More annual reports from NobleOak:
2023 ReportA N N U A L R E P O R T 2 0 2 2
A U S T R A L I A ’ S F A S T E S T ‑ G R O W I N G L I F E I N S U R E R
NobleOak is an independent, Australian
APRA‑regulated life insurer. NobleOak has been
protecting Australians for over 145 years with a core
belief of treating others as we would like to be treated.
We genuinely put the customer first and are proud
to be Australia’s most awarded Direct Life Insurer.
NobleOak Life Limited AnnuAl RepoRt 2022
C o n t e n t S
03
04
07
08
10
13
A proud History
FY22 performance
Highlights
letter From the Chair
Chief executive’s
Report
FY22 operational
Highlights
Financial Report 2022
NobleOak Life Limited AnnuAl RepoRt 2022
NobleOak Life Limited AnnuAl RepoRt 2022
01
NobleOak Life Limited AnnuAl RepoRt 2022
02
A pRouD HIStoRY
nobleoak traces its roots back to one of the first
benevolent societies in Australia. these societies
originated with a truly noble purpose – to help families
when life threw its worst at them.
Members of the community each
contributed a small weekly amount
to a communal ‘fund’.
When a member of the community
became seriously ill or injured,
or unfortunately died, the fund
provided an essential safety net for
their family. Over one hundred and
forty years later, we’re still driven
by the same desire to help protect
Australians and their families.
Today NobleOak is an award winning,
digitally advanced, high growth life
insurer, and challenger to the larger,
more traditional incumbents – but our
desire to look after and provide the
best service to our customers remains.
In a world that often seems
increasingly self‑centred, buying
Life Insurance to protect those that
you love – when you ultimately won’t
benefit – is a beautiful, selfless act.
NobleOak Life Limited AnnuAl RepoRt 2022
03
FY22 peRFoRMAnCe HIGHlIGHtS
We are pleased to announce that we have
delivered strong year‑on‑year growth and
exceeded key FY22 prospectus forecast measures.
Insurance
premium Revenue
$248.4m
+46.2% Growth vs. FY21
exceeds prospectus forecast
of $216.9m by 14.5%
new Business
$60.9m
-11.7% Growth vs. FY21
> Below prospectus forecast
of $66.1m by 7.9%
In‑force premium1
$254.6m
+39.8% Growth vs. FY21
exceeds prospectus forecast
of $233.4m by 9.1%
underlying npAt2
$9.5m
+35.2% Growth vs. FY21
exceeds prospectus forecast
of $9.0m by 4.9%
no. of Active policies1
$103k+
+33.4% Growth vs. FY21
Strong growth year on year
Note:
1. Excludes the Genus administration business.
2. Underlying NPAT was disclosed on a pro forma basis in the Prospectus to present the income statement for FY22 and prior
periods on a comparable basis across historical and forecast periods. Note there was no pro‑forma adjustment made to the
FY22 Underlying NPAT. The $9.0m Prospectus FY22 forecast Underlying NPAT figure used to calculate growth in FY22 reflects
Underlying NPAT excluding these pro forma adjustments and is directly comparable to the actual FY22 Underlying NPAT
of $9.5m. A reconciliation between Statutory NPAT to Pro Forma Underlying NPAT is illustrated further on page 33.
NobleOak Life Limited AnnuAl RepoRt 2022
04
NobleOak Life Limited AnnuAl RepoRt 2022
05
DRIVING
GRoWtH
AND CUSTOMER
SATISFACTION
FOR LONG‑TERM
PERFORMANCE
We are very confident
in the long‑term
prospects of the
NobleOak Direct
Channel, where our
ambition is to be a
leading challenger
brand in the $11 billion
Australian individual
life risk market.
NobleOak Life Limited AnnuAl RepoRt 2022
06
letteR FRoM tHe CHAIR
As Australia’s fastest‑growing life insurer, our strategy is working.
We continue to take market share from the incumbents by
investing in our platform and people, while building our brand.
Dear Shareholder,
On behalf of the Board of Directors, I am pleased
to present NobleOak’s 2022 Annual Report.
The Company’s first full year as a listed company
has been a successful one, having achieved strong
financial results and made good strategic progress
despite the ongoing challenges presented by
COVID‑19 and regulatory change in the Australian
life insurance industry. It is particularly pleasing that
in these challenging times we have still achieved
our key Prospectus Forecasts for 2022.
As well as preparing the company for a successful
IPO, our team under the leadership of Chief
Executive Officer Anthony Brown, did an exceptional
job to manage the impact of ongoing regulatory
change. This included developing and rolling out
new Individual Disability Income Insurance (IDII)
products in time for the 1 October 2021 industry
deadline set by APRA.
At the same time, they maintained the excellent
customer service that has seen NobleOak win Plan
for Life’s Overall Direct Life Insurance Excellence
Award for four years running, a tremendous effort
that reflects the company’s customer‑centric culture.
Since the rollout of the new IDII products in October,
the Australian life insurance market has been
going through a period of significant adjustment.
New business volumes across the market are down
materially as insurers review their market positioning.
This has also had a positive impact as customer
switching activity has significantly reduced, resulting
in lower industry wide lapse rates. The higher priced
new products will also contribute to a more profitable
life insurance industry in the future, benefiting all
insurers, including NobleOak.
There are additional challenges in the advised market,
where the number of advisers continues to decline
following the Financial Services Royal Commission.
While we believe the advised market has an important
role to play for the industry and for NobleOak, we also
believe that the diversification provided by our Direct
Channel is an important differentiator.
We are confident in the long‑term prospects of
the NobleOak Direct Channel, where our ambition
is to be a leading challenger brand in the $11 billion
Australian individual life risk market. With our
market share at around 2%, there is still a lot
of room for growth.
As Australia’s fastest‑growing life insurer, our
strategy is working. We continue to take market
share from the incumbents by investing in our
platform and people, while building our brand.
At our AGM last November, Emery Feyzeny
retired from the Board of NobleOak after 10 years
as a director, including 4 years as Deputy Chairman.
Sarah Brennan subsequently joined the Board
as a non‑executive director, bringing 25 years’
experience in financial services including life
insurance. Sarah is a highly regarded executive
and public company director and has already
proven to be a fantastic addition to the Board.
Board renewal has been a priority for us as a listed
company and we will continue to ensure that
we have the right depth of skills and experience
to deliver on our strategic objectives and ensure
we maintain strong governance.
On behalf of my fellow directors, I would like to thank
the NobleOak team for their hard work and results
this year. Thanks also to you, our shareholders,
for your continued support.
We believe NobleOak is well positioned for future
growth and prosperity and look forward to another
successful year ahead.
I look forward to seeing many of you at our AGM
on Thursday 24 November.
Yours sincerely,
Stephen Harrison
Chair
NobleOak Life Limited
NobleOak Life Limited AnnuAl RepoRt 2022
07
CHIeF eXeCutIVe’S RepoRt
We continue to make excellent progress in executing our
growth strategy across our strategic segments.
Dear Shareholder,
I am pleased to report a strong performance in FY22,
as we navigated a challenging operating environment
in our first year as a listed company.
It is easy to forget that as recently as February 2022,
much of Australia’s east coast was locked down
due to the Omicron outbreak, with domestic
borders closed and teams forced to work remotely.
Against this backdrop, for the business to have
remained operationally resilient and our teams
to have minimised the impact on our customers
is satisfying.
As a result, we achieved exceptional in‑force premium
growth of 39.8% to $254.6 million, with active policies
up by 33.4% to 103,000 and underlying profits across
our three channels increasing by 35.2% to $9.5 million
– all ahead of the respective Prospectus forecasts.
I am personally delighted that the NobleOak team
has delivered these results in a tough environment.
Impact of industrywide sustainability measures
The strong result was achieved despite the impact
of industry sustainability measures, including the
launch of new Individual Disability Income Insurance
(IDII) products.
The NobleOak team did an excellent job to develop
and roll out our new IDII products in time for the
1 October 2021 industry deadline set by APRA.
As expected, sales in both direct and intermediated
business benefited from higher customer activity
in the lead up to October. However, new business
volumes across the market are down by over 30%
since, as life insurers revise their new products and
pricing to ensure the market positioning fits their
respective risk appetites.
While we expect the market to take some time to
normalise and for sales to continue to be impacted
in the near‑term, we expect in‑force premium,
the value driver of the business, to continue to
grow in line with expectations due to continued
low lapse rates.
Growth strategy
We continue to make good progress in executing
our growth strategy across our strategic segments.
Direct Channel
In the Direct Channel, sustained investment
in brand and technology is improving the
customer experience and driving growth.
We continue to grow our network of Alliance Partners
which now number over 30. During the year, we
signed distribution agreements with Qudos Bank,
Illawarra Credit Union, Royal Automobile Club
of Western Australia (RAC) and Auto & General
Service (Budget Direct). These alliances are already
generating pleasing application and sales volumes.
Strategic partner Channel
We continue to work with our Strategic Partners,
NEOS, PPS Mutual, and Avant, to ensure we
support them and that we have ongoing commercial
alignment following the introduction of new IDII
products. While the advised market continues to
change as an outcome of the Royal Commission,
with the number of advisers decreasing, the Strategic
Partner Channel remains an important part of our
business. We worked closely with NEOS and PPS
to launch and refine new product portfolios during
the year, and continue to assess whether there is
potential for a new Avant product in the future.
NobleOak Life Limited AnnuAl RepoRt 2022
08
CHIeF eXeCutIVe’S RepoRt
continued
Genus
We successfully integrated the Auto & General
run‑off portfolio in June 2022. We had purchased
these administration rights from Auto & General
in late 2021.
We will continue to selectively evaluate run‑off
portfolio acquisitions for our Genus administration
business; however, the bar remains high.
Culture important for our customers and our people
Our strong culture has always been the foundation
of our success and is important for our customers
and our people.
This year we won 18 awards, including the prestigious
Plan for Life Overall Direct Life Insurance Excellence
Award for the fourth year in a row. We also received
the prestigious Canstar Outstanding Value Awards
for both our Premium Life Direct Life Insurance
and Income Protection Insurance for the seventh
consecutive year.
In our Direct Channel we have retained market‑leading
net promoter scores and customer satisfaction
ratings, and I am proud to see us maintain our high
ratings on Google and Feefo of 4.4 or more out of 5.
We continue to have high staff engagement, with
96% of respondents who participated in NobleOak’s
2022 Employee Engagement Survey indicating that
they would refer someone to work for NobleOak.
This is important in a competitive talent market,
as it enables us to attract talented people. In FY23,
we will be moving into a new premises to support
our continued growth and engaging culture.
Making progress on eSG
In last year’s Annual Report, I detailed our commitment
to making progress on environmental and social
governance (ESG) initiatives and working with
our key stakeholders to develop an objective ESG
framework, including targets.
This year, we have made good progress in this area,
working with key internal and external stakeholders
to develop a framework aligned to the UN Sustainable
Development Goals (UNSDGs).
We have focused on areas that make sense for
NobleOak, including climate change, recycling,
workplace diversity, human rights and modern
slavery, ethics and governance, and importantly
have committed to achieving net zero carbon
emissions by 2030.
Our intention is to report back on this framework
annually, and we look forward to discussing it with
our shareholders.
More about NobleOak’s actions on ESG initiatives
are included under “Environmental, Social and
Governance (ESG) Framework”.
looking ahead
In the near‑term, we are well capitalised and
operationally positioned to withstand the economic
uncertainty and inflationary environment we are facing.
NobleOak has protected Australians for over 145 years
and our experience has shown us that life insurance
is traditionally resilient in times of economic stress,
as policyholders become increasingly risk averse and
retain their policies as a hedge against uncertainty,
further supporting favourable lapse rates.
Renewal intentions are one of the clearest measures
of how the life insurance value proposition stacks up
for customers and this year’s edition of our industry
Whitepaper found that 70% of customers intend to
renew their policy in 2022, up from 50% in 2021 and
only 33% in 2020.
Rising interest rates are expected to be a tailwind
for the industry and NobleOak, bringing with them
the expectation of improved investment returns.
While we are not immune from inflationary impacts
on our cost base, our products do contain inflation
adjustments and our strong culture and high
employee engagement act as valuable mitigants.
As I look ahead, I am confident that we have the
right team and strategy to continue capturing
the significant opportunity ahead of us, whatever
the conditions.
I would like to thank the NobleOak team for their
commitment this year, as well as our partners,
our customers, and you, our shareholders, for
your ongoing support.
Yours sincerely,
Anthony R. Brown
Chief Executive Officer
NobleOak Life Limited
NobleOak Life Limited AnnuAl RepoRt 2022
09
FY22 opeRAtIonAl HIGHlIGHtS
FY22 was a transformational year for nobleoak,
with a number of operational milestones being met.
Most awarded Direct life Insurer (2021 to April 2022)
1
Maintained High Customer Satisfaction
launch of White label programs
for RAC WA and Budget Direct
Maintained low
lapse Rates
Increased Digital
Revenue
Note:
1. Feefo rating based on 169 service ratings over the past year (as at 10 August 2022).
NobleOak Life Limited AnnuAl RepoRt 2022
10
launch of new Disability
Income products
NobleOak Life Limited AnnuAl RepoRt 2022
11
NobleOak Life Limited AnnuAl RepoRt 2022
12
F I N A N C I A L R E P O R T 2 0 2 2
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NobleOak Life Limited
AC N 0 87 6 4 8 70 8
14
Directors’ Report
25
Operating and Financial Review
34
Operating Segment Review
38
Remuneration Report
56
Auditor’s Independence Declaration
57
Financial Report Contents
109
Directors’ Declaration
110
Independent Auditor’s Report
115
Shareholders’ Information
118
Directory
NobleOak Life Limited AnnuAl RepoRt 2022
13
DIReCtoRS’ RepoRt
The Directors of NobleOak Life Limited (ASX: NOL, NobleOak or the Company) submit their report, together with
the financial report of the consolidated entity (the Group) for the year ended 30 June 2022 (the financial year).
Directors
The following persons were Directors of NobleOak during the financial year and since the end of the financial year,
unless otherwise noted:
• Stephen Harrison (Chair)
• Anthony Brown (CEO)
• Andrew Boldeman
• Sarah Brennan (appointed 8 December 2021)
• Kevin Hamman
•
Inese Kingsmill
• Emery Feyzeny (retired 1 December 2021)
Current Directors
The biographies for the current Directors of NobleOak are detailed below:
Stephen J Harrison – Independent non‑executive Director
Stephen Harrison was appointed as a Director of the Company in January 2011
and as Chair of the Company in November 2018. Mr Harrison has over 35 years of
experience in financial services, funds management, private equity and accounting.
Mr Harrison is currently the Chair of ASX listed companies IncentiaPay Limited and
Aumake Limited. Mr Harrison is also the Chair and Co‑Founder of fund manager
Conscious Capital Limited. Mr Harrison has previously served as a Director of
ASX‑listed companies The Gruden Group/Sinetech Limited, Exoma Energy Limited
and Blue Energy Limited. He previously held Director positions with Investec Funds
Management and the Australian subsidiary of US‑based fund manager Sanford
C Bernstein.
Mr Harrison holds a Bachelor of Economics from Adelaide University, and is a
Certified Practising Accountant.
Other ASX listed company directorships held in the past three years:
•
IncentiaPay Limited (ASX:INP): 15 February 2019‑current
• Aumake Limited (ASX: AUK): 1 March 2022‑current
• MEC Resources Ltd (ASX: MMR): 31 July 2020‑1 September 2020
Chair of the
Board of Directors
Member of the
Risk Committee
Member of the
Audit Committee
NobleOak Life Limited AnnuAl RepoRt 2022
14
DIReCtoRS’ RepoRt
continued
Anthony R Brown – executive Director
Anthony Brown was appointed Chief Executive Officer of the Company in July 2012,
and a Director of the Company in July 2013. Mr Brown has approximately 30 years
of experience in general management, finance, strategy, operations, marketing
and distribution.
Mr Brown was previously Chief Operating Officer at AMP Capital, Head of
Commercial Insurance Marketing at Promina/Suncorp, Publisher at CCH Australia
and Manager at KPMG.
