Up 45% in a year, this ASX 200 insurance stock is going gangbusters on strong earnings

Earnings were strong enough for a special dividend.

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The Helia Group Ltd (ASX: HLI) share price is rocketing on Tuesday.

In afternoon trade, following the release of its results, the ASX 200 mortgage insurance stock is up 11% to $4.83.

This means that its shares are now up 45% over the last 12 months.

ASX 200 insurance stock jumps on FY 2023 results

  • New insurance written (NIW) down 35% to $13 billion
  • Gross written premium (GWP) down 42% to $185.2 million
  • Insurance revenue down 9% to $427.3 million
  • Total incurred claims ratio of 15.7%
  • Statutory net profit after tax up 37% to $275.1 million
  • Underlying net profit after tax up 7% to $247.7 million
  • Fully franked final dividend of 15 cents per share
  • Unfranked special dividend of 30 cents per share

What happened during the year?

Over the 12 months, the company formerly known as Genworth Mortgage Insurance Australia, reported a 35% reduction in NIW and a 42% fall in GWP. This reflects the low level of industry new housing loan commitments, especially for loans above an 80% loan to value ratio (LVR).

Management notes that the Federal Government First Home Guarantee is also having a noticeable impact on the LMI industry.

However, that couldn't stop the company delivering strong profit growth in FY 2023.

The ASX 200 insurance stock reported a statutory net profit after tax of $275.1 million (up 37%) and underlying profit of $247.7 million (up 7%). The former was boosted by pre-tax unrealised mark to market investment gains in the shareholder funds.

This strong profitability allowed the Helia board to declare a fully franked final dividend of 15 cents per share and an unfranked special dividend of 30 cents per share. Both are payable on 22 March 2024.

Management commentary

Helia's CEO and Managing Director, Ms. Pauline Blight-Johnston, said:

I am pleased to deliver another strong full year result that reflects Helia's operational performance and financial resilience. Underlying NPAT is higher than the strong prior corresponding period (pcp), reflecting the combination of a low claims environment and higher net investment revenue. We are also pleased to continue our delivery of active and appropriate capital management for our shareholders.

Outlook

FY 2024 Insurance revenue is expected to be within a range of $360 million to $440 million from $427.3 million.

Its total incurred claims ratio is expected to increase towards 30%, which is representative of Helia's expectations through the cycle.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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