2019
ANNUAL
REPORT
NobleOak Life Limited
For the year ended 30 June 2019
NobleOak
At NobleOak, we believe in a more noble
approach to providing Life Insurance.
It’s more than just in our name.
Many people believe that nobility is
something that you’re born into, but for us,
it’s the quality of being noble in character
and conduct – and doing the right thing. It’s
why we provide the best possible products
and service to our clients to protect them
from uncertainty. Our organisation was
founded more than 140 years ago as a mutual
society with the motto ‘United to Assist’,
so the desire to help others is woven into
every strand of our DNA.
The nobility isn’t just on our side of the table
– we recognise the inherent nobility of our
clients in deciding to take out Life Insurance.
It’s the ultimate selfless act, born out of the
desire to protect the ones you love.
It’s this appreciation that informs everything
we do as a company – from fully underwriting
our policies to our greater transparency
and simplicity.
Our ambition is to create a product and
service that adds value to your life. By putting
our clients first, we aim to be the leading
direct life insurer in Australia.
WHO
WE ARE
NobleOak’s vision is
to help Australians
protect themselves
and their loved ones
by providing the
best value Life and
Income Protection
insurance available
on the market.
WHAT WE
BELIEVE
At NobleOak, we truly believe in
providing the best for our clients and
being the trusted insurer they deserve
and need.
Our strategy has been built on the
four core beliefs below:
We believe Australians
deserve better
We believe Life Insurance is a need,
not a want. For too long, Australians
have had to pay too much for the
quality Life Insurance they need to
protect themselves and their family.
NobleOak strips out unnecessary
costs to provide more affordable
cover backed with personal service.
We are an independent life insurer, an
unlisted public company in Australia.
NobleOak was established in 1877 as
The United Ancient Order of Druids
Friendly Society of NSW. We are a
demutualised friendly society regulated
by the Australian Prudential Regulation
Authority (APRA), and our products
are backed by global reinsurers for
extra security. In 2012, NobleOak
rebranded and launched its direct
strategy to become a leading provider
of Direct (non-advised) Life Insurance,
with excellent client service and
high-quality, comprehensive products.
At NobleOak, we predominantly
target self-directed mass-affluent
Australians.
We also partner with a few select
organisations and white-label our
products for an ongoing fee to
diversify our revenue. We select
these partners carefully to ensure they
are delivering unique value to their
members or clients.
Visuals: NobleOak’s Nobleman campaign September 2019
We believe Australians
should feel confident at
claim time
We believe Life Insurance should
be done the right way from the
start, and clients should know what
they are covered for. We ask a few
more health and lifestyle questions
at application time, so clients have
greater certainty at claim time.
We believe in keeping our
clients happy
We focus on exceeding customer
expectations and limiting our
marketing costs, so we can provide
lower premiums, award-winning
cover and better personal service.
It’s not rhetoric. We really do put
clients first.
We believe in a good
night’s sleep
Our products have no hidden clauses
or tricks. We simply provide great
value, comprehensive Life Insurance
so our clients can sleep more
comfortably at night.
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Annual Report 2019NobleOak Life Limited OUR
VALUES
NobleOak recruits
high performers with
a genuine desire to
make a difference
and provide better
protection to
Australians.
ADAPTABILITY
We are responsive to, and drive,
positive change to ensure our
clients get the best service and
products they can. We continually
learn and improve.
DELIVERY
We deliver results, not excuses.
This includes both to our clients and
to each other. When we say we are
going to do something, we do it.
Our Australian-based phone service
team is highly accessible to our clients.
Each team member at NobleOak
lives by these values:
NOBILITY
We put our clients first at all times.
We act with integrity. We are here
to protect Australians with better
cover, by making Life Insurance more
accessible and affordable.
SIMPLICITY
We use simple, clear communication
and avoid jargon. We aim to make
getting Life Insurance and Income
Protection easier and faster and
explain the process clearly to our
clients. Each Product Disclosure
Statement (PDS) is written clearly
with no fine print, so clients know
exactly what they are covered for.
We provide professional, friendly,
and fast service.
Visuals: NobleOak’s Nobleman campaign September 2019
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Annual Report 2019NobleOak Life Limited OUR
PRODUCTS
We continue to provide
comprehensive cover at a lower cost,
with award-winning personal service.
As we do not pay large upfront
commissions to advisers, we pass
savings to our clients through lower
premiums and invest in better service.
We offer a range of cover types to
protect clients against the financial
impacts of accidents, death and
sickness without the need for
financial advice.
Life Cover
Death and terminal illness cover
up to $15 million of cover.
Trauma (Critical Illness)
Insurance
Cover for 38 conditions
up to $2 million of cover.
Total and Permanent
Disablement Insurance
Lump sum payment in the event of
disablement due to sickness or injury
up to $5 million of cover.
Income Protection
Insurance
Provides up to 75% of
monthly income
(up to $25,000 per month).
Business Expenses
Insurance
Provides protection for fixed business
expenses up to $25,000 per month.
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Annual Report 2019NobleOak Life Limited
OUR RECENT
ACHIEVEMENTS
>50%
Number of Policies (Growth)
>60%
In-force Annual Gross Premium (Growth)
>14%
Normalised Profit Before Tax (Growth)*
* Normalised Profit Before Tax = Reported Profit Before Tax
adjusted for the impact of the change in discount rate on the
valuation of Deferred Acquisition Costs during the year
Satisfaction
94.4%
Service
95%
Referral
>90%
of our clients felt that the service
provided during the quotation and
application was ‘good’ or ‘excellent’
of our clients felt that
the service provided to date
was ‘good’ or ‘excellent’
of our clients would recommend
NobleOak’s products and services
to others
Feefo Customer
ratings website
‘Gold Trusted
Service Award’
NobleOak Direct Income Protection
Awarded CANSTAR for
NobleOak Direct Life Insurance
Awarded CANSTAR for
‘2019 Outstanding
Value Award’
‘2019 Outstanding
Value Award’
Strategic Insights
Strategic Insights
‘2018 Direct Life Insurance
Customer Service Award’
‘2018 Direct Life Insurance
Overall Excellence Award’
Direct Life Insurance Excellence Awards
Direct Life Insurance Excellence Awards
Net Promoter Score (NPS)
23%
Market leading loyalty
and advocacy score
Digital
Enhanced Conversion
Rate Optimisation
Around 20% improvement in Digital
conversions
Website Traffic
>51%
Increase in website
users YOY
Growth
Premium Growth
In 2019, the in-force premium for our
‘core’ (NobleOak-branded)
Life Insurance offering increased to
$36 million. This represents an
increase of 30% from 2018.
Customer Satisfaction
>4.5/5
Customer satisfaction
(Google and Feefo)
Diversification
Launch of Genus Life
Insurance Services
Administration of over 80,000 clients
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Annual Report 2019NobleOak Life Limited CONTENTS
Chairman’s Letter
Board of Directors
CEO’S Report
Leadership Team
Directors’ Report
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
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Visuals: NobleOak’s Nobleman campaign September 2019
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Annual Report 2019NobleOak Life Limited CHAIRMAN’S
LETTER
On behalf of the Board, I am pleased
to present the 2019 NobleOak
Life Limited Annual Report. This
report provides an overview of our
performance in the 2019 financial year.
It has been a year of transformational
change for the Australian Life
Insurance industry at large and another
strong year of growth for our business.
REGULATORY
ENVIRONMENT
The financial services industry saw
unprecedented levels of scrutiny
and change throughout the year.
This was driven largely by the Royal
Commission into Financial Services and
ASIC’s review of Direct Life Insurance.
Royal Commission into
Misconduct in the Banking,
Superannuation and
Financial Services Industry
The Royal Commission into
Misconduct in the Banking,
Superannuation and Financial Services
Industry has been a significant
moment in time for the Life Insurance
sector. A number of key changes
will be implemented which will
undoubtedly have a long-lasting effect
on the industry. Such changes include
the reduction of adviser commissions,
the likely ASIC endorsement of
the Life Code of Practice, changes
to default superannuation, and the
potential ban on ‘hawking’ (non-
solicited outbound selling calls).
While many of these
recommendations are generic in
nature at this stage, with greater
direction to be provided in the next 12
months, we believe NobleOak should
not be materially impacted by these
changes due to our long-standing
business strategy and culture. We are
pleased to have withstood the 2018
ASIC Direct Life Insurance review and
the Royal Commission in good shape.
We will carefully monitor the findings
to manage our reputational risk and
continue to work with our team and
business partners to ensure we limit
our exposure and risk.
Some ramifications of the changes in
the industry include greater funding
of our regulators, APRA and ASIC,
which in turn increases the scrutiny of
the industry. While in some cases this
is a positive move for the customer, it
has also resulted in a greater need to
invest in compliance across all insurers,
including NobleOak.
CONSOLIDATION
The landscape of Life Insurance
continues to change with several
major institutions deciding to exit
their Life Insurance business. The
market also continues to consolidate.
Following recent transactions (TAL
purchasing Suncorp Life, Zurich
merging with OnePath, and AMP
selling its Life business to Resolution
Life), the top four insurers now
represent 80% market share.
Our direct to customer model
continues to be validated by these
changes and the potential for further
scaling remains as many competitors are
distracted with large integration projects.
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CONTINUATION OF
DIRECT STRATEGY
Our strategy this year has continued
to focus on delivering growth and
building scale for the business,
while navigating the new insurance
landscape. I am pleased to advise
that we achieved an increase in
sales delivered from both our ‘core’
(NobleOak-branded direct business)
and ‘partnership’ business.
In 2019, the in-force premium for
our ‘core’ (NobleOak-branded) Life
Insurance offering increased to $36
million. This represents an increase of
30% from 2018.
The total gross in-force premium for
our ‘active partnership’ business (PPS,
Avant and NEOS), increased from $10
million in July 2018 to $24 million as
of 30 June 2019. This represents an
increase of 150% as NEOS in particular
started to accelerate their distribution.
OUR PARTNERS
We entered into partnership with
NEOS Life in early 2018. NEOS Life
focuses on distribution through the
adviser/retail market. This strategic
partnership further broadens our
distribution footprint, providing greater
top line diversification. The partnership
has started well, with NEOS achieving
substantial growth in the first year.
Our other partnerships, Avant and
PPS, continue to build and deliver on
their growth ambitions and I would
like to thank their teams for their
ongoing commitment and contribution
to our growth.
FREEDOM
OPPORTUNITY
On 15 April 2019, Freedom Insurance
Group announced to the market that
it had accepted an offer from a third
party in relation to the transition of
its policy administration services to
another service provider.
NobleOak took on the administration
of these policies from 1 June
2019. This is an important step for
NobleOak. Taking on this business
will strengthen our bottom line from
2020 through the administration fee
arrangements and significantly lift the
scale of our business as we transfer
many of the former Freedom staff into
our business. There are over 80,000
policies to be administered, which
have been in run-off since Freedom
ceased accepting new business in
September 2018 and will continue to
lapse over the next few years.
This development naturally comes
with some risks. To manage these
risks, we have structured the
integration of the business to ensure
we minimise the distraction to the
core business, and importantly,
maintain our strong customer-centric
culture. We have taken on additional
lease space on a separate floor in our
current location at 66 Clarence St and
have recruited specialist staff to run
the operation.
We look forward to advising further
on the success of this development in
future updates.
FINANCIAL
PERFORMANCE
In 2019, we returned a normalised
profit before tax of $5.0 million. This
represents an increase of 14% from
2018. Reported Profit before tax
(before normalising adjustment) was
$7.7m. This is a very pleasing result
and reflects the significant growth for
the business during the year and our
focus on implementing our strategy to
build shareholder value.
CAPITAL
As at June 2019, NobleOak maintains
capital above its target level.
NobleOak will look to raise capital in
late 2019 to further accelerate growth
of our in-force book and brand.
RISK MANAGEMENT
FRAMEWORK
The Royal Commission and ASIC’s
review of Direct Life Insurance
have both reaffirmed our decision
to strengthen our focus on our
regulatory, strategic and operational
risk management framework. The
NobleOak Management Team and
Board believe ongoing investment in
managing risk is critical to our longer-
term growth aspirations. To that end,
we will continue to foster a culture that
proactively addresses risks to ensure
the sustainability of the business.
LOOKING AHEAD
In 2019, NobleOak delivered growth
in a low growth market environment
that has seen widespread disintegration
of trust within the community.
NobleOak is well positioned to take
advantage of this disruption and
further grow our business. No doubt
more industry headwinds will emerge
in the coming year, but the Board
believes we are very well placed to
deal with these while further building
shareholder value.
Stephen Harrison
Chairman
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Annual Report 2019NobleOak Life Limited BOARD OF
DIRECTORS
STEPHEN HARRISON
Chairman and Non-Executive Director
Stephen has over 36 years of experience in financial services, funds
management and private equity and accounting fields. He has held Director
positions with Investec Funds Management and the Australian subsidiary of
US-based fund manager Sanford C Bernstein. Stephen has been a founder
and has held directorships in a number of listed companies, both in Australia
and overseas. He was previously Director Financial Services for BDO Nelson
Parkhill, Chartered Accountants. Stephen is currently Chairman and Director
of Sinetech Limited, Chairman of Conscious Capital Funds Management and
IncentiaPay Limited.
EMERY FEYZENY
Deputy Chairman and Non-Executive Director
Emery has over 45 years of experience in the superannuation industry,
including 15 years as a partner at KPMG. He established and headed KPMG
Superannuation Services Pty Ltd for 18 years and advised the Superannuation
Senate Select committee on the taxation of superannuation funds in Australia.
He is currently a Director of REI Superannuation Fund and Chair of the
Fund’s Investment Committee. He holds a Bachelor of Science and is a Senior
Associate of the Australian and New Zealand Institute of Insurance and Finance,
a member of the Institute and Faculty of Actuaries and a member of the
Australian Institute of Company Directors.
KEVIN HAMMAN
Non-Executive Director
Kevin has over 31 years of experience in the financial services industry
including senior management and Director roles in investment and private
banking. Kevin currently holds several executive directorships in private
companies in the financial services, property development and investment
industries. Kevin holds a Bachelor of Commerce Degree, a Diploma in
Financial Services and Finance, and the Associate Diploma with The Institute
of Bankers. He is a Member and Graduate of the Australian Institute of
Company Directors.
ANTHONY R BROWN
Chief Executive Officer and Director
Anthony has been CEO of NobleOak for over 7 years. He has
over 28 years of experience in marketing, strategy, operations and
distribution. He was previously COO at AMP Capital, Head of Strategy
and Marketing at AMP, Head of Commercial Insurance Marketing at
Suncorp, and Manager at KPMG. Anthony has completed the General
Management Program at Harvard Business School, Boston, has an
MBA from the AGSM, and is a Chartered Accountant. He also holds a
Bachelor of Economics degree (University of Sydney) and a Master of
Commerce degree (University of NSW).
MARTIN EDWARDS
Non-Executive Director
Martin is the CEO - Technology in Practice at Avant Mutual Group and a
Director of Darjack Pty Ltd, MyPracticeManual Limited, and Hoxton MPM
Pty Ltd. Martin has over 23 years of experience holding multiple General
Manager roles in Treasury, Capital, Strategy and Insurance. Martin is a fellow
of the Institute of Actuaries of Australia. Other previous positions include
MBF’s Group Treasurer and roles at Commonwealth Bank and Trowbridge
Consulting. Martin attended the General Management Program at Harvard
Business School and holds a Bachelor of Science. He is a Member and
Graduate of the Australian Institute of Company Directors.
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Annual Report 2019NobleOak Life Limited CEO’S
REPORT
GROWTH
Throughout 2019, the in-force
premium of our ‘core’ (NobleOak-
branded) direct business increased by
30% through focusing on providing
quality, affordable cover.
Our ‘partnership’ business (PPS, Avant
and NEOS) increased by 150%. This
active partnership business excludes
Freedom Insurance (Freedom).
NobleOak discontinued issuing
Freedom policies in July 2017.
Canstar Outstanding
Value Awards
In March, we were again awarded the
Canstar Outstanding Value Award for
Direct Income Protection for 2019.