Mr Brown has completed the General Management Program at Harvard Business
School, Boston, has an MBA from the Australian Graduate School of Management,
and is a Chartered Accountant. Mr Brown also holds a Bachelor of Economics degree
from the University of Sydney and a Master of Commerce degree from the University
of NSW. He is also a member of the Australian Institute of Company Directors.
Other ASX listed company directorships held in the past three years:
• N/A
Andrew J Boldeman – non‑executive Director
Chief Executive Officer
of the Company
Member of the
Product & Insurance
Committee
Member of the
Finance & Investment
Committee
Andrew Boldeman was appointed as a Director of the Company in June 2020.
Mr Boldeman has spent his career in the life insurance and broader financial services
industries in Australia, Asia and the UK. From 2013 to 2020, Mr Boldeman was
the Managing Director of Avant Mutual, Australia’s largest doctor’s organisation
which includes Avant Insurance, Avant Law, Doctors Health Fund as well as several
technology and financial services businesses. From 2007 to 2013, Mr Boldeman
was CEO Group Life at TAL. Mr Boldeman has also previously spent time as an
Appointed Actuary and as a management consultant.
Mr Boldeman is a Fellow of the Institute of Actuaries of Australia and holds a Bachelor
of Economics from Macquarie University.
Other ASX listed company directorships held in the past three years:
Chair of the Product &
Insurance Committee
Member of the
Risk Committee
Member of the
Nomination &
Remuneration
Committee
Member of the
Finance & Investment
Committee
• N/A
NobleOak Life Limited AnnuAl RepoRt 2022
15
DIReCtoRS’ RepoRt
continued
Chair of the
Audit Committee
Member of the
Risk Committee
Member of the
Product & Insurance
Committee
Sarah J Brennan – Independent non‑executive Director
Sarah Brennan was appointed as a Director of the Company in December 2021.
Ms Brennan has over 25 years’ experience in financial services, encompassing life
insurance, financial planning, superannuation, private client advisory, broking
and banking.
Ms Brennan is currently Managing Director of BMFS Consulting. She held previous
senior roles with Deutsche Bank including as Principal Officer of Deutsche Life,
MLC Limited and Citigroup Life. She was also the Founder and Managing Partner
of Comparator Business Benchmarking, a leading provider of benchmarking to
Australian financial services markets.
Ms Brennan is currently a Non‑Executive Director of AMP Super and has previously
served as a Non‑Executive Director of ASX‑listed Mortgage Choice Limited, BLSSR
Pty Ltd (a NAB Subsidiary), The Financial Advice Centre Pty Ltd, Old Mutual Australia/
Skandia Australia, and Van Eyk Research Pty Ltd. Ms Brennan was also Director and
Founder of The Private Collection Australia and a past Deputy Chair and Director
of Financial Planning Association of Australia.
Ms Brennan holds a Bachelor of Arts from Macquarie University, a Graduate
Management Diploma from the Australian Graduate School of Management,
and is a graduate member of the Australian Institute of Company Directors.
Other ASX listed company directorships held in the past three years:
• Mortgage Choice (ASX: MOC): March 2018 – July 2021
Kevin Hamman – Independent non‑executive Director
Kevin Hamman was appointed as a Director of the Company in January 2011
and Deputy Chair of the Board of Directors effective 2 December 2021.
Deputy Chair of the
Board of Directors
Mr Hamman has over 35 years of experience in the financial services industry and has
held various senior management and Director roles in investment and private banking.
Chair of the
Risk Committee
Mr Hamman currently holds and previously held several executive directorships and
senior management positions in private and public companies in the financial services,
property development and investment industries including within the Private Client
Division of Investec Bank Ltd, Cape of Good Hope Bank Ltd, First National Bank Ltd
and Barclays Bank Ltd.
Mr Hamman holds a Bachelor of Commerce from The University of South Africa,
a Diploma in Financial Services and Finance from The Institute of Bankers in
South Africa and an Associate Diploma from The Institute of Bankers. Mr Hamman
is also a member and graduate of the Australian Institute of Company Directors.
Other ASX listed company directorships held in the past three years:
Chair of the Finance
& Investment
Committee
Member of the
Audit Committee
Member of the
Nomination &
Remuneration
Committee
• N/A
NobleOak Life Limited AnnuAl RepoRt 2022
16
DIReCtoRS’ RepoRt
continued
Inese I Kingsmill – Independent non‑executive Director
Inese Kingsmill was appointed as a Director of the Company in December 2019.
Prior to joining the Company, Ms Kingsmill gained extensive senior experience
across marketing, digital, e‑commerce, sales and customer‑facing functions
at a range of companies. Previous positions include Chief Marketing Officer
at Virgin Australia, Director of Consumer Marketing and Director of Corporate
Marketing at Telstra, and Director Partner Strategy at Microsoft.
Ms Kingsmill is currently the Chair of ASX listed company hipages Group Holdings
and also holds the position of Non‑Executive Director of ASX‑listed company
Bigtincan Holdings. She was formerly a Non‑Executive Director of WorkVentures,
Rhipe Limited, Spirit Technology Solutions and Chair of the Australian Association
of National Advertisers.
Ms Kingsmill holds a Bachelor of Business (Marketing) from Western Sydney
University and is a member of the Australian Institute of Company Directors.
Other ASX listed company directorships held in the past three years:
• Rhipe Limited (ASX: RHP): 15 April 2019 – November 2021
• Spirit Technology Solutions (ASX: ST1): 1 July 2020 – 30 September 2021
• hipages Group Holdings Limited (ASX: HPG): 1 October 2020 – current
• Bigtincan Holdings Limited (ASX: BTH): 6 October 2021 – current
Chair of the
Nomination &
Remuneration
Committee
Member of the
Product & Insurance
Committee
Member of the
Finance & Investment
Committee
executives
The biographies for NobleOak’s Chief Financial Officer and Company Secretary are detailed below:
Scott pearson – Chief Financial officer
Scott Pearson has held the position of Chief Financial Officer of the Company since January 2019. Mr Pearson
has over 30 years’ experience in the financial services industry covering health insurance, general insurance,
life insurance and reinsurance.
Mr Pearson was previously Head of Finance at RGA Australia, Chief Financial Officer at Avant Mutual Group,
Deputy Chief Financial Officer/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.
Mr Pearson is a Certified Practising Accountant and holds a Bachelor of Business (Accounting) from Charles
Sturt University.
Suzanne Barron – Company Secretary
Suzanne Barron was appointed as Company Secretary & General Manager, Legal, in June 2022.
Ms Barron is an experienced corporate and commercial lawyer and company secretary with a wealth of
experience in‑house across a range of industries, including financial services, insurance, wealth management,
media and FMCG. She has over 25 years’ experience as a lawyer, and over 15 years’ experience as a
company secretary.
Ms Barron holds a Bachelor of Science and Bachelor of Laws, and is admitted as a solicitor of the Supreme
Court of NSW. Ms Barron is a Fellow of the Governance Institute of Australia, and a Graduate of the Australian
Institute of Company Directors.
NobleOak Life Limited AnnuAl RepoRt 2022
17
DIReCtoRS’ RepoRt
continued
Anand Sundaraj – Company Secretary
In July 2022, Mr Anand Sundaraj was appointed as Joint Company Secretary alongside Suzanne Barron.
Mr Sundaraj is a corporate lawyer with over 20 years’ experience, specializing in advising on mergers &
acquisitions and capital raising for both publicly listed and privately held entities. He is currently the company
secretary of a number of ASX‑listed and unlisted entities, and a charitable foundation.
Mr Sundaraj holds a Bachelor of Laws (with Honours) and a Bachelor of Science from Monash University
and is admitted as a solicitor of the Supreme Courts of New South Wales and Victoria. Mr Sundaraj is principal
of Sydney‑based law firm, Sundaraj & Ker.
In June 2022, Ms Charisse Nortje resigned from her role as Company Secretary, which she served since her
appointment in June 2021.
Meetings of Directors
The number of meetings of the Company’s Board of Directors and of each Board Committee held during the year
ended 30 June 2022, and the number of meetings attended by each Director are as follows:
Board
Board Risk
Committee
Audit Committee
Finance &
Investment
Committee
nomination &
Remuneration
Committee
product &
Insurance Board
eligible
to attend Attended
eligible
to attend Attended
eligible
to attend Attended
eligible
to attend Attended
eligible
to attend Attended
eligible
to attend Attended
Mr S J Harrison5
Mr A R Brown
Mr A J Boldeman1
Ms S Brennan2
Mr E A Feyzeny3
Mr K Hamman4
Ms I I Kingsmill6
17
17
17
7
10
17
17
17
16
17
6
10
17
17
Notes:
4
4
2
2
2
4
4
2
2
2
7
3
4
7
6
3
4
7
6
6
6
5
6
6
6
5
10
10
6
10
10
4
6
10
10
4
10
10
10
10
10
10
1. Mr Boldeman is the Chair of the Product & Insurance Committee. Mr Boldeman is a Member of the Risk Committee, Finance & Investment
Committee and Nomination & Remuneration Committee.
2. Ms Brennan was appointed to the Board on 8 December 2021. Ms Brennan is the Chair of the Audit Committee and is a Member
of the Risk Committee and Product & Insurance Committee.
3. Mr Feyzeny was Chair of the Audit Committee from 12 December 2018 to 1 December 2021 and Chair of the Risk Committee from
1 January 2021 to 1 December 2021. Mr Feyzeny resigned from the Board on 1 December 2021.
4. Mr Hamman was appointed Deputy Chair of the Board effective 2 December 2021. Mr Hamman is the Chair of the Finance & Investment
Committee and was appointed Chair of the Risk Committee on 1 January 2022. Mr Hamman was Chair of the Nominations & Remuneration
Committee until 1 January 2022 and has been a Member since 1 January 2022.
5. Mr Harrison is the Chair of the Board, and a Member of the Audit Committee and Risk Committee. Mr Harrison was a Member of the
Product & Investment Committee from 1 July 2021 to 8 December 2021.
6. Ms Kingsmill was appointed as Chair of the Nomination & Remuneration Committee on 1 January 2022. Ms Kingsmill was appointed
a Member of the Finance & Investment Committee on 1 August 2021. Ms Kingsmill is a Member of the Product & Insurance Committee.
NobleOak Life Limited AnnuAl RepoRt 2022
18
DIReCtoRS’ RepoRt
continued
Directors’ shareholdings
The following table sets out each Director’s or related entity of the Director’s relevant interest in shares and rights
or options in shares of the Company or a related body corporate as at the date of this report.
number of
ordinary
Shares
51,282
Nil
437,002
110,000
227,273
172,727
153,000
150,454
38,000
Nil
performance
rights
options3
Related entity holding the security
(Where applicable)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
TK Consulting (Aust) Pty Ltd ATF
The Hamman Family Trust
KH Investments Pty Ltd ATF KH
Development Trust
Future Super KH Custodian Pty Ltd
ATF Future Super Fund
Future Super KH Pty Ltd ATF Future
Super Fund
MSJ Capital Pty Ltd ATF Harrison
Superannuation Fund
1,512,541
947,018
273,084
3,980,769
Nil
Nil
Brohok Investment Co Pty Ltd
name
Mr A Boldeman
Ms S Brennan1
Mr K Hamman
Mr S J Harrison
Ms I I Kingsmill
Mr A R Brown2
Notes:
1. Ms Brennan was appointed to the Board on 8 December 2021.
2. Mr Anthony Brown is a participant in the Performance Rights Plan (refer note 7.1(c)), from the 2019 plan that matures in 2022,
141,024 shares have accrued, of the 208,064 total share entitlements available. For the 2020 plan that matures in 2023, 105,145
shares have accrued, of the 253,703 total share entitlements available. For the 2021 plan that matures in 2024, 41,852 shares have
accrued, of the 231,795 total share entitlements available. For the 2022 plan that matures in 2025, as the plan was just issued in
August 2022, no shares have accrued of the 253,456 total shares entitlements available, these shares will vest in the relevant years
if conditions are met over the full measurement periods.
3. Options available will only vest on the performance of specific events. Details of the options are shown in note 7.1(b).
During the financial year, the following Directors had in the normal course of business, an additional interest
in the Company as set out below:
• Mr A J Boldeman, formerly Board representative of Avant. Avant is a Partner of NobleOak and all transactions
have been carried out under normal commercial terms. Due to Mr Boldeman being a representative of Avant
prior to NobleOak’s listing on the ASX, Mr Boldeman was not considered by the Board to be independent
until NobleOak’s listing on the ASX. Mr Boldeman ceased being a representative of Avant at the date of listing
of NobleOak on the ASX.
Company Secretary
Ms Charisse Nortje was appointed Company Secretary on 29 June 2021 and remained in this role until 22 June 2022.
Ms Suzanne Barron was appointed as Company Secretary on 7 June 2022.
Mr Anand Sundaraj was appointed as a joint Company Secretary on 27 July 2022.
NobleOak Life Limited AnnuAl RepoRt 2022
19
DIReCtoRS’ RepoRt
continued
principal activities
The principal activities of the Group during the period were the manufacture and distribution of Life Insurance
products (including death, total and permanent disability, trauma, income protection and business expenses
insurance) through both its Direct and Strategic Partnership (Advised) channels.
NobleOak also provides administration services for run‑off Life Insurance portfolios through its subsidiary
Genus Life Insurance Services Pty Ltd.
Financial review
In FY22, insurance premium revenue increased by 46.2% to $248.4million (FY21: $169.9 million) and exceeded
the FY22 Prospectus forecast of $216.9 million by 14.5%. This was primarily driven by growth in in‑force premium,
which increased by 39.8% to $254.6 million (FY21: $182.1 million) and exceeded the FY22 Prospectus forecast
of $233.4 million by 9.1%.
The growth in in‑force premium came from both the Direct Channel and Strategic Partner Channel as follows:
• Direct Channel: in‑force premium grew by 20.5% to $69.2 million, exceeding the FY22 Prospectus forecast
of $64.3 million by 7.6% driven by strong new business sales of $10.2 million during the year and average
lapse rates of 8.4%; and
• Strategic partner Channel: in‑force premium grew by 48.7% to $185.4 million, exceeding the FY22 Prospectus
forecast of $169.1 million by 9.6%. This was primarily driven by new business sales during the year of $50.7 million.
NobleOak’s Underlying NPAT for FY22 was $9.5 million, up 35.2% from FY21 ($7.0 million) and 4.9% ahead of the
FY22 Prospectus forecast of $9.0 million. On a statutory reporting basis, NPAT decreased by 65.6% to $1.7 million
(FY21: $4.9 million), after including the impact of changes in economic assumptions on the valuation of policy
liabilities and non‑recurring costs such as those pertaining to the Initial Public Offering (IPO).
Ipo and capital management
NobleOak Life Limited (ASX: NOL) was admitted to the Official List of the Australian Securities Exchange (ASX)
and its ordinary shares commenced trading on 22 July 2021. This was a significant milestone for NobleOak and
the Directors would like to thank all who were involved in the process, including new and existing shareholders
for their support.
The Company’s shares were offered at $1.95 each, with total proceeds raised (before transaction costs) of $63 million.
NobleOak received $31 million for the issue of new shares and the selling shareholder, Avant, receiving $32 million
for the sale of its entire stake in NobleOak.
The purpose of the IPO was to:
• support NobleOak’s growth strategy and future growth opportunities;
• broaden the Company’s shareholder base;
• provide a liquid market for the Company’s shares;
•
facilitate an increased brand profile that may arise from being a publicly listed entity; and
• provide existing Shareholders with an opportunity to realise a portion of their investment in the Company.
Following the IPO capital raise and NobleOak’s continued robust financial performance, the business’s capital
position has further strengthened. As an APRA regulated Life insurer, NobleOak remains well capitalised with
a regulatory solvency ratio of approximately 316.0% at 30 June 2022.
NobleOak continues to prudently monitor its capital position to ensure the business remains well capitalised
to support our existing customer base and invest in the business to drive further growth.
