Directors’ Report
the front-end wealth portal capitalised software asset (-$2.0 million). A loss on the sale of CFML was also recognised in the financial year (-$2.1 million). Costs related to the exit of the superannuation business of $2.3 million (FY23: $0.8 million) have also been separately reported. These include redundancies, legal fees and consulting costs incurred to date. Further costs are expected to be incurred to the date of the exit after which these costs will cease (mainly related to redundancies and technology exit costs). Investment in Associate (Centrepoint Alliance) On 17 November 2023, ClearView announced the sale of approximately 39.6 million shares in Centrepoint Alliance to COG Financial Services Limited ( COG ), at a share price of 33 cents per share representing total consideration of $13.1 million. The sale shares represented approximately 19.9% of Centrepoint Alliance’s issued capital. The remaining 8.4 million shares were subsequently sold on the market from 17 November 2023, at an average exit price of circa 27 cents per share, representing total consideration of $2.2 million (net of costs of sales). The sale resulted in $2.2 million gain on disposal (FY23: Nil). ClearView has fully divested the investment in associate and holds no Centrepoint Alliance’s shares as at 30 June 2024. The Centrepoint Alliance transaction has been equity accounted until the date of sale, contributing $0.6 million in FY24 (FY23: $0.6 million). Economic assumption impact on AASB 17 liability (-$2.2 million) This is as a result of changes in the long term discount rates used to determine the (re)insurance contract asset/insurance contract liability which is discounted using market discount rates that typically vary at each reporting date. ClearView separately reports this volatility. AASB 17 has materially changed the sensitivity of reported profit to interest rate movements. The impact of the changes in long-term discount rates on the AASB 17 insurance contract liability in the year (including the economic effects from assumption changes), caused an decrease in after-tax profit of -$2.2 million (FY23: +$3.0 million).
both the lump sum and disability income business and reflects the policyholder renewal and repricing cycle. Due to a shorter contract boundary for the stepped premium business, ClearView recognises the directly attributable insurance acquisition costs over the longer term by raising an asset for insurance acquisition cash flows on Balance Sheet, related to the future renewals of the yearly renewable term business. Premiums that are collected over the life of the insurance contract include an allowance for the recoverability of the acquisition costs incurred. The AIACF is amortised based on the present value of premiums and is written off over the life of a stepped premium contract. The onerous contract (and related impairment) testing of the AIACF is more granular under AASB 17 and as such impairment (over and above the amortisation) may lead to material reported profit impacts, although there is no change in the annual cash flows of a policy and is therefore recoverable from the cash flows at a portfolio level (subject to lapse risk). As such, the AIACF impairment reflects a (brought forward) timing difference in the write off of the asset and changes the pattern and timing of the reported profit release over the life of a stepped premium policy. The increased claims assumptions (for income protection and TPD products) impacted the AIACF impairment (and loss recognition) in FY24. This is driven by a timing delay (between periods) in increasing premium rates to cover these increased costs (that has not been allowed for in the valuation). The further phase of the gross premium repricing cycle in CY25 is likely to result in the AIACF impairment (and the loss recognition) partially reversing in FY25 (given this is a timing variant to the premium rate increase). The non-cash impairment is separately removed from Underlying NPAT given that the cash flow collection and recoverability on the portfolio as a whole remains unchanged and reflects a timing in the release of profit. The Underlying NPAT is adjusted to ensure the AIACF that is amortised does not reflect any impairments post the transition date of 1 July 2022. The impact of the impairment of the AIACF in the year, caused a decrease in after-tax profit of -$16.3 million (FY23: -$10.0 million). Change in loss component (loss recognition) (-$12.2 million) Given the level of granularity of reporting (and onerous contract assessment) under AASB 17, the loss component (and related loss-recovery component) has been separately reported to remove the upfront
Impairment of AIACF (non-cash) (-16.3 million)
ClearView’s underlying (gross) yearly renewable term stepped premium business contract boundary is materially shortened from a long-term, natural expiry contract boundary under AASB 1038 to a 12-month contract boundary under AASB 17. This applies to
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ClearView Wealth Limited
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