This is our fourth award for Income
Protection.
In June, we also won the Canstar
Outstanding Value Award for Direct
Life cover again, the fourth such award
in a row.
NobleOak is the only life insurer
to win four consecutive awards for
outstanding value for Direct Life
Insurance and Income Protection.
These eight awards secure
NobleOak’s position as the pre-
eminent direct insurer in providing
outstanding value to clients and
provide us with valuable marketing
opportunities.
I am pleased to
report that 2019
was another year
of strong growth
for NobleOak
in an extremely
challenging
environment.
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Visuals: NobleOak’s Nobleman campaign September 2019
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Annual Report 2019NobleOak Life Limited
Feefo Gold Trusted
Service Award
We also received the Gold Trusted
Service Award from Feefo for the
second year in a row. This award
is only provided to companies that
have received consistent ratings
for exceptional service from our
customers.
Finder Product Awards
In August, NobleOak received the
Best Life Insurance Award for 2019.
The Finder Awards recognise ground-
breaking Australian products and
innovations that are ‘challenging the
status quo’.
GROWTH WITH
PARTNERS
Our established partnerships with PPS
and Avant delivered growth in sales in
their respective target segments. We
are also pleased with the first full year
performance of NEOS Life.
PPS
Since the launch of the PPS
Professional Choice portfolio of Life
products in mid-2016, sales growth
continues as their unique product
offering builds momentum. The PPS
in-force premium has now grown to
$12.7 million.
Avant
Avant specialises in providing a range
of insurances to medical professionals.
Avant is also a major equity partner.
The Avant membership is continuing
to show support for the range of
specialised Life Insurance products
including Life, TPD and Income
Protection. The Avant in-force
premium has now grown to $3.1
million.
NEOS
In early 2018, we entered into
an agreement with NEOS Life to
underwrite the NEOS Protection suite
of Life Insurance cover types which
was launched in June 2018. NEOS
sells exclusively through financial
advisers and manages the entire value
chain. The NEOS portfolio is now
being marketed through independent
financial advisers with positive early
signs. Inforce premium at the end of
their first full year was $8.5 million.
The results reflect
our focused
commitment to
meeting our clients’
needs in a market
impacted by the
revelations from the
Royal Commission
and falling consumer
confidence in the
financial services
industry.
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CAPITAL GROWTH
INFRASTRUCTURE
SUMMARY
As the business grew in 2019, it was
necessary to invest in more scalable
infrastructure. This includes upgrading
our administration platform to a more
stable version.
GROWTH OF STAFF
Our workforce grew significantly (by
around 120%) during the year, with
the addition of the Genus team.
We continue to recruit people
who not only have the necessary
skills and experience to deliver
on their role, but also fit with our
‘customer-first’ philosophy and can
contribute to a high-performance
culture. The increase in the number
of full-time staff was driven both by
the addition of the Genus team and
by the growth in our core business,
especially within our Sales and Service,
Quality Assurance and Digital
Marketing teams.
The NobleOak team is diverse,
representing many nationalities,
cultures, ages and genders.
CLAIMS
The key to our business is the
efficient and timely payment of claims.
At a time of great emotional and
financial distress for our clients and
their families, we strive to ensure
that we pay these claims as quickly
as possible. Our published service
standards have been set higher than
those required under the FSC Code
of Practice to ensure we provide the
best service possible.
In February 2018, we raised $12
million from our existing shareholders
and a new strategic shareholder,
Private Portfolio Managers. The
strong support from our investor
base further confirmed their support
of NobleOak’s vision and strategic
direction. A proportion of this capital
has been used to fund the execution
of a new multi-channel marketing
campaign to further drive growth and
start to build a more recognisable
brand.
GROWTH OF
INVESTMENT
MARKETING
We launched our new ‘No Bull’
advertising campaign in August 2018 in
order to boost our brand recognition
and generate further leads and sales.
The campaign increased our brand
awareness from 11.8% to 19.1%.
Building on the success of this
campaign, we launched a ‘nobility’
campaign in September 2019.
DIGITAL
Investing in digital
Over the course of the past year, we
have accelerated our investment in,
and expansion of, our digital marketing
channels to support the growth of
the business. Our continued focus
on Paid Search and Organic Search,
combined with the introduction of
Programmatic, Display and Social
channels, has seen a 38% increase
in web users from 134,000 (FY18) to
185,000 (FY19).
As a result of the above initiatives,
sales from our digital channels
increased by over 22%, representing
27% of sales for the financial year.
The last 12 months have seen
significant growth across all areas of
our business: customers, distribution,
infrastructure and our people.
While we expect further regulatory
change in 2020, we are confident we
will continue our growth trajectory
and build a more valuable business
with the customer at the centre of
everything we do.
I hope that you are pleased with
our progress.
Anthony R Brown
Chief Executive Officer
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Annual Report 2019NobleOak Life Limited LEADERSHIP
TEAM
ANTHONY R BROWN Chief Executive Officer & Director
Anthony has been CEO of NobleOak for over 7 years. He has over 28 years of experience in
marketing, strategy, operations and distribution. He was previously COO at AMP Capital, Head of
Strategy and Marketing at AMP, Head of Commercial Insurance Marketing at Suncorp, and Manager
at KPMG. Anthony has completed the General Management Program at Harvard Business School,
Boston, has an MBA from the AGSM, and is a Chartered Accountant. He also holds a Bachelor of
Economics degree (University of Sydney) and a Master of Commerce degree (University of NSW).
PATRICIA PRIEST Chief Operating Officer
Patricia has worked in senior finance and strategy roles within the insurance industry across
the world. Most recently Patricia was CFO of Munich Re based in Spain and Portugal.
She also led finance teams in Zurich Australia and Aon in the UK. She is a Canadian Chartered
Accountant, who commenced her career at Deloitte in Toronto. She holds the Diploma in Insurance
from the Chartered Insurance Institute in the UK. Patricia changed roles from CFO to COO in
March 2019.
MATTHEW WILSON Chief Risk Officer
Matthew is an experienced corporate lawyer and risk governance practitioner with diverse
corporate experience across financial services businesses in Australia and New Zealand.
Matthew is a NSW legal practitioner and holder of an unrestricted practising certificate. He
holds a Bachelor of Laws and Graduate Diploma of Legal Practice from UTS Sydney and is a
member of the Law Society of NSW and the Risk Management Institute of Australia. He is a
Senior Associate of the Australian and New Zealand Institute of Insurance and Finance and has a
Diploma of Financial Planning.
PHIL HILL Chief Underwriter
Phil has worked in the Life Insurance industry in Australia for over 40 years, both in reinsurance
and with a number of major life offices including CommInsure and Tower. He has worked
in Senior Management positions in all areas of risk insurance including Underwriting, Claims,
Product Development and Risk Management. His primary area of responsibility has involved
Underwriting and he has held Chief Underwriter roles with various Life offices over the past
30 years. He joined NobleOak in 2014 as Chief Underwriter and Claims Manager and was
appointed as NobleOak’s Head of Underwriting in 2016. He is a Senior Associate with the
Australian and New Zealand Insurance Institute and holds a Diploma in Business Management.
He is also a Senior Associate of the Australian Life Underwriters and Claims Association.
MATT MINNEY Head of Claims, Operations & Partnerships
Matt is an experienced superannuation and Life Insurance manager who has worked within the
financial services sector for organisations such as AMP and ClearView (previously NRMA, MBF
and Bupa). Matt has expertise in administration, underwriting, claims, superannuation legislation
and call centres. Matt holds a Diploma of Financial Services (Life Insurance) from the Australian
and New Zealand Institute of Insurance and Finance. Matt joined NobleOak in September 2016.
SCOTT PEARSON Chief Financial Officer
ROB TREACY Head of Digital
Scott has 30 years of experience in the financial services industry covering health insurance, general
insurance and reinsurance. He was previously Head of Finance at RGA Australia, Chief Financial
Officer at Avant Mutual Group, Deputy CFO/Head of Group Finance & Reporting at MBF
Australia Limited and has held other roles within Calliden Group Limited (formerly Reinsurance
Australia Corporation) and CIC Insurance Limited. Scott is a Certified Practising Accountant and
holds a Bachelor of Business (Accounting).
Rob joined NobleOak as Head of Digital in July 2019. He has 12 years of digital & marketing
experience in driving growth through digital channels and assets. He was recently Senior Digital
Marketing Team Leader at TAL Direct as well as working at digital agencies across CommBank,
Westpac and Telstra accounts. Rob has a passion for driving digital transformational change to
organisations and teams leveraging on technology and disruptive thinking to deliver positive
business outcomes.
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Annual Report 2019NobleOak Life Limited DIRECTORS’
REPORT
The Directors of NobleOak Life Limited
(the Company) present their report, together
with the Financial Statements of the
Consolidated Group, being the Company and
its controlled entity, for the financial year
ended 30 June 2019.
Visuals: NobleOak’s Nobleman campaign September 2019
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Annual Report 2019NobleOak Life Limited NAMES, PARTICULARS AND EXPERIENCE OF DIRECTORS
NAMES, PARTICULARS AND EXPERIENCE OF DIRECTORS (CONT.)
i)
Particulars of the qualifications and experience of each Director as at the date of this report are as follows:
Kevin Hamman
Stephen J Harrison
Non-Executive Director appointed on 27 January 2011. Appointed as
Deputy Chairman on 1 July 2011 until appointment as Chairman on the
28 November 2018.
Over 36 years of experience in the financial services, funds management,
private equity and accounting fields.
Has held Director positions with Investec Funds Management and the Australian
subsidiary of US based fund manager Sanford C. Bernstein. Has been a founder
and held directorships in a number of listed companies both in Australia and
overseas. Previously was National Director, Financial Services for BDO Nelson
Parkhill, Chartered Accountants. Was a non-executive Director of Blue Energy
Limited, an ASX listed entity and Power Air Corporation, a US listed renewable
energy company.
Former Director of Exoma Energy Limited, an ASX listed entity, and current
Chairman and Director of Sinetech Limited, an ASX listed entity. Current
Chairman of Conscious Capital Funds Management.
Certified Practicing Accountant, Bachelor of Economics, PS146 qualifications.
Emery Feyzeny
Chairman of the Board of
Directors.
Member of the Risk Management
Committee, the Board Audit
Committee, the Finance &
Investment Committee and
Product & Appraisal Committee.
Age 62.
Non-Executive Director appointed on 24 February 2011. Appointed as Chairman
on 1 July 2011. Resigned as Chairman on 27 February 2013. Appointed as Deputy
Chairman 28 November 2018.
Chairman of the Risk Management
Committee & Board Audit
Committee.
Over 45 years of experience in the Superannuation industry, including 15 years as a
partner at KPMG. He established and headed KPMG Superannuation Services Pty Ltd
for 18 years.
Member of Remuneration &
Nominations Committee
Age 69.
Appointed by APRA to undertake remediation process for members superannuation
under the trusteeship of Commercial Nominees and has advised the Superannuation
Senate Select Committee on the taxation of superannuation funds.
Currently a Director of REI Superannuation Pty Ltd, a $1.5 billion industry
Superannuation Fund and Chair of the Fund’s Investment Committee.
Bachelor of Science, Senior Associate of the Australian and New Zealand Institute
of Insurance and Finance, a member of the Institute and Faculty of Actuaries and a
member of the Australian Institute of Company Directors.
Non-Executive Director appointed on 27 January 2011.
Over 31 years of experience in the Financial Services industry including senior
management and director roles in Investment and Private Banking.
Currently holds several executive directorships in private companies in both the
financial services industry and property development and investment industry.
Chairman of the Remuneration &
Nominations Committee, Finance
& Investment Committee and the
Product & Appraisal Committee.
Member of the Board Audit
Committee
Holds a Bachelor of Commerce Degree, a Diploma in Financial Services and Finance,
and the Associate Diploma with The Institute of Bankers.
Age 58.
Member and Graduate of the Australian Institute of Company Directors.
Anthony R Brown
Executive Director appointed on 31 July 2013.
Over 28 years of experience in marketing, strategy, operations and distribution,
specialising in financial services.
Previously COO at AMP Capital, Head of Strategy and Marketing at Hillross (AMP);
Head of Marketing and Product Development at Promina insurance; Head of
Commercial Insurance Marketing at Suncorp and Manager at KPMG.
Chief Executive Officer of the
Company.
Responsible Officer for the
Company.
Member of the Product &
Appraisal Committee
Completed the General Management Program at Harvard Business School (Boston),
Holds a Masters of Business Administration (from the AGSM), is a Chartered
Accountant and holds a Bachelor of Economics from the University of Sydney.
Age 52.
Martin Edwards
Non-Executive Director appointed on 26 October 2016.
Over 23 years of experience holding multiple General Manager roles in Treasury,
capital, strategy and insurance.
Currently the CEO Technology in Practice within the Avant Mutual Group and is a
Director of My Practice Manual Limited, Hoxton MPM Pty Ltd and Darjack Pty Ltd.
Other previous positions include MBF’s Group Treasurer and roles at Commonwealth
Bank and Trowbridge Consulting.
Holds a Bachelor of Science Degree from the University of Sydney, attended the
General Management Program at Harvard Business School and is a Fellow of the
Institute of Actuaries of Australia. Member and Graduate of the Australian Institute
of Company Directors.
Member of the Risk Management
Committee, Finance & Investment
Committee, Product & Appraisal
Committee, Remuneration &
Nominations Committee
Age 43.
ii) Directors that retired during the year: Mr P Sampson, appointed 6 February 2013, resigned 28 November 2018.
Directors that were appointed during the year: There were no new Directors appointed during the year.
All Directors have been in office since the start of the financial year to the date of this report unless otherwise indicated above.
24
25
Annual Report 2019NobleOak Life Limited
iii) During the financial year, 13 Directors’ meetings, 6 Risk Management Committee meetings, 4 Board Audit
Committee meetings, 3 Finance & Investment Committee meetings, 6 Remuneration & Nominations Committee
meetings and 3 Product Appraisal Committee meetings were held. Attendances were as follows:
iv)
The Company keeps a register containing information about the Directors including each Director’s or related entity
of the Director’s interest in securities issued by the Company or in a benefit fund of the Company.
Directors’
Meetings
Risk
Management
Committee
Board Audit
Committee
Finance &
Investment
Committee
Meeting
Remuneration
& Nominations
Committee
Meeting
Product &
Appraisal
Committee
Meeting8
Number
eligible to
attend
Number
attended
Number
eligible
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Mr EA Feyzeny3
Mr K Hamman5
Mr SJ Harrison1
Mr P Sampson2
Mr A R Brown6
Mr M Edwards4
13
13
13
5
13
13
12
13
13
5
13
12
6
-
6
4
-
2
6
-
6
4
-
2
4
3
4
1
-
-
4
2
4
1
-
-
-
3
1
2
-
3
-
3
1
2
-
3
6
6
-
3
-
3
6
6
-
3
-
3
-
3
2
-
3
1
-
3
2
-
3
1
Name
Number of
Ordinary
Shares
Mr K Hamman
437,002
Performance
rights
Number of
Options
Related entity holding the security
(Where applicable)
TK Consulting (Aust) Pty Ltd ATF The Hamman Family
Trust
Mr K Hamman
136,364
KH Investments Pty Ltd ATF KH Development Trust
Mr K Hamman
227,273
Future Super KH Custodian Pty Ltd ATF Future Super
Fund
Mr K Hamman
172,727
Future Super KH Pty Ltd ATF Future Super Fund
Mr K Hamman
153,000
Mr E A Feyzeny
150,000
Mr E A Feyzeny
240,000
Emery and Judy Feyzeny ATF Pluvial Superannuation
Fund
Mr S J Harrison
148,667
Julie McConaghy, S J Harrison’s wife
Note
1.
2.
3.
4.
5.
Mr S J Harrison was appointed Chairman of the Board of Directors 28 November 2018, he was Chairman of the Board Audit Committee until 12 December
2018 and member of the Risk Management Committee for the entire year. Appointed to the Finance & Investment Committee on the 12 December 2018.
