Helia Group Limited · ASX:HLI
Helia — FY2024 Earnings Presentation
48 slides from Helia's earnings presentation, Feb 25, 2025
Slide 1: 2024 Full Year Results Investor Presentation
1 (Presentation Title) – produced by Helia Insurance Pty Ltd. For use by (customer name) only. Not for distribution.
Slide 2: Disclaimer
Disclaimer 2 This presentation contains general information in summary form which is current as at 31 December 2024. It may present financial information on both a statutory basis (prepared in accordance with Australian accounting standards which comply with International Financial Reporting Standar
Slide 3: Agenda
3 Agenda 1. Overview 4 2. FY24 Financial results 14 3. Closing comments 32 4. Supplementary information 36 5. Glossary 45
Slide 4: Overview
Overview Pauline Blight-Johnston Chief Executive Officer and Managing Director 2024 Full Year Results
Slide 5: FY24 highlights
5 FY24 highlights Strong financial Key financial drivers Strategic progress Capital management results Underlying NPAT1 Insurance revenue 100% of 2024 PCA coverage $221m $389m renewals retained ratio 2.10x3 Statutory NPAT Total claims incurred2 Six new customer FY24 dividends of ($37m) integrations
Slide 6: Key performance measures
6 Key performance measures Statutory NPAT ($ millions) Underlying diluted EPS (cps) Insurance revenue ($ millions) PCA coverage ratio1 467.7 2.21 275.1 427.3 2.10 389.2 1.86 231.5 201.2 76.3 76.1 60.8 FY22 FY23 FY24 FY22 FY23 FY24 FY22 FY23 FY24 FY22 FY23 FY24 Underlying NPAT ($ millions) Underlying
Slide 7: Operating environment
7 Operating environment Labor force resilient Dwelling values stabilising Interest rates stable at cycle peak 4.0% unemployment rate remains low, participation National home dwelling values rose 4.9% in FY24 RBA cash rate target unchanged at 4.35% in FY24 rate strong and hours worked increased WA an
Slide 8: HLVR lending recovering, but LMI GWP subdued
8 HLVR lending recovering, but LMI GWP subdued High LVR residential lending ($ billions) Industry and Helia quarterly GWP ($ millions) 70.0 50% 400 60% 60.0 51% 40% 350 49% 50% 50.0 300 40% 40.0 30% 250 35% 33% 35% 40% 200 30% 30.0 20% 150 20.0 20% 10% 100 10.0 10% 50 0.0 0% 0 0% Mar-19 Dec-19 Sep-1
Slide 9: Government schemes negatively impacting industry GWP
9 Government schemes negatively impacting industry GWP Government Guarantees issued1 HLVR lending ($ billions) 50,000 120 40,000 100 80 30,000 60 20,000 72% 40 54% 10,000 57% 77% 20 68% 0 0 Jun 19/20 Jun 20/21 Jun 21/22 Jun 22/23 Jun 23/24 Jun 24/25 June 19/20 Jun 20/21 Jun 21/22 Jun 22/23 Jun 23/24
Slide 10: Industry arrears and LMI delinquencies stabilising
10 Industry arrears and LMI delinquencies stabilising Industry 90+ day arrears Delinquencies (number of) 9,000 1.0% 8,000 0.8% 7,000 6,000 0.6% 5,000 4,000 0.4% 3,000 0.2% 2,000 1,000 0.0% 0 Mar-19 Dec-19 Sep-19 Mar-20 Dec-20 Sep-20 Mar-21 Dec-21 Sep-21 Mar-22 Dec-22 Dec-23 Sep-22 Mar-23 Sep-23 Mar-
Slide 11: Disciplined capital management
11 Disciplined capital management Dividend per share (cps) Principles • Deploy capital at attractive returns for shareholders • Return to and then operate within Board target range of 1.40 – 1.60x PCA 53 over time 27 30 • Target stable fully franked ordinary dividend • Explore options to return exce
Slide 12: Sustainability framework
12 Sustainability framework Driving social wellbeing Enhancing climate resilience Working with lenders to understand and Accessible housing assess risk Maintain net zero for Supporting communities Scope 1 and 2 emissions Employee culture and wellbeing Investment portfolio emissions measurement Enabl
Slide 13: Helia strategy
