CLEARVIEW WEALTH LIMITED — Annual Report 2011

Aug 23, 2011

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Full Year 2011 Results SIMON SWANSON – MANAGING DIRECTOR ATHOL CHIERT – CHIEF FINANCIAL OFFICER 24 AUGUST 2011

TRANSFORMATIONAL YEAR

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YEAR END JUNE $M(unless stated otherwise)	2011	2010	CHANGE
Underlying NPAT1	19.3	(1.0)	n/a
Reported NPAT2	8.7	2.4	260%
Dividend per share (cents, fully franked)	1.8	nil	n/a
Underlying EPS (cents, fully diluted)	4.6	(0.5)	n/a
Net Assets per share3 (cents)	60.5	59.1	2%
Embedded value4	259	223	16%

ClearView is a profitable, cash generating business with significant potential for growth and value creation. Dividend reinstated in FY11.

1 Underlying profit is the Board’s key measure of profitability and the basis on which the dividend payment is determined. It consists of profit after tax adjusted for amortisation, restructure and transition costs, one-off system upgrade costs and AIFRS insurance liability adjustment (tax effected).

2 Reported FY10 NPAT is from continuing operations adjusted for the profit on acquisition as a result of completion adjustments.

3 Net assets per share is adjusted for the Employee Share Plan (ESP) loan of $12.0 million and 20.7 million ESP shares.

4 Pro forma embedded value as at 30/06/2010 includes the Parent entity and an estimate for ClearView Financial Advice (formerly ComCorp).

2

RETURN ON CAPITAL EMPLOYED

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CAPITAL RETURN

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$248 M $19.3M
250 $239 M UNDERLYING
NPAT
69
200 79 FY11 ROCE
$1.6M
150 53 INVESTMENT
40 RETURN ON
$M SURPLUS 14% POST TAX
CAPITAL
100 UNDERLYING BUSINESS LINE PROFIT
ON CAPITAL EMPLOYED
$17.7M
120 126
50 BUSINESS LINE
PROFIT = 17.7/(120+126)/2
0
Pro forma 30/06/10 1 30/06/2011
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Capital employed Surplus capital 2 Intangibles and DTA

1 Pro forma as if current Capital Management Plan had been implemented as at 30/06/10. 2 Surplus capital above internal target requirements prior to FY11 dividend and capital benefit of utilisation of tax losses.

3

EMBEDDED VALUE (EV)[1]

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300.0 $259 M
$248 M
39
$223 M 16
250.0
11
200.0
46
63
54
150.0
$M
Financial planning
100.0 101 Wealth mgmt
104
98
Life insurance
50.0
Net worth
59 65 73
0.0
Proforma including 31/12/2010 30/06/2011
Parent & ComCorp
30/06/2010
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MOVEMENTS FROM FY10 DUE TO:

• Emerging profit

• Reduced expenses across group post acquisition

• Reduced claims assumption in life insurance

• Increased lapse assumption reflective of recent trends

• Changed advice fee structure between Wealth and Financial Planning

EXCLUDES THE FOLLOWING:

• Value of future franking credits (potential value $45m)

DISCOUNT RATE SENSITIVITY	RDR -1%	RDR +1%
Net worth	73	73
Life insurance	107	95
Wealth management	47	44
Financial planning	40	37
Total excl. franking credits	267	249

• Value of $7m carried forward revenue tax losses and $9m unrecognised capital losses

• Value attributable to future growth potential

• 1 EV increase based on consistently applied risk discount rates of 11% for life insurance and 12.75% for wealth management. EV is prior to FY11 dividend and capital benefit of utilisation of tax losses.

