ClearView Wealth Limited has unveiled plans to divest its wealth management business, announcing it has entered into an agreement with investment management and technology company, Human Financial.
As part of the prospective sale, ClearView is expected to receive cash consideration of $1.3 million, while also acquiring a 40 per cent stake in Human Financial.
The announcement formed part of ClearView’s half-year results update, in which it reported a $1 million loss across its wealth management business in the first half of the 2023 financial year (1H23), down from a net profit of $1.1 million in 1H22.
The company’s decision to sell its wealth management division comes just two years after it offloaded its financial advice business to Centrepoint Alliance.
ClearView continues to hold a 24.5 per cent stake in Centrepoint Alliance, which delivered a $1.7 million profit in 1H23, up from a loss of approximately $500,000 in 1H22.
Overall 1H23 result
ClearView has posted an underlying net profit after tax of $16.3 million in 1H23, up 31 per cent on the previous corresponding period.
The earnings improvement came off the back of a 46 per cent increase in revenue generated by its life insurance business, from $13.3 million to $19.4 million.
This was supported by 11 per cent growth in in-force premiums to $290.9 million and a 9 per cent increase in new insurance business volumes to $11.3 million
Gross premiums rose 8 per cent over the six months to 31 December 2022 to $160 million.
Reflecting on the overall 1H23 result, ClearView managing director Simon Swanson attributed the company’s performance to its simplification strategy.
“The last few years have been about simplification and transformation, and we are starting to see the benefits of our ongoing investment in people, processes, and technology,” he said.
“Furthermore, the sale of our financial advice business in 2021 has resulted in a better home for former staff and financial advisers, and a simpler ClearView while enabling us to continue participating in the growing advice margin through our strategic interest in Centrepoint Alliance.
“Similarly, the proposed divestment of our managed investments business and subsequent 40 per cent interest in Human Financial will expand our capacity to serve our customers and financial advisers, and sharpen our focus on lifting Life Insurance market share and profitability.”
Mr Swanson went on to renew ClearView’s support for recommendations handed down by Michelle Levy from the Quality of Advice Review (QAR), particularly the recommendation to retain current life insurance commission caps.
“We are supportive of any reforms that make good advice accessible and affordable to more Australians,” he said.
“Key recommendations in the QAR final report, if implemented, will go a long way to achieving that goal by removing unnecessary complexity in the system and reducing the compliance burden on advice businesses.
“Importantly, the commission model is an important funding mechanism that helps keep the upfront cost of purchasing life insurance down. It gives consumers the choice over how they pay for life insurance advice, be that fees, commissions or a combination of both.”