ClearView Wealth Limited (CVW) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Geoff Black. I am the Chairman of ClearView Wealth Limited, and I would like to welcome you to our 2025 Annual General Meeting. Firstly, I would like to acknowledge the traditional custodians of country throughout Australia and their connections to land, sea and community. We pay our respects to Elders past and present and extend that respect to all Aboriginal and Torres Strait Islander peoples today. If we experience technical issues today, there's a little bit of echoing there if somebody wouldn't mind tweaking that. If we do experience technical issues today, we will communicate with registered participants on how to access the meeting again. As a quorum is present, I now declare the meeting and the poll open. I would like to introduce our directors who are here today, ClearView's Managing Director; Nadine Gooderick; Jenny Lyon, Gary Burg, Eddie Fabrizio, Linda Scott, Michael Alscher, and I believe Nat Thompson is going to be here very shortly. I'd also like to welcome Judilyn Beaumont, our General Counsel, Chief Risk Officer and Company Secretary; other members of the executive team in the room; and Louise Burns and Matt Floyd from EY, our auditors. Voting at today's meeting will be conducted in person and via the online platform managed by Computershare. The returning officer, Glenn Rogers, is with us today. For those attending virtually and entitled to vote at today's meeting, please log into the online voting portal as provided in the Notice of Meeting and online voting guide. Voting on all resolutions today will be conducted by way of a poll to allow everyone attending our meeting virtually with enough time to vote, I advise that online voting is now open on all resolutions. If you are eligible to vote at this meeting, please select the Vote icon, and this will bring up a list of resolutions and voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded. You will receive a vote confirmation on your screen. You can cast and change your vote on all resolutions up until the time I declare voting closed. I welcome your questions and advise that Judilyn Beaumont, our Company Secretary, will monitor the Q&A function on the webinar. We will attend to questions after all resolutions have been read out. Online attendees can submit questions at any time. Please note that while you can submit questions at any time, I will not address them until later in the meeting. To submit a question, please select the Q&A icon and type your question in the text box. Once finished, please send -- please hit the send button and to ask a verbal question, please follow the instructions written below the broadcast window. Questions may be moderated or combined if there are multiple questions on the same topic. When asking your question in person, please wait until you have a microphone before asking a question, so that online attendees can also hear. Please identify yourself as a shareholder or a visitor, or if applicable, who you represent and advise, which item of business your question relates to. I will then determine whether the question is appropriate for me as Chairman, the auditor, or Nadine as Managing Director to answer. The notice of this meeting was given to shareholders in accordance with the Corporations Act, and I therefore take the notice of meeting and resolutions as read. The agenda for today's meeting is set out on the slide shown on the screen, and I will deliver my address before handing over to Nadine. I will then address the items of business, after which I will answer any questions. On behalf of the Board, welcome to ClearView's 2025 Annual General Meeting. FY '25 was a transformative year for ClearView marked by substantial progress in executing our strategic objectives and reinforcing our position as a leading independent life insurer. It also showcased the depth of life insurance expertise within our management team and the long-term nature of our business. Global uncertainty and domestic cost of living pressures have continued to shape consumer behavior influencing claims experience, lapse rates and purchasing decisions. In response, ClearView remains committed to balancing premium rates benefit design and affordability, ensuring our products remain accessible and sustainable for customers. Notwithstanding the cost of living pressures, we continue to see customers recognizing the value of their life insurance cover whether renewing or modifying their cover as part of ClearView's retention program to ensure protection, important for themselves or their family. ClearView has seen encouraging growth in the retail advice life insurance space. Our ongoing vision is to make life insurance more accessible and help close the insurance -- under insurance gap in Australia, and we continue to pursue this goal by being a technology-led and efficiency and service-driven provider. In an industry undergoing increasing consolidation, ClearView stands out as one of the few remaining independent life insurance companies in Australia. FY '25 marked the completion of 2 major strategic milestones. Firstly, the exit from the wealth business. In February '25, ClearView successfully exited its wealth business, delivering on our commitment to simplify and sharpen our strategic focus. And secondly, delivering our unified policy administration platform. We are now just weeks away from administering all 130,000 life insurance policies on a single modern cloud-based platform. The multiyear transformation will deliver significant benefits, reducing costs, improving operational efficiency, enhancing both customer and adviser experience and unlocking deeper customer insights through advanced data analytics. These achievements position ClearView as a pure-play life insurer with a clear ambition to be best-in-class. They also laid the groundwork for a superior digital experience for advisers and customers work that commenced in FY '25 and accelerate opportunities to further leverage technology and AI to reduce acquisition and maintenance costs. I would