Directors’ Report
• Profitability - changes to the timing and pattern of profit release including impacts on statutory reported profit from the more detailed level of granularity and onerous contract assessment . AASB 17 impacts the timing of the profit release pattern (coverage units release), with no impact over the full life of a policy. Furthermore, the stepped premium business is now treated as a short-term contract boundary under AASB 17 (as opposed to the level premium business and reinsurance that continue to be recognised as long duration contracts). This difference in treatment of the gross and reinsurance contract boundary (for stepped premium contracts) causes a timing mismatch that changes the pattern of profit recognition between periods (no impact over the life of a policy). • Non IFRS Underlying NPAT remains the Board’s key measure of performance and normalises the statutory reported profit for the granularity, onerous contract assessment and volatility that has been introduced with the adoption of the new standard, including the non-cash impairment of the asset for insurance acquisition cash flows ( AIACF ), interest rate and market volatility, current year timing impacts of assumption changes on the contractual services margin and loss recognition movements between periods. AASB 17 does not impact the fundamental economics of ClearView’s life insurance business – there is no change to the underlying product cash flows, financial strength, claims paying ability, or dividend capacity. It is a new accounting standard for insurance and reinsurance contracts required by the Australian Accounting Standards Board (consistent with International Financial Reporting Standards) that impacts the timing of the recognition of insurance earnings, not the quantum in total. Further details on AASB 17 – ‘Insurance Contracts ’ are outlined in Note 5 and 9.6 of the Financial Statements. FY24 Results overview The ClearView Group achieved the following results for the year ended 30 June 2024, with comparatives updated on a AASB 17 basis. The discussion of operating performance in the operating and financial review section of this report is presented on a management reported basis unless otherwise stated. Management reported results are non-IFRS financial information and are not directly comparable to the statutory results presented in other parts of this financial report. ClearView’s statutory and management reported profit after tax reconcile to the same number.
process, which repeats and renews itself. ClearView aspires to a risk culture that considers: “Managing risk is integral to our business and demonstrated in our actions and decisions of our people, executive leadership team ( ELT ) and Board. Our people and customers are at the centre of our risk culture and we commit to ongoing communication, escalation, constructive challenge and making considered decisions to manage risk consciously. Where there is ambiguity, ClearView will firstly ask “Should we?” and then “Can we?”. To enable the effective facilitation, embedding and maintenance of a sound risk culture, ClearView has outlined and described a series of key attributes including (but not limited to) speaking-up, leadership, accountability and responsibility, risk frameworks and performance management & incentives to strike a balance between behavioural and structural elements. In addition to the broader RMF workplan, the Group Risk and Compliance function also maintains and executes an annual workplan of activities to support the ongoing maturity of risk culture across ClearView. Implementation of AASB 17 ClearView has adopted AASB 17 – ‘Insurance Contracts ’ for the first time, with the standard becoming effective from 1 July 2023. AASB 17 – ‘Insurance Contracts’ represents a material change in the accounting for life insurance contracts, and introduces significant change in the recognition, measurement, presentation and disclosure of these contracts. Key changes from the adoption of the new standard include: • Balance Sheet - lower net assets at transition (1 July 2022) of $83.6 million (after tax) and creation of a related deferred tax asset of $35.9 million . As at the transition date, the 1 July 2022 opening Balance Sheet has an initial net asset reduction of $83.6 million (after tax) - this is then released (over time) leading to a positive impact on future profit release. As these temporary differences create income tax losses on transition and that it is probable that the Group will make future profits 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. • Capital - no change in regulatory capital requirements. The Group will however realise a tax (capital) benefit in future periods as the income tax losses (recognised) on transition are utilised.
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ClearView Annual Report 2024
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