Attended 2 Product & Appraisal Committee meeting as substitute for Mr Edwards due to Conflict of interest in the matters being discussed.
Mr P Sampson was Chairman of the Board of Directors and a member of the Board Audit Committee, Risk Management Committee, Finance & Investment
Committee and Remuneration & Nominations Committee until his resignation from all appointments on the 28 November 2018.
Mr E Feyzeny was Chairman of the Risk Management Committee and member of the Board Audit Committee of which he became Chairman on 12
December 2018 and a member of the Remuneration & Nominations Committee for the entire year.
Mr S J Harrison
150,454
Mr S J Harrison
635,579
Jasmah Investments Pty Limited ATF The Jasmah
Investments Trust (Julie McConaghy, S J Harrison’s wife)
Mr S J Harrison
38,000
MSJ Capital Pty Ltd ATF Harrison Superannuation Fund
Mr M Edwards was a member of the Finance and Investment Committee and the Product & Appraisal Committee for the entire year and was appointed to
the Risk Management Committee on the 12 December 2018. Appointed to the Remuneration & Nominations Committed on the 12 December 2018
Mr A R Brown *
1,252,769
58,504
351,327
Mr K Hamman was Chairman of the Finance & Investment Committee and a member of the Remuneration & Nominations Committee of which he became
Chairman on 12 December 2018. He was appointed to the Product & Appraisal Committee and became Chairman on 31 October 2018 and appointed to
the Board Audit Committee on the 12 December 2018.
Mr A R Brown
3,532,073
Brohok Investment Co Pty Ltd
6.
Mr A R Brown was Chairman of the Product & Appraisal Committee until 31 October 2018 and was a member of the committee for the entire year.
Mr M Edwards
13,476,747
Representative of Avant Group Holdings Limited
* Anthony Brown is a participant in the Performance Rights Plan (refer note 19d), from the 2017 plan that matures in 2020,
29,415 shares have accrued, of the 191,818 total share entitlement available in the 2018 plan that matures in 2021, 29,089
shares have accrued, of the 281,062 total shares entitlement available. These shares will vest in in the relevant years if
conditions are met over the full measurement periods.
Options issued during the year will only vest on the performance of specific events. Details of the options are shown in note
17(b).
(v)
The following Directors have in the normal course of business, an interest in the Company as set out below:
Mr M Edwards
Board representative of Avant. Avant is a white label partner of NobleOak and all
transactions are carried out under normal commercial terms.
26
27
Annual Report 2019NobleOak Life Limited
COMPANY SECRETARY
OPERATING RESULTS AND REVIEW OF OPERATIONS
Mr Anthony Brown was appointed Company Secretary on 8 September 2017 and remained in office for the entire
financial year.
The Statement of Comprehensive Income of the Consolidated Group shows a profit for the current year before income tax
of $7,724,276 ($4,300,164 for 2018 financial year).
PRINCIPAL ACTIVITIES
The principal activities of the Consolidated Group during the year were Life Insurance products including Death, Disability,
Trauma, Income Protection and Business Expenses Insurance.
DIRECTORS & KEY PERSONNEL REMUNERATION
The Directors and Key Personnel of NobleOak Life Limited during the year were:
1)
Non Executive Directors
Mr E A Feyzeny, appointed 24 February 2011
Mr P Sampson, appointed 6 February 2013 resigned 28 February 2018.
Mr K Hamman, appointed 27 January 2011
Mr S J Harrison, appointed 27 January 2011
Mr M Edwards, appointed 26 October 2016
2)
Executive Director and Key Personnel
Mr A R Brown – Executive Director, Chief Executive Officer and Company Secretary, appointed 31 July 2013, 23 July
2012 and 8 August 2017 respectively
Mrs P Priest – Chief Operations Officer, appointed 25 September 2017
Mr S Pearson – Chief Financial Officer, appointed 11 February 2019
Mr S Balakrishnan – Former Chief Marketing Officer, appointed 5 June 2017, resigned 11 September 2018
Mr M Wilson – Chief Risk Officer, appointed 1 October 2014
The compensation of the Directors and Key Personnel is set out below:
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
In comparing the 2019 and 2018 results, the following is noted:
˚
˚
˚
˚
˚
The 2019 profit was positively impacted by the reduction in interest rates during the year. The company’s Actuarial
estimate of policy liability reserves, including deferred acquisition costs, are discounted to present value using risk
free interest rates. The impact of the change in interest rates on the valuation of deferred acquisition costs was a
favourable $2.7m to profit before tax. This has no impact to the NobleOak capital position.
Normalised (underlying) profit before tax adjusting for this change in interest rated is $5.0m as set out in the following
table.
Profit Before Tax
Add/(Less) – Impact of change in Interest rates on Deferred Acquisition Cost
Normalised Profit Before Tax
Consolidated
2019
$m
2018
$m
7.7
(2.7)
5.0
4.3
0.1
4.4
The Company has continued to invest in order to deliver the growth in new sales premiums through its direct
marketing and promotion activities and partnership channels. The investment has seen in-force premiums of the
Company grow over $23m (gross premiums), an increase of 63% above the 2018 year end in-force premiums in the
open benefit funds.
Our partnerships have continued to grow in the current year:
˚
˚
˚
PPS benefit fund’s Life Insurance and Income Protection products called Professionals Choice, launched in
June 2016. This product suite now has in-force premium of $12.7m growing by 63% in the year.
Avant benefit fund’s Life Insurance products were established in January 2017. This fund now has $3.1m in
in-force premium and grew at 69% during the year.
The NEOS Life Benefit Fund established in June 2018 has completed its first full year with in-force premium
reaching $8.5m.
During the year, NobleOak established a wholly owned subsidiary, Genus Life Insurance Services Pty Ltd (Genus).
On 1 June 2019, Genus took over the administrative services of the Freedom and Rewards Benefit Funds previously
administered by Freedom Insurance Group, who have ceased trading. Genus also entered into an agreement to
administer a pool of policies insured by Swiss Re, also previously administered by Freedom. The new business activity
contributed $0.2m to profit before tax in the year.
Non Executive Directors*
Short-term employee benefits
Post-employment benefits
Executive Directors and Key Personnel
Short-term employee benefits
Post-employment benefits
213,186
18,864
265,360
25,170
213,186
18,864
265,360
25,170
232,050
290,530
232,050
290,530
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Other than the matters disclosed above, there were no significant changes in the state of affairs of the Consolidated Group
during the financial year.
1,591,743
1,501,940
1,532,775
1,501,940
56,855
71,707
56,855
71,707
1,648,598
1,573,647
1,589,630
1,573,647
1,880,648
1,864,177
1,821,680
1,864,177
AFTER BALANCE DATE EVENTS
No matters or circumstances, other than that referred to in the financial statements or notes thereto, have arisen since the
end of the financial year that has significantly affected, or may significantly affect, the operations of the Consolidated Group,
the results of those operations, or the state of affairs of the Consolidated Group in future financial years.
* Mr M Edwards is the Avant representative on the Board and does not receive director remuneration from NobleOak.
28
29
Annual Report 2019NobleOak Life Limited
FUTURE DEVELOPMENTS
DIRECTORS’ DECLARATION
The Directors of the Company declare that the attached financial statements and notes are in accordance with the
Corporations Act 2001 and:
a)
b)
c)
d)
comply with Accounting Standards and other mandatory professional reporting requirements, the Corporations
Regulations 2001 and as stated in Note 1 to the financial statements, compliance with International Financial
Reporting Standards (IFRS);
give a true and fair view of the financial position as at 30 June 2019 and the performance for the year ended
on that date;
in the opinion of the Directors, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable;
the allocation and distribution of the surplus of the Benefit Funds of the Company have been made in accordance
with Division 5 of Part 4 of the Life Insurance Act 1995 and the Benefit Fund Rules of each Benefit Fund; and
e)
no assets of the Benefit Funds of the Company have been applied or invested in contravention of any relevant laws.
This declaration is made in accordance with a resolution of the Board of Directors.
On behalf of the Directors
Anthony R Brown
Director
Sydney, 18 September 2019
Stephen Harrison
Chairman
Disclosure of information regarding the likely developments in the operations of the Company in future financial years and
the expected results of those operations is likely to result in unreasonable prejudice to the Company. Accordingly, this
information has not been disclosed in this report.
REGULATORY CHANGE IMPACTS
During the year, there have been no regulatory changes that have impacted on the preparation and presentation of financial
information or the capital structure of the company.
DIVIDEND PAYMENTS
No dividends have been paid or declared during the financial year (2018: Nil).
INDEMNIFICATION OF OFFICERS AND AUDITORS
During the financial year, the Company paid insurance premiums to insure the Directors and Officers of the Company, and
its related entities against any liability which may be incurred by the Directors or Officers in carrying out their duties in good
faith, to the extent permitted by the Corporations Act 2001.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an officer or auditor of the Company or of any related entities against a liability incurred
as such an officer or auditor.
ENVIRONMENTAL ISSUES
The Consolidated Group’s operations are not regulated by any significant environmental regulations under a law of the
Commonwealth or of a state or territory.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company to intervene in any proceedings to
which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those
proceedings. The Company was not a party to any such proceedings during the year.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is included on page 14 of the financial report.
This report is made in accordance with the resolution of the Board of Directors.
On behalf of the Directors
Anthony R Brown
Director
Sydney, 18 September 2019
Stephen Harrison
Chairman
30
31
Annual Report 2019NobleOak Life Limited AUDITOR’S INDEPENDENCE DECLARATION
INDEPENDENT AUDITOR’S REPORT
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
The Board of Directors
NobleOak Life Limited
66 Clarence Street
SYDNEY NSW 2000
18 September 2019
Dear Directors
NobleOak Life Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to
provide the following declaration of independence to the Board of Directors of
NobleOak Life Limited.
As audit partner for the audit of the financial statements of NobleOak Life Limited
for the financial year ended 30 June 2019, I declare that to the best of my
knowledge and belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001
in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Stuart Alexander
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation
Member of Deloitte Asia Pacific Limited and the Deloitte Network
32
33
Liability limited by a scheme approved under Professional Standards Legislation Member of Deloitte Asia Pacific Limited and the Deloitte Network Independent Auditor’s Report to the Members of NobleOak Life Limited Opinion We have audited the financial report of NobleOak Life Limited (the “Company”) and its subsidiary (the “Group”) which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and the Directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Company and Group’s financial position as at 30 June 2019 and of their financial performance for the year then ended; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the “Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the Board of Directors of the Company, would be in the same terms if given to the Board of Directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Deloitte Touche Tohmatsu ABN 74 490 121 060 Grosvenor Place 225 George Street Sydney NSW 2000 PO Box N250 Grosvenor Place Sydney NSW 1219 Australia DX 10307SSE Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www.deloitte.com.au Annual Report 2019NobleOak Life Limited
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
Other information
The Board of Directors is responsible for the other information. The other information
comprises the information included in the Annual Report, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially
inconsistent with the financial report or our knowledge obtained in the audit or otherwise
appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material
misstatement of this other information; we are required to report that fact. We have
nothing to report in this regard.
The Board of Directors’ responsibilities for the financial report
The Board of Directors is responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the Board of Directors determine
is necessary to enable the preparation of the financial report that gives a true and fair
view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Board of Directors is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless the Board of
Directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a
whole is free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with the
Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We
also:
Identify and assess the risks of material misstatement of the financial report,
whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Group’s internal
control.
Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by the Board of Directors.
Conclude on the appropriateness of the Board of Directors’ use of the going
concern basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going
concern.
Evaluate the overall presentation, structure and content of the financial report,
including the disclosures, and whether the financial report represents the
underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of
the entities or business activities within the Group to express an opinion on the
financial report. We are responsible for the direction, supervision and performance
of the Group’s audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
DELOITTE TOUCHE TOHMATSU
Stuart Alexander
Partner
Chartered Accountants
Sydney, 18 September 2019
34
35
Annual Report 2019NobleOak Life Limited
Statement of Profit or Loss and Other Comprehensive Income
For the Financial Year Ended 30 June 2019
Statement of Financial Position
As at 30 June 2019
Consolidated
The Company
Note
2019
$
2018
$
2019
$
2018
$
69,020,117
55,083,632
62,089,367
50,048,131
Cash and cash equivalents
(42,115,104)
(34,112,917)
(42,115,104)
(34,112,917)
26,905,013
20,970,715
19,974,263
15,935,214
Receivables
Financial assets
Gross policy liabilities ceded under reinsurance
Assets
1,113,490
629,696
1,104,394
458,428
1,161,234
458,428
1,776,571
1,740,031
4,468,676
624,086
1,161,234
4,631,666
(2,321,516)
(1,144,975)
(2,321,516)
(1,144,975)
(8,912,099)
(12,365,807)
(6,597,132)
(10,395,630)
15
(867,179)
(736,929)
(867,179)
(736,929)
(4,463,900)
(2,702,114)
(3,347,032)
(2,702,114)
(5,004,353)
(2,410,452)
(4,105,059)
(2,386,452)
Other assets
Plant and equipment
Deferred tax asset
Intangibles
Total assets
Liabilities
Payables
Provisions
(960,179)
(841,235)
(1,244,381)
(686,421)
Gross policy liabilities
Consolidated
The Company
Note
2019
$
2018
$
2019
$
2018
$
21
7
8
15
9
10
11
12
13
14
15
11,513,929
8,191,586
10,053,353
6,108,101
3,189,088
4,009,715
7,333,460
2,612,488
12,978,815
20,754,758
12,992,620
20,904,758
19,481,690
15,547,998
19,481,690
15,547,998
548,140
1,135,133
1,196,644
150,000
459,369
219,383
319,979
185,133
259,455
219,383
2,688,304
1,062,677
2,640,602
769,109
-
619,109
53,112,452
51,819,595
48,105,167
50,137,253
13,661,554
8,556,799
1,717,339
376,807
9,173,080
1,490,287
7,025,671
376,807
(8,353,192)
2,982,965
(8,353,192)
2,982,965
Continuing Operations
Insurance premium revenue
Reinsurance expenses
Net insurance premium revenue
Investment income
Net commissions from reinsurers
Fees & other revenue
Claims expense - net of reinsurance recoveries
Policy acquisition costs
Members liability revaluation
Salary & employee benefits
Administration expenses
Other expenses
Profit Before Tax
Income tax expense
Profit After Tax
3(a)
3(a)
3(a)
3(a)
3(a)
3(b)
3(b)
3(b)
3(b)
7,724,276
4,300,164
7,523,462
4,299,679
Total liabilities
7,025,701
11,916,571
2,310,175
10,385,443
4
(2,490,888)
(1,044,274)
(2,430,619)
(1,044,129)
Net assets
46,086,751
39,903,024
45,794,992
39,751,810
5,233,388
3,255,890
5,092,843
3,255,550
Equity
Other Comprehensive Income
-
-
-
-
Total Comprehensive income
attributable to Owners of the Company
5,233,388
3,255,890
5,092,843
3,255,550
Earnings per share
Basic (cents per share)
Diluted (cents per share)
6
6
10.03
9.78
7.17
7.01
The above Statement of Profit or Loss and Other Comprehensive Income
should be read in conjunction with the accompanying notes to the financial statements.
Issued share capital
Accumulated profits
Share based payment reserve
17(a)
16
17(b)
37,121,794
36,301,200
37,121,794
36,301,200
8,758,522
3,525,134
8,466,763
3,373,920
206,435
76,690
206,435
76,690
Total equity
46,086,751
39,903,024
45,794,992
39,751,810
The above Statement of Financial Position
should be read in conjunction with the accompanying notes to the financial statements.
