed. In 2024, CBA accounted for 44% of Helia’s GWP.
Despite the risk of market share loss, Fitch and S&P noted that LMI revenue recognition is spread over extended periods – often up to 15 years – softening any immediate financial impact.
Helia Group Limited’s financial results for the year ending Dec. 31, 2024 (FY24), reflected a challenging environment. Statutory net profit after tax declined 16% to $231.5 million, while underlying profit dropped 11% to $220.9 million.
The company said unrealised investment movements were a factor in the result. GWP rose 6% to $195.6 million, but total insurance revenue decreased 9% to $389.2 million, reflecting prior-year trends and premium adjustments.
The group reported a 19% decline in insurance service result to $291.9 million and a 7% fall in its financial result due to weaker investment returns. The investment yield was 4.9%, slightly below the previous year’s level.
Capital strength remained a positive factor, with Helia ending 2024 with a prescribed capital amount (PCA) ratio of 2.1x. S&P expects Helia to remain well above its internal capital benchmark of 99.95% confidence over the next three years. This projection assumes continued run-off of older policies and fewer capital demands from new business.
Looking ahead, Fitch warned that Helia could face further downgrades if profitability erodes or capital adequacy deteriorates significantly. The agency cited a return on equity below 8% or a PCA ratio under 1.5x as potential triggers for action.
