Directors’ Report
• The in-force capital generation reflects a combination of the Underlying NPBT achieved and policy acquisition costs released (collected) from the in-force portfolios in a particular financial period. • The Group has a PCA capital coverage ratio of 5.1 times at 30 June 2024, reflecting the strength of the overall capital position of the Group.
Chart 7: Group Regulatory Capital Coverage ($M)
PCA ratio of 5.1x
124.7
24.4
Prescribed Capital Amount
Regulatory Capital Base
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 to 50%- 70% of Underlying NPAT subject to the capital requirements of the business at the time. 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 around Embedded Value estimation and its relationship to the prevailing share price. A FY23 fully franked final cash dividend of $19.8 million, equating to 3 cents per share was paid on 22 September 2023. This represented an increase of 50% on the prior year. A FY24 fully franked interim cash dividend of $9.9 million, equating to 1.5 cents per share was paid on 22 March 2024, the first time an interim dividend has been paid. The Board has declared (on 21 August 2024), a fully franked FY24 final dividend of $11.1 million, equating to 1.7 cents per share, with a record date of 5 September 2024 (FY24 final dividend is payable on 20 September 2024).
1 Underlying NPAT (from continuing operations) continues to be adopted by the Board as its key measure of Group profitability and basis for dividend payment decisions. It is used as a non IFRS measure of earnings that excludes the impacts of market and interest rate volatility, with the definition updated to reflect the application of AASB 17. Underlying NPAT (from continuing operations) has been defined as the consolidated profit after tax excluding the effects of economic changes on both the AASB 17 insurance contract liability and the incurred income protection disabled lives reserves, the (non-cash) impairment of the asset for acquisition cash flows ( AIACF ), changes in the loss component that is predominantly driven by the level premium business, current year timing impacts of assumption changes on the contractual services margin and any costs considered unusual to the Group’s ordinary activities. Underlying NPAT includes the amortisation of capitalised software and leases, underlying investment income (the portfolio carry yield on the investment portfolio and interest rate earned on physical cash holdings), costs associated with the incurred claims reinsurance treaties and interest costs associated with corporate debt and Tier 2 Capital.
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ClearView Annual Report 2024
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