4

2H FY11 OPERATIONAL UPDATE

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• Strategic partner developments

  • Penetration of Bupa member base continued with MBF telemarketing pilots and member centres in preparation for broader rollout

  • Queensland Country 1st credit union to add life insurance products to existing agreement that distributes wealth products (launch planned for Oct 11)

• Released 5 new direct life insurance products and upgraded client facing websites

• Strong investment performance from ClearView wholesale funds

• Launched two new asset classes in wholesale funds – international listed infrastructure and emerging markets

• Winner of the Money Management non-aligned ‘Dealer Group of the Year’ for

• 2011

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PROFIT & LOSS – FY11

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$M, YEAR END JUNE	1H	2H	FY11	COMMENTS
Life insurance profit	5.0	4.0	9.0	Lapse losses continued into 2H, part of which related to a change in the credit card billing system that was resolved in the last quarter. Lapse losses were the main contributor to negative experience in FY11. Increase in lapse rate assumption reflective of recent trends.
Wealth management profit	5.0	5.2	10.2	2H net outflow improved vs 1H but management fees not as positively impacted by market movement. Tax benefit flowed through in 2H.
Financial planning profit	(0.1)	(0.3)	(0.4)	Includes fees earned from ClearView’s licensed planners and from retail unit trusts. Cost restructure planned to further improveperformance and reduce costs.
Listed entity and other	0.4	0.1	0.5	Mainly investment earnings less listed entity costs.
Underlying NPAT	10.3	9.0	19.3	Lower 2H profit primarily as a result of lower fee revenue, lapse losses in life insurance and an increase in costs related to building a platform for growth, offset by a further tax benefit.
Amortisation	(3.9)	(3.5)	(7.4)	Non cash item that relates to acquired intangibles predominantlyfrom the Bupa acquisition.
One-off adjustments	(3.5)	0.3	(3.2)	Includes $1.4m provision to restructure Financial Planning business. Refer to next slide for breakdown.
Reported NPAT	2.9	5.8	8.7	Includes reduction in deferred tax asset (DTA) due to utilisation of $4.1m of losses (tax effected) with capital benefit expected in FY12.

Results reflect a solid, profitable business at the beginning of a growth phase.

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ONE-OFF ADJUSTMENTS – FY11

$M, YEAR END JUNE	1H	2H	FY11
AIFRS policy liability adjustment1	(2.6)	2.0	(0.6)
Life administration system upgrade2	(0.7)	0.0	(0.7)
Transition and Restructure costs3	(2.1)	(1.4)	(3.5)
Other	0.1	(0.2)	(0.1)
Income tax effect	1.8	(0.1)	1.7
Total one-off adjustments (after tax)	(3.5)	0.3	(3.2)

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1 The life insurance contract policy liability (based on Australian IFRS) is discounted using market consistent rates that typically vary at each reporting date and create volatility in the policy liabilities and consequently earnings. ClearView reports this volatility under the IFRS DAC adjustment which represents a timing difference in the release of profit and has no impact on cash earnings.

2 One-off system upgrade to latest version post the Bupa acquisition.

3 Transition costs in 1H largely relate to costs payable to Bupa prior to the migration off Bupa’sinfrastructure and post acquisition employee termination related costs.

The restructure costs in 2H relate to a provision to restructure the Financial Planning business unit planned for FY12.

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LIFE INSURANCE – FY11

NEW BUSINESS

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Focus has been
1.2 1.1 1.1
on developing
infrastructure
1.0 0.9
for growth in
new market
0.8
segments
$M 0.6 0.6
0.4
0.2
0.0
July-Dec 09 Jan-Jun 10 Jul-Dec 10 Jan-Jun 11
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SOURCES OF PROFIT

YEAR ENDED JUNE 2011	$M
Planned profit margin released1	11.5
Profit arising from difference between actual and expected experience	(2.5)
Underlying life insurance profit after tax	9.0
One-off adjustments (after tax)	(0.9)
Amortisation	(1.4)
Reported life insurance profit after tax	6.7

1 Includes investment earnings on surplus capital.

2 The MBF Broken Bones policy was terminated with effect from 1 July 2011.

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PREMIUMS IN FORCE

MILLION $41

IN FORCE PREMIUM MIX

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22%
TERM LIFE –
SHORT FORM
UNDERWRITTEN
14%
59%
ACCIDENTAL
TERM LIFE – FULLY
DEATH
UNDERWRITTEN
2%
FUNERAL PLAN
2%
BROKEN BONES [2]
1%
OTHER
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WEALTH MANAGEMENT– FY11

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FUM NET FLOWS[1]

FUNDS UNDER MANAGEMENT

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July-Dec 09 Jan-Jun 10 Jul-Dec 10 Jan-Jun 11
0
-10
-20
-30
$M -40
-50 -35
-60 -48
-70 -60
-80 Reflective of tough
-90 market conditions
and historical focus
-100 -87
on pension products
which has been
affected by trend to
defer retirement
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PROFIT RECONCILIATION[1]

YEAR ENDED JUNE 2011	$M
Wealth mgmt underlying profit after tax	10.2
One-off adjustments (after tax)	(0.8)
Amortisation	(5.2)
Reported wealth management profit after tax	4.2

• 1 Retail unit trusts included in FUM and FUM net flows but excluded in Wealth Management profit in FY11.