NobleOak Life Limited AnnuAl RepoRt 2022
20
DIReCtoRS’ RepoRt
continued
Acquisition of run‑off administration portfolio
On 22 July 2021, NobleOak (via its wholly‑owned subsidiary, Genus Life Insurance Services Pty Ltd) entered
into a binding agreement to acquire the administration rights from Auto & General with respect to a portfolio of
Budget Direct and Ozicare branded life insurance policies in run‑off (A&G Portfolio) and entered into a distribution
agreement with Auto and General. The transaction successfully completed on 25 August 2021, with integration
concluding in June 2022.
The total consideration payable by Genus for the A&G Portfolio was $3.2 million, satisfied by the issue
of ordinary shares in NobleOak priced at $1.95 per share (the IPO price). The shares issued are subject
to a 12 month escrow period.
The distribution of products was launched in February 2022, for an initial three‑year term.
people
NobleOak conducts an annual employee engagement survey, comprising questions across areas such as career
development, work engagement and environment, remuneration and benefits, leadership, risk and workplace
health and safety. Our most recent employee engagement was conducted in April 2022, with a participation
rate of over 96% with positive results. The engagement score was 86% and the risk culture score was 89%.
We remain committed to investing in and bolstering our leadership team to ensure NobleOak is well supported
as it continues to pursue growth.
Annual Corporate Governance Statement
NobleOak is committed to achieving high corporate governance standards. In accordance with the 4th edition
ASX Corporate Governance Council’s Principles and Recommendations, the Company’s annual Corporate
Governance Statement, as approved by the Board, is published and available on the Company’s website at:
https://www.nobleoak.com.au/corporate‑governance/.
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.
Subsequent events
On 1 August 2022, the Group entered into a lease agreement for its new primary office premises on Level 4,
44 Market Street, Sydney for a lease term of 7 years commencing 1 February 2023. The annual rent for the
first year is $1.3 million.
No other matters or circumstances, other than that referred to in the financial statements or notes thereto,
have arisen subsequent to 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.
Future developments
For information regarding the likely developments in the operations of the Company in future financial years,
please refer to the Outlook within the Operating Review on page 37.
NobleOak Life Limited AnnuAl RepoRt 2022
21
DIReCtoRS’ RepoRt
continued
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.
AASB 17 Insurance Contracts will apply to the Company from 1 July 2023 and the Company is in the process
of its implementation of AASB 17. This new accounting standard will have a significant impact on the sector,
please refer to Note 1(f) for more information.
Dividend payments
During FY21, the Directors resolved to determine the payment of a dividend of $0.12 per share franked to
100%. The dividend was paid out of the Company’s existing cash reserves (prior to the IPO) on 20 July 2021.
The aggregate dividend amount of approximately $8.2 million was paid to holders of ordinary shares in the
Company as at the Record Date of 9 June 2021.
As outlined in the Prospectus, NobleOak’s current priority is to reinvest cashflows into the business to support
its ongoing growth. Accordingly, no dividend has been declared for the financial year ended 30 June 2022.
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, Social and Governance (eSG) Framework
NobleOak is a strong supporter of a sustainable and ethical community.
On ASX listing in 2021, we committed to developing an Environmental, Social and Governance (ESG) framework,
including defining and reporting on key ESG measures relevant to the NobleOak business. Our plan in our first
year as a listed entity was to:
• Develop a high level ESG position/strategy that compliments corporate strategy and addresses
United Nations Sustainability Development Goals (UN SDGs).
• Develop and monitor key priority ESG targets, including diversity.
•
Improve communications with respect to ESG to shareholders.
In late 2021, we developed an ESG framework in line with the UN SDGs. The current framework is set out below,
and will be updated and evolve throughout 2022/23, when targets will be finalised.
NobleOak Life Limited AnnuAl RepoRt 2022
22
DIReCtoRS’ RepoRt
continued
eSG Measure
Key Metrics
target (s)
By When
t Climate change
n
e
m
n
o
r
i
Recycling
Paper
Workplace
multicultural
diversity
Workplace
gender diversity
Leadership
gender diversity
Human rights &
Modern Slavery
Board diversity
Ethical standards
v
n
e
l
a
i
c
o
S
e
c
n
a
n
r
e
v
o
G
Relevant
un SDG
13, 15
13, 15
Carbon emissions
Net zero by 2030
30 Jun 2030
Recycling of our office waste
50% reduction in
total office waste
3 years
Reduction in office
paper usage
Team members from diverse
cultural backgrounds outside
of Australia
TBC
40%
2‑3 years
11, 12, 13
Now
3, 5
Employees identify as female
40%
Now
Senior Leadership Team
members identify as female
30% by FY22
Now
35% by FY23
40% by FY24
5, 10
5, 10
Commitment to Human Rights Adhere to Human
Now
1, 3, 10
Board members identify
as female
Rights policy
30% FY22
31 Dec 2021
5, 10
40% by FY24
Score all employees on
cultural adherence,
including nobility/integrity
100% target with
a minimum score
of 90%
Now – in
annual staff
survey
9, 12
Linking E&S
with executive
remuneration
Incorporate culture/
values measure in each
manager’s STI
100% of STI
programs by
October 2022
1 Oct 2022
8, 17
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 and non‑audit services
The auditor’s independence declaration is included on page 56 of the financial report.
non‑audit services
Details of amounts paid or payable to the auditor for non‑audit services provided during the year by the auditor
are outlined in note 2.2 (v) to the financial statements.
The Directors are satisfied that the provision of non‑audit services, during the year, by the auditor (or by another
person or firm on the auditor’s behalf) is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001.
NobleOak Life Limited AnnuAl RepoRt 2022
23
DIReCtoRS’ RepoRt
continued
The Directors are of the opinion that the services as disclosed in note 2.2 (v) to the financial statements do not
compromise the external auditor’s independence, based on advice received from the Audit Committee, for the
following reasons:
• all non‑audit services comply with the NobleOak audit independence policy and have been reviewed
and approved to ensure that they do not impact the integrity and objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in Code
of Conduct APES 110 ‘Code of Ethics for Professional Accountants’ issued by the Accounting Professional &
Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or
decision‑making capacity for the Company, acting as advocate for the Company or jointly sharing economic
risks and reward.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191, dated 24 March 2016 and in accordance with that Corporations Instrument amounts in this report,
and the financial report, have been rounded off to the nearest thousand dollars.
This report is made in accordance with the resolution of the Board of Directors.
On behalf of the Directors
Anthony R Brown
Director
Sydney, 30 August 2022
Stephen Harrison
Chair
NobleOak Life Limited AnnuAl RepoRt 2022
24
opeRAtInG AnD FInAnCIAl ReVIeW
The Board presents its FY22 operating and financial review to provide shareholders with an overview of the
Company’s operations, business strategy, financial position, and prospects for the future. This review complements
the financial report and has been prepared to provide useful and meaningful information.
As an APRA‑regulated friendly society, NobleOak manufactures and distributes life risk insurance products
(including death, total and permanent disability, trauma, income protection and business expenses insurance)
through both its Direct and Strategic Partnership (Advised) channels. NobleOak also provides administration
services for run‑off Life Insurance portfolios through its subsidiary Genus Life Insurance Services Pty Ltd.
NobleOak is a challenger brand to the more traditional life risk insurance market incumbents and operates
in the approximately $11 billion Australian individual life risk insurance market.
nobleoak’s core values
NobleOak has four core values which help to link its 145‑year‑old heritage with its relatively new existence as a
demutualised friendly society. These values underpin NobleOak’s business model and are summarised as follows:
• nobility: we put our clients and members first at all times. Integrity is the essence of our business and we
are here to protect Australians with better cover;
• Simplicity: we use simple, clear communication at all times and avoid jargon. We aim to make getting life
insurance easier and ensure our clients know what they are covered for;
• Adaptability: we continually drive, and respond to, positive change to ensure our clients have access to the
best service and products; and
• 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.
overview of nobleoak’s operations
NobleOak operates across the life insurance value chain, including product design and manufacturing, marketing,
distribution, administration, underwriting and claims.
NobleOak operates across three business lines:
• Direct Channel: more affordable and accessible Life Insurance products delivered through an omnichannel
customer acquisition strategy. These products are mostly NobleOak‑branded policies marketed and
distributed by NobleOak, direct‑to‑market and through Alliance Partners, without personal financial advice;
• Strategic partner Channel: white‑labelled tailored Life Insurance products designed and delivered in
partnership with developers and distributors of intermediated life risk insurance policies (“Strategic partners”)
on an advised basis; and
• Genus: administration business, managing insurance portfolios which are no longer issuing new policies
(entirely reinsured).
NobleOak Life Limited AnnuAl RepoRt 2022
25
opeRAtInG AnD FInAnCIAl ReVIeW
continued
NobleOak generates revenue differently across each of the three business lines:
• Direct Channel: NobleOak earns a distribution margin, manufacturing (product) margin and a margin
on retained insurance risk in the portfolio;
• Strategic partner Channel: NobleOak earns a manufacturing margin through a management fee it receives
for providing services such as policy manufacturing and claims handling. The Company also earns a margin
on retained insurance risk in the portfolio; and
• Genus: NobleOak earns an administration fee from the respective insurer for administering each of the
portfolio’s life insurance books.
Direct business
NobleOak-branded policies marketed and distributed by NobleOak,
including through Alliance Partners and without personal financial advice
Direct Channel
Delivering a full suite of life insurance products:
term life, TPD, income protection, trauma, business expenses
Strategic Partner Channel
Genus
Tailored advised products
NobleOak-issued white labelled policies marketed and
administered by Strategic Partners’ adviser/member networks
Administration business
Administration of legacy
life insurance portfolios
By operating across three business lines, NobleOak has diversified revenue streams with varying exposures
to different customer demographics and parts of the life risk insurance value chain.
NobleOak Life Limited AnnuAl RepoRt 2022
26
opeRAtInG AnD FInAnCIAl ReVIeW
continued
Strategy & focus during the year
Currently, NobleOak is a comparatively small player within the large and growing Australian life risk insurance
market with long‑term growth drivers, including:
• population growth;
• an ageing population;
•
•
rising household wealth, income and debt; and
inflation.
Whilst there may be some near‑term uncertainty arising from higher inflation and a potential economic slowdown,
as well as regulatory changes across the life insurance industry and the ongoing impacts of COVID‑19, NobleOak
expects the following trends to continue to drive growth in the market, including:
•
•
increasing levels of underinsurance in the life insurance industry; and
increasing consumer propensity to buy life insurance directly.
NobleOak’s focus is to continue to build and maintain a sustainable life insurance business. Its approach to business
reflects a strong focus on risk management, long‑term sustainable growth and operating with:
• well‑defined culture and risk framework;
• disciplined underwriting;
•
robust claims management and reinsurer relationships;
• service‑led administration;
• prudent capital management; and
• disciplined growth.
Overall, NobleOak believes that there are significant growth opportunities for the business in the short,
medium and long term, which can be broadly placed in the following three categories:
•
increasing insurance risk retained by NobleOak;
• organic growth initiatives; and
• acquisition opportunities.
NobleOak Life Limited AnnuAl RepoRt 2022
27
opeRAtInG AnD FInAnCIAl ReVIeW
continued
Risk management
Risk Management Framework
NobleOak has in place systems for identifying, measuring, evaluating, monitoring, reporting and controlling
or mitigating material risks that may affect its ability to meet its obligations to policyholders. These systems,
together with the structures, policies, processes and people supporting them, comprise the Company’s Risk
Management Framework.
Outlined below are the critical components of NobleOak’s Risk Management structure and Internal Capital
Adequacy Assessment Program (ICAAP).
Risk Appetite Statement
Board risk appetite
Risk Management Strategy
Overview of approach to risk
Risk Management Framework
How risk is managed
Risk & ICAAP Glossary
Common terms
ICAAP Summary Statement
Overview of how ICAAP is being implemented
and capital is managed
Recovery Plan
A contingency plan which
interacts with ICAAP
Business Plan
12-month plan and 3-year
business strategy
ICAAP Annual Report
Review of current and future
capital adequacy
Key Risk Policies
Governance Policies that address
key material risks
Strategic Partner Governance Framework
Oversight rhythms for partnership
business key material risks
Risk Review Program
Summary and review of all key risks, treatments and actions
and capital management actions
Capital Position – Summary
Monthly summary of NobleOak’s capital position
with future forecasts
Financial Condition Report
Annual Actuary review of NobleOak
and our capital position
NobleOak’s risk management and appetite objectives are to:
• provide a framework to enable the identification and management of risk at all levels of the organisation
as set out in its Risk Management Framework;
• align the risk management effort to the objectives and goals of the organisation to ensure that key risks
are addressed, including new and emerging risks;
• manage identified risks within the risk appetite of the organisation and specifically within risk tolerances
as set out in its Risk Appetite Statement; and
• manage its capital in accordance with its Internal Capital Adequacy Assessment Process.
These objectives are to be met by:
• enabling a consistent and enterprise‑wide risk process for adoption;
• defining risk roles and responsibilities across different levels of the organisation;
• helping embed risk management as part of the way business is undertaken;
• encouraging a culture of disclosure; and
•
requiring a regular re‑assessment and reporting of risk to the Board Risk Committee, Board and management.
NobleOak Life Limited AnnuAl RepoRt 2022
28
opeRAtInG AnD FInAnCIAl ReVIeW
continued
principal Risks
NobleOak’s Risk Management Framework sets out the approach to the management of risk at NobleOak with
a focus on empowering front‑line employees to identify, promptly report and manage risk in consultation with
specialist risk resources. NobleOak’s senior leadership team is responsible for managing key material risks in the
business under the guidance of a Chief Risk Officer.
NobleOak’s Board Risk Management Committee ultimately considers key material risks and refers high rated
risks under the RMF and the RAS to the Board for decision‑making on risk taking or recommendation on risk
management actions.
The major strategic risks to the NobleOak business, along with management’s risk appetite, are outlined in the
NobleOak RMF and the NobleOak RAS. The material risk areas for NobleOak include (but are not limited to):
•
•
failure to comply with, and adverse changes to, applicable laws and regulations;
industry and regulatory compliance including regulatory change and investigations;
• additional regulatory capital requirements by APRA;
• governance and risk management practices may not be effective;
•
•
insurance risk including adverse movements in claims liabilities;
reinsurance risk including reinsurer terms and reinsurance asset concentration capital charges;
• distribution risks including risks relating to Strategic Partner relationships;
• operational risk including recruitment and retention of people, cyber risk;
• discontinuance (lapse) risk;
•
increased competitor activity as market stabilises;
• concentration of insurance risk in relation to higher risk income protection products;
•
life insurance market disruption risk including new entrants; and
• macro economic risk impacting insurance liability management including rising inflation and interest rates.
NobleOak is committed to ensuring it remains in compliance with its regulatory obligations as well as maintaining
strong governance across all areas of the business.
life insurance and regulatory environment
In recent years, the Australian Life Insurance industry has faced an unprecedented period of regulation,
scrutiny and disruption.
Following the Hayne Royal Commission, APRA remains particularly focused on the sustainability of the life
insurance industry due to the ongoing poor performance of the retail income protection market. Increased
incidence of mental health related TPD (Total and permanent disability) and income protection claims in the
market persists, driven by the impacts of COVID‑19 and the resulting economic environment.
To address this, APRA has sought to encourage innovation in product design for income protection products
to develop products that are sustainable over the long‑term. As a result, changes to Income Protection contracts
were enforced as part of the 1 October 2021 regulation amendments. As expected, these changes significantly
impacted new business volumes, initially triggering a sharp increase in submissions prior to the 1 October deadline,
followed by a material reduction in new business volumes across the industry. While the regulation changes
are anticipated to drive improved sustainability and profitability for Income Protection style products over the
longer‑term, it is expected that new business volumes will take some time to return to pre‑2021 volumes.
NobleOak anticipates some further regulatory reform to focus on areas such as product design, compliance,
governance, and reporting. While these reforms may adversely affect new business volumes and operating expenses
in the short‑term, demand is expected to stabilise as the changes become embedded across the sector and will
ultimately contribute to broader industry sustainability. Further legislative changes are also possible as a result
of future ASIC and APRA actions.
