Notes to the Financial Statements
directly link the underlying assets held to support those liabilities, with the primary market risks and credit risks passed on to the policyholder (as discussed above); • The assets held to support the capital guaranteed units in the ClearView Life No.4 statutory funds are maintained, in accordance with the Board’s Investment Policy and Guidelines, in high quality, short dated fixed interest assets and cash. Asset- liability risk is substantially reduced via this means; and • Similarly, assets held to support the contract liabilities and risk capital of the ClearView Life No.1 statutory fund are maintained, in accordance with the Board’s investment Policy and Guidelines, in high quality, fixed interest assets and cash that generally closely match the duration and inflation characteristics of those contract liabilities and capital reserves. See further details on the investments made to match the claims reserves, capital reserves and excess assets elsewhere in the report. Outsourcing and supplier management ClearView seeks to manage the risks arising from the use of a third party through initial and ongoing due diligence and oversight throughout the supplier life cycle. Business continuity and disaster recovery ClearView is exposed to the risk of disruption to its business operations and IT systems from a host of disasters that vary in degree from minor to catastrophic. Business continuity is the process of restoring the business back to functionality after a crisis. Disaster recovery differs in that it is the process of getting all-important IT infrastructure and operations up and running following an outage. ClearView adopts a holistic approach in managing Business Continuity Management ( BCM ), which includes policies, plans and procedures for ensuring critical business functions including IT infrastructure can be maintained or recovered in a timely fashion in the event of a disruption. Its purpose is to minimise the financial, legal, regulatory, reputational and other material consequences arising from a disruption caused by an internal or external event. As part of ClearView’s BCM approach, the Crisis Management Team ( CMT ) will consider the threat level that is most appropriate to ClearView’s operations and will develop a response using the current Business Continuity Plan ( BCP ) and Information Technology Disaster Recovery Plan ( ITDRP ), taking into account all information available at the time.
114 requires that the trustee maintains adequate financial resources to address losses arising from the operational risks that may affect the ClearView Retirement Plan (CRP). Since the retirement as the trustee of CRP on 14 December 2023, CLN is no longer an operating entity and subsequently released the capital previously held for ORFR (refer to section 8.5 for detail). In addition, the Group holds additional capital reserves over regulatory capital in accordance with its Board adopted ICAAP. This is to ensure that there is a low likelihood that the Group (and its regulated subsidiaries) will breach their regulatory requirements and so that the Group has sufficient capital to manage its near term business plans and provide a buffer (capital and time) to take action to deal with reasonably foreseeable adverse events that may impact the businesses. These additional reserves are partly held within the subsidiaries where the key risks reside, and partly in a central reserve within the parent entity. Investment management and market risk (Interest rate, asset liability management) a) Asset risks The primary asset risks borne by the Group relate to the financial assets of the Company and its operating subsidiaries excluding those in the non-guaranteed investment linked funds in ClearView Life’s statutory fund No.4 (referred to below as ClearView assets). The primary financial risks related to the financial assets in the non-guaranteed investment linked funds in ClearView Life’s statutory fund No.4 are borne by policyholders of the life investment contracts as the investment performance on those assets is passed through, in full, to those policyholders (referred to below as Policyholder assets). Nonetheless, the Group has a secondary exposure to the Policyholder assets and off-balance sheet client funds, via the impact on the fees charged by the Group which vary with the level of Policyholder and client funds under management and under administration, as well as related reputational exposure (for further detail on Asset risks refer to section 3). b) Asset-Liability mismatch risk Asset-liability mismatch risk arises to the extent to which the assets held by the Group to back its liabilities (especially its contract liabilities and guaranteed investment account liabilities) do not closely match the nature and term of those liabilities. In practice, the market risk and credit risk exposures of the Group primarily relate to the extent that the Group retains a net exposure with respect to these risks and the extent to which the variation in asset values do not mirror the variation in liability values. In this context it is noted: • The investment linked liabilities of ClearView Life
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ClearView Wealth Limited
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