like to acknowledge our commitment and perseverance of the leadership team and successfully executing on this multiyear transformation. It was a massive task and really has set a strong foundation for future success. Alongside our strategic transformation, we have continued to strengthen our performance culture and build the capability of our people. A key focus has been deepening life insurance expertise across the organization while fostering diversity of thought to drive innovation and resilience. The Board continues to work closely with management to ensure our governance framework supports, our approved risk appetite, and promotes a culture of accountability and sound decision-making. In FY '25, we enhanced ClearView's operational resilience and risk management capabilities through the implementation of CPS 230 operational risk management requirements, the adoption of the financial accountability regime, and continued progress on Phase 2 of the IDI review to support sustainable growth. We are also on track to prepare a mandatory sustainability report on managing climate-related risks from 1 July 2026 as part of complying with AASB S2 climate-related exposures. Risk management remains central to our strategic decisions. We continue to invest heavily in cybersecurity, operational resilience, process improvement and customer engagement, ensuring ClearView remains well positioned to navigate complexity and deliver long-term value. ClearView's strategic transformation has been a focus throughout FY '25. While new business sales were slightly down on FY '24, momentum has accelerated over the past 6 months, reflecting the strength of our underlying strategy. In-force premiums grew strongly to $412 million, up from $374 million in FY '24, an increase of 10.4%. This growth was driven by a combination of targeted retention initiatives and premium rate adjustments. The business experienced claims volatility in the first quarter of FY '25, underscoring the long-term nature of life insurance, leveraging the deep expertise of our management team, ClearView responded swiftly with targeted strategies that delivered a solid second half evidenced by a double-digit 12% growth in underlying NPAT. The strong second half performance enabled the company to deliver a full group underlying NPAT of $32.3 million, encouraging this momentum has continued into Q1 FY '26 with early signs of efficiency gains reflected in an improved cost-to-income ratio. We expect the benefits of our transformation and increased scale to progressively optimize our financial position going forward. In FY '25, given the significant discount of share price to embedded value and the company's view of value, the Board considered the best use of surplus capital was to conduct a share buyback in lieu a dividend. The on-market buyback program was announced on the 10th of March 2025 with $5.4 million worth of shares being purchased over the period of 30 June 2025. In line with its stated intention of recommencing the buyback after the release of the full year results, a further $9.9 million of shares on issue have been purchased with total number of shares bought to date as of 5 November 2025 being 29.2 million shares. In line with the Board's overall dividend policy, the total of impact of any capital management initiatives in a particular year, either through the declaration of dividends or conducting an on-market share buyback program should not exceed the dividend target payout ratio of between 40% and 60% of group underlying NPAT from continuing operations. The Board remains supportive of the buyback program, subject to market conditions and alignment with stated dividend target payout ratio. In FY '25, the group undertook a $120 million Tier 2 capital raising, and was able to do so at a significantly improved margin than the previously raised Tier 2 capital in 2020, reflecting the group's acknowledgment of ClearView's financial strength. This raising strengthens the group's capital position, enabling it to pay -- repay debt and provides further capital management flexibility. On the 5th of November, the company redeemed $75 million of Tier 2 subordinated notes. During the year, the Board made the decision to establish a stand-alone investment committee previously oversight of investment management resided with the Audit Committee. However, given the increasing scope of responsibilities within the Audit Committee and the critical importance of capital and investment management to ClearView, the formation of a dedicated committee was both timely and strategic. Eddie Fabrizio has been appointed Chair of the Investment Committee. As ClearView nears completion of its simplification and transformation objectives, the Board has also commenced a reassessment of its own capabilities to ensure it is well positioned to guide the company into the next phase of growth. Key areas of focus will include technology innovation, including artificial intelligence, cybersecurity and customer engagement as we strive to provide smarter and simpler solutions in the life insurance market. Consistent with this, I would like to welcome our newest Director, Linda Scott, to the Board. Linda sits on the Audit, the Risk Compliance and Nomination and Remuneration Committees. Linda brings an enormous expertise and experience in governance, advocacy and strategy development are customer-focused lens and is currently the Chair of a major superannuation fund. In conclusion, I would like to thank my fellow directors for their contribution during the year and for the significant additional work undertaken outside regular meetings, particularly, in relation to the implementation of the share buyback and completion of the wealth exit. Also to Nadine, the executive leadership team and all ClearView staff, who have stepped up your contribution is acknowledged and appreciated. We have an outstanding leadership team that has built strong momentum as the business goes from strength to strength under Nadine's leadership. I would now like to hand over to our Managing Director, Nadine Gooderick.