NobleOak Life Limited AnnuAl RepoRt 2022
29
opeRAtInG AnD FInAnCIAl ReVIeW
continued
As a life insurer with a clear customer‑focused, culturally and service‑led value proposition, NobleOak welcomes
structural industry change which is expected to deliver better outcomes for customers and establish a foundation
for long term, sustainable growth in the industry. Additionally, given the significant investment, infrastructure
and technical capabilities required to operate as a life insurance company, NobleOak believes all of these factors
significantly increase the barriers to entry for potential new entrants, thus further strengthening NobleOak’s
position within the industry and ability to continue gaining market share.
NobleOak believes it is well positioned to take advantage of industry disruption to drive further sustainable growth
in the business. Nevertheless, NobleOak continues to prudently monitor and manage the risks posed by regulatory
changes and ensures that it remains in compliance with its regulatory obligations.
NobleOak, like all insurers globally, is preparing for the implementation of AASB 17 – Insurance Contracts,
effective 1 July 2023. AASB 17 Insurance Contracts, is the Australian equivalent of the International Accounting
Standard IFRS 17 Insurance Contracts, and will represent a material change in the accounting of life insurance
contracts, previously dealt with under a margin on services approach, in accordance with AASB 1038 Life Insurance
Contracts. NobleOak has mobilised a team to facilitate the accounting, actuarial, technological and other process
changes required to implement the standard. Further details are available in Note 1(f).
FY22 results overview
FY22 was a transformational year for the business. In an environment of continued regulatory scrutiny, the ongoing
impact of COVID‑19 and consequent economic uncertainty, NobleOak completed a successful IPO, continued to
invest in strengthening its team, processes and systems and recorded strong growth in premiums and profits.
The business exceeded key FY22 Prospectus forecast measures, including:
• Underlying NPAT of $9.5 million, up 35.2% on the prior year;
• Active policies in place at 30 June 2022 now exceed 103,000, (33.4% growth);
•
•
In‑force premium at 30 June 2022 grew by 39.8% to $254.6 million;
Insurance premium revenue was up 46.2% to $248.4 million.
These results were achieved while also:
• maintaining high customer service quality standards, as evidenced by third party awards from Canstar
(Direct Life and Income Protection products), Plan for Life (Overall Excellence Award), Feefo Gold Trusted
service award, Mozo (Life insurer on the Year) amongst other awards;
• committing to ongoing investment in people, processes and systems to improve scalability;
•
•
further enhancing insurance and partner governance frameworks and capability;
launching new alliance partnerships with RAC WA, Budget Direct, Qudos Bank, Heritage Bank,
Illawarra Credit Union and BlueRock Private Wealth;
•
launching new Individual Disability Income Insurance (IDII) products;
• navigating COVID‑19 restrictions, predominantly during the first half of the FY22; and
•
transitioning to a publicly listed entity.
Following the successful completion of the IPO in July 2021, NobleOak significantly strengthened its balance
sheet and capital adequacy levels.
As with most businesses, the impact of the COVID‑19 pandemic continued to be felt by NobleOak during
the financial year. Lockdowns enforced in the first half of the financial year in many parts of Australia forced
NobleOak to transition rapidly to a hybrid working environment, with most team members working remotely.
However, the Company’s robust systems and processes and flexible approach ensured the impact on customers
and staff was minimal, as demonstrated by NobleOak’s continued growth, high customer satisfaction and staff
engagement levels.
NobleOak Life Limited AnnuAl RepoRt 2022
30
opeRAtInG AnD FInAnCIAl ReVIeW
continued
Since the onset of the pandemic, NobleOak has experienced strong growth and lower lapse rates, which the
management team believes has been driven in part by Australians placing increased value on life insurance
cover during an extended period of uncertainty.
Following the successful launch of new IDII products in October 2021, new business activity has remained subdued
across the industry. However for NobleOak, in‑force premium – the key value driver to our business – has continued
to grow, driven by continued favourable lapse rates, and exceeds the Prospectus forecast by 9%.
Across the business, NobleOak’s underwriting performance remained robust, with no material claims deterioration
due to the Company’s disciplined underwriting approach. While administration expenses were elevated in the first
half following investment in development of the new IDII product and onboarding new partnerships, the business
has since returned to a more normal level of operating expenditure.
During the year, the Company also reviewed and restructured commercial arrangements with each of its Strategic
Partners. This was an important initiative which further aligns NobleOak with its Strategic Partners, and will be
an important driver of NobleOak’s performance in FY23 and beyond.
The Genus business continues to provide high‑quality service to the market. During the financial year, the business
successfully completed the acquisition of the Auto & General administration run‑off portfolio and integrated the
portfolio, and also completed the Freedom Conduct Remediation Program, which meant the business contributed
strongly to the Group’s profit over the period.
Overall, NobleOak is delighted with its FY22 results and proud that its team has remained focused on delivering
industry‑leading life insurance cover for Australians and remaining true to NobleOak’s values of Nobility, Simplicity,
Adaptability and Delivery.
overview of financial result
NobleOak achieved the following results for the years ended 30 June 2022.
$’000
Direct
Strategic Partners
Genus
Group underlying npAt1
Impact of policy liability economic
assumption changes (post tax)
Impact of IPO expenses (post tax)
Reported npAt
Reported Basic earnings per share (cents)
Underlying Basic earnings per share (cents)
prospectus
Forecast
FY22
5,318
2,897
816
9,031
Actual
FY22
5,386
3,222
868
9,476
(5,825)
(1,966)
1,685
2.00
11.22
Actual
FY21
3,589
2,113
1,306
7,008
(775)
(1,330)
4,903
7.69
10.99
Variance to
prospectus
%
Variance to
prior Year
%
1.3%
11.2%
6.4%
4.9%
50.1%
52.5%
(33.5%)
35.2%
651.6%
47.8%
(65.6%)
(74.0%)
2.1%
1. Underlying NPAT is a non‑IFRS financial measure, defined as net profit after tax excluding the impact on the valuation of policy liability
from changes in economic assumptions and IPO expenses. Economic assumptions are driven by external economic market conditions
and can generate volatility in statutory profits. Disclosing an underlying measure of profits, which excludes the impact of changes
in economic assumptions and non‑recurring costs such as those pertaining to the IPO, allows the users of financial information to
better assess the underlying performance of the business (as is contemplated by ASIC RG 230 Disclosing non‑IFRS financial information).
Underlying net profit after tax grew by 35.2% to $9.5 million in FY22 and exceeded the FY22 Prospectus forecast
of $9.0 million by 4.9%.
Due primarily to the impact of changing economic assumptions on the valuation of policy liabilities and non‑recurring
IPO costs, NobleOak’s Reported NPAT decreased by 65.6% to $1.7 million in FY22.
The Company is pleased with the performance of all business segments, each of which has contributed positively
to the growth in profits reported during the period and exceeded its respective FY22 Pro forma (underlying)
Prospectus Forecasts.
NobleOak Life Limited AnnuAl RepoRt 2022
31
opeRAtInG AnD FInAnCIAl ReVIeW
continued
Key Metrics
$’000/%
In‑force premium (ex Genus) at period end
New business
Net insurance premium revenue
Net insurance premium revenue growth
Underlying gross insurance margin
Underlying administration expense ratio
Investment return
underlying npAt
Underlying NPAT growth
Actual
FY22
prospectus
Forecast
FY22
254,592
233,437
60,885
63,701
36.7%
14.2%
8.7%
0.1%
9,476
35.2%
66,105
56,536
22.6%
15.5%
9.7%
0.3%
9,031
Actual
FY21
182,077
68,961
46,611
27.2%
17.6%
11.4%
0.5%
7,008
The following section provides an overview of some of the Group’s consolidated key metrics. More detailed
commentary on the results and key metrics by Segment are included in the Operating Segment Review.
In‑force premium and new business
In‑force premium is the key value driver of NobleOak’s business. Pleasingly, the Company has continued to
deliver strong in‑force premium growth of 39.8% on the prior corresponding period to $254.6 million, which was
9.1% ahead of the FY22 Prospectus forecast. This growth was driven primarily by strong sales across the Direct
and Strategic Partner segments, with continued low lapse rates the primary driver of the outperformance.
New business sales for the year were $60.9 million, down 11.7% on the prior corresponding period, as NobleOak
continued to achieve strong market share gains in both the direct and intermediated channels. Since the introduction
of new IDII products, which were required to be launched by all insurers by 1 October 2021 in accordance with
new regulatory standards, new business activity has remained relatively subdued as expected as many existing
policyholders retain their pre‑existing cover. Whilst conditions are yet to fully normalise, NobleOak anticipates
a level of improvement over the next 12 months, with lower lapse rates than historical levels to partially offset
reduced new business activity.
The Company will remain disciplined in its pursuit of new business, ensuring its products remain competitive
while appropriately operating within its risk appetite.
net insurance premium revenue
Total net insurance premium revenue increased by 36.7% to $63.7 million in FY22 (FY21: $46.6 million),
benefiting from the strong growth in annual in‑force premium and low lapse rates across the Direct and Strategic
Partner Channels.
Net premium revenue as percentage (%) of gross premium revenue decreased by 1.8% to 25.6% in FY22 (FY21: 27.4%),
reflecting the higher growth in the Strategic Partner segment where risk retention is lower. The Company continues
to execute on its strategy to gradually increase insurance risk retention in the Strategic Partner Segment as
confidence in these portfolios grows.
underlying gross insurance margin (before admin expenses)
The total Underlying Gross Insurance Margin decreased from 17.6% in FY21 to 14.2% in FY22.
Both the Direct and Strategic Partner segments reported relatively stable Underlying Gross Insurance Margins,
driven primarily by favourable claims experience both in FY22 and FY21. The reduction in the total Group
Underlying Gross Insurance Margin was driven largely by an expected change in mix of the Group portfolio,
with the Strategic Partner segment growing faster than the Direct segment.
NobleOak Life Limited AnnuAl RepoRt 2022
32
opeRAtInG AnD FInAnCIAl ReVIeW
continued
underlying administration expense ratio
NobleOak continues to invest in building capability to deliver sustainable growth over the near to medium term,
and as a result, its expense base continues to grow in line with business volumes.
Whilst total administration expenses have increased by 13.5%, the underlying administration expense ratio
improved by 2.7% in FY22 to 8.7% (FY21: 11.4%) as operating leverage emerged. Cost management discipline
remains important in the current inflationary environment, as the Company seeks to maintain stable margins
and benefit from economies of scale over the longer term.
During the year, the business incurred significant one‑off costs relating to the development and launch of new
IDII products, the integration of the A&G run‑off portfolio into the Genus business and the establishment of new
processes to support the launch of new distribution arrangements with RAC WA and Budget Direct. $1.4 million
of these costs were capitalised during the year as the economic benefits are expected to be consumed over
its expected useful lives.
Administration expense in FY22 included depreciation and amortisation expense of $1.8 million (FY21: $1.1 million), with
the increase being driven by the amortisation of the A&G admin right and product development project expenditure.
Investment returns
Investment returns remained commensurate with the low interest rate environment that prevailed throughout
FY22. Whilst NobleOak’s investment strategy is not expected to generate material profits in the near‑term,
during the year the Board approved amendments to the investment strategy including an asset allocation to
short‑duration fixed interest asset classes, which are projected to enhance returns while retaining the portfolio’s
overall low risk profile and benefit from the increasing interest rate environment.
Reconciliation of Statutory npAt to underlying pro Forma npAt
The table below reconciles the statutory NPAT to the underlying pro forma NPAT, using the pro‑forma adjustment
methodology consistent with the Prospectus. These pro‑forma adjustments are non‑IFRS adjustments made
to the periods prior to the IPO (which occurred in July 2021). The pro‑forma adjustments illustrate the impact of
costs attributable to the IPO, public company cost structures, changes to salary packages and incentives effected
for certain senior employees and one‑off, non‑recurring items. The purpose of the adjustments is to present the
income statement on a comparable basis and in a manner consistent with internal management reporting.
$’000
Statutory NPAT
Impact of policy liability economic assumption changes (post tax)
Impact of IPO expenses (post tax)
Underlying NPAT
Changes in executive remuneration1
Listed company expenses2
Income tax effect3
Pro‑Forma Underlying NPAT
Notes:
Consolidated
FY22
Consolidated
FY21
1,685
5,825
1,966
9,476
NA
NA
NA
9,476
4,903
775
1,330
7,008
(572)
(549)
336
6,223
1. Reflects the impact of changes in executive remuneration in place from completion of the IPO being applied to the historical periods.
2. Reflects NobleOak’s estimate of the annual costs that it will incur as a listed company as if it had been a listed company from 1 July 2020.
These costs include additional Directors’ remuneration, ASX listing fees, additional share registry fees, higher Directors’ and officers’
insurance premiums, higher annual general meeting costs, higher annual report costs, media and investor relations costs and higher
levels of audit fees.
3. Pro‑forma tax expense rate of 30% has been applied, which is the Australian corporate tax rate.
NobleOak Life Limited AnnuAl RepoRt 2022
33
opeRAtInG SeGMent ReVIeW
We are pleased with the performance of all of our business segments, each of which has contributed positively
during the period and exceeded the prospective FY22 Prospectus forecast.
operating segment review
Direct
$’000/%
In‑force premium at period end
New business
Lapse rate
Net insurance premium revenue
Net insurance premium revenue growth
Underlying gross insurance margin
Administration expense ratio
Investment return
underlying npAt
Underlying NPAT growth
prospectus
Forecast
FY22
64,303
12,500
9.5%
33,638
21.9%
33.3%
21.3%
0.8%
5,318
Actual
FY22
69,177
10,166
8.4%
35,036
28.5%
31.3%
19.3%
0.2%
5,386
50.1%
Actual
FY21
57,414
11,084
6.8%
27,258
32.5%
33.8%
22.7%
(0.5%)
3,589
In the Direct segment, ongoing investment in the NobleOak brand continues to drive momentum and increased
market awareness. In FY22, this delivered another strong result in a market which is facing significant ongoing
regulatory scrutiny and market disruption. NobleOak’s Direct strategy of investing in digital marketing initiatives
alongside growing its alliance partnerships with organisations such as RAC WA and Budget Direct has helped to
drive strong growth in the number of active policies of 18.6% to 40,311, with in‑force premium growing by 20.5%
to $69.2 million at 30 June 2022.
Over the reporting period, new alliance partnerships have been announced with Qudos Bank (September),
Royal Automobile Club of Western Australia (October) and Auto & General Services (February). NobleOak
is committed to further expanding the alliance partnership channel which in conjunction with the Company’s
strong digital presence will enable the business to generate strong growth in Direct market share, which has
increased from 0.4% in 2019 to 0.7% in 2022.
NobleOak’s disciplined underwriting and expense management has continued to deliver stable returns, with
normalised profit generated from the Direct Segment increasing to $5.4 million in FY22, up 50.1% from the prior
year and slightly ahead of the Prospectus forecast.
The Underlying Insurance Margin remains strong, with a 2 percentage point decline over the prior year driven
by slight increase in lapse rates which remain well below industry averages.
The Administration Expense ratio improved by 3 percentage points to 19.3%, with economies of scale more than
offsetting an increased investment in digital initiative, resourcing and capabilities and IDII product development
and implementation. Looking ahead, the current inflationary environment is expected to impact the Company’s
expenses, however NobleOak’s products do contain automatic inflation adjustments which will contribute to
protecting margins.
NobleOak Life Limited AnnuAl RepoRt 2022
34
opeRAtInG SeGMent ReVIeW
continued
A strong focus on NobleOak’s core values of nobility, simplicity, adaptability and delivery continues to deliver strong
customer outcomes, resulting in strong feedback for NobleOak in the Direct Channel, including:
• 95% of existing clients rate customer service provided to date as ‘good’ or ‘excellent’ which is continuously
monitored by our post interaction surveys;
• a 4.8/5 Feefo customer rating as at 30 June 2022. NobleOak received a second Platinum Trusted Service
award for maintaining a Gold Trusted Service Award standard for three consecutive years in 2022;
• a 4.4/5 Google customer satisfaction rating as at 30 June 2022; and
• NobleOak was again the most awarded Australian direct Life insurer in 2022, winning awards from Canstar,
Plan for Life, Mozo Experts Choice and Finder during the year for the quality of our Life Insurance and Income
Protection products. NobleOak also won Money Magazine’s inaugural Direct Life Insurance Cover of the
Year 2022, and the Direct sales team was named the #1 Sales Contact Centre in Australia by GRIST.
