Release Date: August 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ClearView Wealth Ltd (ASX:CVW, Financial) reported a 25% increase in group underlying net profit after tax to $35.3 million.
- New business market share rose to 11%, with gross premiums up 10% to $358.1 million.
- The company introduced an interim dividend of $0.015 per share and a final dividend of $0.017 per share, bringing the total FY24 dividend to $0.032 per share.
- ClearView Wealth Ltd (ASX:CVW) successfully adopted the new AASB 17 accounting standard, which does not impact the economics of the business.
- The company has a solid balance sheet with net assets of $353.2 million, backed by cash and highly rated securities.
Negative Points
- The business was adversely impacted by total permanent disability and income protection claims experienced during the year.
- The long-term material claims assumptions have been updated to reflect increased claims costs, necessitating further premium repricing in 2025.
- The transition to AASB 17 resulted in an initial net asset reduction of $83.6 million after tax.
- ClearView Wealth Ltd (ASX:CVW) is finalizing its exit from wealth management, which may involve transitional challenges.
- Operational efficiency savings from technology investments are expected but have not yet been fully realized.
Q & A Highlights
Q: Can you provide an overview of ClearView's financial performance for FY24?
A: Nadine Gooderick, Managing Director: ClearView reported a group underlying net profit after tax of $35.3 million, a 25% increase from the previous year under the new AASB 17 accounting standard. Key highlights include a rise in new business market share to 11%, gross premiums of $358.1 million (up 10%), and a life insurance underlying NPAT margin of 11%. The company also introduced an interim dividend of $0.015 per share and a final dividend of $0.017 per share, totaling $0.032 per share for FY24.
Q: How has the adoption of the AASB 17 accounting standard impacted ClearView?
A: Athol Chiert, Chief Financial Officer: The adoption of AASB 17 affects the timing of when insurance earnings are recognized but does not impact the economics of the business. ClearView's financial strength, product cash flows, and ability to pay claims and dividends remain unchanged. Group underlying NPAT from continued operations increased by 25% to $35.3 million, with life insurance underlying NPAT up 23% to $39.5 million.
Q: What are the future financial targets and strategic goals for ClearView?
A: Nadine Gooderick, Managing Director: ClearView aims to increase new business market share to 12%-14%, in-force market share to around 4%, gross premiums to $400 million, and an underlying NPAT margin of 11%-13% by FY26. The company is focused on business simplification, technology transformation, and leveraging its distribution footprint to meet these goals.
Q: Can you elaborate on the strategic technology transformation at ClearView?
A: Nadine Gooderick, Managing Director: The strategic technology transformation will provide significant flexibility, enabling ClearView to customize its flagship ClearChoice product offerings efficiently and at scale. This transformation aims to meet the evolving needs of customers and distribution partners while improving operational efficiency and customer service.
Q: What are the key drivers behind the improved NPAT margin for the life insurance business?
A: Athol Chiert, Chief Financial Officer: The improved NPAT margin, which increased to 11% from 9.9% in the prior year, is driven by interest rate changes, strong business momentum, and benefits from the transformation program. However, it was also impacted by total permanent disability and income protection claims. Future margin improvements are expected from scale benefits, increased underwriting risk exposure, and operational efficiency savings.
Q: How is ClearView managing its exit from wealth management?
A: Athol Chiert, Chief Financial Officer: ClearView has made significant progress in exiting wealth management, including the sale of its stake in Centrepoint Alliance and the retirement of its trustee. The company has also sold its investment management business, focusing solely on life insurance moving forward.
Q: What is the current state of ClearView's balance sheet?
A: Athol Chiert, Chief Financial Officer: ClearView has net assets of $353.2 million, backed by cash and highly rated securities, providing strong downside protection. The transition to AASB 17 resulted in an initial net asset reduction of $83.6 million after tax, which will be released back to profit over time. The total group deferred tax asset related to carryforward losses is $43.8 million as of June 30, 2024.
Q: What are the future focus areas for ClearView in FY25?
A: Nadine Gooderick, Managing Director: Business simplification remains a key priority, with significant milestones achieved in the past three years. ClearView continues to invest in technology and transformation, with plans to migrate the existing in-force onto a new functional platform by the first half of FY26. The company aims to drive higher customer engagement, retention, and satisfaction through various initiatives.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
