Lenders mortgage insurance powerhouse Helia yesterday said it has been informed by ING that as part of a Request for Proposal process relating to the bank’s LMI requirements, ING Bank Australia has decided to proceed with negotiations with an alternate provider.
This will either be QBE LMI or Arch LMI, and very likely the latter.
Helia said its contract with ING expires on 30 June 2026 but includes a right for ING to terminate the contract by providing three months’ notice.
The LMI business underwritten under this contract represents around 17 per cent of Helia’s 2024 Gross Written Premium. ING is likely to be Helia’s second largest customer following Commonwealth Bank.
“The financial impact of ceasing to write new business from ING will emerge gradually over time and the absence of new business from ING will likely decrease the level of organic capital generation and scope for further capital management activity” Helia said.
Having almost certainly also lost new business from Commonwealth Bank (by far its largest customer), Helia is in a bind.
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So, Helia announced: “The board has commenced a comprehensive business review.
“The review will consider the business response to the expected loss of new business from two significant customers and the broader impact of the recently announced changes to the government’s Home Guarantee Scheme for first home buyers on our operating environment.”
The Home Guarantee Scheme, which applies to first home buyers, is set to be widened following the re-election of the Labor government.
The existing Home Guarantee Scheme, Helia said two months ago “has seen the volume of first home buyers using LMI decline in recent years” and this trend is bound to accelerate.
Helia’s options include soldiering on, generating much lower gross written premium and profits; finding a buyer for the business or – the biggie – putting the business into runoff.
Most probably finding a buyer is where the Helia board will land. If there are any.