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Helia Group Ltd (ASX: HLI)

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Question asked 05/06/2026

Helia Group Ltd (ASX: HLI)

Hi Guys, Just wondering whether you have a current view on Helia (HLI). Your website indicates that you sold out of your holdings in your Active Income Portfolio on 27th October last year for $5.66 per share. It looks, according to the Trading View chart, as though the price has been pretty much rangebound since then. I couldn't bring myself to sell at the time or since as the share price has held up and the franked dividends have been stellar. I seem to remember the concern has been about the loss of, or the potential loss of, CBA as their main customer. The PE is very low which is appropriate if they are due to lose a lot of business, but this also makes me wonder whether the loss of that account has been factored into the share price and that therefore they are trading at fair value. I'm also wondering how likely they are to find other customers to replace CBA which might make holding onto them make sense? Would appreciate your thoughts on this. Also, according to said Trading View chart the highest price achieved by HLI on 27th October 2025 was $4.90 and that in fact HLI has never traded as high as $5.66. Does this suggest that Trading View's charts are inaccurate? On another topic, I for one appreciated hearing that your ethics prevent you from investing in Credit Corp. I understand you don't want to alienate customers by expressing views that might be contrary to their values however I consider that it is important that we prospective purchasers of shares in companies are informed about so called ethical issues surrounding their business models so that we can make informed decisions about whether to invest in them. Looking forward to hearing your response to my questions. Pietro

Answer

Hi Pietro,

Helia Group (HLI) is Australia’s leading provider of Lenders Mortgage Insurance (LMI), protecting banks and lenders against losses when borrowers default on high loan-to-value ratio (LVR) home loans.

We actually bought the stock into weakness following the announced loss of the ING contract which came after they also announced the loss of CBA. CBA and ING accounted for ~60% of gross written premium, so it was a material hit. However, HLI holds regulatory capital on their balance sheet, and when they write fewer policies, regulatory capital requirements decline, and they can pay money back to share holders. That was our thesis on HLI and the position did well in a reasonably short amount of time, gaining ~40%. If you go to the opinion section of the Helia company page (here) you can read about our views at the time on this position.

As at December 2025, HLI had excess capital of ~$320m, However, Helia then declared a 16c final dividend plus 67c special dividend, totaling about $226.2m, and said the pro-forma PCA ratio after those dividends would be 1.73x. That now implies that HLI has excess capital of ~$100m. When we bought the stock, they had excess capital of ~$600m – which was what we were drawn to.

Right now, their back book continues to run off, and the core business is shrinking materially. Helia is increasingly reliant on smaller banks, regional lenders and non-bank mortgage originators for new business. Notably, the company no longer has any of the major banks as active LMI customers, despite counting CBA, NAB and Westpac among its clients when it listed as Genworth in 2014.

HLI won’t replace CBA, and they have paid back capital to shareholders on that basis. HLI will be a smaller business going forward than it was in the past. The recent Budget has also cast a shadow over the Australian housing market and HLI has suffered accordingly falling ~8% in the last fortnight on the expectation of lower housing turnover.

We doubt the share price will do much from here – with all returns coming from dividends. On that basis it looks okay, but we prefer companies with more growth, feeding into a growing dividend, which HLI is unlikely to have. Further, we do not expect the same flow of special dividends going forward that have been paid during 2025/26 – which was $1.47.

In terms of charts and prices the Bloomberg chart is shown below with a $5.72 high posted on 27/10/25. Trading view may adjust prices for special dividends paid – not sure on that one, but the stock certainly traded at that level.

Thanks for the feedback on Credit Corp (ASX: CCP), much appreciated and in general a consensus view.

chart

Helia Group Ltd (HLI)

LAST UPDATED 03/06/2026 12:04

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