It has been another day to forget for shareholders of one ASX 200 share.
In morning trade, this stock has crashed a massive 28% to a lowly $3.92.
Which ASX 200 share?
The share in question is Helia Group Ltd (ASX: HLI). It is the leading provider of Lenders Mortgage Insurance (LMI) provider formerly known as Genworth Mortgage Insurance.
The company's LMI offer protects lenders if a homeowner defaults on a home loan and the lender is unable to recover the outstanding loan amount from the sale of the secured property.
It also helps borrowers get a home loan with a lower deposit.
Why are its shares crashing?
Investors have been selling down this ASX 200 share after it announced the loss of another major contract.
According to the release, ING Bank (Australia) has informed Helia Group that as part of a Request for Proposal (RFP) process relating to its LMI requirements, ING has decided to proceed with negotiations with an alternate provider.
Helia's supply and service contract with ING expires on 30 June 2026 but includes a right for ING to terminate the contract by providing three months' notice.
This will be a major blow for the ASX 200 share. It notes that the LMI business underwritten under this contract represented approximately 17% of Helia's 2024 Gross Written Premium (GWP).
This is the second major contract it has lost this year. In March, the company revealed that Commonwealth Bank of Australia (ASX: CBA) is not expected to renew its contract when it expires at the end of December.
The LMI business underwritten under its CBA contract represented approximately 44% of GWP in FY 2024. This means the loss of 61% of GWP from these two contracts.
What's next?
Helia will continue to generate GWP from ING until the contract is terminated or expires.
In addition, revenue associated with in-force policies will be recognised over the next 15 years in accordance with the timing of insurance revenue recognition.
It also notes that "the financial impact of ceasing to write new business from ING will emerge gradually over time and the absence of new business from ING will likely increase the level of organic capital generation and scope for further capital management activity."
The company then concludes:
The Board has commenced a comprehensive business review. The review will consider the business response to the expected loss of new business from two significant customers and the broader impact of the recently announced changes to the Government's Home Guarantee Scheme for first home buyers on our operating environment.