Thank you, Geoff. Good morning, and thank you for joining us today. It is a pleasure to speak with you about ClearView's strategic direction, performance and the exciting opportunities ahead. Over the past year, we have continued to transform ClearView into a technology-led life insurer with a unique market position that sets us apart in the industry. ClearView has, since its inception in its current form in 2010, positioned itself as a challenger brand in a market that has consolidated over time. ClearView has sustained a track record of top line growth over a multiyear period with its market share of new business flows in the adviser market, increasing to 10% to 11% from a standing start in 2012. Our strong brand and highly effective distribution team has continued to deliver strong sales momentum and market penetration. Unlike incumbent insurers burdened by multiple legacy platforms and products, ClearView's ambition has been to operate on a single modern cloud-based technology stack. At the heart of this strategy is the creation of a cloud-based insurance platform that enables speed, agility and a unified customer view driving operational efficiency and data-driven decision-making. Aligned with this ambition, we commenced the implementation of our transformation and simplification strategy from around 2020 with a core focus on building out our new cloud-based insurance platform. This included strategic partnerships with Oracle for back-end systems and salesforce for front-end engagement to ensure we are fully -- we are future-proofed and ready to leverage advanced capabilities and their international investment in research and development, including AI. ClearView has completed its exit from wealth management, marking our transformation into a focused technology-led insurer. The migration of the in-force portfolios to our new insurance platform is on track for completion by the end of calendar year 2025, eliminating duplication and simplifying processes. The ClearChoice product has been operating on the platform since the product launch in 2021. We're excited by the launch of our digital adviser and customer portals in the second half of FY '26 enhancing the ease of doing business and improving the adviser and customer experience. We're now at the start of a new phase for ClearView, one that has shifted from transformation to growth with optionality across product and channel expansion on a modern cloud-based insurance platform at its core. The platform has capabilities beyond retail life insurance, including group life, customer-led initiatives and retirement products, including annuities. We also continue to look at product innovation by testing and learning to further enhance sustainability. While the larger incumbent insurers continue to grapple with multiple legacy platforms and products, ClearView is focused on its investment in technology that is expected to progressively deliver sustainable improvement in our cost-to-income ratio over time. As Geoff mentioned, despite a difficult start to the FY -- financial year -- FY '25 financial year, ClearView's second half results were strong delivering double-digit growth aligned to claims normalization and strong business performance. Claims continue to be within an expected range for the first quarter of FY '26, and claims management remains a key focus for the business. Our cost-to-income ratio continues to improve as technology and business simplification drives operating leverage. Revenue growth is outpacing cost base increases, reducing customer acquisition costs and enhancing the adviser and customer experiences. ClearView's sustained track record of top line growth continued in the first quarter of FY '26, with premiums up 12%. We also maintained the sales momentum at a run rate of over $3 million a month, from May 2025 into the first quarter of FY '26 with $9.6 million in new business for the quarter, this is up 13% over the prior corresponding period. This is driven by the strength of relationships and service and our distribution team. Our mix of in-force portfolio continues to shift to the flagship product. With total in-force premiums increasing to $425 million in Q1 FY '26, including the ClearChoice product of $123 million of the portfolio, which is up 47%. ClearView is a founding member of the Council of Australian Life Insurers, CALI, actively supporting industry initiatives for mental health, affordability and sustainability. We're also engaged with government reforms to create opportunities for life insurers and better support financial advisers and customers. The life insurance industry is a key contributor to maintaining the financial well-being and resilience of Australians and the broader community. Together, we continue to work with CALI to address the underinsurance gap in Australia and help more Australians and their families obtain access to the life insurance they need. We remain hopeful that the delivering financial -- better financial outcomes changes proposed by the government will create opportunities for life insurers to better support financial advisers and our customers. I'm excited about the future of ClearView. We're entering a new phase on growth with distinct opportunities for product and channel expansion enabled by our technology platform. We aim to expand and diversify our business, striving to be the life insurer of choice in the market. Our regulatory positioning, including an APRA-regulated life insurance license, modern technology platform and strong distribution capabilities set us apart as a challenger brand in a consolidated industry grappling with legacy issues. We are well placed for sustainable growth, and improved profitability driven by our culture of being a successful challenger brand. Thank you for your continued support and confidence in ClearView. We look forward to delivering on our strategy and creating long-term value for our shareholders. I'll now hand back to Geoff to continue the meeting. Thank you.