Helia strategy 13 Strategic Objectives Drive Deliver results operational through agility and risk world-class maturity performance Grow the Grow and defend market our LMI market Deliver results through for LMI share world-class performance 2024 Full Year Results Grow the market for LMI
Slide 14: FY24 Financial results
FY24 Financial results Michael Cant Chief Financial Officer 2024 Full Year Results
Slide 15: Income Statement
15 Income Statement FY24 v FY24 commentary: ($ millions) 1H23 2H23 FY23 1H24 2H24 FY24 FY23 • Insurance revenue down on pcp due to lower GWP in recent (%) years and experience variations on top-up premium credits Insurance revenue 219.8 207.4 427.3 194.8 194.4 389.2 (8.9) Insurance service expense •
Slide 16: Insurance revenue
16 Insurance revenue FY24 commentary: ($ millions) 1H23 2H23 FY23 1H24 2H24 FY24 • Insurance revenue down 9% on pcp Expected insurance service expenses 76.0 88.1 164.1 75.4 74.0 149.4 • Premium experience variations driven by higher-than- incurred expected level of premium credits from top-ups Risk
Slide 17: Gross written premium (GWP)
17 Gross written premium (GWP) GWP ($ millions) GWP walk ($ millions) 7.7 2.3 322.4 1.1 (0.7) 289.7 259.9 249.1 239.3 184.1 188.6 195.6 185.2 131.4 109.7 96.6 88.6 85.9 1H19 2H19 1H20 2H20 1H21 2H21 1H22 2H22 1H23 2H23 1H24 2H24 FY23 LVR mix Volume Rate Bulk FY24 FY24 commentary: • GWP up 6% on pcp
Slide 18: Insurance service expense
18 Insurance service expense ($ millions) 1H23 2H23 FY23 1H24 2H24 FY24 Incurred claims from current period 44.7 19.9 64.6 35.7 17.0 52.8 Changes to liabilities for prior incurred claims (85.6) (46.2) (131.8) (45.6) (44.4) (90.0) Total incurred claims (40.9) (26.3) (67.2) (9.9) (27.3) (37.2) Insuran
Slide 19: Claims paid
19 Claims paid Mortgages in possession (MIP) and paid claims (number of) FY24 commentary: 800 700 • Number of paid claims down 31% and number of MIPs down 20% on pcp 600 500 • Policies in negative equity remain low at 0.5% of total in-force 400 • Biggest negative equity improvements in WA and Qld, w
Slide 20: Delinquencies
20 Delinquencies Delinquency waterfall (count) Change in delinquency count by state 20% 10,000 8,000 7,203 (6,486) 0% FY19 1H20 FY20 1H21 FY21 1H22 FY22 1H23 FY23 1H24 FY24 6,000 4,000 (166) -20% 4,532 5,083 2,000 -40% 0 FY23 New Cures Claims paid FY24 delinquencies -60% NSW VIC WA QLD Other Total F
Slide 21: Incurred claims
21 Incurred claims Composition of total incurred claims ($ millions) FY24 commentary: FY22 FY23 FY24 100 • Incurred claims from current period reflect favourable claim experience 50 • Impact of experience for prior incurred claims benefit included: 0 • Stable delinquency cure rates -50 • Dwelling va
Slide 22: Insurance service result
22 Insurance service result Insurance service result composition ($ millions) ($ millions) 1H23 2H23 FY23 1H24 2H24 FY24 400 Contractual service margin recognised 73.1 65.7 138.8 74.4 75.7 150.1 350 Risk adjustment recognised in revenue 23.9 25.2 49.1 20.0 19.6 39.6 300 Net expense from reinsurance
Slide 23: Net investment revenue
23 Net investment revenue Annualised return on total investments 5% FY24 commentary: 4% • Interest and dividend / distribution revenue up on pcp due to maturing 3% bonds being reinvested at higher average rates and elevated distributions from equities 2% 1% • Realised and unrealised gains are lower
Slide 24: Net insurance finance expense
24 Net insurance finance expense ($ millions) 1H23 2H23 FY23 1H24 2H24 FY24 Interest accreted to liabilities (28.5) (32.7) (61.2) (31.9) (32.5) (64.4) Changes in interest rates (0.3) (28.3) (28.7) 7.2 (8.7) (1.4) Insurance finance expense (28.8) (61.1) (89.9) (24.7) (41.1) (65.8) Reinsurance finance
Slide 25: Balance Sheet
25 Balance Sheet ($ millions) 31 Dec 23 30 Jun 24 31 Dec 24 FY24 commentary: Assets • Cash and investments down 4% on pcp due to payment of Cash 57.0 35.0 112.4 dividends and on-market share buy-backs Accrued investment income 26.7 32.6 24.6 • Insurance contract liabilities fell 11% on pcp due to: I