36
37
Annual Report 2019NobleOak Life Limited Statement of Cash Flows
For the Financial Year Ended 30 June 2019
Statement of Changes in Equity
For the Financial Year Ended 30 June 2019
Consolidated
The Company
The Company
Note
2019
$
2018
$
2019
$
2018
$
Issued share
capital
Accumulated
profits
Share based
payment
reserve
Total
equity
Note
$
$
$
$
Cash flows from operating activities
Premium received
Reinsurance premium payments
Reinsurance recoveries received
Claims paid
Interest received
71,939,805
56,619,910
65,009,055
51,584,409
(42,333,855)
(34,112,917)
(42,333,855)
(34,112,917)
14,887,986
12,887,121
14,887,986
12,877,121
(16,176,789)
(13,516,344)
(16,176,789)
(13,516,344)
Balance as at 1 July 2017
Share capital net of transaction cost
Profit for the year
Recognition of share based payments
24,373,143
11,928,057
-
-
118,370
1,690
24,493,203
-
3,255,550
-
-
11,928,057
3,255,550
-
75,000
75,000
477,100
410,148
468,004
404,538
Balance at 30 June 2018
36,301,200
3,373,920
76,690
39,751,810
Fees and other income received
14,970,841
5,503,091
19,806,450
8,613,272
Marketing and policy acquisition costs
(34,616,654)
(22,399,760)
(34,616,654)
(20,429,583)
Payments to other suppliers and employees
(14,051,620)
(13,787,446)
(13,636,028)
(14,045,624)
Net cash from/(used in) operating activities
21(b)
(4,903,186)
(8,856,197)
(6,591,831)
(8,625,128)
Recognition of share based payments
Cash flows from investing activities
Purchase of plant and equipment
Sale/(purchase) of financial assets
Acquisition & payment of subsidiary
Payment for intangible assets
(1,045,697)
(158,027)
(95,697)
(158,027)
8,450,632
(4,273,055)
8,587,329
(4,273,055)
-
-
-
(502)
-
(148,374)
-
(148,374)
Consolidated
Net cash from/(used in) investing activities
7,404,935
(4,579,456)
8,491,130
(4,579,456)
Cash flows from financing activities
Amounts received from issue of shares
Cost of issue of shares
17(a)
17(a)
820,594
12,013,784
820,594
12,013,784
-
(85,727)
-
(85,727)
Net cash generated from financing activities
820,594
11,928,057
820,594
11,928,057
Net increase/(decrease) in cash and cash
equivalents held
Cash and cash equivalents at the
beginning of the financial year
Cash and cash equivalents at the end of
the financial year
3,322,343
(1,507,596)
2,719,893
(1,276,527)
8,191,586
9,699,182
7,333,460
8,609,987
21(a)
11,513,929
8,191,586
10,053,353
7,333,460
Share capital net of transaction cost
820,594
Profit for the year
-
5,092,843
-
-
-
129,745
820,594
5,092,843
129,745
-
-
Balance at 30 June 2019
17(a)
37,121,794
8,466,763
206,435
45,794,992
Issued share
capital
Accumulated
profits
Share based
payment
reserve
Total
equity
Note
$
$
$
$
Balance as at 1 July 2017
Share capital net of transaction cost
Profit for the year
Recognition of share based payments
24,373,143
11,928,057
-
-
269,244
-
3,255,890
1,690
24,644,077
-
-
11,928,057
3,255,890
-
75,000
75,000
Balance at 30 June 2018
36,301,200
3,525,134
76,690
39,903,024
Share capital net of transaction cost
820,594
Profit for the year
Recognition of share based payments
-
-
-
5,233,388
-
-
-
129,745
820,594
5,233,388
129,745
Balance at 30 June 2019
17 (a)
37,121,794
8,758,522
206,435
46,086,751
The above Statement of Cash Flows
should be read in conjunction with the accompanying notes to the financial statements.
The above Statement of Changes in Equity
should be read in conjunction with the accompanying notes to the financial statements.
38
39
Annual Report 2019NobleOak Life Limited
1
Statement of Significant Accounting Policies
1
Statement of Significant Accounting Policies (cont.)
This financial report includes the consolidated financial statements and notes of NobleOak Life Limited and its
controlled entities (“Consolidated Group” or “Group”), and the separate financial statements and notes of NobleOak
Life Limited, the parent entity (“Company”). NobleOak Life Limited is a company limited by shares, incorporated and
domiciled in Australia.
Basis of Preparation
The financial report is a general purpose report that has been prepared in accordance with Australian Accounting
Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting
Standards Board, the Life Insurance Act 1995 (“the Life Act”) and the Corporations Act 2001. For the purpose of
preparing the financial statements, the Company is a for-profit entity.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial
report containing relevant and reliable information about transactions, events and conditions to which they apply.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with
International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial
report are presented below. They have been consistently applied unless otherwise stated.
The financial report has been prepared on an accruals basis and is based on historic costs, except financial instruments
that are measured at revalued amounts or fair values at the end of each reporting period. The amounts presented in
the financial report are in Australian dollars and have been rounded to the nearest dollar.
The Company operates predominantly in the financial services industry. As such, the assets and liabilities disclosed in
the statement of financial position are grouped by nature and listed in an order that reflects their relative liquidity.
Change in accounting policy
At the date of authorisation of the consolidated financial statements, the Standards and Interpretations that were
issued but not yet effective are listed below.
Standard/Interpretation
AASB 9 ‘Financial instruments’ - The Company is taking
the deferral approach and will be implement at the
same time as AASB 17 ‘Insurance contracts’
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
1 January 20212
30 June 2023
AASB 16 ‘Leases’
1 January 2019
30 June 2020
AASB 17 ‘Insurance contracts’ will replace AASB 1038.
1 January 20212
30 June 2023
2 In June 2019 the IASB tentatively agreed to delay the effective date by one year to periods beginning on or after 1 January 2022
Impact of changes to Australian Accounting Standards and Interpretation
Going concern
IFRS 17 ‘Insurance Contracts’
The financial statements have been prepared on a going concern basis, which contemplates continuity of normal
business activities and the realisation of assets and discharge of liabilities in the normal course of business.
IFRS 17 requires insurance liabilities to be measured at a current fulfilment value and provides a more uniform
measurement and presentation approach for all insurance contracts. These requirements are designed to achieve
the goal of a consistent, principle-based accounting for insurance contracts. AASB 17 will supersede AASB 1038
Insurance Contracts as for financial year ends beginning on 1 January 2022. The IASB originally proposed that this
would be effective from 2021; however, in June 2019, tentatively agreed to delay the effective date by one year to
periods beginning on or after 1 January 2022. The Directors of the Company anticipate that the application of IFRS
17 in the future is likely to have a material impact on the amounts reported and disclosures made in the company and
consolidated financial statements. The Company is currently evaluating the standard and its impacts to determine the
implementation roadmap. It is not possible to provide a reasonable estimate of the effect of IFRS 17 at this time.
AASB 9 ‘Financial Instruments’
AASB 9 Financial Instruments replaces AASB 139 Financial Recognition and Measurement. AASB 9 includes
revised guidance on the classification and measurement of financial instruments. It also carries forward guidance on
recognition and de-recognition of financial instruments from AASB 139. The application of AASB 9 is not expected
to have a material impact on the results of the Company. The majority of the Company’s assets are assets backing
policyholder liabilities and are currently designated at fair value through the profit or loss. The Company’s other
financial instruments (i.e. receivables and payables) are held at amortised cost. The Company is taking the deferral
approach and has measured those liabilities which are within the scope of AASB 4 and these are greater than the
90% threshold of total liabilities required to take the deferral option. The impact of AASB 9 is currently being
evaluated by the Company to consider the impact and implementation alongside AASB 17.
40
41
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited
1
Statement of Significant Accounting Policies (cont.)
1
Statement of Significant Accounting Policies (cont.)
AASB 16 ‘Leases’
AASB 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the
financial statements of both lessees and lessors. The accounting model for lessees will require lessees to recognise
all leases on balance sheet, except for short-term leases and leases of low value assets. AASB 16 applies to annual
periods beginning on or after 1 January 2019. The Company’s only material lease is that of its premises and it will be
treated accordingly, but no material impact is expected to the accounts.
(a) Principles of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent
(NobleOak Life Limited) and the subsidiaries. Subsidiary is an entity the parent controls. The parent controls
an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity. Details of the subsidiary are provided in
Note 26.
The assets, liabilities and results of a subsidiary are fully consolidated into the financial statements of the Group
from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued
from the date that control ceases. Intercompany transactions, balances and unrealised gains or losses on
transactions between group entities are fully eliminated on consolidation. Accounting policies of a subsidiary
have been changed and adjustments made where necessary to ensure uniformity of the accounting policies
adopted by the Group.
Goodwill
Goodwill is carried at cost less accumulated impairment losses. Goodwill is calculated as the excess of the
sum of:
(i)
(ii)
the consideration transferred;
any non-controlling interest; and
(iii)
the acquisition date fair value of any previously held equity interest;
over the acquisition date fair value of net identifiable assets acquired.
The acquisition date fair value of the consideration transferred for a business combination plus the acquisition
date fair value of any previously held equity interest shall form the cost of the investment in the separate
financial statements.
Goodwill on acquisitions of subsidiaries is included in intangible assets.
Goodwill is tested for impairment annually and is allocated to the Group’s cash-generating units or groups
of cash-generating units, representing the lowest level at which goodwill is monitored not larger than an
operating segment. Gains and losses on the disposal of an entity include the carrying amount of goodwill
related to the entity disposed of.
Changes in the ownership interests in a subsidiary are accounted for as equity transactions and do not affect
the carrying values of goodwill.
Business combinations
(b) Cash and cash equivalents
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving
entities or businesses under common control. The business combination will be accounted for from the
date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including
contingent liabilities) assumed is recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting
from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent
consideration classified as equity is not re-measured and its subsequent settlement is accounted for within
equity. Contingent consideration classified as an asset or liability is re-measured each reporting period to fair
value, recognising any change to fair value in profit or loss, unless the change in value can be identified as
existing at acquisition date.
All transaction costs incurred in relation to the business combination are expensed to the statement of
comprehensive income.
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
Cash and cash equivalents comprise cash on hand, deposits held at call with banks, other short term highly
liquid investments and bank overdrafts. Bank overdrafts are shown within liabilities on the consolidated
statement of financial position.
(c)
Employee benefits
Provision is made for the Company’s liability for employee benefits arising from services rendered by
employees to balance date. Employee benefits that are expected to be settled within one year have been
measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later
than one year have been measured at the present value of the estimated future cash outflows to be made for
those benefits. Those cashflows are discounted using market yields on high quality corporate bonds with terms
to maturity that match the expected timing of cashflows.
(d) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or
for disclosure purposes.
The fair value of financial instruments are measured by level of the following fair value measurement hierarchy:
(i)
(ii)
(iii)
quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices) (level 2)
inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(level 3)
42
43
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited
1
Statement of Significant Accounting Policies (cont.)
1
Statement of Significant Accounting Policies (cont.)
(e)
Financial instruments
(j)
Income tax
A financial instrument is any contract that gives rise to a financial asset in one entity and a financial liability or
equity instrument in another entity and are recognised when the Consolidated Group become a party to the
contractual provisions of the instrument.
Financial assets
The Company has identified the following classes of financial asset: cash and cash equivalents, financial
assets and receivables. Financial assets comprise both assets held to fund policyholder liabilities and excess
shareholder’s assets. Financial assets are measured at fair value through profit or loss and include bank bills and
term deposits, and Australian fixed interest bond.
Financial liabilities
The Company has identified the following classes of financial liability: Payables.
Financial instruments designated as fair value through profit or loss
The policy of management is to designate a group of financial assets or financial liabilities as fair value through
profit or loss when that group is both managed and its performance evaluated on a fair value basis for both
internal and external reporting in accordance with the Company’s documented investment strategy.
(f)
Policyholders’ and members’ funds
Policyholders’ funds are those financial assets which are held to fund the insurance provisions of the Company.
The remaining financial assets, including equities, managed funds and investment in shares represent
Shareholders’ funds.
(g) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office. In these circumstances, the GST is recognised as
part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the
statement of financial position are shown inclusive of GST.
Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of
investing and financing activities, which are disclosed as operating cash flows.
(h)
Impairment of assets
At each reporting date, the Company reviews the carrying amounts of both its tangible and intangible non-
financial assets to determine whether there is any indication that those assets have been impaired. If such an
indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to
sell and value in use, is compared to the asset’s carrying value. An excess of the asset’s carrying value over its
recoverable amount is expensed to the statement of comprehensive income.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
(i)
Receivables
Trade accounts receivable are carried at amounts due and are generally settled within 30 days. A provision
is raised for any doubtful debts based on a review of all outstanding amounts at balance date. Bad debts are
written off in the period in which they are identified.
The Company is subject to income tax on investment income less an appropriate proportion of administration
and overhead expenses. Certain benefits are exempt from income tax under provision of the Income Tax
Assessment Act.
The income tax benefit (expense) for the year comprises current income tax benefit (expense) and deferred
tax benefit (expense).
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated
using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities
(assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation
authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances
during the year as well unused tax losses.
Current and deferred income tax benefit (expense) is charged or credited directly to equity instead of the
profit or loss when the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also
result where amounts have been fully expensed but future tax deductions are available. No deferred income
tax will be recognised from the initial recognition of an asset or liability, excluding a business combination,
where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting
date. Their measurement also reflects the manner in which management expects to recover or settle the
carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent
that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset
can be utilised. Even when the deferred tax asset is not shown on the consolidated statement of financial
position, that benefit is still available to the Company and can be re-introduced onto the statement of financial
position when it is probable that future taxable profits will be available.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended
that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur.
Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax
assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable
entity or different taxable entities where it is intended that net settlement or simultaneous realisation and
settlement of the respective asset and liability will occur in future periods in which significant amounts of
deferred tax assets or liabilities are expected to be recovered or settled.
Tax Consolidation
NobleOak Life Limited is the head entity of the Tax Consolidated Group comprising of NobleOak Life Limited
and its wholly owned entities. Under tax consolidation, the head entity assumes the following balances from
controlled entities within the Tax Consolidated Group:
(i)
(ii)
current tax balances arising from external transactions recognised by entities in the tax consolidated
group which occurred after implementation date; and
deferred tax assets arising from unused tax losses and unused tax credits recognised by entities in the
Tax Consolidated Group which occurred after implementation date.
44
45
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited 1
Statement of Significant Accounting Policies (cont.)
1
Statement of Significant Accounting Policies (cont.)
(j)
Income tax (cont.)
Assets and liabilities which arise as a result of balances transferred from entities within the Tax Consolidated
Group to the head entity are recognised as related party balances receivable and payable in the statement of
financial position. The recoverability of balances arising from tax funding arrangements is based on the ability of
the Tax Consolidated Group to utilise the amounts recognised by the head entity.
(k) Payables
Trade payables and other accounts payable are recognised when the Company becomes obliged to make
future payments resulting from the purchase of goods and services.
(l)
Financial statements presentation
The financial statements are prepared by combining the financial statements of the Company’s Benefit Funds
and Management Fund. A list of Benefit Funds appears in notes 27-28 of the financial statements.
(m) Plant and equipment
(o) Revenue recognition
Management fee revenue
Management fee revenues are recognised in the period in which the services are performed and obligations
satisfied.
Premium income
Premium income is recognised on a due basis subject to the rules governing each Benefit Fund.
i)
Life Insurance contracts
Premiums on Life Insurance contracts are separated into their revenue and deposit components.
Where it is not practicable to split out the two components, all premiums have been recognised as
revenue. Where policies provide for the payment of amounts of premiums on specific due dates, such
premiums are recognised as revenue when due. Unpaid premiums are recognised as revenue only
during the days of grace or where secured by the surrender values of the policies concerned. Other
premiums are recognised as revenue on a due basis.
Plant and equipment is recorded at cost less any accumulated depreciation and impairment losses.
ii)
Life investment contracts
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Company and
the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement
of comprehensive income during the financial period in which they are incurred.
Under life investment contracts the life companies receive deposits from policyholders which are then
invested on behalf of the policyholders. No premiums are recognised as revenue. Fees deducted
from members accounts are accounted for as fee revenue. Life investment premiums are treated as a
movement in life investment contract liabilities.
Depreciation
Interest revenue
Depreciation is calculated using the straight line method over the asset’s useful life to the Consolidated Group
commencing from the time the asset is held ready for use. Useful lives range between 3 to 20 years.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount. The recoverable amount is assessed on the basis of
the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The
expected net cash flows have been discounted to their present values in determining recoverable amounts.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains
and losses are included in the statement of comprehensive income.