Strategic partner
$’000/%
In‑force premium at period end
New business
Lapse rate
Net insurance premium revenue
Net insurance premium revenue growth
Underlying gross insurance margin
Administration expense ratio
underlying npAt
Underlying NPAT growth
prospectus
Forecast
FY22
169,135
53,605
8.0%
18,633
43.4%
5.1%
2.3%
2,897
Actual
FY22
185,415
50,719
4.0%
25,304
82.0%
4.8%
2.1%
3,222
52.5%
Actual
FY21
124,664
57,878
4.0%
14,991
50.6%
4.6%
1.7%
2,113
The Strategic Partner Channel continues to deliver strong growth, as NobleOak’s contemporary product offerings,
high quality service and strong partnerships with Neos and PPS continuing to deliver market share growth.
In‑force premium has grown to $185.4m at 30 June 2022, an increase of 48.7% from $124.7m at 30 June 2021.
This growth was driven by strong new business sales during the year and continued low lapse rates of 4.0%,
as in‑force premium exceeded the Prospectus forecast by 9.6%.
As in the Direct Channel, customer insurance purchasing activity through advised channels has markedly declined
across the industry since the introduction of the new IDII products. New business sales were down by 12.4%
on the prior year to $50.7 million reflecting the lower industry sales activity.
In a challenging environment, the Company is pleased with the performance of the Strategic Partner Channel,
with in‑force premium market share growing from 0.4% in 2019 to 2.0% in 2022.
NobleOak Life Limited AnnuAl RepoRt 2022
35
opeRAtInG SeGMent ReVIeW
continued
The Strategic Partner Channel delivered Underlying NPAT of $3.2 million for FY22, an increase of 52.5% on the
prior year and 11.2% ahead of the Prospectus forecast. The Underlying Insurance Margin remained stable in FY22,
again supported by favourable claims experience. The Administration Expense ratio remains low.
NobleOak continues to engage with its Strategic Partners to ensure the ongoing alignment of commercial
arrangements and an appropriate balance of risk and return.
Individual Strategic Partner highlights:
Avant – The existing product closed to new business from 1 October 2021. NobleOak is working with Avant
to assess its options going forward.
ppS – A new IDII Product was launched on 1 October 2021. NobleOak continues to work with PPS to ensure the
product features and market positioning meets its risk appetite. NobleOak’s partnership with PPS remains strong
with both companies’ objectives closely aligned. NobleOak has recently completed a review of the commercial
terms to ensure they meet its requirements of both parties going forward.
neoS – A new IDII product was launched on 1 October 2021 and NobleOak continues to work with Neos to
ensure the product features and market positioning meets its risk appetite. NobleOak also recently completed
a review of the commercial terms and operational arrangements with Neos to ensure strategic alignment.
Genus
$’000/%
In‑force premium under management
Administration Expenses
Amortisation of Portfolio Acquisition Costs
underlying npAt
Underlying NPAT growth
prospectus
Forecast
FY22
22,278
4,520
–
816
Actual
FY22
25,501
6,077
263
868
(33.6%)
Actual
FY21
32,249
6,252
–
1,306
In‑force premium under management by Genus decreased in line with expectations in FY22, driven by the conduct
remediation program on the Freedom portfolio which concluded in April 2022.
The expected decline in the in‑force premium under management due to the Freedom remediation program
was partially offset by the acquisition of the A&G administration run‑off portfolio, which added $4.1 million to
the in‑force premium under management.
The transition of the administration of the A&G portfolio has seen both revenues and expenses for Genus exceed
the Prospectus forecast due to the introduction of this portfolio.
Genus generated $0.9 million Underlying NPAT in FY22, exceeding the Prospectus forecast by 6.4%, primarily driven
by the acquisition of the A&G portfolio.
NobleOak Life Limited AnnuAl RepoRt 2022
36
opeRAtInG SeGMent ReVIeW
continued
outlook
NobleOak is expecting to have another strong year in 2023.
Entering FY23, the near‑term economic outlook remains uncertain, with rising inflationary pressures and the
unwinding of unprecedented economic stimulus measures impacting the economy. Despite these headwinds,
the Australian economy remains relatively robust, with interest rates still relatively low in historical terms
(albeit expected to rise over the near term) and unemployment low.
As most life insurance policies are indexed to inflation, increased inflation drives nominal increases in life risk
in‑force premium, which is expected to support in‑force premium growth for NobleOak.
The lingering impact of COVID‑19 continues to weigh on the economy and financial markets and will likely continue
to impact growth in the life insurance industry in the near‑term. However, there are strong indications that the
pandemic has also contributed to a reduction in lapse rates across the industry, which has largely offset a lack
of new business growth.
Following the introduction of new IDII products in October 2021, new business activity is expected to remain
subdued in the medium term. NobleOak expects a moderate improvement in the near‑term but does not expect
to see a return to pre‑2021 levels over the next 12 months. It is important to note that in‑force premium remain
the key long‑term value driver for NobleOak and continued lower lapse rates are expected to offset much of
the impact on new business activity.
Overall, NobleOak has a strong track record of growth in a market which continues to face regulatory changes,
scrutiny and disruption. Despite the challenging environment, the market opportunity for NobleOak remains
significant and attractive.
NobleOak will remain disciplined in its pursuit of growth across its business. In the Direct Channel, the Company
will continue to invest in its digital capabilities and broaden alliance partnerships. The distribution arrangements
with RAC WA and Budget Direct, which were only in place for part of FY22, are expected to contribute more
meaningfully to growth and profits in FY23.
Customer insurance purchasing activity has reduced across the industry following the introduction of the new
IDII products and has also been impacted by the decline in the number of financial advisors. This will impact growth
in the Strategic Partner Segment, which is expected to be more closely aligned with the Direct Segment moving
forward. Having renewed the commercial arrangements with each of its Strategic Partners, NobleOak is now better
aligned with each Partner and this channel is expected to remain a strong contributor to Group profitability.
Genus has developed a robust capability in transition management and the administration of legacy life insurance
businesses. This segment is expected to provide a meaningful financial contribution in FY23, with the potential
to acquire and administer additional portfolios in the future, however the bar for considering portfolio acquisitions
remains high.
NobleOak expects the emerging trends of increasing level of underinsurance in the industry and increasing
consumer propensity to buy direct insurance to continue. As a small player in a large addressable market with
many structural growths, the Company remains well positioned to take advantage of market dislocation,
continue to capture market share and deliver robust growth.
NobleOak’s resilient business model is underpinned by a large and growing annuity‑style revenue base, with
inflation‑linked premiums that are expected to substantially offset cost inflation pressures. The Company’s strong
culture has enabled NobleOak to attract and retain a high calibre and talented team in an increasingly competitive
labour market. The strong capital position provides the firepower to continue to invest for growth, and when
combined with NobleOak’s proven underwriting and expense discipline, enables the Company to expect relatively
stable margins across each segment and continued growth in annual profit..
NobleOak Life Limited AnnuAl RepoRt 2022
37
ReMuneRAtIon RepoRt
Section
title
Description
1
2
3
4
5
6
Introduction
Remuneration governance
Describes the scope of the Remuneration Report and
the individuals whose remuneration details are disclosed,
together with a summary of the key changes during the year.
Describes the role of the Board and the Nomination and
Remuneration Committee (NRC) and the use of remuneration
consultants when making remuneration decisions.
Non‑Executive Director remuneration
Provides details regarding the fees paid to
Non‑Executive Directors.
Executive remuneration
Outlines the principles and strategy applied to executive
remuneration decisions and the framework used to deliver
rewards, including company performance and Executive
KMP remuneration linkages.
Key Management Personnel (KMP)
equity interests
Provides details regarding shareholdings in NobleOak Life
Limited of the non‑executive directors and Executive KMP.
Employment agreements
Provides details of the contractual arrangements between
NobleOak Life Limited and the executives whose
remuneration details are disclosed.
NobleOak Life Limited AnnuAl RepoRt 2022
38
ReMuneRAtIon RepoRt
continued
1. Introduction
NobleOak believes that attracting, developing, engaging and retaining talented executives and employees will
provide the Company with a sustainable advantage over the long term. Building and maintaining a culture and
implementing people and systems to support such a belief and culture are strategic priorities for NobleOak.
Key principles of NobleOak policies are attracting, learning and development, engagement, workplace health
and safety, talent and succession management, and appropriate but competitive remuneration and benefits.
The Board’s philosophy and approach to executive remuneration is to balance fair remuneration for skills and
expertise with a risk and reward framework that supports longer‑term growth and sustainability of NobleOak.
The Company strives to be a leader in the life insurance business that is both compassionate and customer focused.
The Board believes NobleOak’s approach to Key Management Personnel (KMP) remuneration is a balanced,
fair and equitable approach designed to reward and motivate a successful and experienced executive team to
deliver ongoing business growth which is designed to meet the expectations of not only shareholders, but also
other stakeholders.
Scope
This Remuneration Report sets out, in accordance with the relevant Corporations Act 2001 (Cth) (Corporations Act)
requirements, the remuneration arrangements in place for KMP during FY22.
Key Management personnel
KMP have authority and responsibility for planning, directing and controlling the activities of NobleOak and
comprise the non‑executive directors (NEDs) as well as the Chief Executive Officer (CEO), who is also an executive
director, and the Chief Financial Officer (CFO). The CEO and CFO, for purposes of the Remuneration Report,
are referred to as Executive KMP. KMP are listed below and for further details on the KMP please refer to the
Directors’ Report.
non‑executive Directors
Stephen Harrison (Chair)
Andrew Boldeman
Sarah Brennan (appointed 8 December 2021)
Kevin Hamman
Inese Kingsmill
Emery Feyzeny (retired 1 December 2021)
executive KMp (Ceo)
Anthony Brown – Chief Executive Officer/Executive Director
executive KMp (CFo)
Scott Pearson – Chief Financial Officer
NobleOak Life Limited AnnuAl RepoRt 2022
39
ReMuneRAtIon RepoRt
continued
2. Remuneration governance
This section of the Remuneration Report describes the role of the Board and the Nomination & Remuneration
Committee, and the use of remuneration consultants when making remuneration decisions affecting KMP.
Role of the Board and the nomination & Remuneration Committee
The Board is responsible for NobleOak’s remuneration strategy and policies. Consistent with this responsibility,
the Board has an established Nomination & Remuneration and Committee (NRC) which is comprised solely
of NEDs, with the majority being independent.
Key responsibilities of the NRC are to:
• ensure that appropriate procedures exist to assess the remuneration levels of the Board Committees
and the Board as a whole and direct reports to the CEO;
•
review whether there is any gender or other inappropriate bias with respect to the remuneration for directors,
senior executives or other employees;
• ensure that NobleOak adopts, monitors and applies appropriate remuneration policies and procedures;
• ensure that reporting disclosures related to remuneration meet the Board’s disclosure obligations and all
relevant legal and accounting standard requirements;
•
review and make recommendations to the Board on remuneration reviews and incentive plans, in line with
relevant legislation and corporate governance principles relating to remuneration practices and employment
policies; and
• ensure appropriate superannuation arrangements are in place for NobleOak.
The NRC’s role and interaction with the Board, internal and external advisors, is further illustrated below.
The Board
Ultimately responsible for remuneration decisions, considering recommendations
and advice from the Nomination & Remuneration Committee.
Nomination & Remuneration Committee
The NRC operates under the delegated authority of the Board.
The NRC is empowered to source any internal resources and obtain external independent professional
advice it considers necessary to enable it to make recommendations to the Board on the following:
Remuneration policy
in respect of NEDs
Remuneration policy,
composition and quantum
of remuneration components
for Executive KMP and
performance targets
Design features of employee
and executive STI and LTI plan
awards, including setting
of performance and other
vesting and claw back
conditions
Ensuring the Company has
the appropriate policies and
procedures in place to
effectively manage talent
acquisition and retention,
including superannuation
arrangements
External consultants
Internal resources
Further information on the NRC’s role, responsibilities and terms of reference can also be viewed in the Investor
Centre, Corporate Governance section of the NobleOak website.
NobleOak Life Limited AnnuAl RepoRt 2022
40
ReMuneRAtIon RepoRt
continued
use of remuneration consultants
During FY21, the Board of NobleOak engaged Crichton & Associates Pty Limited (C&A) to benchmark overall
remuneration for the Board and CEO. The NRC and Board considered the recommendations from C&A as well
as a number of other issues in developing the remuneration structures for the financial year ending 30 June 2022.
All proposed remuneration consultancy engagements were approved by the NRC in accordance with the
Corporations Act.
No formal advice was sought from independent remuneration consultants in setting the FY23 remuneration levels.
NobleOak purchases market remuneration data from a primary provider of remuneration data appropriate for
roles within the Australian life insurance industry. The benchmarking data is used as a guide and not a substitute
for thorough consideration of all the issues by the NRC and the Board.
3. non‑executive director remuneration
neD remuneration
principle
Comment
Fees are set by
reference to key
considerations
Fees for NEDs are based on the nature of the NEDs’ work and their responsibilities.
The remuneration levels reflect the complexity of NobleOak’s business and the extent
of regulatory requirements and oversight applicable to a publicly listed Friendly Society.
Remuneration is
structured to preserve
independence whilst
creating alignment
Aggregate Board
and committee
fees are approved
by shareholders
post‑employment benefits
Superannuation
In determining the level of fees, survey data on comparable companies is considered.
NEDs’ fees are recommended by the NRC and then considered by the Board.
Shareholders approve the aggregate amount available for the remuneration of NEDs.
To preserve independence and impartiality, NEDs are not entitled to any form of
incentive payments including options and the level of their fees is not set with reference
to any measure of NobleOak performance.
The Board has no approved minimum shareholding guidelines for NEDs. NEDs are
encouraged to have a shareholding in NobleOak.
The total amount of fees paid to NEDs in FY22 was within the aggregate amount
approved by shareholders at the EGM held on 25 June 2021 of $1,000,000 per annum
including superannuation.
Superannuation contributions have been made for NEDs who are paid through
payroll at a rate of 10.0% (but only up to the Australian Government’s prescribed
maximum contributions limit) which satisfies the Company’s statutory superannuation
contribution obligations. The contribution rate will increase in future years in line
with mandated legislative increases (with the first of such increases having occurred
on 1 July 2022 to 10.5%). Contributions are included in the base fee.
Retirement schemes
There are no other retirement schemes in place for NEDs, other than Statutory
Superannuation as described above.
other benefits
equity instruments
NEDs do not receive any performance related remuneration, options, performance
rights or shares.
other fees/benefits
NEDs receive reimbursement for costs incurred directly related to NobleOak business.
No payments were made to NEDs during 2022 for travel allowances, extra services,
or special exertions.
NobleOak Life Limited AnnuAl RepoRt 2022
41
ReMuneRAtIon RepoRt
continued
neD total remuneration paid
Short‑term
benefits
equity Based
payments
post‑employment
benefits
Andrew Boldeman
Sarah Brennan1
Emery Feyzeny2
Kevin Hamman
Stephen Harrison
(Chair)
Inese Kingsmill
total
total
Fees
($)
performance
Rights
($)
termination
benefits
($)
128,688
89,284
76,304
–
49,493
95,586
137,959
117,634
192,750
186,000
127,611
125,191
712,805
613,695
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Super‑
annuation
Benefits3
($)
12,869
8,482
–
–
4,949
18,936
–
–
–
–
–
–
17,818
27,418
total
($)
141,557
97,766
76,304
–
54,442
114,522
137,959
117,634
192,750
186,000
127,611
125,191
730,623
641,113
Year
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
1. Ms Brennan was appointed as a director in December 2021 and therefore did not receive any remuneration for FY21. FY22 remuneration
reflects the pro rata amount received.
2. Mr Feyzeny retired as a director in December 2021 and therefore FY22 remuneration reflects the pro rata amount received.
3. Superannuation contributions have been made for NEDs who are paid through payroll.
NobleOak Life Limited AnnuAl RepoRt 2022
42
ReMuneRAtIon RepoRt
continued
4. executive remuneration
executive KMp remuneration
NobleOak’s executive remuneration policies and framework are designed to attract, motivate and retain high
performing talent with the aim of achieving the Group’s strategic objectives in a manner consistent with NobleOak’s
values, while maximising shareholder value.
