Notes to the Financial Statements
is stated prior to the declaration of the FY24 final dividend and any further capital release from the exit of the wealth management business (net of costs). The surplus capital position and future business capital generation is anticipated to fund the net capital expenditure impacts of the investment in the new PAS (relative to the quantum that could be permissible to be counted for capital purposes). ClearView also has access to the Debt Funding Facility, to the extent further funding is required. ClearView has implemented an incurred claims treaty with Swiss Re for lump sum and income protection business, where claims (including reserve components) are paid when a claim is incurred which reduces the concentration risk exposure. There is no Asset Concentration Risk charge under LPS 117 relating to the Swiss Re exposure as at 30 June 2024. As previously reported, the $70 million irrevocable letter of credit with a major Australian bank on behalf of Swiss Re has been reinstated effective from 30 June 2022 to further reduce any likelihood of concentration risk exposure. Fitch assigned ClearView a Long-term Issuer Default Rating ( IDR ) of ‘BBB’. At the same time, Fitch assigned ClearView’s operating subsidiary, ClearView Life, an Insurer Financial Strength Rating ( IFS ) of BBB+. The outlooks for both ratings are stable and were reaffirmed as ‘stable’. Dividends and On-market 10/12 limit share buyback The Board seeks to pay dividends at sustainable levels with a target payout ratio of between 40% and 60% of Underlying NPAT 1 . The dividend policy has been set (subject to available profits and financial position) to consider regulatory requirements and available capital within the Group. It is intended that the target payout ratio of 40%-60% will be uplifted post completion of the IT transformation investment and wealth management exit. ClearView’s ability to pay a franked dividend depends upon factors including its profitability, the availability of franking credits and its funding requirements which in turn may be affected by trading and general economic conditions, business growth and regulation. The Board continues to seek to: • Pay dividends at sustainable levels; • Maximise the use of its franking account by paying fully franked dividends; and • Ensure transparent communication to the market
The covenants of the facility agreement state that the Group’s debt must not exceed 35% of the Group’s total debt and equity. The Group’s interest cover ratio for the preceding 12 months period must be at least 3 times. As a result of the implementation of AASB 17 since 1 July 2023, the interest cover calculation has been updated for the year ended 30 June 2024. The interest cover is the ratio of the adjusted consolidated profit to the interest expense. The adjusted consolidated profit is the consolidated reported profit after tax from continuing operations plus the changes in AIACF impairments plus the changes in economic assumption impact on AASB 17 liability plus the income tax expense plus the interest on the Notes plus the interest on the borrowings. The interest expense is the interest on the Notes plus the interest on the borrowings. Furthermore, under the facility agreement, a review event occurs where the capital base of the life company, ClearView Life, falls below the minimum PCA ratio of 1.5 times (excluding any supervisory adjustments and reinsurance concentration risk charges). Based on the results to 30 June 2024, ClearView has been operating within its covenants under the terms of the Facility Agreement. The Group has not identified any breaches at 30 June 2024 nor at the time at which these financial statements were authorised for issue. The facility has been secured by a number of cross guarantees, refer to section 9.5 for detail. ClearView Life Assurance Limited has a $2 million (30 June 2023: $2 million) overdraft facility with National Australia Bank at a benchmark interest rate of 10.72% p.a (2023: 10.47% p.a) calculated daily. Any overdrawn balance in excess of the overdraft will incur an additional margin of 1.5% p.a (2023: 1.5% p.a) above the benchmark interest rate. The bank overdraft is short-term in nature and was unutilised at 30 June 2024 and 30 June 2023. There is an additional $0.25 million credit card facility with National Australia Bank in the name of ClearView Administration Services Pty Limited. 6.6 Capital risk management The Group maintains capital to protect customers, creditors and shareholders against unexpected losses to a level that is consistent with the Group’s risk appetite. The Group’s capital structure consists of ordinary equity comprising issued capital, retained earnings and reserves (as detailed in section 6.2). ClearView generates positive cash flows from in-force portfolios which is subsequently reinvested into new business generation. The net surplus capital position of the Group above internal benchmarks of $27.1 million at 30 June 2024
around Embedded Value estimation and its relationship to the prevailing share price.
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ClearView Wealth Limited
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