Slide 26: Cash and investments
26 Cash and investments Technical funds ($ millions) 31 Dec 23 % 30 Jun 24 % 31 Dec 24 % Commonwealth1 360.8 32.1 318.6 31.3 343.1 36.9 • Average duration 3.9 years2 State Gov't 404.4 36.0 349.9 34.4 298.4 32.1 • 100% fixed interest and cash Corporate / other 356.7 31.8 348.6 34.3 269.5 29.0 Cash &
Slide 27: Insurance and reinsurance contract liabilities
27 Insurance and reinsurance contract liabilities FY24 commentary: ($ millions unless otherwise stated) 31 Dec 23 30 Jun 24 31 Dec 24 • LRC continued to fall due to lower in-force volumes PV future cashflows 608.7 564.1 522.1 • CSM represents future expected profits and has increased as a proportion
Slide 28: Liability for incurred claims (LIC)
28 Liability for incurred claims (LIC) Liability for incurred claims ($ millions) Average reserve per reported delinquencies 550 $40,000 500 $35,000 450 400 $30,000 350 $25,000 300 $20,000 250 200 $15,000 150 $10,000 100 $5,000 50 - $- FY19 FY20 FY21 FY22 FY23 FY24 FY19 FY20 FY21 FY22 FY23 FY24 Repo
Slide 29: Contractual service margin (CSM)
29 Contractual service margin (CSM) CSM walk ($ millions) FY24 commentary: 64.0 45.0 (150.1) • CSM balance largely steady, benefitting from positive changes in estimates 14.6 • CSM recognised significantly exceeded new business CSM • $142m of CSM expected to emerge over the next 12 months, excluding
Slide 30: Regulatory capital
30 Regulatory capital ($ millions) 31 Dec 23 30 Jun 24 31 Dec 24 FY24 commentary: Capital base • PML dropped due to cancellations and portfolio seasoning, Net assets 1,141.4 1,061.4 1,080.4 which more than offset new business strain Regulatory adjustments for goodwill/intangibles (11.4) (10.7) (9.4)
Slide 31: Capital walk
31 Capital walk PCA coverage ratio walk (x)1 0.44 0.04 0.24 2.10 1.86 0.23 (0.18) (0.01) 1.73 0.20 (0.22) (0.30) (0.14) 0.23 1.87 1.66 1.50 Dec-23 Statutory NPAT Dividends & buy- In-force runoff New business Reinsurance (% of Other Dec-24 Dividend Buy-back Pro forma backs strain PML) Tier 1 Tier 2 F
Slide 32: Closing comments
Closing comments Pauline Blight-Johnston Chief Executive Officer and Managing Director 2024 Full Year Results
Slide 33: Outlook and FY25 guidance
33 Outlook and FY25 guidance Insurance • FY25 insurance revenue expected to be within range of $310m to $390m revenue Total incurred • FY25 total incurred claims ratio expected to remain well below Helia’s expectations of a claims through the cycle total incurred claims ratio of approximately 30% 20
Slide 34: Accelerating financial wellbeing through home ownership
34 Accelerating financial wellbeing through home ownership Early signs of cyclical Returns in excess of Delivering strong Leading LMI insurer1 Capital management recovery2 cost of capital TSR3 HLI 172.4% ($ billions) Underlying ROE (%) ($ millions) Insurer 111.0% 70 Insurer 87.8% 14 259.5 60 Insurer
Slide 35: Q&A
Q&A 2024 Full Year Results
Slide 36: Supplementary information
Supplementary information 2024 Full Year Results
Slide 37: Residential mortgage lending market
37 Residential mortgage lending market Originations and HLVR penetration1 Industry new loans funded: Investment vs. owner occupied ($ billions, %) Helia NIW: Investment vs. owner occupied ($ billions, %) 2 32% 34% 30% 29% 29% 30% 45 35% 40 24% 20% 179.8 35 14% 12% 14% 184.0 185.0 30 3.7 4.2 128.8 15
Slide 38: Insurance in-force
38 Insurance in-force As at 30 Jun 2024 As at 31 Dec 2024 Original Effective Change in Original Effective Change in Book year $ billions % Book year $ billions % LVR LVR house price % LVR LVR house price % 2014 & prior 86.3 38.0% 84.2% 25.3% 132.9% 2014 & prior 81.2 36.9% 84.2% 21.5% 144.1% 2015 11.