(n) Provisions
Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for
which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the
financial asset.
Commission revenue
Commission revenue is recognised when all service obligations are complete and revenue is received from
customers.
All revenue is stated net of the amount of goods and services tax (GST).
(p) Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in
an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost
using the effective interest method less impairment.
(q)
Intangibles
Goodwill and other intangibles are initially recorded at the amounts by which the purchase price exceeds the
fair value attributed to the interest in the net fair value of identifiable assets, liabilities and contingent liabilities at
date of acquisitions. Goodwill and other intangibles are tested annually for impairments and carried at cost less
accumulated impairment losses.
46
47
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited 1
Statement of Significant Accounting Policies (cont.)
1
Statement of Significant Accounting Policies (cont.)
(r)
Leases
(u)
Life investment contract liabilities
Leases of fixed assets where substantially all risks and benefits incidental to the ownership of the asset, but not
the legal ownership, that are transferred to the Company are classified as finance leases.
Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair
value of the leased property or the present value of the minimum lease payments, including any guaranteed
residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest
expense for the period.
Leased assets are depreciated on a straight-line basis over their estimated useful lives, where it is likely that the
Company will obtain ownership of the asset, or over the term of the lease.
Lease payments for operating leases, are charged as expenses on a straight line basis in the periods in which
they are incurred.
(s) Claims expense
i)
Life Insurance contracts
Claims are recognised when the liability to a policyholder under a Life Insurance contract has been
established or upon notification of the insured event. Claims are separated into their expense and
withdrawal components. Claims on risk business are treated as an expense and are recognised when a
liability to the policyholder is established.
ii)
Life investment contracts
There is no claims expense in respect of investment contracts. Surrenders and withdrawals which relate
to life investment contracts are treated as a movement in life investment contract liabilities. Other claim
amounts are similar to withdrawals and as such, do not relate to the provision of services or the bearing
of risk. Accordingly, they are not expenses and are treated as movements in Life Insurance contract
liabilities.
(t) Basis of expense apportionment
All operating expenses in respect of Life Insurance or life investment contracts have been apportioned
between policy acquisition, policy maintenance and investment management expenses with regard to the
objective when incurring the expense and the outcome achieved.
The apportionment process is adopted by applying the following methodology:
(i)
(ii)
Expenses that can be directly identifiable and attributable to a particular class of business are allocated
directly to that class of business. Expenses directly attributable to the ordinary and superannuation
participating and non-participating classes of business that cannot be directly allocated to a particular
class of business are apportioned based upon the appropriate cost drivers;
Commission expenses that cannot be allocated to a class of business, for example volume bonuses, are
apportioned on the basis of new business and renewal commissions of each class, allowing for limits
implied by the basis of adviser remuneration;
(iii)
Investment expenses are apportioned to the classes of business on the mean balance of assets under
management; and
(iv) Other expenses that cannot be allocated to a particular class of business are apportioned to the classes
of business based on appropriate cost drivers, including number of new policies issued and related
premiums, number of new units issued, mean balance of assets under management, average number of
policies in-force and time and activity based allocations.
Investment contract premiums are separated into their revenue and deposit components.
i)
Deposit component
The deposit element is initially recognised at fair value. Fair value is determined by estimating the
amount payable under the contract for any premiums received less any current or future exit penalties.
The fair value is measured as the higher of the current surrender value and an estimate of the
discounted future maturity benefit payable in respect of that deposit.
The current surrender value is the amount which the contract holder is entitled to receive upon
immediate surrender. This equates to the premiums received less any surrender penalties.
When calculating the discounted future maturity benefit, the surrender penalty is calculated per the
terms of the contract. For regular premium contracts the calculation is based on a discounted cash flow
that incorporates the ultimate total redemption less future deposits receivable. The resulting surrender
penalty differs to the penalty that would be applied if the contract immediately lapsed leading to a
different financial instrument liability.
The deposit element, or financial instrument liability, is subsequently measured at fair value, with any
change in value being recognised in the statement of comprehensive income.
ii)
Revenue component
Accounting standards contemplate a situation where there is a difference between the considerations
(premiums) received from a policyholder and the sum of the fee revenue and financial liability
recognised upon receipt.
Accounting standards define this part as the Management Services Element.
The difference between the consideration received and the fair value of the deposit element relates to
future management services revenue and is initially recognised on the statement of financial position as
Deferred Revenue Liability.
Fees received are deferred and recognised as revenue over the life of the contract.
(v)
Life Insurance contract liabilities
The financial reporting methodology used to determine the value of Life Insurance contract liability is referred
to as Margin on Services (MoS).
Under MoS, the excess of premium received over claims and expenses (‘the profit margin’) is recognised over
the life of the contract in a manner that reflects the pattern of risk accepted from the policyholder as services
are provided (‘the service’), hence the term Margin on Service. The movement in Life Insurance contract
liability recognised in the statement of comprehensive income reflects the planned release of this margin.
The assumptions used in the calculation of the insurance contract policy liabilities are reviewed at each
reporting date.
48
49
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited 1
Statement of Significant Accounting Policies (cont.)
2 Critical accounting judgements and estimates
(w) Policy acquisition costs
Life Insurance contracts
The Appointed Actuary, in determining the Life Insurance contract liabilities, takes account of the deferral
and future recovery of acquisition costs which are capitalised by way of movement in Life Insurance contract
liabilities, then amortised over the period in which they will be recovered.
Policy acquisition costs comprise the costs of acquiring new business, including commission, advertising, policy
issue and underwriting costs, agency expenses and direct and indirect other sales costs. Acquisition costs are
initially expensed in the statement of comprehensive income with any amounts to be deferred then taken to
the statement of financial position as an adjustment to policy liabilities.
(x) Outward reinsurance expense
Premiums ceded to reinsurers under reinsurance contracts are recorded as an outward reinsurance expense
and are recognised over the period of indemnity of the reinsurance contract.
(y) Asset backing of policy liabilities
Each Benefit Fund of the Company is accounted for independently. Separate management accounts are
maintained. Each Benefit Fund holds its own assets that provide the financial backing to ensure future policy
liabilities can be met. The appointed actuary regularly reviews each Benefit Fund’s financial information to
ensure that assets are able to meet or exceed the requisite capital adequacy and solvency requirements.
In accordance with AASB 1038 ‘Life Insurance Contracts’, financial assets backing policy liabilities are designated
at fair value through profit or loss. Financial assets backing policy liabilities consist of high quality investments
such as cash and fixed income securities.
(z) Share-based payment arrangements
Equity-settled share-based payments to directors and employees are measured at the fair value of the equity
instruments at the grant date.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Company’s estimate of equity instruments that will
eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company
revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the
original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities at year end.
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances. The key areas
where critical accounting estimates are applied are noted below.
(a)
Life Insurance contract liabilities
Life Insurance contract liabilities are computed using statistical or mathematical methods, which are expected
to give approximately the same results as if an individual liability was calculated for each contract. The
computations are made by suitably qualified personnel on the basis of recognised actuarial methods, with
due regard to relevant actuarial principles. The methodology takes into account the risks and uncertainties of
the particular classes of Life Insurance business written. Deferred policy acquisition costs and present value of
in-force business (PVIF) are connected with the measurement basis of Life Insurance contract liabilities and are
equally sensitive to the factors that are considered in the liability measurement. The key factors that affect the
estimation of these liabilities and related assets are:
•
•
•
•
The estimated cost of providing benefits and administering these insurance contracts;
Expected mortality and morbidity experience on Life Insurance products, including enhancements to
policyholder benefits;
Discontinuance experience, which affects the Group’s ability to recover the cost of acquiring new
business over the expected life of the contracts; and
The amounts credited to policyholders’ accounts compared to the returns on invested assets through
asset-liability management and strategic and tactical asset allocation and recoverability.
In addition, factors such as regulation, competition, interest rates, taxes, securities market conditions and
general economic conditions affect the level of these liabilities. Details of specific actuarial policies and methods
are set out in note 32.
(b) Assets arising from reinsurance contracts
Assets arising from reinsurance contracts are also computed using the above methods. In addition, the
recoverability of these assets is assessed on a periodic basis to ensure that the balance is reflective of the
amounts that will ultimately be received, taking into consideration factors such as counterparty and credit risk.
Impairment is recognised where there is objective evidence that the Group may not receive amounts due to it
and these amounts can be reliably measured.
(c)
Fair value of financial instruments
The fair value of financial instruments that are not traded in an active market is determined by using valuation
techniques in accordance with the measurement hierarchy in Note 8. Assets that are not Level 1 assets are
valued by using discounted cashflow techniques based on market observable inputs.
(d) Deferred tax assets
Determining whether deferred tax assets are recognised requires an estimation of future taxable profits against
which the assets can be released. This estimation process is based on relevant available information pertaining
to the business and the exercise of management judgement.
Recognition therefore involves judgements and estimations regarding the future financial performance of
the company and reflects a prudent regard, where considered appropriate, for the inherent uncertainties
associated with making such estimations and judgements in relation to deferred tax assets. Details of the
carrying amount of the deferred tax asset are set out in Note 11.
50
51
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited 2 Critical accounting judgements and estimates (cont.)
3 Profit from continuing operation (cont.)
(e)
Impairment of non-financial assets
The Company assesses at each balance sheet date whether there is objective evidence that any non-financial
asset not carried fair value is impaired. Such an asset is impaired and impairment losses are incurred only if
there is objective evidence of impairment as result of one or more events that have occurred after the initial
recognition of the asset (the loss event) and that loss event has an impact on the estimated future cash flows of
the asset that can be reliability estimated.
3 Profit from continuing operation
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
The profit from operations includes the
following items of income and expense:
(a)
i) Net Insurance Premium Revenue
Premium revenue from insurance contracts
71,675,474
56,619,910
64,744,724
51,584,409
Less: Deposits recognised as an increase
in policy liabilities
(2,655,357)
(1,536,278)
(2,655,357)
(1,536,278)
Less: Outward reinsurance expense
(42,115,104)
(34,112,917)
(42,115,104)
(34,112,917)
69,020,117
55,083,632
62,089,367
50,048,131
ii) Investment Revenue
Interest & investment revenue
Increase in market value of investments
iii) Net commissions from reinsurers
Commissions received from/(clawback to)
reinsurers
Commissions clawback from/(paid to)
distributors
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
438,797
674,693
410,148
219,548
429,701
674,693
404,538
219,548
1,113,490
629,696
1,104,395
624,086
17,803,381
(30,334,846)
17,803,381
(30,334,846)
(17,344,953)
31,496,080
(17,344,953)
31,496,080
458,428
1,161,234
458,428
1,161,234
The balances change in 2018 and 2019 are a result of the fact that Freedom arrangement with NobleOak was
placed in run off in 2017.
iv) Fees & Other Revenue
Management fees & administration fees
1,777,263
59,847
4,469,368
2,951,482
26,905,013
20,970,715
19,974,263
15,935,214
Other revenue
(692)
1,680,184
(692)
1,680,184
NobleOak’s in-force premium as at 30 June 2019 in active benefit funds was $59,946,121 ($36,789,245 as at 30
June 2018). In-force premiums in closed benefit funds as at 30 June 2019 was $22,134,517 ($28,015,860 as at 30
June 2018). NobleOak does not generate net premium revenue from closed benefit funds, therefore the premium
reduction shown does not impact on trading results. From 1 June 2019, NobleOak generated revenue from the
closed benefit funds to support the administration cost of managing the run-off to these policies.
There is a difference between in-force premiums and the revenue recognised in the profit or loss statement due to
timing of policy start dates (earned premium) and sales incentives offered with the policies (premium free periods).
For core Life Insurance business, the gross premium (including base premium and fees) is collected by NobleOak
Services Limited (the subsidiary company and the administrator). The base premium is paid to NobleOak Life Limited
(the parent company and the insurer) which is recognised as insurance premium revenue in the company’s statement
of profit or loss. The fee component of the gross premium retained in the subsidiary company is recognised within
the insurance premium revenue in the consolidated profit or loss statement.
1,776,571
1,740,031
4,468,676
4,631,666
(b) Expenses
Profit before income tax has been arrived at
after charging the following expenses:
i) Claims Expenses
Claims payments
Claims expense reserve
16,213,729
13,534,065
16,213,729
13,534,065
572,123
488,031
572,123
488,031
Less: Reinsurance claims recovery
(14,464,336)
(12,877,121)
(14,464,336)
(12,877,121)
2,321,516
1,144,975
2,321,516
1,144,975
52
53
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited 3 Profit from continuing operation (cont.)
4
Income taxes
ii) Policy Acquisition Costs
Commission
Stamp duty
Underwriting & medical costs
Marketing & promotion
Salary & employee benefits
Printing, postage, stationery & IT expenses
Depreciation and amortisation
Other acquisition cost
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
9,536,433
10,857,487
1,350,398
1,314,243
907,858
1,128,628
7,221,466
1,350,398
1,314,243
10,355,768
5,010,294
10,355,768
5,143,765
4,508,627
5,143,765
567,233
140,976
418,601
397,753
117,279
254,934
567,233
140,976
418,601
8,887,310
907,858
1,128,628
5,010,294
4,508,627
397,753
117,279
254,934
Movement in deferred acquisition costs
(19,915,318)
(10,817,053)
(19,915,318)
(10,817,053)
8,912,099
12,365,807
6,597,132
10,395,630
iii) Administration expenses
Administration expenses include the following expenses:
27,609
187,383
558,657
1,431,692
318,800
19,192
214,860
491,585
539,317
170,366
27,609
187,383
513,019
1,064,833
318,800
19,192
214,860
491,585
515,317
170,366
Depreciation
Amortisation
Payments under operating leases
Professional services & advisers
Marketing & promotion
Printing, postage, stationery, telephone
& IT expenses
Loss on disposal of assets
Board & committee costs
Insurance
(a)
The components of tax expense comprise:
Current tax
Deferred tax
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
999,228
-
852,694
-
1,491,660
1,044,274
1,577,925
1,044,129
2,490,888
1,044,274
2,430,619
1,044,129
(b)
The prima facie tax on profit from operations before income tax is
reconciled to income tax as follows:
Prima facie tax expense on profit from operations
before income tax at 30% (2018: 30%)
2,317,283
1,290,049
2,257,039
1,289,904
Add:
Tax effect of:
Deferred Revenue
Members Liability
Non-deductible depreciation & amortisation
Non-deductible capital loss
Non-deductible expenses
Under/(over) provision of prior year income tax
Less
Tax Effect of:
-
(450,000)
-
(450,000)
260,154
106,790
78,244
10,422
3
221,079
105,399
9,863
12,902
41,393
260,154
106,790
78,244
10,422
(22)
221,079
105,399
9,863
12,902
41,393
455,613
(59,364)
455,588
(59,364)
1,719,259
591,739
1,232,462
591,739
Amortised tax benefits of capital items
393,088
254,024
113,841
-
297,577
85,816
393,088
254,024
113,841
-
297,577
85,816
Deductible expenses
Non assessable other income
-
70,545
211,463
50,727
60,056
75,628
-
70,545
211,463
50,727
60,056
75,628
282,009
186,411
282,008
186,411
5,004,353
2,410,452
4,105,059
2,386,452
Income tax expense attributable to profit for the year
2,490,888
1,044,274
2,430,619
1,044,129
iv) Other expenses
Other expenses include the following expenses:
Bank charges
Management fees
General expenses
475,450
48,344
436,385
481,809
37,518
321,908
341,689
566,191
336,502
365,434
-
320,987
5 Remuneration of auditors
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
960,179
841,235
1,244,382
2,386,452
Audit of the financial report - current year
153,750
131,250
117,500
107,250
54
55
The auditor of the Company is Deloitte Touche Tohmatsu.
