Key Highlights

• Helia reported net profit after tax of $100.0m for 1H26, down 25% on the prior period.

• ING Bank Australia accounted for 22% of Gross Written Premiums in the half.

• Dividends paid in the half of $227.6m also exceeded net profit of $100.0m, which is the arithmetic behind the fall in NTA per security from $3.72 to $3.22.

• The next report is the full-year result for the year to 31 December 2026, expected in February 2027, together with the progress of the $75m buy-back.

How does a lenders Mortgage insurer pay a large special Dividend in a half when profit is lower? Helia Group's (ASX:HLI) first-half 2026 result, for the six months to 30 June 2026 and reported in August 2026, answers it with capital: the company holds more than it needs against its board targets and is handing some of it back. Net profit after tax was $100.0m, down 25%, yet an Interim Dividend of 16.0 cents and a Special Dividend of 27.0 cents were declared. The result is a case study in how capital-return stories depend on how long surplus Capital lasts.

The central development: lower earnings, large returns

Helia reported net profit after tax of $100.0m for 1H26, down 25% on the prior period. Total Revenue from ordinary activities was $215.6m, also down 25%.

The interim dividend is 16.0 cents per share, fully franked, and the special dividend is 27.0 cents per share, unfranked. Dividends paid in the first half totalled $227.6m. The company also extended its on-market buy-back, with a maximum of $75m to be repurchased by the end of 2026.

Business and revenue drivers

Helia insures lenders against losses when a borrower with a high loan-to-value ratio defaults and the property sells for less than the debt. Lenders pay a premium, usually passed on to borrowers, when the Loan is written. Helia recognises that premium over time, so Earnings reflect past lending volumes, as well as claims experience and Investment returns on its portfolio.

Because premium is earned over several years, a fall in new Business shows up gradually. Lower gross written premiums suggest fewer high loan-to-value loans were insured in the period, which will reduce future premium recognition unless volumes recover.

Customer concentration and contracts

A critical commercial point is customer concentration. ING Bank Australia accounted for 22% of gross written premiums in the half. A new four-year agreement with ING started on 1 July 2026, and the company renewed exclusive lenders mortgage insurance arrangements with ING and two other major customers, according to the report. Renewals reduce near-term risk, since losing a major customer would reduce premium volumes.

Capital position

PCA coverage compares available capital with the amount regulators require, and it is the standard measure for insurers.

Special dividends and buy-backs are possible only because of that surplus. They are not recurring in the way that an ordinary dividend is; the size of any future return depends on earnings, claims experience and how much capital the business needs to write new policies.

Outlook

That limits visibility, and investors have little guidance beyond the contract renewals and capital commentary. In the absence of guidance, the main information comes from the trend in premiums, claims and capital.

Why the dividend exceeds half-year profit

Interim and special dividends together are 43.0 cents per share. Dividends paid in the half of $227.6m also exceeded net profit of $100.0m, which is the arithmetic behind the fall in NTA per security from $3.72 to $3.22. This is the logic of a capital return: a company with surplus regulatory capital pays out balance-sheet strength, not just current earnings. The sustainable level of Ordinary Dividends is therefore a different question, and depends on profit and on how much capital the book requires.

Sector and competitive position

Australia's lenders mortgage insurance market is concentrated: Helia competes mainly with QBE's LMI business and with lenders' captive arrangements. Lenders also use government-backed schemes for first-home buyers that reduce the need for insurance on some loans. The regulator, APRA, sets capital standards, and changes to those standards or to housing policy would affect Demand and capital needs. The competitive position rests on long relationships with large lenders and a record of underwriting, but concentration means a few contracts matter.

Risks and what to monitor

- Housing downturn: falling prices or rising Unemployment raise delinquencies and claims, though Helia's claims were favourable in the half.

- Premium volumes: lower gross written premiums reduce future earnings.

- Concentration: ING made up 22% of premiums, and other large lenders are important.

- Capital return limits: special dividends depend on surplus capital, which diminishes as it is returned.

- Regulation: APRA capital settings and housing policy.

- Lower claims benefits: past releases of provisions may not repeat.

The next report is the full-year result for the year to 31 December 2026, expected in February 2027, together with the progress of the $75m buy-back.