Shares in ASX-listed lenders’ insurer Helia (ASX:HLI) – formerly Genworth – fell -17% in afternoon trades on Wednesday as Commonwealth Bank (ASX:CBA) gave notice to the company it wants to alter an existing contract with Helia.
Currently, Helia provides insurance for Commonwealth’s mortgage lending division; a contract which underpins much of the fundamental value proposition for Helia’s shareholders.
The wording of Helia’s announcement on Wednesday was ultimately unclear on what exactly CBA wants to do with the contract – though the language used hinted at a possible extension of coverage to the entire CBA group, which includes BankWest.
However – and this is likely what has spooked the market – that contract, inked in January 2022, was meant to last until 2025.
Clearly, despite some possibly positive language in Helia’s announcement on Wednesday, the market isn’t so sure.
That the company is back to negotiations well short of the contract’s original expiry date has been enough to amplify worries in an ASX not particularly defined by a risk-off atmosphere of late.
What exactly transpires for Helia remains to be seen. But as of mid-afternoon, it’s been enough to put Helia at the top of today’s biggest single-company declines on the ASX.
HLI last traded at $3.50.