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited
6 Earnings per share
7 Receivables
Trade receivables
GST receivable
Other receivables – related party
Maturity analysis:
Current
Non-current
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
5,410,168
2,885,374
1,514,500
2,298,255
697,933
303,714
955,447
-
-
1,539,768
301,020
13,213
6,108,101
3,189,088
4,009,715
2,612,488
6,108,101
3,189,088
4,009,715
2,612,488
-
-
-
-
6,108,101
3,189,088
4,009,715
2,612,488
Earnings per share (cents)
Basic earnings (cents)
Diluted earnings (cents)
Basic earnings per share
Consolidated
2019
$
2018
$
10.03
9.78
7.17
7.01
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are
as follows:
Profit for the year attributable to owners of the Company
5,233,388
3,255,890
Earnings used in the calculation of basic earnings per share
5,233,388
3,255,890
Weighted average number of ordinary shares for the purpose
of basic earnings per share
52,180,564
45,393,302
Diluted earnings per share
The earnings used in the calculation of diluted earnings per share are as follows:
Profit for the year attributable to owners of the Company ($)
5,233,388
3,255,890
Earnings used in the calculation of total diluted earnings per share
5,233,388
3,255,890
The weighted average number of ordinary shares for the purposes of diluted earnings per share reconciles to the
average number of ordinary shares used in the calculation of basic earnings per share as follows:
Weighted average number of ordinary shares used in the calculation of basic
earnings per share
52,180,564
45,393,302
Shares deemed to be dilutive in respect of the Premium Option Plan and
Performance Rights Plan
1,313,146
1,044,659
Weighted average number of ordinary shares used in the calculation of diluted
earnings per share (all measures)
53,493,710
46,437,961
56
57
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited 8 Financial assets
9 Other assets
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
-
-
150,502
150,000
9,262,750
17,713,384
9,126,053
17,713,384
3,716,065
3,041,374
3,716,065
3,041,374
12,978,815
20,754,758
12,992,620
20,904,758
9,262,750
17,713,384
9,126,053
17,713,384
3,716,065
3,041,374
3,866,567
3,191,374
12,978,815
20,754,758
12,992,620
20,904,758
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
9,262,750
17,713,384
9,126,053
17,713,384
3,716,065
3,041,374
3,716,065
3,041,374
-
-
-
-
12,978,815
20,754,758
12,842,118
20,754,758
Financial assets held at cost:
Shares in Subsidiary
Financial assets held at fair value
through profit or loss:
Bank bills and term deposits
Fixed interest investment
Maturity analysis:
Current
Non-current
Level 1
Bank bills and term deposits
Level 2
Fixed interest Investment
Level 3
Fair value hierarchy
The investments carried at fair value have been classified under the three levels of the fair value hierarchy as follows:
(i)
(ii)
Level 1: quoted prices (unadjusted) in active markets for identical assets
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset, either
directly (as prices) or indirectly (derived from prices)
(iii)
Level 3: inputs for the asset that are not based on observable market data (unobservable inputs)
There have been no movements between levels during the year.
Prepayments
Other
Maturity analysis:
Current
Non-current
10 Plant and equipment
Gross carrying amount
Balance at 1 July 2018
Additions
Write offs
Balance at 30 June 2019
Accumulated depreciation
Balance at 1 July 2018
Write offs
Depreciation expense
Balance at 30 June 2019
Net book value
As at 30 June 2018
As at 30 June 2019
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
533,758
14,382
459,169
200
305,597
14,382
259,255
200
548,140
459,369
319,979
259,455
548,140
459,369
319,979
259,455
-
-
-
-
548,140
459,369
319,979
259,455
Consolidated
The Company
Plant & Equipment
Plant & Equipment
$
$
367,585
1,045,697
(82,211)
1,331,071
(148,202)
21,203
(68,939)
(195,938)
219,383
1,135,133
367,585
95,697
(82,211)
381,071
(148,202)
21,203
(68,939)
(195,938)
219,383
185,133
Depreciation is recognised as an expense during the year and is included in the depreciation expense disclosed in
Note 3(b) to the financial statements.
58
59
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited
11 Deferred tax asset
12
Intangibles
The balance comprises temporary difference
attributable to:
Amounts recognised in profit & loss:
Asset impairments
Accrued expenses
Employee entitlement provision
Prior year tax losses
Intangibles
Share capital issue costs
Consolidated
The Company
2019
$
555,000
215,802
218,441
2018
$
555,000
130,722
113,042
2019
$
555,000
182,204
147,325
2018
$
555,000
112,249
113,042
29,263
1,667,132
-
1,637,903
118,759
59,389
123,156
99,252
118,759
59,389
123,156
99,252
1,196,644
2,688,304
1,062,677
2,640,602
Movement:
Opening balance as at beginning of year
2,688,304
3,732,578
2,640,602
3,683,945
Charged to income statement
(1,491,660)
(1,044,274)
(1,577,925)
(1,044,129)
Tax loss transferred from subsidiary
-
-
-
786
Closing balance as at end of year
1,196,644
2,688,304
1,062,677
2,640,602
Consolidated
The Company
Goodwill –
NobleOak
Services
Limited
Product
Development
– NobleOak
Life Limited
Administration
Software
Development
– NobleOak
Life Limited
Total
Intangible
Product
Development
Administration
Software
Development
Total
Intangible
$
$
$
$
$
$
$
Gross carrying
amount
Balance at 1 July 2018
150,000
1,118,780
776,865
2,045,645
1,118,780
776,865
1,895,645
Write offs
-
(1,118,780)
(776,865) (1,895,645)
(1,118,780)
(776,865)
(1,895,645)
Balance as at 30
June 2019
Accumulated
amortisation
Balance at 1 July 2018
Write offs
Amortisation expense
Balance at 30 June
2019
Net book value
150,000
-
-
150,000
-
-
-
-
-
-
-
737,150
539,386
1,276,536
737,150
539,386
1,276,536
(857,967)
(705,598) (1,563,565)
(857,967)
(705,598)
(1,563,565)
120,817
166,212
287,029
120,817
166,212
287,029
-
-
-
-
-
-
As at 30 June 2018
150,000
381,631
237,478
769,109
381,631
237,478
619,109
As at 30 June 2019
150,000
-
-
150,000
-
-
-
60
61
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited 13 Payables
15 Policy & member liabilities
Consolidated
The Company
2019
$
-
7,604,291
2,173,834
3,883,428
2018
$
-
7,259,358
1,297,441
-
2019
$
339,327
6,969,519
1,864,234
-
2018
$
-
5,960,047
1,065,624
-
13,661,554
8,556,799
9,173,080
7,025,671
13,661,554
8,556,799
9,173,080
7,025,671
-
-
-
-
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
Balance at beginning of financial year
(12,565,033)
(3,669,161)
(12,565,033)
(3,669,161)
Allocations to policyholders/members
(16,137,028)
(9,632,801)
(16,137,028)
(9,632,801)
(Decrease)/Increase in value expensed in the
financial year (i)
867,179
736,929
867,179
736,929
Balance at end of financial year
(27,834,882)
(12,565,033)
(27,834,882)
(12,565,033)
(i)
2018 and 2019 increase/(decrease) in value expensed in the financial year relates to bonus and other benefits
allocated to members.
Being:
13,661,554
8,556,799
9,173,080
7,025,671
Gross policy liabilities
(8,353,192)
2,982,965
(8,353,192)
2,982,965
Payables - Related parties
Sundry creditors
Accruals
Contract Liability
Maturity analysis:
Current
Non-current
14 Provisions
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
Provision for income tax
Employee benefits
999,204
718,135
-
376,807
999,204
491,083
-
376,807
Maturity analysis:
Current
Non-current
1,717,339
376,807
1,490,287
376,807
1,465,332
252,007
274,937
101,870
1,344,083
146,204
274,937
101,870
1,717,339
376,807
1,490,287
376,807
Less gross policy liabilities ceded
under reinsurance
(19,481,690)
(15,547,998)
(19,481,690)
(15,547,998)
Net policy & members liability/(asset)
(27,834,882)
(12,565,033)
(27,834,882)
(12,565,033)
Life Insurance contract liability/(asset) using the accumulative best estimate method, net of reinsurance
Value of future Life Insurance contract
benefits net of reinsurance
Value of future acquisition expense net
of reinsurance
7,134,182
6,143,655
7,134,182
6,143,655
(36,267,820)
(19,283,521)
(36,267,820)
(19,283,521)
Life Insurance contract holders’ bonus
1,298,756
574,833
1,298,756
574,833
Net policy members liability/(asset)
(27,834,882)
(12,565,033)
(27,834,882)
(12,565,033)
16 Accumulated profits
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
Balance at beginning of financial year
Net profit from operation after income tax
3,525,134
5,233,388
269,244
3,255,890
3,373,920
5,092,843
118,370
3,255,550
Balance at end of financial year
8,758,522
3,525,134
8,466,763
3,373,920
62
63
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited
17 Share capital
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
(a)
Issued share capital
Fully paid ordinary shares
37,121,794
36,301,200
37,121,794
36,301,200
Movement in issued share capital
Company & Consolidated
Ordinary Shares
Opening Balance 1 July 2017
Ordinary Share – Sophisticated Investor –
March 2018 (i)
Less Transaction cost
Balance 30 June 2018
Number of
Shares
42,329,724
Issue Price
$ Value
24,373,143
9,241,372
1.30
12,013,784
-
51,571,096
(85,727)
36,301,200
Ordinary Share – Staff share scheme (ii)
27,684
1.30
35,989
Ordinary Shares – Directors Options Exercised
December 2018 (iii)
320,000
0.54
172,800
Ordinary Shares – Performance Options
Exercised December 2018 (iv)
Ordinary Shares – Performance Options
Exercised March 2019 (v)
Less Transaction cost
Balance 30 June 2019
379,500
0.54
204,930
542,500
0.75
406,875
-
-
52,840,780
37,121,794
(i)
(ii)
(iii)
(iv)
(v)
Ordinary Shares issued to sophisticated investors from capital raising activities undertaken in March 2018.
Ordinary Shares issued to employees under the Employee Share Purchase Plan, the shares were issued at the then market rate.
Options issued to Directors in the 2013 Premium Options plan have been exercised.
Options issued to Directors with Performance criteria in the 2013 Premium Options plan have been exercised.
Options issued to CEO with Performance criteria in the 2015 Premium Options plan have been exercised.
17 Share capital (cont.)
(b) Share based payment reserve
Number of Options/Rights
$ Value
Opening Balance 1 July 2017
NobleOak Premium Option Plan options no longer available for vesting (i)
NobleOak Premium Option Plan options no longer available for vesting (ii)
Ordinary Share – 2017 Long Term Incentive Rights (iii)
Balance 30 June 2018
2013 Premium Option Plan exercised – Performance based (i)
Ordinary Shares – 2017 Long Term Incentive Rights (iii)
2013 Premium Option Plan exercised – Directors (iv)
Ordinary Shares – 2018 Long Term Incentive Rights (v)
Option Plan 2019 – IPO (vi)
Balance 30 June 2019
1,602,417
1,690
(90,417)
(185,000)
-
-
57,692
75,000
1,384,692
76,690
(922,000)
(18,803)
(320,000)
-
(5,000)
-
58,333
105,000
1,225,468
29,745
1,407,690
206,435
Options/rights plan
Number Grant date
Expiry date
Exercise price
Expired
(1) 2013 Premium Option Plan
699,500
19/12/2013
19/12/2018
(2) 2015 Premium Option Plan (CEO)
542,500
18/03/2015
11/03/2019
Current
(3) 2015 Premium Option Plan (Staff)
(4) 2016 Premium Option Plan
(5) 2017 Performance Rights Plan
(5) 2019 Performance Rights Plan
50,000
35,000
38,889
58,333
18/03/2015
01/12/2016
03/11/2017
23/06/2019
(6) Senior Management & Leadership Team
Option Plan (vi)
1,225,468
01/06/2019
11/03/2020
01/07/2020
n/a
n/a
31/12/2022 &
31/12/2023
0.54
0.75
0.75
1.045
Nil
Nil
1.30
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Vesting of NobleOak Premium Option Plan entitlements are dependant on long term performance. This option plan has finalised and resulted in
90,417 options being forfeited in 2018 and the total vested options of 922,000 exercised during the 2019 year.
Vesting and the ability to exercise vested options is depended on being employed at NobleOak. 185,000 options are no longer available due to
terminated employment.
A 2017 Long-term incentive plan was established for key executives. The plan is based on the outcome of 3 years results ending 30 June 2020. This
reserve is a provision for the estimate potential shares earned to date based on current year’s results. During the 2019 year the expected rights issue
reduced from that estimated in 2018.
Options issued under the 2013 Premium Option Plan with an expired dated of December 18 have been exercised and the plan has now expired.
A 2018 Long-term incentive plan was established for key executives. The plan is based on the outcome of 3 years results ending 30 June 2021. This
reserve is a provision for the potential shares earned to date based on current year’s results. These rights were reviewed by the Board and reissued
in line with an independent review (by AON) completed during the year.
Options issued on the 1 June 2019 are issued to executives and senior management and vest in 2020 and 2021 and are dependent on achieving the
planed objectives.
64
65
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited
18 Lease commitments
Operating leases relate to office space at Level 7, 66 Clarence Street Sydney for the company and Level 1 and Level 7, 66
Clarence Street Sydney for the consolidated group.
19 Related party disclosures (cont.)
b)
Shares issued to Directors or Associates of Directors
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
Non-cancellable operating lease payments
Not longer than 1 year
887,068
618,596
641,148
618,596
Longer than 1 year and not longer than 5 years
2,422,382
2,404,000
1,762,852
2,404,000
19 Related party disclosures
(a) Key management personnel remuneration
The Directors of NobleOak Life Limited during the year were:
Mr E A Feyzeny, appointed 24 February 2011
Mr P Sampson, appointed 6 February 2013, resigned 28 November 2018.
Mr K Hamman, appointed 27 January 2011
Mr S J Harrison, appointed 27 January 2011
Mr A R Brown, appointed 31 July 2013
Mr M Edwards, appointed 26 October 2016
The compensation of the Directors and Key Personnel is set out below:
Non Executive Directors
Short-term employee benefits
Post-employment benefits
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
213,186
18,864
265,360
25,170
213,186
18,864
265,360
25,170
232,050
290,530
232,050
290,530
Executive Directors and Key Personnel
Short-term employee benefits
Post-employment benefits
1,591,743
1,501,940
1,532,775
1,501,940
56,855
71,707
56,855
71,707
1,648,598
1,573,647
1,589,630
1,573,647
Total
1,880,648
1,864,177
1,821,680
1,864,177
Details of the shares held by Directors or their Associates are included in the 2019 Directors Report.
The following shares were issued during the year to Directors or Associates of Directors:
699,500 options issued under the 2013 Premium Option plan have been exercised, there are no more available
options under this plan. The exercise price was the standard issue prices for non-related investors at the time the
options were issued.
542,500 options issued under the 2015 Premium Option Plan (CEO) have been exercised, these were issued based
on performance criteria. There are no more available options under this plan. The exercise price was the standard
issue prices for non-related investors at the time the options were issued.
In August 2018, staff members were each issued with 769 shares under the Employee Share Purchase Plan, Anthony
Brown being an employee was entitled and issued the same number of shares as all other staff members.
All shares issued to Directors were issued on the same terms as all other shareholders in each share issue.
Directors Name
2013 Premium Option
Plan options exercised
(exercised price $0.54)
2015 Premium Option
Plan (CEO) options
exercised (exercised
price $0.75)
Employee Share
Purchase Plan August
2018 (issue Price $1.30)
Mr A E Feyzeny
Mr S Harrison
Mr K Hamman
Mr A R Brown
120,000
120,000
40,000
379,500
542,500
769
(c) Options issued to Directors
The NobleOak Premium Option Plan was established in December 2013 to align the interests of Employees and
Directors with that of Shareholders as well as providing a greater incentive for involvement in the long-term goals of
the Company. Options issued in 2013 and 2015 to Directors have now been exercised or have expired.
A new option plan dated 1 June 2019 has been established for key personnel and is based on the achievement of
specific goals, Anthony Brown was issued with 351,327 options under this plan that vest on achieving the specific
events in 2020 and 2021.
