Notes to the Financial Statements
5.6.3 Impact of contracts recognised in the period
Contracts originated not in a net gain
Contracts originated in a net gain
Total
2024
$’000
$’000
$’000
Reinsurance contracts held Estimates of present value of future cash outflows Estimates of present value of future cash inflows
(111,661) 122,549 (8,523)
— (111,661) — 122,549 — (8,523)
Risk adjustment for non-financial risk
CSM
2,365
—
2,365
Contracts originated not in a net gain
Contracts originated in a net gain
Total
2023
$’000
$’000
$’000
Reinsurance contracts held Estimates of present value of future cash outflows Estimates of present value of future cash inflows
(103,320)
— (103,320) — 105,818 — (8,624) — (6,126)
105,818 (8,624) (6,126)
Risk adjustment for non-financial risk
CSM
5.7 Capital adequacy ClearView Life Assurance Limited (ClearView Life) is subject to minimum capital regulatory capital requirements in accordance with Australian Prudential Regulation Authority ( APRA ) Life Insurance Prudential Standards. ClearView Life is required to maintain adequate capital against the risks associated with its business activities and measure its capital to the ‘Prudential Capital Requirement’ ( PCR ). ClearView Life has in place an Internal Capital Adequacy Assessment Process ( ICAAP ), approved by the Directors, to ensure it maintains required levels of capital within each of its statutory and general funds. In September 2022, APRA finalised changes to the capital and reporting frameworks for insurance in response to the introduction of AASB 17. Subsequently, APRA made minor amendments to the finalised standards in June 2023. Under the amended reporting standards, capital base adjustments reflects the difference between the adjusted contract liabilities held for capital purposes and the contract liabilities held under AASB 17. This predominantly reflects the removal of the deferred acquisition cost asset ( AIACF ) that is not permitted to be counted in the regulatory capital base under the APRA capital standards. The capital base adjustment also includes the removal of any deferred tax assets that cannot be included under the standards. The 1 July 2022 opening Balance Sheet impact on net assets for in-force business as at the transition date has an impact of $83.6 million after tax. As a result of the transition to AASB 17, the Group’s accounting net life insurance contract liability, for which the carrying amount will be settled in future periods has increased. This results in an increase in the deductible temporary differences and a related deferred tax asset of $35.9 million, given the movement in the net life insurance contract liability is deductible when settled in the future. While the Australian Taxation Office ( ATO ) and Treasury has yet to provide any announcement or guidance in respect of the AASB17 impacts on life insurance companies, there is no indication as at the date of the report that AASB 17 will result in a change to the income tax laws. As these temporary differences create income tax losses on transition, given that it is probable that the Group’s future taxable profit will be available against which the tax losses can be utilised, the additional deferred tax asset of $35.9 million has been recognised on balance sheet on transition. However, no capital benefit has been taken into account in the period. The tax benefit should be realised in future periods as the losses are utilised. The ClearView’s regulatory capital base and prescribed capital amount do not change significantly under the amended capital prudential and reporting standards. The capital adequacy position at balance date for ClearView Life, in accordance with the APRA requirements, is as follows:
149
ClearView Wealth Limited
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