Remuneration is intended to satisfy the following key criteria:
• providing a balance between incentivising the behaviours and actions (inputs) that lead to sustainable
and profitable growth, and the results (outputs) achieved;
•
•
•
including underlying profit, in line with APRA guidelines, as a core component of plan design;
focusing on sustained growth in shareholder value, particularly growth in share price;
incentivising above market return on capital in the medium to long term;
• achieving an effective balance between short and long‑term strategic objectives; and
•
focusing executives on non‑financial drivers of value that promote sustainability, including:
– attracting, retaining and developing high calibre personnel;
–
factors relating to our customers that drive long term customer satisfaction and customer value;
– building and maintaining a prosperous and unique corporate culture, with a genuine focus on the customer; and
– effectively managing risks across the organisation, such as operational, regulatory and reputational risks.
Fixed remuneration components are determined having regard to the specific skills and competencies
of the Executive KMP with reference to both internal and external relativities, particularly local market and
industry conditions.
The ‘at risk’ components of remuneration are strategically directed to encourage the Executive KMP to strive
for superior performance on a risk‑adjusted basis by rewarding the achievement of targets that are challenging,
clearly defined, understood and communicated within the ambit of accountability of the relevant Executive KMP.
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continued
Executive KMP remuneration objectives are exemplified through three categories of remuneration,
as illustrated below:
Executive KMP remuneration objectives
Attract, motivate and
retain competent
executives across
NobleOak’s business
The creation of reward
differentiation to drive
performance values
and behaviours
A balance between
‘fixed’ and ‘at risk’
components
Shareholder value
alignment through
equity components.
Total target remuneration (TTR) is set by reference to the relevant market benchmarks
Fixed
At risk
Total fixed remuneration (TFR)
Short‑term incentives (STI)
TFR is set based on relevant
market relativities, reflecting
responsibilities, performance,
qualifications, experience and
geographic location
STI performance criteria
are set by reference to
NobleOak performance targets
comprising both financial and
non‑financial measures
Long‑term incentives (LTI)
LTI targets are linked
to NobleOak Underlying
Earnings Per Share (EPS)
and Total Shareholder
Return (TSR) growth
Remuneration will be delivered as:
Base salary plus any
fixed elements related
to local markets,
including superannuation
or equivalents
Cash payment Part
will be subject to
service and deferred
for at least one year
Equity in performance rights.
All equity is held subject to
service and performance
for 3 years from grant date.
The equity is at risk and subject
to claw back provisions
until vesting.
Strategic intent and market positioning
TFR will generally be positioned
at the median compared to
relevant market‑based data
considering expertise and
performance in the role.
Performance incentive is
directed to achieving Board
approved targets, reflective of
market circumstances. TFR + @
Target STI + @ Target LTI is
intended to be positioned in the
3rd quartile of the relevant
benchmark comparisons.
LTI is intended to reward
Executive KMP for sustainable
long‑term shareholder growth
brining alignment to
shareholders’ interests. TFR +
@Target STI + @ Target LTI is
intended to be positioned in the
3rd quartile of the relevant
benchmark comparisons.
TTR is intended to be positioned in the third quartile compared to relevant market benchmark
comparisons for at target performance. Fourth quartile TTR may result if outperformance is achieved.
Total Targeted Remuneration (TTR)
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continued
Remuneration composition mix and timing of receipt
NobleOak intends to provide an appropriate and competitive mix of remuneration balanced between fixed
and ‘at risk’ components, with payment in the form of both cash and equity.
(a) Remuneration mix – FY22 and FY23
The current Remuneration mix for the CEO and CFO are shown below:
position
CEO
CFO
StI (%)
Up to 60% of TFR,
(40% @ target)
Up to 50% of TFR
(25% @ target)
ltI (%)
Rights of 80% of TFR
(Half of these vest @target)
Rights of 80% of TFR
(Half of these vest @target)
The ‘at risk’ component (STI and LTI) represents the intended remuneration opportunity for the Executive KMP
assuming the performance requirements set for each component are satisfied.
(b) total Fixed Remuneration (tFR)
NobleOak intends to position executives in line with the market median level. This positioning is confirmed
regularly by reference to remuneration surveys and independent benchmark assessments from time to time.
(c) total target Remuneration (ttR)
NobleOak intends to position TTR levels for its executives between the median and 75th percentile of the market.
In the opinion of the Board, the TTR under the remuneration mix adopted by NobleOak delivers an overall risk
adjusted reward opportunity which is intended to ensure both fair and market competitive remuneration is awarded.
(d) tFR explained
TFR includes all remuneration and benefits paid to an executive calculated on a total employment cost basis.
In addition to base salary, superannuation and other individual specific allowances are included.
Executive KMP TFR is tested regularly for market competitiveness by reference to appropriate independent
and externally sourced comparable benchmark information, including for comparable ASX‑listed companies.
Criteria assessed includes aspects such as (but not limited to) market capitalisation of comparable businesses,
executive responsibilities, performance, qualifications, experience and location.
TFR adjustments, if any, are made with reference to individual performance, a change in job role or responsibility,
changing market circumstances as reflected through independent benchmark assessments or through promotion.
Any adjustments to Executive KMP remuneration are approved by the Board, based on NRC and
CEO recommendations.
(e) Variable (‘at risk’) remuneration explained
Variable remuneration is intended to constitute a material portion of the CEO and other Executive KMP’s potential
compensation package. The above percentages are at target and may increase if stretch targets are achieved
(i.e., performance above targets). Apart from being market competitive, the purpose of variable remuneration
is to incentivise executives’ behaviour towards optimising NobleOak’s long term performance, having regard
to customer, community and other stakeholder expectations.
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continued
The key aspects are summarised below:
Short‑term incentives (StI) – FY22 and FY23
purpose
performance targets
The STI arrangements at NobleOak are designed to reward executives for the
achievement against annual performance targets set by the Board at the beginning
of the performance period. The STI program is reviewed annually by the NRC and
approved by the Board.
The key performance objectives of NobleOak are directed to achieving Board
approved targets, with individual executives being assessed on a range of financial
and non‑financial measures (dependent on their role). The targets follow a balanced
scorecard with key performance areas including Financial, Customer & Growth,
Strategic Delivery and People & Culture, allocated across the management team.
To assess management performance, the Board use underlying financial results
which exclude the impact of changes in economic assumptions on policy liabilities
and non‑recurring costs such as those pertaining to the IPO as it allows for a better
assessment of the underlying performance of the business. Any anomalies or
discretionary elements are approved and validated by the Board.
Payment of STI may be withheld if the Board determines that any specific
‘Performance gateway or Culture and Values gateway has not been met’.
performance Gates
and Modifiers Gate
Performance gates apply to the assessment of performance targets, to ensure that
key minimum requirements are met in order to award incentives.
Rewarding
performance
Mandatory
deferral of StI
Performance modifiers allow either the upward or downward adjustment of the award.
Modifiers generally apply where performance was materially below the expected
standard. In rare circumstances, the Board may seek to introduce an upward modifier.
These performance gates and modifiers ensures appropriate award for performance
and supports the prevention and mitigation of misconduct risk.
The STI performance ratings are determined under a predetermined matrix, with the
Board determination as final.
Effective 1 August 2021 a deferral of a portion of STI (for selected executives) was
introduced to further enhance alignment with shareholder interests. The STI awards
are determined at the end of each year and then held for one year until vesting.
This structure was designed with the objectives to increase prospects for retention
and further align executives with shareholder interests.
The deferred STI component for FY22 was calculated based on a predetermined 25%
of the STI amount, above a minimum threshold (depending on the relevant position).
Once the STI award has been granted, no further performance measures apply
other than continued tenure for the vesting period (one year minimum).
option for discretion
The STI is at the discretion of the Board and CEO and is subject to change
or cancellation at any time.
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continued
Each Executive KMP has corporate and individual targets and objectives, including sound risk management
practices as well as demonstrating NobleOak’s core values and corporate culture, which are key factors in the
assessment. Key design elements of the FY22 STI plan pertaining to the KMP were as follows:
Measure
Financial
Strategy & Operations
Customers
People & Culture
total
KMp (Allocated proportion %)
Anthony Brown
(Ceo)
Scott pearson
(CFo)
40%
20%
20%
20%
100%
35%
40%
10%
15%
100%
long‑term incentives (ltI) – FY20‑22, FY21‑23
Prior to ASX listing in July 2021, NobleOak offered equity incentives under the NobleOak Life Ltd Performance
Rights Plan. The LTI was designed to align employee and shareholders’ interests and to provide employees with
the opportunity to acquire Company shares for no cash outlay. It also aimed to aid in long term retention of
Executive KMP to maintain a stable team.
Key design elements of the LTI plan and issues made across the periods (each a “Measurement period”) outlined
above were as follows:
FY20‑22 and FY21‑23
tranche 1
The vesting is determined by the Total in‑force Premium
– Direct Business (TIPD).
At the end of the 3‑year Measurement Period the Company’s
TIPD CAGR over the Measurement Period will be calculated
and compared against the vesting scale.
Measurement period
FY20‑22
FY21‑23
30%
30%
tranche 2
The vesting is determined by the Compound Annual Growth
Rate (CAGR) in Underlying EBIT.
30%
30%
tranche 3
At the end of the Measurement Period the Company’s
Underlying EBIT CAGR over the Measurement Period will
be calculated and compared against the vesting scale.
The vesting is determined by the following
performance measures:
• Customer Net Promoter Score (NPS);
• Partner Survey Score;
• Staff Survey Score; and
• Cost of Acquisition (FY21‑23 only).
At the end of the Measurement Period the Company’s 3‑year
average of each measure will be calculated and compared
against the vesting scale.
40%
40%
total performance Rights (By plan Year)
total performance Rights (for the Ceo and CFo)
331,245
331,245
794,391
448,250
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continued
long‑term incentives (ltI) – From (ASX listing) FY22‑24, FY23‑25
Effective from ASX Listing in July 2021, a new LTI plan has been offered to selected senior managers under
a new scheme known as the NobleOak Long Term Incentive Plan (LTIP). The LTIP will provide an annual
opportunity for Executive KMP and other selected senior managers (based on their ability to influence and
execute strategy) to receive an equity award that is intended to align a significant portion of those in the LTIP’s
overall remuneration to shareholder value over the longer term. All LTIP awards remain at risk and subject to
‘claw back’ (forfeiture or lapse) until vesting and must meet or exceed performance targets set over the
vesting period.
Key design elements of the LTI plan and issues made across the periods (each a “Measurement period”)
are as follows:
purpose
types of equity
awarded
time of grant
time restrictions
Dividends
Voting rights
Retesting
ltI allocation
To align Executive KMP and other selected senior managers remuneration opportunity
with shareholder value and provide retention stimulus.
Under the NobleOak LTIP, selected senior managers are offered performance rights
(being a right (at nil exercise price) to fully paid ordinary shares of NobleOak Life
Limited), subject to satisfying the relevant requirements.
Grants will be issued in September 2022 (was Jun‑21 for FY21) as part of the normal
annual salary and incentive review process.
Grants awarded to the Executive KMP and other selected senior managers are tested
against the performance hurdles set, at the end of the performance and service period
(usually at least three years). If the performance hurdles are not met at the vesting
date, performance rights will lapse.
No dividends are attached to performance rights.
There are no voting rights attached to performance rights.
There will be no retesting of performance hurdles.
The size of individual LTI grants for the Executive KMP and other selected senior
managers are determined in accordance with the Board approved remuneration
strategy mix.
The allocation methodology for performance rights is to determine the target LTI
dollar value for each executive and divide it by the ‘face value’ of the right without
discounting for service or performance hurdles.
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continued
performance hurdles and vesting
tranche 1
prospectus Forecast tranche
FY22‑24
FY23‑25
One third
NA
The vesting of Rights prospectus Forecast Tranche will be conditional
on achieving specific underlying NPAT targets set out in the Prospectus
FY22 forecast (of $9.03 million) Financial Information (which, for the
avoidance of doubt, will include the expenses associated with all
incentive payments made and grants which vest in respect of FY22)
for FY22 and one of:
• a ‘weighted’ in‑force insurance premium (calculated by adding
one quarter of in‑force insurance premium from the Strategic
Partnership Channel and all of the in‑force insurance premium
from the Direct Channel) implied by FY22 Forecast Financial
Information (being approximately $106.5 million); or
• direct sales as set out in the FY22 Forecast Financial Information
being $12.5 million,
The executive will also be required to remain employed with
the Company for three years after the date of grant of rights.
tranche 2
Total Shareholder Return (TSR) Tranche
One third
50%
The vesting of Rights tSR tranche will be conditional on achieving
specific TSR targets:
Compound annual growth (CAGR) in total
Shareholder Return (tSR) (3 years)
Performance (p.a)
% of equity to vest
< 8%
>8% up to 12%
> 12% up to 16%+
0%
12.5% to 50% pro‑rata
50% to 100% pro‑rata
Performance rights vest if the time restrictions and relevant
performance hurdles are met. The Board must approve any special
provisions, in accordance with Company policies, in the event of
termination of employment or a change of control.
The executive will also be required to remain employed with the
Company for 3 years after the date of grant of rights.
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continued
tranche 3 underlying* earnings per Share (epS) tranche
FY22‑24
FY23‑25
One third
50%
The vesting of Rights EPS Tranche will be conditional on achieving
specific EPS targets below.
Compound annual growth (CAGR) in earnings per Share (epS) (3 years)
performance epS (CAGR)
% of equity
to vest
FY22‑24
FY23‑25
Below Threshold level
0%
0%
0%
EPS (CAGR)
(threshold level)
EPS (CAGR)
(target level)
EPS (CAGR)
(Stretch level)
12.5%
13.0 cents
(11.5%)
15.7 cents
(11.8%)
15.0 cents
(17.0%)
17.7 cents
(16.4%)
50%
100%
17.0 cents
(22.0%)
20.35 cents
(22.0%)
Performance rights vest if the 3‑year time restrictions and relevant
performance hurdles are met. The Board has the discretion to
make any special provisions in the event of a change of control.
The performance period for each grant ends on 30 June in the
third year after the date of the grant of rights (i.e.. the performance
period for rights granted in September 2022 will end on 30 June 2025).
The executive must remain employed with the company throughout
the period and at the date of vesting.
Underlying EPS for each relevant financial year will be calculated as
Underlying NPAT for that financial year, divided by the weighted
average number of ordinary shares.
The Implied Annual Compound Growth Rate in Earnings per
Share for the FY22‑24 period is an estimate based on the expected
Pro‑forma FY21 Earnings Per Share at the date of issue of the grants
(i.e., 9.38 cents – which was adjusted to take into account one‑off
and ongoing costs items associated with the IPO).
The Board will make other adjustments as required by item (2)
in paragraph 11 of ASX Guidance Note 19.
total performance Rights
total performance Rights (for the Ceo and CFo)
789,736
833,960
395,898
432,894
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continued
other remuneration elements and disclosures relevant to executive KMp
Claw Back
The Board has claw back arrangements in place for Executive KMP for both the STI and LTI where there has
been material misconduct by the executive.
Hedging and margin lending prohibition
Under the NobleOak Securities Trading Policy and in accordance with the Corporations Act, equity granted under
NobleOak equity incentive schemes must remain at risk until vested if they are performance rights. It is a specific
condition of grant that no schemes are entered into, by an individual or their associates that specifically protect
the unvested value of performance rights allocated.
NobleOak also prohibits the CEO or other ‘Designated Persons’ (including Executive KMP) providing NobleOak
securities in connection with any margin loan or similar financing arrangement unless that person has received
a specific notice of no objection in compliance with the policy from the Board.
NobleOak, in line with good corporate governance, has a formal policy setting down how and when employees
of NobleOak may deal in NobleOak securities.
