Helia’s Group’s gross written premium fell 11% to $85.9 million in the first half as banks self-insured and fewer property buyers borrowed at levels requiring lenders’ mortgage insurance.

Fewer new loans were written above the 80% loan to property value ratio – the level at which lenders insist borrowers buy LMI. Government assistance for first homebuyers also reduced LMI demand.

The insurer says underlying profit fell 22% to $106.5 million in the half.

CEO and MD Pauline Blight-Johnston says new business volumes “remain soft” and Helia is working with lenders on opportunities to expand risk appetite. Initiatives may include removing underwriting restrictions in some high-density postcodes and opening investor lending to a 95% loan to value ratio.

“We are intensifying our focus on growing and defending our LMI market share while working with a range of stakeholders to grow the market for LMI,” she said.

“We do believe there ... remains a great opportunity for LMI. LMI is a very elegant and important solution in Australia, and we’re committed to making it as effective as it can be.”

Claims incurred were unusually low last year and in the first quarter of this year, the company says.

It says there was a modest increase in mortgage arrears in January to June. New mortgage delinquencies rose 23% compared with a year earlier but remained below historical totals at 3737. The delinquency rate was up 11 basis points to 0.63%.

Claims incurred totalled $35.7 million in the first half, compared with $19.9 million in the last six months of last year.

“We do believe that we will see increased delinquencies over coming months and years, and we are well positioned to manage that,” Ms Blight-Johnston said.  

The positives for Helia included a resilient Australian labour market and a 3.7% rise in national property values to record levels in the first half.

Full-year revenue is expected to be $375-$415 million, with second-half claims incurred expected to increase.

In June, Helia said Commonwealth Bank had sought a new proposal for the provision of LMI. The bank is Helia’s biggest customer, accounting for more than half of its $185.2 million gross written premium last year.

“We are doing a lot as an organisation to impact the things within our control and help people understand the value of the product,” Ms Blight-Johnston said.