Helia Faces Major Setback as CBA Moves to New LMI Provider

Highlights:

• CBA Ends Long-Term Partnership with Helia – Commonwealth Bank of Australia (CBA) is in exclusive negotiations with a new provider, signaling the end of its five-decade relationship with Helia Ltd (ASX: HLI) for lenders mortgage insurance (LMI) services.
• Financial and Strategic Impact – With CBA accounting for 44% of Helia’s gross written premium (GWP) in FY24, the company is implementing strategies to mitigate the loss and explore new partnerships.
• Stock Decline Amid Uncertainty – At the time of writing, Helia’s share price has dropped 25.15%, trading at $3.63, as investors react to the potential revenue loss.

CBA to End Long Standing Contract with Helia

Helia Ltd (ASX: HLI) is on track to lose a significant contract with the Commonwealth Bank of Australia (CBA) as the bank begins exclusive discussions with a different provider for lenders mortgage insurance (LMI) services. The existing supply and service agreement between Helia and CBA, set to expire on 31 December 2025, is now unlikely to be extended.

If the negotiations conclude successfully, Helia will stop writing new LMI policies for CBA at the beginning of FY26.

CEO Expresses Disappointment Over CBA’s Decision

Helia’s CEO and Managing Director, Pauline Blight-Johnston, voiced disappointment over the potential end of a five-decade partnership with CBA.

For the past 50 years, CBA and Helia have helped hundreds of thousands of Australians achieve

homeownership. Given our long and successful collaboration, we are disappointed by this development and would have welcomed the chance to continue our partnership,” Blight-Johnston stated.

She added that Helia had presented a strong proposal that balanced its strategic relationship with CBA while ensuring sustainable returns for shareholders.

Future Outlook and Financial Impact

Although Helia will stop generating new business from CBA after FY25, it will continue to earn gross written premium (GWP) from existing policies, with revenue being recognized over the next 15 years under the AASB 17 accounting framework.CBA accounted for about 44% of Helia’s GWP in FY24. Despite the impending loss, Helia reaffirmed its previous financial guidance and outlined strategies to mitigate the impact. The company plans to explore new partnerships and optimize its capital management, targeting a capital coverage ratio between 1.40 and 1.60 times the prescribed capital amount.

At the time of writing, Helia's shares have declined by 25.15%, trading at $3.63.

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