Directors’ Report
Impact of Discontinued Operations and interest in Centrepoint Alliance (-$8.2 million) • It includes the earnings attributable to the interest in Centrepoint Alliance including the profit on the sale of the investment (+$2.8 million). • It also includes the net impacts of the wealth management business (-$11.1 million) made up of the Underlying NPAT operating loss, the loss on sale of CFML, the net of tax impairment of the front-end wealth portal capitalised software asset and exit costs incurred. The goodwill impairment does not impact the EV calculations. Life Insurance Claims (-$4.3 million) • Underlying adverse claims performance (relative to assumptions) resulted in a reduction in the EV in FY24. The claims performance was driven by higher than expected incidence on the income protection and TPD products. • ClearView has continued its investment in claims capability, rehabilitation programs and other initiatives to support return to work outcomes. • The actuarial assumptions on the long-term income protection and TPD claims were strengthened to allow for the increased claims costs. There was a partial offset through the reduction in trauma and non advice (closed to new business) claims assumptions. • See further commentary on claims experience for the year on page 37.
Maintenance Expenses (-$1.4 million) • The actual maintenance overrun of $1.4 million is driven by investment into key areas of the business as noted earlier in the report. • The key focus is on the technology transformation to enable operational efficiencies, scale benefits and enhanced data and analytics. • The migration of the in-force portfolios and related automation and simplification of back end processes should lead to operating efficiencies and improved in-force margins. These benefits are expected to start to flow through from the 1H FY26. Net Investment Experience (-$0.9 million) • This reflects the investment return benefit relative to underlying earning rate of 4% adopted in the EV calculations. This was offset by the interest cost of the corporate debt and Tier 2 subordinated loans that is not allowed for in the EV calculations. Other expense Impacts (-$4.3 million) Overall the adverse net expense impact that is not allowed for in the EV calculations are as follows: • The Group’s listed overhead costs for the year (-$0.9 million after tax); and • Costs considered unusual to the ordinary activities including those recognised in relation to the strategic review and information technology system costs (-$3.4 million). Net change in assumptions and other impacts (+$6.9 million) • The long-term actuarial assumptions on the income protection and TPD claims were strengthened to allow for the increased claims costs. • The long term actuarial lapse assumptions were broadly reshaped as at 30 June 2024. • These assumption changes (together with a further gross premium repricing cycle in CY25 across the relevant products to cover these assumption changes) have been allowed for in the EV calculations at 30 June 2024. Assumptions used in the EV are consistent with best estimate assumptions in the statutory insurance contract liability valuation, with the exception of the assumed CY25 repricing noted above. • Other impacts include the reduction in the target risk capital and related items given the simplicity and core focus of the business on life insurance (as noted earlier in the report).
Lapses and inflation impacts (+$4.2 million)
• For the year, lapses have been largely in line with expectation for the advice business including allowances for the re-pricing of the portfolios. • Inflation linked premiums for the year have been materially higher than expected given both the inflation rate and take up of the indexed benefit by customers. • Superannuation is a significant funding source of life insurance and the relatively low unemployment rate has supported both the inflation take up rate as well as the lapse performance of the business. • The interest rate increases and impacts on household budgets will continue to be closely monitored. • See further commentary on lapse experience on page 37.
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ClearView Annual Report 2024
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