NobleOak’s Securities Trading Policy is available on the NobleOak website under Investor Centre,
Corporate Governance.
nobleoak Company performance
FY22 was a transformational year for the business. In an environment of continued regulatory focus, COVID‑19
and economic uncertainty, NobleOak navigated a successful IPO, significant investment in new personnel and
systems and record growth. The business exceeded key FY22 Prospectus forecast measures, including:
• Underlying NPAT of $9.5million, representing 35.2% growth over prior year;
• Active policies in place at 30 June 2022 now exceed 103,000, (33.4% growth);
• New Business during the year of $60.9 million across all channels, (11.7% decrease);
•
•
In‑force premium at 30 June 2022 is over $254.6 million (39.8% growth);
Insurance premium revenue is up to $248.4 million (46.2% growth).
These results were achieved while also:
• maintaining our high customer service quality standards, evidenced by third party awards from Canstar
(Direct Life and Income Protection products), Plan for Life (Overall Excellence Award), Feefo Gold Trusted
service award, Mozo (Life insurer on the Year) amongst other awards;
• committing to ongoing investment in our people, processes and systems to improvement scalability;
•
•
•
further enhancing our insurance and partner governance frameworks and capability;
launching new alliance partnerships with RAC WA, Budget Direct and Qudos Bank;
launching new IDII products;
• navigating COVID‑19 restrictions, predominantly during the first half of the FY22; and
•
transitioning to a publicly listed entity.
NobleOak Life Limited AnnuAl RepoRt 2022
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continued
The performance of the Group is summarised in the table below:
Financial performance
2022
$’000
2021
$’000
Insurance premium revenue
248,401
169,932
Net insurance premium revenue
Net Profit After Tax
Underlying net profit after tax
Basic EPS (cents)
Diluted EPS (cents)
Underlying Basic EPS (cents)
ltI performance outcomes
LTI Vested (% of grant) (Target = 50%)
63,701
1,685
9,476
2.00
1.95
11.22
2022
67.8%
46,611
4,903
7,008
7.69
7.50
10.99
2021
38.6%
Total Performance Rights Vested
224,516
172,570
2020
$’000
105,568
36,638
7,636
5,836
13.58
13.32
10.38
2020
30.1%
57,733
Total Performance Rights Vested
(For CEO & CFO)
tracking unvested ltI Awards
224,516
172,570
57,533
ltI Award
Vesting Date
2020
2021
2022
30‑Jun‑23
29‑Jun‑24
30‑Jun‑25
tracking (50% of
Rights vest at target)
Above Target
Close to Target
Period Just started
During FY22, the Company achieved the following goals:
Financial
Strategy & operations
2019
$’000
71,675
27,237
5,233
3,350
10.03
9.78
6.42
2019
N/A
N/A
N/A
2018
$’000
56,620
21,366
3,256
2,206
7.17
7.31
4.86
2018
N/A
N/A
N/A
total
performance
Rights
total
performance
Rights (For
Ceo & CFo)
794,391
789,736
833,960
448,250
395,898
432,894
• Strong financial performance, exceeding
key FY22 Prospectus measures including:
–
–
In‑force premium: $254.6m
(up 9.1% vs. Prospectus Forecast)
Insurance premium revenue: $248.4m
(up 46.2%)
– Underlying NPAT: $9.5m (up 35.2%)
• New business sales impacted by reduced
activity post‑launch of new IDII products
• Robust risk management procedures, with no
significant regulatory actions, breaches or
remediations across the business during FY22
• Successful delivery of key Business Plan initiatives,
including successful launch of IDII product,
partnerships with Budget Direct and RAC WA
and continued collaborative approach with
Strategic Partners
Customers
people & Culture
• Continued below‑market lapse rates
and high customer satisfaction rates
• Maintained disciplined approach to
customer acquisition
• Strong focus on entrenching NobleOak’s core
values, delivering high levels of staff engagement,
with over 96% of respondents in our most recent
Employment Engagement Survey stating they
were proud to work for NobleOak
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continued
Short‑term Incentive outcomes
Relationship between nobleoak performance and executive KMp remuneration
Each Executive KMP has corporate and individual targets and objectives, including sound risk management
practices as well as demonstrating NobleOak’s core values and corporate culture, which are key factors in
the assessment.
Taking into account the Company and the individual goals achieved, the resultant potential STI awards
for Executive KMP for FY22 are as follows:
Key Management personnel
Anthony Brown (CEO)
Scott Pearson (CFO)
target StI %
Minimum
– Maximum
StI %
Actual StI
Achieved %
40%
25%
0% – 60%
0% – 50%
38.4%
28.8%
executive KMp remuneration table
The remuneration of each Executive KMP for the year ended 30 June 2022 is set out below:
Short‑term Benefits
equity‑Based
payments
Base
Salary
($)
Cash StI
($)
other
Cash
Benefits
($)
Deferred
StI
Rights
($)
ltI
perfor‑
mance
Rights
($)
ltI
options
($)
long
Service
leave
($)
Anthony
Brown
Scott
Pearson
FY22 537,458
216,616
FY21 465,897
224,447
FY22 376,087
114,565
FY21 354,906
123,000
total
total
FY22 913,545
331,181
FY21 820,803
347,447
–
–
–
–
–
–
– 226,088
110,042
–
–
–
–
264,747
31,961
157,236
84,383
171,838
24,509
383,324
194,425
– 436,585
56,470
–
–
–
–
–
–
other
Super‑
annuation
($) total ($)
23,680
1,113,884
21,786 1,008,838
23,680
755,951
21,786 696,039
47,360 1,869,835
43,572 1,704,877
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continued
5. KMp eQuItY InteReStS
The tables below set out the equity interests held by NEDs and Executive KMP.
Shares
Directors of nobleoak life limited
Andrew Boldeman
Sarah Brennan (appointed 8 December 2021)
Emery Feyzeny1 (retired 1 December 2021)
Kevin Hamman2
Stephen Harrison3
Inese Kingsmill
KMp of nobleoak life limited
Anthony Brown4
Scott Pearson
opening
Balance
(1 July 2021)
Shares
Acquired
Shares Sold
Closing
Balance
(30 June 2022)
–
–
390,000
1,126,366
188,454
–
51,282
–
–
–
–
–
5,118,247
375,063
25,000
89,815
–
–
–
51,282
–
390,000
26,364
1,100,002
–
–
–
–
188,454
–
5,493,310
114,815
1. Of the Shares held by Mr Feyzeny, 150,000 Shares are held in the name of Emery Feyzeny and Judy Feyzeny as trustees for the
Pluvial Super Fund.
2. Of the Shares held by Mr Hamman, 437,002 Shares are held in the name of TK Consulting (Aust) Pty Ltd as trustee for the Hamman
Family Trust (an entity associated with Mr Hamman), 227,273 Shares are held in the name of Future Super KH Custodian Pty Ltd
as trustee for the Future Super Fund (an entity associated with Mr Hamman), 172,727 Shares are held in the name of Future Super
KH Pty Ltd as trustee for the Future Super Fund (an entity associated with Mr Hamman) and 110,000 Shares are held in the name
of KH Investments Pty Ltd as trustee for the KH Development Trust (an entity associated with Mr Hamman).
3. Of the Shares held by Mr Harrison, 38,000 Shares are held in the name of MSJ Capital Pty Ltd as trustee for the Harrison Super
Fund (an entity associated with Mr Harrison).
4. Of the Shares held by Mr Brown, 3,980,769 Shares are held in the name of Brohok Investments Co Pty Ltd (an entity associated
with Mr Brown). 108,396 shares were acquired through the exercise of performance rights issued through 2018 LTI Plan.
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continued
6. eMploYMent AGReeMentS
The Executive KMP operate under employment agreements.
The following sets out details of the employment agreements relating to the CEO and CFO. The terms for the
CEO and CFO are similar but do, on occasion, vary to suit different needs.
length of contract
The CEO and CFO are on permanent contracts, which is an ongoing employment
contract until notice is given by either party.
notice periods
Resignation
termination on
notice by nobleoak
In order to terminate the employment arrangements, the CEO and CFO are required
to provide NobleOak with six months’ written notice.
On resignation, unless the Board determines otherwise, all unvested STI or LTI benefits
are forfeited.
NobleOak may terminate employment of the CEO and CFO by providing six months’
written notice. The Company may make payment in lieu of the notice period based
on TFR. On termination on notice by NobleOak, unvested STI or LTI benefits may be
varied, terminated, suspended or exercised, in the absolute discretion of the Board
(subject to the listing rules of the ASX).
Death or total and
permanent disability
On death or total and permanent disability, the Board has discretion to allow all
unvested STI and LTI benefits to vest.
termination for
serious misconduct
NobleOak may immediately terminate employment at any time in the case of serious
misconduct, and Executive KMP will only be entitled to payment of TFR up to the
date of termination.
On termination without notice by NobleOak in the event of serious misconduct:
• all unvested STI or LTI benefits will be forfeited; and
• any ESS instruments provided to the employee on vesting of STI or LTI awards
that are held in trust, will be forfeited.
Statutory entitlements
Payment of statutory entitlements of long service leave and annual leave applies
in all events of separation.
post‑employment
restraints
The CEO’s contract includes a post‑employment restraint around working for a
competitor direct insurer of 6 months. The CFO is also subject to a post‑employment
restraint for up to 6 months.
NobleOak Life Limited AnnuAl RepoRt 2022
55
AuDItoR’S InDepenDenCe DeClARAtIon
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Tel: +61 2 9322 7000
Fax: +61 2 9322 7001
www.deloitte.com.au
The Board of Directors
NobleOak Life Limited
66 Clarence Street
Sydney NSW 2000
30 August 2022
Dear Board Members,
Auditor’s Independence Declaration to 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 lead audit partner for the audit of the financial report of NobleOak Life Limited for the financial year
ended 30 June 2022, 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 faithfully
DELOITTE TOUCHE TOHMATSU
Max Murray
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
NobleOak Life Limited AnnuAl RepoRt 2022
56
FInAnCIAl RepoRt ContentS
Consolidated Statement of Profit or Loss
and Other Comprehensive Income ..............................58
4 Other assets and liabilities ........................................84
4.1 Plant and equipment .............................................84
Consolidated Statement of Financial Position ........59
4.2 Right‑of‑use assets and Lease Liabilities....85
Consolidated Statement of Changes in Equity ..... 60
Consolidated Statement of Cash Flows .....................61
Notes to the Financial Statements ...............................62
4.3 Intangibles ................................................................... 87
4.4 Provisions .....................................................................88
5 Life insurance contracts .............................................89
5.1 Accounting for life insurance contracts ......89
1 About this report...........................................................62
5.2 Disaggregated information
(a) General Information ...............................................62
by Benefit Fund ......................................................... 91
(b) Statement of compliance ....................................62
5.3 Policy & member liabilities ..................................95
(c) Basis of preparation ...............................................62
5.4 Capital Adequacy ....................................................96
(d) Controlled Entities ...................................................62
5.5 Summary of Significant Actuarial
(e) Going concern ...........................................................63
(f) Change in accounting policy .............................63
(g) Principles of consolidation..................................66
Methods and Assumption ...................................99
5.6 Critical accounting judgements
and estimates ...........................................................102
(h) Business combinations .........................................67
6 Capital structure .......................................................... 103
(i)
Impairment of assets .............................................67
6.1 Share capital .............................................................103
(j) Significant accounting policies ........................67
6.2 Accumulated profits ............................................105
(k) Critical accounting judgements
and estimates .............................................................67
2 Results for the year ......................................................68
2.1 Revenue items ...........................................................68
7 Other disclosures ........................................................105
7.1 Related party disclosures ..................................105
7.2 Interests in subsidiaries ......................................106
7.3 Notes to the consolidated statement
2.2 Expense items ...........................................................69
of cash flow ............................................................... 107
2.3 Segment Information............................................. 72
7.4 Information on the Group’s operations .....108
2.4 Earnings per share .................................................. 74
7.5 Additional information ........................................108
2.5 Dividends...................................................................... 74
7.6 Contingent liabilities .............................................108
2.6 Taxes ............................................................................... 75
7.7 Subsequent events ...............................................108
3 Receivables, payables and investments .............79
Directors’ Declaration ......................................................109
3.1 Receivables .................................................................79
3.2 Payables ........................................................................79
3.3 Investment .................................................................. 80
Independent Auditor’s Report ...................................... 110
Shareholders’ Information ...............................................115
3.4 Financial risk management ................................. 81
Directory ................................................................................. 118
NobleOak Life Limited AnnuAl RepoRt 2022
57
ConSolIDAteD StAteMent oF pRoFIt oR
loSS AnD otHeR CoMpReHenSIVe InCoMe
For the Financial Year ended 30 June 2022
Continuing operations
Insurance premium revenue
Reinsurance expenses
Net insurance premium revenue
Investment income
Net commissions
Fees & other revenue
Claims expense – net of reinsurance
recoveries
Policy acquisition costs
Change in net policy liabilities
(before economic assumption changes)
Change in net policy liabilities
(economic assumption changes)
Administration expenses
IPO expenses
operating profit
Lease interest expense
profit Before tax
Income tax expense
profit After tax
other Comprehensive Income
total Comprehensive income
attributable to owners of the Company
earnings per share
Basic (cents per share)
Diluted (cents per share)
Consolidated
the Company
note
2022
$’000
2021
$’000
2022
$’000
2021
$’000
2.1
2.1
2.1
2.1
2.1
2.2
2.2
5.3
5.3
2.2
2.2
2.6
2.4
2.4
248,401
169,932
230,919
156,872
(184,700)
(123,321)
(184,700)
(123,321)
63,701
181
15,097
4,422
(9,485)
(45,170)
46,611
(207)
13,046
4,044
46,219
1,166
15,097
14,068
33,551
779
13,046
9,916
(5,922)
(9,485)
(5,922)
(38,549)
(42,095)
(35,669)
7,000
10,617
7,000
10,617
(8,321)
(21,969)
(2,808)
2,648
(47)
2,601
(916)
1,685
–
(1,108)
(8,321)
(19,356)
(18,498)
(1,900)
(2,808)
7,276
(88)
7,188
(2,285)
4,903
–
2,343
(34)
2,309
(518)
1,791
–
(1,108)
(16,932)
(1,900)
6,378
(64)
6,314
(1,723)
4,591
–
1,685
4,903
1,791
4,591
2.00
1.95
7.69
7.50
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes to the financial statements.
NobleOak Life Limited AnnuAl RepoRt 2022
58
ConSolIDAteD StAteMent
oF FInAnCIAl poSItIon
For the Financial Year ended 30 June 2022
Assets
Cash and cash equivalents
Receivables
Financial assets
Gross policy liabilities ceded under reinsurance
Plant and equipment
Right‑of‑use assets
Deferred tax asset
Intangibles
total assets
liabilities
Payables
Current tax liabilities
Lease liabilities
Provisions
Gross policy liabilities
total liabilities
net assets
equity
Issued share capital
Accumulated profits
Share‑based payment reserve
total equity
Consolidated
the Company
note
2022
$’000
2021
$’000
2022
$’000
2021
$’000
7.3
3.1
3.3
5.3
4.1
4.2
2.6
4.3
3.2
2.6
4.2
4.4
5.3
6.1(a)
6.2
6.1(b)
30,263
12,043
69,200
27,428
169
495
3,562
5,353
31,842
14,037
20,486
35,444
517
1,344
2,932
1,458
27,183
11,250
72,415
27,428
169
360
2,834
1,816
29,058
12,725
20,500
35,444
228
976
2,344
1,308
148,513
108,060
143,455
102,583
28,639
29,027
25,719
25,809
702
556
1,512
5,472
36,881
111,632
95,323
14,826
1,483
111,632
2,104
1,455
1,283
(10,429)
23,440
84,620
62,451
21,298
871
84,620
702
405
–
5,472
32,298
111,157
95,323
14,351
1,483
111,157
2,104
1,060
–
(10,429)
18,544
84,039
62,451
20,717
871
84,039
The above Statement of Financial Position should be read in conjunction with the accompanying notes
to the financial statements.