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BILLION
$1.5
FUNDS UNDER MANGEMENT ($M)
570
SUPER 714
PENSIONS
57
ROLLOVER
35
147
SAVINGS
RETAIL UNIT TRUSTS
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INVESTMENT PERFORMANCE – FY11

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TOTAL 1 YEAR RETURN

FUNDS UNDER MANAGEMENT

CLEARVIEW WHOLESALE FUNDS	W/S FUNDS %	INDEX %	INDEX
Money Market	5.10	4.99	UBS Bank Bill
Bond	6.31	5.55	UBS Composite Bond All Mkts
International Fixed Interest	7.52	5.38	Citigroup World Gov’t Bond
Property	5.90	5.84	S&P ASX 200 Property
Australian Equity	14.33	11.73	S&P ASX 200
International Equity	8.77	2.66	MSCI World Ex Australia

Strong outperformance for all key funds which offer a mix of growth and income.

BILLION $1.5

ASSET MIX

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3%
INT’L FIXED 23% 20%
INTEREST AUSTRALIAN CASH
FIXED INTEREST
5%
EMERGING
MARKETS
7%
4%
LISTED
PROPERTY
INFRASTRUCTURE
25%
13%
AUSTRALIAN
INTERNATIONAL
SHARES
SHARES
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FINANCIAL PLANNING – FY11

FUA NET FLOWS[1]

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30 28
26
25
20
20
$M 15 Reflective of
current market
conditions
10
5
5
0
July-Dec 09 Jan-Jun 10 Jul-Dec 10 Jan-Jun 11
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PROFIT RECONCILIATION[1]

YEAR ENDED JUNE 2011	$M
Financial planning underlying profit after tax	(0.4)
One-off adjustments after tax	(0.8)
Amortisation	(0.7)
Reported financial planning profit after tax	(1.9)

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FUNDS UNDER ADVICE

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BILLION
$1.5
FUNDS UNDER ADVICE ($M) BY PLATFORM
301
NAVIGATOR
554
COLONIAL
165 FIRST STATE
MACQUARIE
64
298
BT
OTHER
64
CHALLENGER
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1 Retail unit trust excluded in FUA and FUA net flows ($18m) but included in Financial Planning profit in FY11.

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BALANCE SHEET SHAREHOLDER[1]

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$M	30/06/11	30/06/10
ASSETS Cash equivalents 122 27
Financial assets - 91
Receivables 6 5
Deferred tax 12 16
PP&E 1 1
Goodwill 5 4
Intangible 52 59
Total Assets 198 203
LIABILITIES Payables 9 17
Current tax - 2
Provisions 4 8
Life Insurance2 (63) (63)
Total Liabilities (50) (36)
Net Assets 248 239
Net Assetsper share3 60.5 cents 58.3 cents
Net Tangible Assets 179 160
NTAper share3 44.6 cents 39.9 cents

STRONG CAPITAL POSITION

• No debt

• $53m[4] surplus capital above internal target requirements

(Note that the basis of reporting surplus capital has changed from regulatory excess)

• Shareholder capital conservatively invested in cash and interest bearing securities

• Changes in proposed APRA capital standards not expected to have a material impact on the capital position

1 Shareholder balance sheet reflects the exclusion of life investments contracts (ie unit linked business) and deconsolidation of retail unit trusts.

• 2 Life insurance asset reflects insurance liabilities net of the future recoverability of the deferred acquisition costs in accordance with the accounting standards. 3 Adjusted for Employee Share Plan (ESP) loan of $12.0m (FY10: $10.0m) and 20.7m (FY10: 17.7m) ESP shares.

4 Surplus capital above internal target requirements prior to FY11 dividend and capital benefit of utilisation of tax losses.