Thanks, Nadine. The first item of ordinary business is to receive and consider the financial statements, directors' report and the auditor's report for the financial year 30 June 2025. There is no resolution, however, this item of business gives shareholders and their proxy the opportunity to ask questions and make comments on the business, its management and financial statements. Shareholders and their proxies may also ask questions of our auditor, in relation to the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the company and the independence of the auditor. As mentioned earlier, Louise Burns and Matt Floyd representing our auditors, EY, are here today and will be available to answer questions. The company's financial statements for year ended 30 June 2025, the directors' report and the auditor's report were distributed to shareholders and are also available on our website. A summary of the resolutions to be dealt with during today's meeting will appear on the following slides. Resolution 1 is to consider and adopt the remuneration report for the year ended 30 June 2025. Shareholders are reminded that the poll is open, and you can vote at any time. Proxy votes for Resolution 1 are outlined on the screen, and I intend to vote all undirected proxies in favor of all resolutions. Gary Burg retires by rotation and is standing for reelection and Linda Scott, who was appointed to fill a casual vacancy during the year is standing for election today. Directors' details and experience were included in the annual report, Notice of Meeting and on the ClearView website. Each of the directors, other than the directors standing for election, recommends the reelection of Gary and the election of Linda. Resolution 2 is to consider, and if thought fit, approve the reelection of Gary Burg, who retires as a director by rotation under the constitution. Proxy votes are outlined on the screen. Resolution 3 is to consider, and if thought fit, approve the election of Linda Scott, who was appointed to fill a casual vacancy on 26 June 2025. Proxy votes are outlined on the screen. Resolution 4 is to consider, and if thought fit, approve the grant and issue of 1,342,344 performance rights to the Managing Director, Ms. Nadine Gooderick, in relation to FY '26 long-term variable remuneration under the ClearView Wealth Limited Rights Plan. Shareholders are reminded that the poll is open, and you can vote at any time. Proxy votes received for this resolution are outlined on the screen. Resolution 5 is to consider, and if thought fit, approve the grant and issue of 268,469 performance rights to Managing Director, Ms. Nadine Gooderick, in relation to FY '26 interim long-term variable remuneration under the ClearView Wealth Limited Rights Plan. Proxy votes received for this resolution are outlined on the screen. Resolution 6 is to consider, and if thought fit, approve the grant and issue of 169,808 restricted rights to the Managing Director, Ms. Nadine Gooderick, in relation to deferred FY '25 short-term variable remuneration under ClearView Wealth Limited Rights Plan. Proxy votes received for this resolution are outlined on the screen. Resolution 7 is to consider, and if thought fit, approve the granting of termination benefits to employee participants in the company's long-term variable remuneration plan as set out in the notice of meeting and explanatory statement. Proxy votes are outlined on the screen. That concludes the resolutions, and I will now take questions from attendees in the room and respond to any that have been submitted online.