66
67
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited 19 Related party disclosures (cont.)
(d) Performance Rights Plan
21 Notes to the statement of cash flow
(a) Reconciliation of cash and cash equivalents
In November 2017, the Board established a Performance Rights Plan as a long term incentive program to align key
management personnel to the performance of the company. This program issues performance rights each year to
eligible personnel with each issue based on achieving the business plan objectives (in-force premium and earning)
over a 3 year period. Issues under this program to Anthony Brown have been:
For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in banks
and cash in money market accounts, net of outstanding bank overdrafts. Cash and cash equivalents at the end
of the financial year as shown in the cash flow statement is reconciled to the related items in the statement of
financial position as follows:
Year
2017
2018
Full Entitlement
Accrued to balance date
191,818
281,062
29,415
29,089
(e) Other transactions with Directors
There has been no other revenue or expense that has arisen from transactions with any of the Directors or their
related entities.
20 After balance date events
There has been no matter or circumstance that has arisen since the end of the financial year that has significantly
affected, or may significantly affect, the operations of the Group, or the state of affairs of the Company in future
financial years.
Consolidated
The Company
2019
$
2018
$
2019
$
2018
$
Cash and cash equivalents (i)
11,513,929
8,191,586
10,053,353
7,333,460
(i) The Consolidated balance includes restricted cash held in the trust account of the subsidiary, as a Trustee of
My Protection Plan of $456,287 (2018: $531,207)
(b) Reconciliation of profit for the year to net cash flows from operating activities
Profit after tax
Depreciation of non-current assets
Amortisation of intangible assets
Loss on Sale or disposal of Investments
Expense related to Share Based Payment
Reserve
Decrease/(increase) in market value of
investments
(Decrease) in policy liabilities
Decrease in assets:
Receivables
Other assets
Increase in liabilities:
Payables
Deferred revenue
Provisions
5,233,388
3,255,890
5,092,843
3,255,550
68,939
287,029
393,088
47,951
303,379
33,050
68,939
287,029
393,088
47,951
303,379
33,050
129,745
75,000
129,745
75,000
(674,693)
(219,548)
(674,693)
(219,548)
(15,269,845)
(8,895,872)
(15,269,845)
(8,895,872)
(2,919,013)
18,635,966
(1,397,227)
18,958,240
1,402,889
890,181
1,517,401
941,159
5,104,755
(21,610,215)
2,147,409
(21,752,058)
-
(1,500,000)
-
(1,500,000)
1,340,532
128,021
1,113,480
128,021
Net cash from operating activities
(4,903,186)
(8,856,197)
(6,591,831)
(8,625,128)
68
69
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited 22 Financial risk management
The Board of Directors has established an investment policy to ensure that assets are adequately protected and
invested in accordance with the Group’s primary objectives of safety, liquidity and yield. The principal goal of the
investment policy is to maximise investment returns while growing the Group’s asset base without putting at risk
the capital adequacy and solvency obligation requirements stipulated by relevant laws and standards (such as those
imposed by the Australian Prudential Regulation Authority). To assist with the implementation and management of
the investment policy, the Board has established a Finance and Investment Committee (FIC).
The Group’s financial instruments consist mainly of deposits with banks, fixed interest investments, accounts
receivable and payable.
The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the
accounting policies to these financial statements, are set out below in the interest rate risk note at 22(a).
(a)
Interest rate risk
The following table details the Consolidated Group’s exposure to interest rate risk at 30 June 2019 and 2018:
2019
Financial Assets
Cash and cash equivalents
Bank bills and term deposits
Fixed interest investments
Trade receivables
Financial Liabilities
Trade payables
Weighted
average
effective
rate
Less than 1
year
Between 1
& 5 years
Over 5
years
Total
%
$
$
$
$
1% 11,513,929
2.5%
5.4%
0%
9,262,750
-
6,108,101
26,884,780
0% 12,711,554
12,711,554
-
-
-
-
-
-
-
-
-
3,716,065
-
11,513,929
9,262,750
3,716,065
6,108,101
3,716,065
30,600,845
-
-
12,711,554
12,711,554
Notes to the Financial Statements
For the Financial Year Ended 30 June 2019
22 Financial risk management (cont.)
(a)
Interest rate risk (cont.)
2018
Financial Assets
Cash and cash equivalents
Cash on term deposit
Fixed interest investments
Trade receivables
Financial Liabilities
Trade payables
Weighted
average
effective
rate
Less than 1
year
Between 1
& 5 years
Over 5
years
Total
%
$
$
$
$
1%
2.5%
5.4%
0%
8,191,586
17,713,384
-
3,189,088
29,094,058
0%
8,556,799
8,556,799
-
-
-
-
-
-
-
-
-
3,041,374
-
8,191,586
17,713,384
3,041,374
3,189,088
3,041,374
32,135,432
-
-
8,556,799
8,556,799
(b) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing
to discharge an obligation. The carrying amounts of financial assets recorded in the Group’s financial statements
represent the Group’s maximum exposure to credit risk in relation to these assets.
The Group’s investment policy sets out a minimum investment counter party grade (as measured by Standard &
Poor’s) for fixed interest and cash investments of at least BBB or better. The Group’s Risk Appetite Statement sets out
a minimum Financial Strength Rating (as measured by Standard & Poor’s) for reinsurers of at least A or better.
(c)
Fair value of financial instruments
The net fair value of financial assets and liabilities approximates the amounts recorded in the financial statements.
The fair value has been determined in accordance with the accounting policies disclosed in note 1 to the financial
statements.
The fair value for the government bonds are determined using valuation models based on market observable inputs.
These instruments are included in level 2.
(d) Liquidity risk
The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by
continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
The Funeral Fund holds a 30 year zero coupon bond maturing in 2035. As per the Appointed Actuary’s advice, the
bond will have to be realised before maturity, and this will be done at an opportune time over the next ten years.
A maturity analysis for the contractual remaining life of financial liabilities has been included in the interest rate risk note
at 22(a).
70
71
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited 22 Financial risk management (cont.)
(e) Sensitivity analysis – Interest rate risk
The Group has performed sensitivity analysis relating to its exposure to interest rate risk at balance date. This
sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in
this risk.
Interest Rate Sensitivity Analysis
At 30 June 2019, the effect on net profit and equity as a result of changes in the interest rate, with all other variables
remaining constant would be as follows:
Change in net profit
-
-
Increase in interest rate by 2%
Decrease in interest rate by 2%
Change in Equity
-
-
Increase in interest rate by 2%
Decrease in interest rate by 2%
2019
$
373,653
(373,653)
373,653
(373,653)
2018
$
207,416
(207,416)
207,416
(207,416)
The above interest rate sensitivity analysis has been performed on the assumption that all other variables remain
unchanged. The Group has no exposure to fluctuations in foreign currency.
Sensitivities relating to Actuarial calculations in regards to insurance products is listed in Note 32
(f) Capital risk management
The Group manages its capital requirements by assessing capital levels on a regular basis. Its objectives are to
maintain an optimal capital structure to reduce the cost of capital whilst providing security, returns and benefits to
policyholders and members.
Life companies are subject to externally imposed minimum capital requirements set and monitored by the Australian
Prudential Regulation Authority. These requirements are in place to ensure sufficient solvency margins for the
protection of policyholders and members.
(g) Life Insurance risk
Life Insurance risk consists of all aspects of the risk arising from the underwriting of insurance risk. The Group ensures
that the insurance risk is controlled through the use of underwriting procedures, appropriate premium rating methods
and approaches, effective claims management procedures and sound product terms and conditions due diligence.
The Group purchases reinsurance to limit its exposure to accepted insurance risk. It cedes to specialist reinsurance
companies a proportion of its portfolio for certain types of insurance risk. This serves primarily to reduce the net
liability on large individual risks and provides protection against large losses. The reinsurers used are regulated by the
Australian Prudential Regulation Authority (APRA) and are members of large international groups with sound credit
ratings.
Notes to the Financial Statements
For the Financial Year Ended 30 June 2019
23
Information on the Company’s operations
The Company operates primarily in Life Insurance industry. The Company’s operations are located in New South
Wales and its customers are located in each State and Territory of Australia.
24 Additional information
NobleOak Life Limited is a public company limited by shares, incorporated in Australia. If the Company is wound up,
shareholders will not be required to contribute further equity other than the balance of any partially paid shares.
Principal Place of Business & Registered Office
Level 7, 66 Clarence Street
SYDNEY, NSW 2000
Tel: 1300 041 494
25 Contingent liabilities
The Group has provided a bank guarantee of $520,998 to support the commercial lease on its office premises at
Level 1 and Level 7, 66 Clarence Street, Sydney NSW 2000.
NobleOak Life Limited (NobleOak) was the insurer of policies sold by Freedom Insurance Group (Freedom)
from April 2014 to June 2017. Following the findings of the Hayne Royal Commission into the actions of Freedom, an
investigation has commenced to assess remediation actions that may be required to correct poor customer experiences.
It is noted that the concerns relate solely to the actions of Freedom in selling insurance products to its customers, and in
retaining these customers, not specific concerns about the insurance contracts it sold. In undertaking the investigation,
NobleOak is working closely with other insurers that Freedom issued policies on behalf of.
In addition, the company has been actively working with its other business partners to review product features and
their distribution and administration practices to ensure no similar issues exist.
The NobleOak Board believes that it is unlikely it will incur any remediation costs associated with the sale or retention
of Freedom policies; however, any amount of remediation by the Company will be contingent upon a number of
events, including the outcome of future investigations and agreements with administrations and distributions, the
timing of which are currently uncertain.
26 Interests in subsidiaries
The subsidiary listed below has share capital consisting solely of ordinary shares, which are held directly by the
Group. The proportion of ownership interests held equals the voting rights held by the Group. The subsidiary’s
principal place of business is also its country of incorporation or registration.
Name of Subsidiary
Principal Place of Business Ownership Interest Held by the Group
NobleOak Services Limited
Sydney, Australia
Genus Life Insurance Services Pty
Ltd
Sydney, Australia
NobleOak Aspire Pty Ltd (formerly
NobleOak UMT Pty Ltd)
Sydney, Australia
2019
%
100%
100%
100%
2018
%
100%
0%
100%
Subsidiary financial statements used in the preparation of these consolidated financial statements have also been
prepared as at the same reporting date as the Group’s financial statements.
72
73
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited
Notes to the Financial Statements
For the Financial Year Ended 30 June 2019
27 Details of Benefit Funds’ income statements
for the year ended 30 June 2019
27 Details of Benefit Funds’ income statements
for the year ended 30 June 2018
Funeral
Benefit
Fund
Risk Fund
No. 1
Reward
Insurance
Benefit
Fund
Freedom
Insurance
Benefit
Fund
PPS Mutual
Benefit
Fund
Avant
Benefit
Fund
Blue Chip
Endowment
Assurance
Fund
NEOS
Benefit
Fund
Funeral
Benefit
Fund
Risk Fund
No. 1
Reward
Insurance
Benefit Fund
Freedom
Insurance
Benefit
Fund
PPS Mutual
Benefit
Fund
Avant
Benefit
Fund
Blue Chip
Endowment
Assurance
Fund
NEOS
Benefit
Fund
$
$
$
S
$
$
$
$
$
$
$
S
$
$
$
$
Premium revenue
Insurance premium
revenue
- 23,078,921
2,371,286 20,284,826 10,878,619
2,496,323
-
2,979,392
Less reinsurance payment
- (14,577,489)
(1,612,359) (14,172,353)
(7,494,214)
(1,293,290)
-
(2,965,399)
Net premium revenue
-
8,501,432
758,927
6,112,473
3,384,405
1,203,033
-
13,993
Investment income
704,878
182,382
1,373
6,915
22,730
21,166
1,766
5,029
Premium revenue
Insurance premium
revenue
Less reinsurance payment
Net premium revenue
-
-
-
16,904,342
2,557,909
23,312,294
5,872,550
1,400,979
(11,362,619)
(1,737,470)
(16,174,668)
(4,119,535)
(718,585)
5,541,723
820,439
7,137,626
1,753,015
682,394
-
-
-
Investment income
252,092
143,285
1,315
5,552
7,978
17,730
2,999
57
(40)
17
-
Net commissions from
reinsurers
Other Revenue
Claim expense – net of
reinsurance recoveries
Acquisition costs
Members liability
revaluation
-
-
-
-
-
(46,407)
31,710
(444,882)
(692)
(2,285,667)
-
-
-
-
-
(12,406)
(18,820)
1,796,340
(655,698)
(5,442,540)
(1,118,398)
(873,665)
(142,020)
-
-
-
(723,923)
Fees to management fund
(99,995)
(1,796,951)
(36,757)
(532,391)
(666,397)
Other expenses
(1)
(120)
(20,067)
(169,252)
(82,976)
(21,209)
-
-
-
-
-
918,007
-
-
-
(1,236)
-
-
-
(4,983)
(303,174)
-
-
(9,945)
Net commissions from
reinsurers
Other Revenue
Claim expense – net of
reinsurance recoveries
Acquisition costs
Members liability
revaluation
-
(23,961)
480,741
673,898
-
30,556
-
-
-
-
9,886
(1,117,420)
-
-
-
-
-
-
-
(12,177)
(15,378)
(710,182)
(783,689)
(7,380,793)
(990,607)
(530,359)
-
-
-
-
-
-
-
-
Fees to management fund
(99,995)
(764,253)
10,816
(3,246)
(684,207)
(268,816)
-
-
-
(467,982)
-
-
(131)
(2,812)
Other expenses
(3)
(189)
(23,606)
(234,328)
(57,719)
(11,381)
-
(421)
Profit/(loss) before tax
462,862
6,396,724
1,371
6,915
358,513
310,505
530
618,927
Profit/(loss) before tax
(116,722)
3,102,850
1,314
5,552
222,199
143,006
56
30,152
Income tax expense
-
(1,919,017)
(412)
(2,075)
(324,731)
(93,151)
(530)
(185,678)
Income tax expense
-
(930,855)
(394)
(1,665)
(207,054)
(42,902)
(56)
(9,045)
Profit/(loss) after tax
462,862
4,477,707
959
4,840
33,782
217,354
Unallocated surplus
at 30 June 2018
86,287 17,732,643
1,154
18,437
294,509
124,052
Transfer to Benefit Funds
- 12,200,000
-
-
-
-
Unallocated surplus
at 30 June 2019
549,149 34,410,350
2,113
23,277
328,291
341,406
-
-
-
-
433,249
21,107
-
454,356
Profit/(loss) after tax
(116,722)
2,171,995
Unallocated surplus
at 30 June 2017
203,010
6,760,648
Transfer to Benefit Funds
-
8,800,000
920
234
-
3,887
15,145
100,104
14,550
279,364
23,948
-
-
-
Unallocated surplus
at 30 June 2018
86,288
17,732,643
1,154
18,437
294,509
124,052
-
-
-
-
21,107
-
-
21,107
74
75
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited 28 Details of Benefit Funds’ balance sheet
as at 30 June 2019
28 Details of Benefit Funds’ balance sheet
as at 30 June 2018
Funeral
Benefit Fund
Risk Fund
No. 1
Reward
Insurance
Benefit
Fund
Freedom
Insurance
Benefit
Fund
PPS Mutual
Benefit Fund
Avant Benefit
Fund
Blue Chip
Endowment
Assurance
Fund
NEOS Benefit
Fund
$
$
$
S
$
$
$
$
Funeral
Benefit Fund
Risk Fund
No. 1
Reward
Insurance
Benefit
Fund
Freedom
Insurance
Benefit
Fund
PPS Mutual
Benefit Fund
Avant Benefit
Fund
Blue Chip
Endowment
Assurance
Fund
NEOS Benefit
Fund
$
$
$
S
$
$
$
$
Assets
Cash and cash
equivalents
Receivables
Bank Bills and
Term Deposits
Fixed Interest
Investment
Gross policy
liabilities ceded
under reinsurance
29,680
2,318,490
57,627
1,255,739
2,367,013
831,260
103,259
1,265,659
2,649
612,992
129,758
253,272
861,624
30,134
1,106,288
6,162,902
52,983
231,005
546,176
526,415
3,716,065
-
-
-
-
-
-
6,604,665
436,301
4,054,296
5,900,665
852,084
-
-
-
-
602,531
100,000
-
1,633,679
Assets
Cash and cash
equivalents
Receivables
Bank Bills and
Term Deposits
Fixed Interest
Investment
Gross policy
liabilities ceded
under reinsurance
10,273
1,457,923
304,649
818,057
1,637,157
551,371
30,908
224,621
3,690
526,919
158,145
354,459
1,513,845
21,853
225
1,232,561
4,500,000
51,306
225,050
160,595
512,830
70,416
3,041,374
-
-
-
-
-
-
6,382,878
359,279
3,607,842
4,842,218
449,790
-
-
11
-
-
(94,009)
Total assets
4,854,682
15,699,049
676,699
5,794,312
9,675,478
2,239,893
103,259
3,601,869
Total assets
4,287,898
12,867,720
873,379
5,005,408
8,153,815
1,535,844
101,549
130,623
Liabilities
Payables
-
8,090,195
228,155
1,642,174
2,105,439
1,394,932
530
1,428,036
Liabilities
Payables
-
6,227,147
501,252
1,278,332
2,414,578
1,164,638
56
109,078
Gross policy liabilities
4,305,533
(26,801,496)
446,401
4,128,861
7,241,748
503,555
102,729
1,719,477
Gross policy liabilities
4,201,610
(11,092,070)
370,973
3,708,639
5,444,728
247,154
101,493
438
Total liabilities
4,305,533
(18,711,301)
674,556
5,771,035
9,347,187
1,898,487
103,259
3,147,513
Total liabilities
4,201,610
(4,864,923)
872,225
4,986,971
7,859,306
1,411,792
101,549
109,516
Net assets
549,149
34,410,350
2,113
23,277
328,191
341,406
Members’ funds
Unallocated surplus
549,149
34,410,350
2,113
23,277
328,291
341,406
Total benefit
members’ funds
549,149
34,410,350
2,113
23,277
328,291
341,406
-
-
-
454,356
454,356
454,356
Net assets
86,288
17,732,643
1,154
18,437
294,509
124,052
Members’ funds
Unallocated surplus
86,288
17,732,643
1,154
18,437
294,509
124,052
Total benefit
members’ funds
86,288
17,732,643
1,154
18,437
294,509
124,052
-
-
-
21,107
21,107
21,107
76
77
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited 29 Segment Information
AASB 8 requires disclosure of operating segments that engage in business activities and whose results are regularly
reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess
performance.