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TRACK TO GROWTH

PRODUCT/PLATFORM ROLLOUT	*	ESTIMATED TIMING
Advice product – Life insurance	1, 3	End of 1H FY12
Bupa rollout Phase I – Telemarketing/ Direct Marketing, member centres	2	Ongoing
Bupa rollout Phase II – call centres, internet and HBA/ Mutual Community	2	2H FY12
Private label platform	2,3	Beginning of 2H FY12
Expand life insurance offering to credit unions and affinity groups	2	Ongoing
Increase strategic partners	4	Ongoing

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*INITIATIVES

1 Upgrade and expand products and processes – initial focus on Life Insurance

2 Leverage alliances with strategic partners (Bupa Australia, credit unions and affinity groups)

3 Penetrate the IFA market

4 Increase strategic partners through additional alliances

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NEW GROWTH INITIATIVES

IFA STRATEGY

• IFAs to become a significant sales channel

• ClearView’s key differentiator is to provide IFAs with access to a relationship driven ‘independent’ partner

• First two initiatives:

• Life advice product expected launch: end of 1H FY12

• Wealth private label wrap platform expected launch: beginning of 2H FY12

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PRIVATE LABEL PLATFORM

• High end offering to financial planners with a full wrap capability (outsourced to third party)

• Allows full ownership of product due to licensing structure and potential for higher margins

• Product offering to include Super, Pension (including transition to Retirement Pension) and Ordinary money (IDPS – Investor Directed Portfolio Service)

• Focused on the accumulation and retirement markets

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DISTRIBUTION MODEL

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PRODUCTS

STRATEGIC PARTNERS

• Direct Insurance[1] • Life

• Accidental death

• • Injury cash • Funeral plan • Serious illness

• Life Advice[2] • Term life[3] • Trauma • TPD (total and permanent disability)[3] • Income protection[3]

Telemarketing/Direct Marketing Strategic partners’ member centres

Strategic partner call centres Melbourne and Brisbane - Bupa

Bupa Australia over 3 million Australians

7 credit unions

2 affinity groups

Investments

• Pensions

• • Superannuation • Rollovers • Managed investments

Private Label Platform[4]

Internet - direct online from Clearview/Bupa websites

Clearview advisers/IFAs[2]

New strategic partners

Lower cost/less capital intensive model than prior to acquisition due to referral management system (RMS) and telemarketing/direct marketing arrangements.

• 1 Direct life products have ability to be white labelled.

• 2 Estimated pilot launch in H1 FY12; sales expected to materialise in H2 FY12.

• 3 Ordinary or superannuation

• 4 Private label platform estimated launch at the beginning of H2 FY12.

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REGULATORY REFORMS

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Regulatory Reform	Effective date	Key Reforms
FOFA Reform	1 July 2012; 1 July 2013	Ban on risk commissions inside super (TBC); 2 year opt-in for fees; scaled advice
Cooper Review	N/A	MySuper, SuperStream, intra-fund advice
Henry Tax Review	2013 - 2020	Employee’s super contribution to increase from 9% to 12%
APRA Capital Standards	1 January 2012	To make the standards more risk-sensitive
IFRS Phase 2: Insurance Accounting	Ongoing	Align insurance accounting globally

Vertically integrated companies like ClearView are in a strong position to adapt to potential regulatory reforms and an uncertain economic environment.

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MARKET OUTLOOK

LIFE INSURANCE

• Overall insurance industry including life has been stable...

• ...however lapse rates have tended to increase across the industry as a whole based on recent experience

• Long term industry growth remains strong with forecast growth at slightly above 9% per annum over the next 10 years (source: DEXX&R)

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WEALTH MANAGEMENT

• GFC has adversely impacted super balances and led to a deferral of retirement to rebuild super balances

• ClearView has historically participated in the retiree market so has disproportionately been impacted via net fund outflows

• Deferral of retirement simply represents a deferral of flow of funds into the retirement phase rather than a long term impact

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OUTLOOK

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• Year-over-year growth in pre tax profitability anticipated in FY2012

• Development of the infrastructure to expand into the IFA market (end to end suite of life advice products and private label platform) will be a focus in 1H

• Learnings from MBF telemarketing pilots and member centre rollouts to be implemented in 1H

