Helia Insurance Pty Ltd. 'A' Ratings Affirmed, Outlook Stable...

Helia Insurance Pty Ltd. 'A' Ratings Affirmed, Outlook Stable

	•	On July 24, 2022, we revised our IICRA for the Australian mortgage insurance sector to low risk, from intermediate risk.
•	We are affirming our 'A' financial strength and issuer credit ratings on Helia, with no effect on the ratings from the revised IICRA. We are also affirming the 'BBB+' rating on its subordinated debt.
•	Our stable outlook reflects our view that Helia will maintain a strong competitive position, solid earnings, and robust capital adequacy.

SYDNEY (S&P Global Ratings) June 6, 2023--S&P Global Ratings today affirmed its 'A' financial strength and issuer credit ratings onHelia Insurance Pty Ltd., and the 'A' financial strength rating onHelia Insurance Pty Ltd. (NZ Branch). We also affirmed the rating on Helia's subordinated debt at 'BBB+'. The outlook on all ratings is stable.

The affirmation of the ratings on Helia (formerly Genworth Financial Mortgage Insurance Pty Ltd.) follows the revision of our insurance industry and country risk assessment (IICRA) for Australia's mortgage insurance sector to low risk, from intermediate risk (see "Risks Ease For Australia's Mortgage Insurers," published July 24, 2022).

We affirmed the ratings on Helia as the revised IICRA has no impact on the ratings. The IICRA score improvement to low risk from intermediate risk does not change our business risk profile given our assessment of Helia's competitive position as strong.

The 'A' ratings and stable outlook on Helia reflect our view of the insurer's strong competitive position, backed by its leading local market share, and strong capital adequacy. Our base case is that Helia's financial resources will be sufficient to support the 'A' ratings over the next two years.

We expect Helia to maintain a leading market share in lenders' mortgage insurance in Australia. The insurer has an Australia-wide presence and a history of sound profitability and innovative strategies that support its business profile. However, we note that its monoline nature and reliance on a single customer for over half of its business presents some concentration risk.

We assess Helia's capital and earnings as strong, reflecting capital consistent with the 'A' level under our mortgage insurance capital model. We expect the insurer's capital to remain comfortably above that level and view the change to an AASB 17 balance sheet in 2023 as neutral to the capital adequacy assessment.

The stable outlook on Helia reflects our view that it will maintain its strong competitive position as the largest provider of lenders mortgage insurance in Australia, as well as strong capital adequacy for at least the next two years.

Although unlikely, we could lower the ratings on Helia over the next two years if there is:

	•	A deterioration in its competitive position, resulting in a material weakening in its market share;
•	A material decline in its operating performance; or
•	A weakening in its prospective capital position to below the 'A' level, under our global insurer capital model.

We could raise the ratings on Helia over the next two years if our prospective view of its capital adequacy sustainably improved to the 'AA' category, according to our capital model.