Are there any questions from the floor or online?

Congratulations, Nadine. I got a few questions. Why have you included the profit forecast that you did in annual report of $42 million to $47 million?

It's pretty well publicized, where Nadine did a presentation that we lodged to the market a couple of weeks ago, we've reconfirmed that and we are reconfirming that range of $42 million to $47 million. Fair comment.

Second thing is, can you give us [indiscernible] income ratio, last year, it was 9.1. Where can it go to in the next few years [indiscernible].

So we're in a position now where we can now start to [indiscernible] back end. So the ratio is decreasing, but we don't give the actual number.

The other issue is the question of the buyback versus dividends. Now obviously, you started to buyback when the stock got built down to about $0.32 approaching to 60. The NAV is around 62, the embedded value is to frank credits, it's 94. At one point, I noticed in recent days, the number of shares being bought back per day is significantly reduced down to about 250,000. When will the Board decide -- I know it's a 12-month thing, but at what point do you decide that the buyback is no longer appropriate and to start paying dividends? I can tell you I've got a lot of clients in the stock, and they want dividends, including myself.

Yes. I think we do have a capital management plan. And as I outlined in the address, we aim to distribute 40% to 60% of underlying NPAT, whether it be by dividend and -- or by buyback. We have that conversation as a Board regularly as part of -- and factors that we consider are some of the points you've raised, discount embedded value, where the share price is, what the market conditions are looking like. At this stage, we're comfortable where we are, but we are actively having that conversation as a Board.

You can't give us anything?

Look, I don't want to give traders and so forth flags of where our points are and so forth, but we are actively considering that issue at all times. And it's...

Well, I think, if you look at it in dividend terms, based on your profitability, you should be able to pay $0.03 or $0.04 a share, which based on the current share price, it's a yield of about 7% fully franked. That's highly attractive to people. And I would strongly argue the buyback, it's done its job and time is for dividends to....

Yes. No. Take it on Board. Thanks. Any other questions in the room? Judilyn, anything online?

Yes, Chair, I have a few questions from online. There's a question from Mr. Andrew Tam. The media reports an increasing incidence of mental health claims, what has the experience that ClearView has had with rising mental health claims? Are you responding to this in terms of pricing, assessing new business, exclusions, limits, terms and conditions, et cetera?

Nadine, take this one.

I think all of the above in the list. There is a lot of -- there's a lot in the industry at the moment on mental health. I think for myself being in the industry for 30 years, we've always had to think about mental health with living benefit products. What we're seeing right now is the cohort on those claims, changing profile in that there's more younger people that are putting in claims for TPD. So TPD product is one where you have to satisfy a test where you will never be able to return to work again. And it's difficult to be able to say that for young people where they're sort of mild transient cases of mental health. So for us, it's really around our underwriting standards, our product wording, and it's really the strength of the claims management that we have in the building. So we've invested very heavily in claims management. We've done an independent review of our claims processes recently, particularly around TPD to make sure that we have best practice. So it really comes down to a multitude of factors. We disclosed at year-end that we had increased our reserves on TPD by about 20%, and the repricing for us went through from the 1st of February 2025. So for us, we tackle this. It's being single-focus now. We really focus on this very, very heavily. And I'm -- I mean, claims are our business. So if they're all legitimate claims, they of course, they all get paid, but it's very much a focus for us day to day.

So further question from Mr. Andrew Tan. What P&L impact does the redemption of the $75 million of the 2020 Tier 2 notes have on the business?