HLI +17.15: Kicking ourselves on this one with HLI (the old Genworth Mortgage Insurance) holding a heap of excess capital which has underpinned a big special dividend and an increase to their on-market share buyback. The stock has resided on our Income Portfolio Hitlist for some time, and it should have been bought – easier to say in hindsight however our thesis has played out – without us!
They are December year-end so these are FY24 numbers:
- Underlying profit of $220.9 million, down -11% y/y but ahead of $217 expected
- Final dividend per share $0.160 up from $0.15 last year
- Plus a special dividend of $0.530
- And they’ve increased the on-market share buyback to maximum of $200m (they had spent $79m up to Dec 31)
There was no update about the CBA contract or the previously disclosed plans to issue a Request for Proposal regarding that contract, which is up in December 2025. The contract started in January 2022 with HLI providing lenders mortgage insurance (LMI) for CBA customers. In June 2024, CBA notified Helia of its intention to modify the terms of this agreement, inviting others to submit proposals.
In terms of guidance, they see insurance revenue of $310 to $390 million and expect total incurred claims ratio to remain well below group expectations of a through-the-cycle ratio of ~30% i.e. low defaults to continue.
MM is now neutral HLI ~$5.70
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