• Broader rollout to Bupa client base in 2H (call centres, internet and HBA/Mutual Community)

• Growth expected in 2H from Life advice product rollout to select advisers and launch of private label platform

• Wealth and Planning will continue to reflect current market conditions

• Unique position + momentum = value creation

• Unique position due to size, ‘independent’ nature and ability to focus on profitable, scalable segments

• Market fundamentals reflect long-term growth rates of 10%

• Future value initially shown through increases in EV and AV

• FY2012 dividend forecast at 20-40% of underlying profit

(subject to regulatory requirements, available profits and financial position)

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Full Year 2011 Results APPENDIX

KEY STATS AS AT 30 JUNE2011

LIFE WEALTH INSURANCE MANAGEMENT MILLION[1] BILLION $41.0 $1.5

INFORCE PREMIUMS FUNDS UNDER MANAGEMENT[2]

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ADVICE FINANCIAL PLANNING BILLION $3.0 FUMA ($1.5bn FUM, $1.5bn FUA)

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FINANCIAL PLANNERS

1 includes MBF Broken Bones policy ($0.7 million) that was terminated with effect from 1 July 2011 2 includes retail unit trust funds of $147 million

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LIFE INSURANCE – FY11

$M, YEAR END JUNE	1H	2H	FY11
Net premiums	18.7	17.9	36.6
Interest income	0.6	0.7	1.3
Net claims incurred	(7.1)	(7.5)	(14.6)
Commissions expense	(0.2)	(0.2)	(0.4)
Operating expenses	(5.3)	(6.1)	(11.4)
Movement in risk policy liabilities	0.5	0.4	0.9
Underlying profit before tax	7.2	5.2	12.4
Income tax expense	(2.2)	(1.2)	(3.4)
Underlying profit after tax	5.0	4.0	9.0

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COMMENTS

• Net premiums largely driven by inforce book; not yet reflective of growth initiatives

• Net claims incurred and expenses broadly in line with expectations, small negative experience due to impact from new business volumes

• Lapse losses (1H:$0.6m; 2H:$1.2m). Credit card collection issue[1] normalised in last quarter of FY11. Lapse assumptions increased by 0.5% reflective of recent trends

• Increase in expenses in 2H reflective of investment in growth initiatives (lag in new business volumes)

21

1 Relates to a change in the billing system for credit card collections implemented in 1H that caused a short term impact on lapses in FY11.

WEALTH MANAGEMENT – FY11

$M, YEAR END JUNE	1H	2H	FY11
Fee revenue	15.7	15.1	30.8
Interest income	1.2	1.1	2.3
Commissions expense	(3.8)	(4.0)	(7.8)
Operating expenses	(6.0)	(6.6)	(12.6)
Underlying profit before tax	7.1	5.6	12.7
Income tax expense	(2.1)	(0.4)	(2.5)
Underlying profit after tax	5.0	5.2	10.2
Funds under management1	1,564	1,515	1,515
Net flows1	(87)	(60)	(147)
Market movement1	107	31	138

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COMMENTS

• Fee revenue largely driven by FUM[1]

• Reduction in 2H FUM despite improvement in net flows due to lower positive market movement

• Inflows lower than historical levels reflecting industry trends, change in distribution model and product structure

• Additional tax benefit in 2H

• Business well positioned for regulatory changes

1 Includes retail unit trust funds: FUM of $147m (Jun 11)/$155m (Dec 10); net outflows of $8m (Jun11)/$10m (Dec 10) and positive market movement of $1m (Jun 11)/$14m (Dec 10); profit from retail unit trusts is included under Planning in FY11.

