Helia Earnings: Can’t Fault the Track Record, but Conditions Unlikely To Remain As Favourable

We increase our fair value estimate for Helia by 9% to AUD 3.70 after another solid result for Australia’s largest provider of home lenders mortgage insurance, or LMI. Our short-term forecasts are lifted materially, with insurance revenue much higher than expected. We also reduce the share count and assume less capital is retained within the business. Despite having surplus capital and subdued new business for some time, we saw risk that economic deterioration could change claim assumptions and absorb capital. But the financial health of the business makes this look increasingly unlikely and the outlook for house prices and unemployment is not as dire as once feared. We assume completion of the AUD 100-million share buyback announced today, plus another AUD 180 million in buybacks by the end of 2024.