Slide 39: Delinquency trends
39 Delinquency trends Number of delinquencies 1H23 2H23 FY23 1H24 2H24 FY24 Opening balance 4,569 4,616 4,569 4,532 5,229 4,532 New delinquencies 3,030 3,121 6,151 3,737 3,466 7,203 Cures (2,861) (3,087) (5,948) (2,948) (3,538) (6,486) Paid claims (122) (118) (240) (92) (74) (166) Closing delinquenc
Slide 40: Claims sensitivity to economic conditions
40 Claims sensitivity to economic conditions Economic assumptions as at 31 December 20241 Claims sensitivity3 LRC ($ millions) LIC Excluding CSM4 Property price Mortgage rates Unemployment rates Upside economics Unemployment -1% (20) (5) 3.8% house price RBA cash rate cut to Stay low but expected to
Slide 41: Reinsurance programme
41 Reinsurance programme Reinsurance coverage by layer (% of APRA 1-in-200) net paid claims Reinsurance cover ($ millions) 100% 700 679.0 90% 600 80% 500 70% 445.0 3rd layer Retained 406.8 60% 400 2nd layer 50% 1st layer 300 Retained 245.0 40% Retained losses Retained 200 30% 20% 100 10% 0 0% 31 Dec
Slide 42: Reconciliations
42 Reconciliations Expenses Statutory NPAT to underlying NPAT1 ($ millions) 1H23 2H23 FY23 1H24 2H24 FY24 ($ millions) 1H23 2H23 FY23 1H24 2H24 FY24 Expenditure incurred 59.4 69.5 128.9 63.1 69.6 132.7 Statutory NPAT 147.5 127.6 275.1 97.0 134.5 231.5 Less investment expenses (1.3) (1.4) (2.7) (1.2)
Slide 43: Australian key economic indicators
43 Australian key economic indicators Change in dwelling values (%) 3 months 6 months 12 months Rental vacancies (%) Dec 23 Jun 24 Dec 24 Sydney (1.4%) (0.9%) 2.3% Sydney 1.7 1.7 2.1 Melbourne 1.5 1.5 2.2 Melbourne (1.8%) (2.9%) (3.0%) Brisbane 1.2 1.1 1.2 Brisbane 1.3% 3.6% 11.2% Perth 0.5 0.8 0.7
Slide 44: History of strong Total Shareholder Return (TSR) delivery
44 History of strong Total Shareholder Return (TSR) delivery TSR to 31 December 2024 54.2% 1YR 48.4% 42.9% 42.0% 41.2% 34.5% 33.7% 26.4% 24.2% 18.0% 16.5% 15.8% 11.4% Insurer Bank Insurer Bank Bank Insurer FINXR Bank Bank HLI Bank Bank ASX200 172.4% 3YR 111.0% 87.8% 81.9% 71.7% 64.6% 63.4% 51.0% 45.
Slide 45: Glossary
Glossary 2024 Full Year Results
Slide 46: Glossary
46 Glossary As at 31 December 2024 Term Definition Term Definition Ageing Movement in reserves on any insurance policy that remains in a delinquent state Claims and expenses (including amortisation of insurance acquisition cash flows) incurred in the period Insurance service expense as well as losse
Slide 47: Glossary
47 Glossary As at 31 December 2024 Term Definition Risk adjustment recognition Risk adjustment recognised as revenue / average LRC risk adjustment balance, annualised where proportion required Return on equity – ROE is NPAT divided by the average of the opening and closing equity balance for a ROE f
Slide 48: Investor materials can be found at:
Investor materials can be found at: Helia.com.au For more information, analysts, investors and other interested parties should contact: Paul O’Sullivan Head of Investor Relations D: +61 499 088 640 E: investorrelations@helia.com.au The release of this announcement was authorised by the Board. 25 Feb