The principal operating segments within the insurance operations of NobleOak are as follows:
Core
Partnership
Closed Funds
(1) Core Book
The term ‘Core’ reflects the Life Insurance protection products that are sold directly to customers under the
NobleOak brand. This umbrella group also includes the management fund, whose function is to recognise the
expenses incurred in respect to this proposition as well as any fees from partnership funds.
Products sold under the Core branded Premium Life Direct or My Protection Plan include Term Life, Total and
Permanent Disablement (TPD), Trauma, Income Protection and Business Expenses.
(2) Partnerships
The term ‘Partnerships’ reflects the Life Insurance protection products which are sold to customers primarily through
advisors under our partners brands. At the current date, NobleOak is the issuer of Life Insurance policies for PPS
Mutual (established 2016), Avant Mutual (established 2017) and NEOS (established 2018). NobleOak retains a small
level of risk as they are largely reinsured.
(3) Closed Funds
The term ‘Closed Funds’ refers to the legacy book of NobleOak where the funds are closed for new members. The
largest and most recent part of the closed funds is in relation to Freedom Insurance where NobleOak ceased being
the issuer of life and funeral insurance protection products in 2017 (Freedom and Reward Funds). In 2018, NobleOak
reflected $1.5m of settlement fees from Swiss Re in respect to the termination of this arrangement. The remaining
two funds are much smaller components which are held for the Druids members (Blue Chip Endowment Assurance
Fund and Funeral Benefit Fund).
Core
Partnership
Closed Funds
Total
2019
$
2018
$
2019
$
2018
$
2019
$
2018
$
2019
$
2018
$
30 Capital Adequacy Requirements
(a) Capital Base
(b) Prescribed capital amount (1)
2019
Capital in excess of prescribed capital amount = (a) - (b)
Capital adequacy multiple (%) (a) / (b)
Capital Base comprises:
Common Equity Tier 1 Capital
Regulatory adjustment applied in calculation of Tier 1 capital
(A) Common Equity Tier 1 Capital
Additional Tier 1 Capital
Regulatory adjustment applied in calculation of Additional Tier 1 capital
(B) Total Additional Tier 1 Capital
Tier 2 Capital
Regulatory adjustment applied in calculation of Tier 2 capital
(C) Total Tier 2 Capital
Total capital base
The Company
8,266,148
5,000,000
3,266,148
165.32%
45,794,995
(37,528,848)
8,266,148
-
-
-
-
-
-
8,266,148
Explanatory Notes:
(1) The minimum level of assets required to be held in each statutory fund, prescribed by the solvency standard
referred to in part 5 of the Life Insurance Act 1995.
(a) Capital Base
(b) Prescribed capital amount (1)
2018
Capital in excess of prescribed capital amount = (a) - (b)
Capital adequacy multiple (%) (a) / (b)
Capital Base comprises:
Common Equity Tier 1 Capital
Regulatory adjustment applied in calculation of Tier 1 capital
(A) Common Equity Tier 1 Capital
Total
revenue
Total
expenses
Tax
Profit after
tax
14,079,996
11,289,255
5,123,481
3,165,588
7,571,635
8,676,803
26,775,112
23,131,646
Additional Tier 1 Capital
Regulatory adjustment applied in calculation of Additional Tier 1 capital
(8,316,154)
(7,275,131)
(3,835,538)
(2,770,233)
(7,099,957)
(8,786,603)
(19,251,649)
(18,831,967)
(B) Total Additional Tier 1 Capital
(1,824,042)
(783,013)
(603,560)
(259,001)
(3,017)
(2,115)
(2,430,619)
(1,044,129)
3,939,800
3,231,111
684,383
136,354
468,661
(111,915)
5,092,843
3,255,550
Tier 2 Capital
Regulatory adjustment applied in calculation of Tier 2 capital
(C) Total Tier 2 Capital
Total capital base
78
79
Explanatory Notes:
(1)
The minimum level of assets required to be held in each statutory fund, prescribed by the solvency standard
referred to in part 5 of the Life Insurance Act 1995.
The Company
17,335,459
4,500,000
12,835,459
385.23%
39,751,811
(22,416,352)
17,335,459
-
-
-
-
-
-
17,335,459
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited
31 Capital Adequacy Requirements of Benefit Funds
31 Capital Adequacy Requirements of Benefit Funds (cont.)
2019
Risk Fund
No. 1
Freedom
Insurance
Benefit
Fund
Reward
Insurance
Benefit
Fund
PPS Mutual
Benefit
Fund
Avant
Benefit Fund
Blue
Chip
Endowment
Bond Fund
NEOS
Benefit
Fund
Funeral
Benefit
Fund
Total
Benefit
Funds
Management
Fund
2018
Risk Fund
No. 1
Freedom
Insurance
Benefit
Fund
Reward
Insurance
Benefit
Fund
PPS Mutual
Benefit
Fund
Avant
Benefit
Fund
Blue
Chip
Endowment
Bond Fund
NEOS
Benefit
Fund
Funeral
Benefit
Fund
Total
Benefit Funds
Management
Fund
(a) Capital Base
1,353,495
273,339
52,226
378,905
670,681
(b) Prescribed capital
amount
Capital in excess of
prescribed capital
amount = (a) - (b)
Capital adequacy
multiple (%) = (a) / (b)
Capital Base comprises:
Net Assets (including
Seed Capital)
Regulatory adjustment
applied in calculation of
Tier 1 capital
(A) Net assets after
applying any regulatory
adjustments
Tier 2 Capital
Regulatory adjustment
applied in calculation of
Tier 2 capital
(B) Total Tier 2 Capital
158,027
68,630
8,669
-
17,658
1,195,468
204,709
43,557
378,905
653,023
856%
398%
602%
3798%
37,175,350
273,279
52,116 378,291 1,091,405
35,821,855
(61)
(110)
(614)
420,724
1,353,495
273,339
52,226
378,905
670,681
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total capital base
1,353,495 273,339
52,226 378,905
670,681
Prescribed capital
amount comprises:
(C) Insurance Risk Charge
-
-
-
(D) Asset Risk Charge
158,027
68,630
8,669
(E) Asset Concentration
Risk Charge
(F) Operational Risk Charge
(G) Aggregation benefit
(H) Combined scenario
adjustment
(I) APRA approved transition
amount under capital
adequacy standards
Prescribed capital amount
= (C) + (D) + (E) + (F)
- (G) + (H) + (I)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
158,027
68,630
8,669
-
-
-
-
-
-
-
-
-
17,658
-
-
-
-
-
17,658
80
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
629,967
551,320
3,909,933 4,356,216
(a) Capital Base
1,462,180
268,495
51,284 344,763
632,424
33,134
-
286,118 2,579,715
596,833
551,320
3,623,815 1,776,500
1901%
1367%
169%
554,355
549,149
40,073,944 9,686,052
(75,612)
(2,172)
36,164,011 5,329,836
629,967
551,320
3,909,932 4,356,216
-
-
-
-
-
-
-
-
-
-
-
-
(b) Prescribed capital
famount
Capital in excess of
prescribed capital
amount = (a) - (b)
Capital adequacy
multiple (%) = (a) / (b)
Capital Base comprises:
Net Assets (including Seed
Capital)
Regulatory adjustment
applied in calculation of
Tier 1 capital
(A) Net assets after
applying any regulatory
adjustments
Tier 2 Capital
Regulatory adjustment
applied in calculation of
Tier 2 capital
(B) Total Tier 2 Capital
135,046
59,512
8,635
-
10,796
1,327,134
208,983
42,650 344,763
621,628
1083%
451% 594%
5858%
20,497,643
268,438
51,154 344,509
874,052
19,035,463
(58)
(130)
(254)
241,628
1,462,180
268,495
51,284 344,763
632,424
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
629,967
551,320
3,909,932 4,356,216
Total capital base
1,462,180 268,495
51,284 344,763
632,424
-
33,134
-
-
-
-
-
33,134
-
-
-
-
-
-
-
-
-
-
286,118
594,534
-
-
- 1,985,181
-
-
-
-
-
-
286,118 2,579,715
Prescribed capital amount
comprises:
(C) Insurance Risk Charge
-
-
-
(D) Asset Risk Charge
135,046
59,512
8,635
(E) Asset Concentration
Risk Charge
(F) Operational Risk Charge
(G) Aggregation benefit
(H) Combined scenario
adjustment
(I) APRA approved transition
amount under capital
adequacy standards
Prescribed capital amount
= (C) + (D) + (E) + (F)
- (G) + (H) + (I)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
135,046
59,512
8,635
-
-
-
-
-
-
-
-
-
10,796
-
-
-
-
-
10,796
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
215,550
88,975
3,063,672 14,196,787
950
-
214,937
1,883,511
214,601
88,975
2,848,734 12,313,277
22701%
1425%
754%
121,106
86,288
22,243,190 21,398,621
(94,444)
(2,687)
19,179,518
7,201,834
215,550
88,975
3,063,672 14,196,787
-
-
-
-
-
-
-
-
-
-
-
-
215,550
88,975
3,063,672 14,196,787
-
-
-
-
-
-
-
-
-
-
214,937
153,197
-
-
-
-
-
-
1,730,314
-
-
-
214,937
1,883,511
-
950
-
-
-
-
-
950
81
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited
32 Summary of Significant Actuarial Methods and Assumption
32 Summary of Significant Actuarial Methods and Assumption (cont.)
Sensitivities
NobleOak conducts sensitivity analyses to quantify the exposure to risk of changes in the key underlying variables.
Interest rates sensitivities are discussed in note 22e. The valuations included in the reported results and best estimate
of future performance are calculated using certain assumptions about these variables. The movement in any key
variable may impact the reported results. The table below illustrates how outcomes during the financial year ended
30 June 2019 in respect of the key variables would have impacted on the net profit and shareholders equity.
Claims Reserves
-
Increase by 10%
- Decrease by 10%
Maintenance Expenses
-
Increase by 10%
- Decrease by 10%
Lapse Rate
-
Increase by 10%
- Decrease by 10%
Policy Liability Discount Rate
-
Increase by 1%
- Decrease by 1%
Change in Profit
after Tax
$
Change in
Equity
$
(87,964)
87,964
(796,490)
796,490
(145,129)
145,129
(87,964)
87,964
(796,490)
796,490
(145,129)
145,129
(2,149,442)
2,562,863
(2,149,442)
2,562,863
The effective date of the actuarial report on policy liabilities and solvency reserves calculation is 30 June 2019. The
actuarial report was prepared by Ms. B. Cummings BEc (Hons) FIAA. The actuarial report indicates that Ms. B.
Cummings is satisfied as to the accuracy of the data upon which policy liabilities have been determined.
Valuation of Policy Liabilities
Policy liabilities for Life Insurance business have been determined in accordance with Life Prudential Standard 340
issued by the Australian Prudential Regulation Authority. The standard requires that the policyholder liabilities be
calculated on the basis of best estimate assumptions and in a way that allows for the systematic release of planned
margins as services are provided to policyholders or premiums are received.
The policy liabilities for Risk Fund No. 1, the PPS Mutual Benefit Fund, the Avant Benefit Fund, the NEOS Benefit
Fund, the Freedom Fund and the Reward Fund have been calculated using an accumulation method. Under this
method, the policy liability is equal to the policies’ Termination Value.
The Termination Value has been calculated as the sum of the amount of unearned premium and the value of
incurred claim liabilities not recognised elsewhere within the Balance Sheet. No explicit actuarial assumptions are
required for the accumulation method except to estimate a provision for incurred but not reported claims and
outstanding claim payments for Group Salary Continuance. The use of the accumulation method will result in profits
emerging in proportion to premiums.
The policy liabilities for the Blue Chip Endowment Bond Fund have been calculated using the accumulation method.
The policy liabilities are equal to the contributions made by members, net of contribution fees, together with
bonus additions to date and uncredited surplus. The current bonus declaration simply results in a movement from
unvested policyholder benefit liabilities to vested policy liability subject to the amount vesting being no more than the
distributable portion of unvested policyholder benefit liabilities.
The policy liability for the Funeral Fund and the Blue Chip Death Fund have been calculated using the projection
method. The projection method uses expected cash flows (premium, investment income, redemptions or benefit
payments and expenses) to establish the value of policy liability. The value of expected future premiums is deducted
from the value of expected future benefit and expense payments to arrive at the net obligation to policy owners.
Disclosure of Assumptions
Required Assumption
Basis of Assumption
Assumption Adopted
Discount rate
– Funeral Fund
Mortality
– Funeral Fund
Management Fees
– Risk Fund No. 1
(% of gross premium)
Management Fees
– other Benefit Funds
(% of net assets)
Yield on Australian Government bonds at the
expected duration of policy liability & illiquidity
premium
2.10%
ALT2010-2012 table adjusted for Funeral Fund
experience
65% of ALT2010-2012
Based on expenses apportioned to Risk Fund, subject
to the Benefit Fund rule that the prudential reserving
requirement of Benefit Fund can be met
4.0%
Based on same dollar management fee charged to
Benefit Fund each year, subject to maximum fee
permissible
Funeral Fund: 2.0%
82
83
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Notes to the Financial StatementsFor the Financial Year Ended 30 June 2019Annual Report 2019NobleOak Life Limited NobleOak Life Limited
ABN 85 087 648 708
AFSL No 247302
Telephone: 1300 041 494
Email enquiries: sales@nobleoak.com.au
Website: www.nobleoak.com.au
Head office address:
Level 7, 66 Clarence Street,
Sydney NSW 2000
GPO Box 4793, Sydney NSW 2001