Notes to the Financial Statements
address the concentration risk. Under the treaties, ClearView LifeSolutions and ClearChoice lump sum and income protection claims are substantially settled on an earned premium and incurred claims basis. ClearView pays an interest charge on the liabilities related to the settlement of the incurred liabilities. As at 30 June 2024, ClearView received $193.6 million of the reinsurer’s share of incurred claims liability (30 June 2023: $176.7 million). The tables below detail the shareholder’s exposure to interest rate risk at the balance sheet date. Consolidated Company 2024 2023 2024 2023 $'000 $'000 $'000 $'000 Variable interest rate exposures Financial assets Cash and cash equivalents 78,404 94,045 13,593 13,929 Floating rate notes 57,285 44,529 — — Total 135,689 138,574 13,593 13,929 Financial liabilities Borrowings 31,000 16,000 — — Subordinated debt 75,000 75,000 — — Reinsurance contract liabilities Reinsurer's share of incurred claims liability received 193,571 176,730 — — Total 299,571 267,730 — — Interest rate sensitivity analysis for floating rate exposures The sensitivity analysis below has been determined based on the Group’s exposure to interest rates at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. In the case of instruments that have floating interest rates, a 1.0% (2023: 1.0%) increase or decrease is used when reporting interest risk internally to key management personal and represents management’s assessment of the reasonably possible change in interest rates. The following table illustrates the effect on the Group from possible changes in market risk that are reasonably possible based on the risk the Group was exposed to at reporting date: Effect on operating profit Effect on net exposure Effect on operating profit Effect on net exposure Consolidated Consolidated Company Company
2024 2023 2024 2023 2024 2023 2024 2023 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
∓ 1639
∓ 1292
∓ 1639
∓ 1292
±136
±139
±136
±139
±1.0% (2023: ±1.0%)
The method used to prepare the sensitivity analysis has not changed in the year. Based on the market exposure management believe that the interest rate variation above is considered appropriate in the current environment.
Fair value sensitivity analysis for fixed rate financial instruments The Group does account for fixed rate financial assets and liabilities at fair value through profit and loss. However, as these assets are currently only held in the investment linked funds, a change in long term interest rates at reporting date would not affect profit and loss as the risks are borne by policyholders of the life investment contracts. e) Foreign currency risk management Foreign currency risk is the risk that the market value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group undertakes certain investments denominated in foreign currencies, hence is exposed to the effects of exchange rate fluctuations. However, the foreign currency risk is borne by policyholders of the life investment contracts and the shareholder has no direct exposure to foreign currency.
Forward foreign exchange contracts
The Group currently does not make use of forward foreign exchange contracts.
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ClearView Annual Report 2024
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