ClearView resets its financial advice business

ClearView has announced the removal of its financial advice segment from embedded value calculations and will suspend the FY19 dividend, with the intentions to institute a share buyback program, as a part of its broader strategy aimed at refocusing its business in 2H FY19.

The company said in an update on its expected results for FY19 issued to the Australian Securities Exchange (ASX) today that it expected the net impact of assumption and methodology changes of $-3.5m on embedded value, as of 30 June, with embedded value further expected to stand approximately at $671.5m.

Further to that, the firm anticipated underlying net profit after tax (NPAT) to amount to $25.1m, including the $1.8m adverse impact on FY19 result from the change in income protection claims assumptions.

The firm also said that is was “actively considering” a share buyback program, in the light of its current share price, and that this would be subject to market conditions as well as its overall capital management strategy.

“Given the current share price, the board believes that buying back shares is a better use of shareholder capital than dividends. Given this, the board had decided to suspend the FY19 dividend and intends to institute a share buy back program in 1HFY20,” ClearView said in the statement.

ClearView also admitted that FY19 was a difficult year for the entire financial services industry due to the impact of the Royal Commission and progressively difficult emerging economic conditions, which were combined with increasing community focus on prices in a lowering interest rate environment.

On the positive note, the company said it managed to complete its remediation program and refocus its business, with key changes including:

  • Revision of its financial advice business strategy and dealer group pricing model;
  • Termination of certain poor performing life insurance distribution relationships; and
  • Repricing of its life insurance and wealth management products.

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