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FINANCIAL PLANNING – FY11

$M, YEAR END JUNE	1H	2H	FY11
Fee revenue	10.4	10.0	20.4
Interest income	0.3	0.3	0.6
Commissions expense	(1.6)	(1.3)	(2.9)
Operating expenses	(9.2)	(9.6)	(18.8)
Underlying profit before tax	(0.1)	(0.6)	(0.7)
Income tax expense	0.0	0.3	0.3
Underlying profit after tax	(0.1)	(0.3)	(0.4)
Funds under advice	1,476	1,446	1,446
Net flows1	26	5	31

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COMMENTS

• Fee revenue includes fees from ClearView’s licensed planners and from retail unit trusts (to be reclassified to Wealth in FY12)

• Cost restructure of business unit planned in FY12 to further improve performance and reduce costs

• Loss of $155m in FUA in 1H from franchise planner; immaterial impact on margin due to commission structure

1 Excludes retail unit trust funds: FUM of $147m (Jun 11)/$155m (Dec 10); net outflows of $8m (Jun11)/$10m (Dec 10) and positive market movement of $1m (Jun 11)/$14m (Dec 10); profit from retail unit trusts is included under Planning in FY11.

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LISTED ENTITY – FY11

$M, YEAR END JUNE	1H	2H	FY11
Interest income	0.6	1.0	1.6
Operating expenses	(0.8)	(0.2)	(1.0)
Underlying profit before tax	(0.2)	0.8	0.6
Income tax expense	0.6	(0.7)	(0.1)
Underlying profit after tax	0.4	0.1	0.5
One-off adjustments	0.3	(1.1)	(0.8)
Reported profit after tax	0.7	(1.0)	(0.3)

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COMMENTS

• Listed entity capital increased by $43m ($26m in1H and $17m in 2H) due to dividend from acquired subsidiary

• Total operating expenses in FY11 representative of listed cost structure

• Positive tax expense in 1H due to finalisation of acquisition

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BALANCE SHEET REPORTED

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$M	30/06/11	30/06/10
ASSETS Cash equivalents 208 198
Financial assets 1,418 1,470
Receivables 10 7
Deferred tax 24 30
PP&E 1 1
Goodwill 5 4
Intangible 52 59
Total Assets 1,718 1,769
LIABILITIES Payables 12 25
Current tax - 2
Provisions 6 8
Life Insurance1 (63) (63)
Life Investment 1,368 1,405
Unit trusts 147 153
Total Liabilities 1,470 1,530
Net Assets 248 239

25

1 Life insurance asset reflects the future recoverability of the deferred acquisition costs in accordance with the accounting standards.

IMPACT OF ESP SHARES

PER SHARE CALCULATIONS

M, YEAR END JUNE	FY11
Number of shares on issue	409
ESP shares on issue	21
Shares on issue to calculate NAV per share (A)	430
Net assets	$248
ESP loans	$12
Proforma net assets (B)	$260
NAV per share = B/A	61 cents
Underlying NPAT	$19.3
Interest on ESP loans	$0.4
Proforma underlying NPAT (C)	$19.7
Underlying NPAT per share = C/A	4.6 cents

BALANCE SHEET

• Accounted for as an option in accordance with AASB 2

• Limited recourse loan not reported as a receivable on Balance Sheet

• Loan repaid with cash if shares are “in the money”

• 20.7 million Employee Share Plan (ESP) shares on issue and $12.0 million loans receivable at 30 June 2011

INCOME STATEMENT

• Underlying NPAT adjusted for after tax interest on ESP loans

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STRATEGIC PARTNERS

BUPA AUSTRALIA

• 10 year exclusive alliance with

• to distribute life insurance and wealth

• Bupa management products

• 3 million+ client base

• Target market = members with discretionary ancillary health cover

OTHER STRATEGIC PARTNERS

• alliance with 6 credit unions and to distribute wealth

• 2 affinity groups management products

• alliance with 1 credit union to distribute life insurance and wealth management products

• No previous attempts by Bupa to market to Mutual Community & HBA members

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DISCLAIMER

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The information in this presentation is general securities advice only and is not intended to constitute a securities recommendation. The presentation does not take into account the investment objectives, financial situation and particular needs of an investor, and is not suitable as a basis for an investment decision. Before making an investment decision we recommend you consulta licensed financialadviser.

The information contained in this presentation is given in good faith and has been derived from sources believed to be accurate. However, no representation or warranty is made as to the accuracy, completeness or reliability of any estimates, opinions, conclusions or other information (all of which may change without notice) contained in this document and, to the maximum extent permitted by law, ClearView Wealth Limited and its related entities and each of their respective directors, officers and agents disclaims all liability and responsibility for any direct or indirect loss or damage which may be suffered by any recipient through relying on anything containedin or omitted from this document.

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