NobleOak Life Limited AnnuAl RepoRt 2022
59
ConSolIDAteD StAteMent
oF CHAnGeS In eQuItY
For the Financial Year ended 30 June 2022
Consolidated
Balance as at 1 July 2020
Share capital net of transaction costs
Profit for the year
Recognition of share‑based payments
Balance at 30 June 2021
Share capital net of transaction costs
Profit for the year
Dividends
Recognition of share‑based payments
Balance at 30 June 2022
the Company
Balance as at 1 July 2020
Share capital net of transaction costs
Profit for the year
Recognition of share‑based payments
Balance at 30 June 2021
Share capital net of transaction costs
Profit for the year
Dividends
Recognition of share‑based payments
Balance at 30 June 2022
note
2.5
6.1
note
2.5
6.1
Issued
share
capital
$‘000
47,120
15,331
–
–
62,451
32,872
–
–
–
Issued
share
capital
$‘000
47,120
15,331
–
–
62,451
32,872
–
–
–
Accumulated
profits
Share‑based
payment
reserve
$‘000
16,395
–
4,903
–
21,298
–
1,685
(8,157)
–
$‘000
16,126
–
4,591
–
20,717
–
1,791
(8,157)
–
$‘000
505
–
–
366
871
–
–
–
612
1,483
$‘000
505
–
–
366
871
–
–
–
612
1,483
95,323
14,826
Accumulated
profits
Share‑based
payment
reserve
total
equity
$‘000
64,020
15,331
4,903
366
84,620
32,872
1,685
(8,157)
612
111,632
total
equity
$‘000
63,751
15,331
4,591
366
84,039
32,872
1,791
(8,157)
612
111,157
95,323
14,351
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes to the
financial statements.
NobleOak Life Limited AnnuAl RepoRt 2022
60
ConSolIDAteD StAteMent oF CASH FloWS
For the Financial Year ended 30 June 2022
Cash flows from operating activities
Premium received
Reinsurance premium payments
Reinsurance recoveries received
Claims paid
Interest received
Dividends received
Consolidated
the Company
note
2022
$’000
2021
$’000
2022
$’000
2021
$’000
249,265
170,818
231,470
158,056
(177,915)
(119,597)
(177,915)
(119,597)
67,970
27,386
67,970
27,386
(51,629)
(33,175)
(51,629)
(33,175)
181
56
140
–
169
1,056
127
1,000
119,475
Fees and other income received
114,374
112,506
125,344
Marketing and policy acquisition costs
(144,593)
(131,717)
(143,132)
(128,817)
Payments to other suppliers and employees
(29,732)
(27,081)
(26,357)
(23,911)
Net cash from/(used in) operating activities
7.3(b)
27,977
(720)
26,976
544
Cash flows from investing activities
Purchase of plant and equipment
Purchase of intangible assets
Purchase of financial assets
(31)
(96)
(4,457)
(1,356)
(31)
(807)
(48,837)
(8,920)
(52,038)
(96)
(1,356)
(8,920)
Net cash used in investing activities
(53,325)
(10,372)
(52,876)
(10,372)
Cash flows from financing activities
Repayment of leasing liabilities
Lease interest paid
Dividends paid
Amounts received from issue of shares
Cost of issue of shares
Net cash from financing activities
net (decrease)/increase 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
2.5
6.1(a)
6.1(b)
(899)
(47)
(8,157)
34,520
(1,648)
23,769
(826)
(88)
–
15,377
(46)
14,417
(656)
(34)
(8,157)
34,520
(1,648)
24,025
(601)
(64)
–
15,377
(46)
14,666
(1,579)
3,325
(1,875)
4,838
31,842
28,517
29,058
24,220
7.3(a)
30,263
31,842
27,183
29,058
The above Statement of Cash Flows should be read in conjunction with the accompanying notes to the
financial statements.
NobleOak Life Limited AnnuAl RepoRt 2022
61
noteS to tHe FInAnCIAl StAteMentS
For the Financial Year ended 30 June 2022
1 About this report
(a) General Information
NobleOak Life Limited (the Company) is a company limited by shares, incorporated and domiciled in Australia.
The Company’s registered office is Level 7, 66 Clarence Street, Sydney NSW, 2000. These consolidated financial
statements comprise the Company, its subsidiaries and controlled entities (together referred to as the “Group”).
The Group is a for‑profit entity and is primarily involved in the sale and management of life insurance products.
The financial report was authorised for issue by the Directors on 30 August 2022. The Company has the power
to amend and reissue the Financial Report.
The financial statements are prepared by consolidating the financial statements of the Group’s Benefit Funds
and Management Fund. A list of Benefit Funds appears in note 5.2 of the financial statements.
(b) Statement of compliance
These financial statements are general purpose financial statements which have been prepared in accordance
with the Corporations Act 2001, Accounting Standards and other authoritative pronouncements issued by the
Australian Accounting Standards Board (AASB), and comply with other requirements of the law.
The financial statements comprise the consolidated financial statements of the Group and the separate financial
statements of the parent entity. For the purpose of preparing the consolidated financial statements, the Company
is a for‑profit entity. Accounting Standards comprise Australian Accounting Standards. Compliance with Australian
Accounting Standards ensures that the financial statements and notes of the Company and the Group comply
with International Financial Reporting Standards (‘IFRS’).
(c) Basis of preparation
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.
Historical cost is generally based on the fair values of the consideration given in exchange for goods and
services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price is directly
observable or estimated using another valuation technique.
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 3.3.
The Group 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.
The Company is that as referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191, dated 24 March 2016, and in accordance with that Corporate Instrument, amounts in the consolidated
financial statements and Directors’ report have been rounded off to the nearest thousand dollars, unless
otherwise indicated.
All amounts are presented in Australian dollars, unless otherwise noted.
(d) Controlled entities
Controlled entities, which make up the Group are all those entities over which the Company has the power
to govern the financial and operating policies, generally accompanying a shareholding of more than one‑half
of the voting rights. A list of controlled entities is summarised in note 7.2.
NobleOak Life Limited AnnuAl RepoRt 2022
62
noteS to tHe FInAnCIAl StAteMentS
continued
(e) Going concern
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.
(f) 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
effective for
annual reporting
periods beginning
on or after
expected to be
initially applied
in the financial
year ending
AASB 17 ‘Insurance contracts’ will replace AASB 1038.
1 January 2023
30 June 2024
AASB 9 ‘Financial instruments’ – The Group is taking the
deferral approach and will implement at the same time
as AASB 17 ‘Insurance Contracts’.
1 January 2021
30 June 2024
AASB 17 Insurance Contracts
AASB 17 Insurance Contracts is a comprehensive new accounting standard for insurance and reinsurance
contracts that replaces AASB 1038 within the Australian Life Insurance industry. It applied to all insurers and
reinsurers, including NobleOak. The objective of the Standard is to ensure that financial entities provide relevant
information that faithfully represents the contracts that it holds, through considering the substantive rights
and obligations under those contracts that may arise from law, regulation or the contracts themselves.
AASB 17 covers the recognition, measurement, presentation, and disclosure of insurance contracts.
The Standard is based on IFRS 17 Insurance Contracts, and will apply to annual reporting periods beginning
on or after 1 January 2023. NobleOak will thus adopt AASB 17 from 1 July 2023.
Key principles under AASB 17, are that an insurance company:
•
Identifies insurance contracts as contracts under which significant insurance risk is accepted through
an agreement to compensate the policyholder in the event of a specified uncertain future event
(that adversely impacts the policyholder).
• Separates non‑insurance components (such as embedded derivatives or investment components)
from insurance contracts.
• Divides contracts into groups that it will recognise and measure together (such as onerous contracts,
or contracts that are incepted in the same year).
• Recognises and measures groups of insurance contracts as:
– Fulfilment cashflows (the risk‑adjusted present value of future cashflows attributable to the contract), plus
– The Contractual Service Margin (‘CSM’) which represents the amount of unearned profit in the group
of contracts.
– Recognises the profit from a group of contracts over the period that insurance coverage is provided.
Losses are recognised immediately.
• Presents insurance revenue, insurance service expenses, insurance finance income or insurance finance
expenses separately in the accounts.
• Discloses information to enable the users of financial statements to assess the effects that contracts
have on the financial position, financial performance, and cash flows of the entity.
NobleOak Life Limited AnnuAl RepoRt 2022
63
noteS to tHe FInAnCIAl StAteMentS
continued
Measurement of insurance contracts
Measurement models
AASB 17 introduces a new measurement model known as the GMM (General Measurement Model). Under the GMM,
the insurance contract liability includes the following key components:
• The liability for remaining coverage (‘LRC’) which represents future insurance coverage to be provided
(after the reporting date). The LRC is measured as the sum of:
–
the present value of expected future cash flows, including an explicit risk adjustment (collectively referred
to as the ‘fulfilment cash flows’); and
–
the CSM, which reflects unearned profit.
• The liability for incurred claims which represents ‘fulfilment cash flows’ arising from past insurance service.
NobleOak expects that most of its insurance contracts will be accounted for using the GMM.
AASB 17 also permits the use of a simplified measurement model known as the Premium Allocation Approach
(‘PAA’), in certain circumstances. This model is similar to the retrospective accounting approach allowed under
AASB 1038, with the exception of the option to recognise any insurance acquisition costs as expenses when
incurred, for contracts that have a coverage period of one year or less. We are in the process of undertaking a
detailed impact assessments to determine eligibility and preference around the application of this measurement
approach to any of our insurance contract groups.
AASB 17 also requires a modified version of the GMM, the variable fee approach (‘VFA’), to be applied to contracts
with direct participation features. The modifications reflect the fact that those contracts provide investment‑related
services and that the Company receives a variable fee for those services. Consideration is being given as to
whether this measurement approach is appropriate to use given the profit share arrangement in our PPS Benefit
Fund or the terminal bonus arrangement in the Funeral Fund.
Risk adjustment
Under AASB 17, the LRC is required to include an explicit risk adjustment, reflecting the compensation that
the Company requires for bearing non‑financial risk. This is a new addition when compared to AASB 1038.
AASB 17 does not prescribe a methodology for calculating the risk adjustment, and the determination of the
compensation required for non‑financial risk requires significant judgement and industry interpretation.
Within NobleOak, consideration is being given to the appropriateness of using a cost of capital approach
vs. a confidence interval drive approach. As a result, this requirement is still subject to change and therefore
the financial impact cannot be reasonably estimated at this point in time.
Discount Rates
AASB 17 requires estimates of future cash flows to be discounted to reflect the time value of money and financial
risks related to those cash flows. It also requires that for policies for which changes in assumptions that relate to
financial risks do not have a substantial effect on the amounts paid to policyholders, that the discount rate used
is locked in from inception. NobleOak is still determining the discount rate methodology.
NobleOak Life Limited AnnuAl RepoRt 2022
64
noteS to tHe FInAnCIAl StAteMentS
continued
Onerous Contracts
AASB 17 requires the identification of ‘groups’ of onerous contracts and recognition of losses arising on these
contracts. NobleOak is currently developing the methodology to be applied to identify and measuring onerous
contract losses.
Onerous contract losses are required to be recognised in the Statement of Comprehensive Income on a gross
basis when the expected fulfilment cash flows exceed the carrying value of the contract, or group of contracts.
Contracts that are measured using the PAA are assumed to not be onerous unless facts and circumstances indicate
otherwise. A loss recovery component (reinsurance recoveries) expected on the onerous contract losses, is also
recognised in the Statement of Comprehensive Income to the extent that the onerous contracts are covered
by reinsurance.
Given the judgemental nature of the measurement of onerous contract losses, and the related loss recoveries,
and evolving industry practice, NobleOak is still determining the financial impact of the onerous contract requirements.
Transition
AASB 17 must be applied retrospectively unless impracticable, in which case the modified retrospective approach
(‘MRA’) or the fair value approach (‘FVA’) may be applied. Careful consideration is still being given to the
requirements and implications of each of these approaches, and thus the extent to which each approach
will be applied under transition.
Presentation and disclosure
AASB 17 introduces significant changes to the presentation of and disclosures in insurers’ financial statements.
These include changes to existing line items and the introduction of new line items in both the Statement of
Financial Position and the Statement of Comprehensive Income.
Statement of Financial Position:
• Existing insurance and reinsurance contract line items will be replaced with single line items representing
insurance and reinsurance contract assets and liabilities separately.
•
Insurance contract liabilities are to include all cashflows that relate to the fulfillment of the insurance contract
including direct costs (such as acquisition and claim costs) and other costs (e.g., indirect costs such as overheads).
Statement of Comprehensive Income:
• Gross earned premium will be replaced by insurance contract revenue, reflecting the amount that the
Company expects to receive for the services it has provided in the period.
• Claims incurred and attributable operational expenses will be combined into a single line item relating
to insurance service expenses.
• The total of insurance contract revenue less the insurance service expense will represent the insurance
service result.
• The effect of discounting (i.e., the time value of money) on expected cash flows of insurance contract assets
and liabilities will be presented as a finance income or expense.
• Amounts related to insurance contracts issued will be presented separately for reinsurance contracts held.
NobleOak Life Limited AnnuAl RepoRt 2022
65
noteS to tHe FInAnCIAl StAteMentS
continued
AASB 17 implementation progress
The implementation of AASB 17 is well underway within NobleOak and a team of key staff members across finance,
insurance and IT has been created and mobilised to progress the detailed design and implementation of required
changes, under the help and guidance of an experienced international consulting firm. Strategic partners have
been engaged and will be involved and input into all stages of the project to ensure successful delivery. Overall
implementation is being overseen by a subset of the Senior Leadership Team, and by the Board Audit Committee.
Accounting policy decisions and application methodologies are being developed and implemented and
significant changes to actuarial and finance systems, data, financial processes, and disclosures are underway.
A key component of the implementation program is to ensure that business value is gained from the changes
being made, and as a result significant attention is being given to uplifting areas of the business over and
above meeting the requirements of the standard. These areas include:
• Data capability and granularity, with the aim of uplifting the quality and granularity of business
performance insights
•
Internal actuarial capability, in line with the growth of the business, and
• Actuarial and financial processes, with the aim of ensuring internal consistency and efficiency.
Significant investment is being made by NobleOak to satisfy these compliance obligations and deliver long term
business process improvements. NobleOak expects to separately disclose the amount of this investment in its
Financial Statements to allow assessment of underlying business performance.
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 Group.
The majority of the Group’s assets are assets backing policyholder liabilities and are currently designated at fair
value through the profit or loss. The Group’s other financial instruments (i.e. receivables and payables) are held
at amortised cost. The standard is now in effect, however the Group is taking the deferral approach that is to
implement the standard at the same time as AASB 17. The Group has measured those liabilities which are within
the scope of AASB 4 Insurance Contracts, and these are greater than the 90% threshold of total liabilities required
to take the deferral option available as an insurer.
From 1 July 2023, AASB 9 will change the Group’s accounting for impairment losses for financial assets by replacing
AASB 139’s incurred loss approach with an expected credit loss (“ECL”) approach. AASB 9 is currently being
evaluated by the Group to consider the impact and implementation alongside AASB 17. As the Group’s assets
backing policyholder liabilities are currently measured as at fair value through profit or loss and other financial
instruments (i.e. receivable and payables) are held at amortised costs, the adoption of AASB 9 does not materially
change the accounting for these assets. For trade and other receivable, the Group will determine the approach
to calculate ECLs.
(g) principles of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (NobleOak
Life Limited) and the subsidiaries. A 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 subsidiaries are provided in note 7.2.
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.
NobleOak Life Limited AnnuAl RepoRt 2022
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noteS to tHe FInAnCIAl StAteMentS
continued
(h) Business combinations
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.
(i) Impairment of assets
At each reporting date, the Group reviews the carrying amounts of its tangible, right‑of‑use and intangible 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.
Right‑of‑use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash‑generating unit to which the asset belongs.
(j) Significant accounting policies
The significant accounting policies adopted in the preparation of the financial report are contained in the notes
to the financial statements to which they relate. All accounting policies have been consistently applied to the
current year and comparative period, unless otherwise stated.
(k) Critical accounting judgements and estimates
The following items are covered in note 5.6:
• Life insurance policy liabilities, including the actuarial methods and assumptions.
• Assets arising from reinsurance contracts.
• Further details on the potential impacts of COVID‑19.
NobleOak Life Limited AnnuAl RepoRt 2022
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noteS to tHe FInAnCIAl StAteMentS
continued
2 Results for the year
2.1 Revenue items
Consolidated
the Company
2022
$’000
2021
$’000
2022
$’000
2021
$’000
(i) Net Insurance Premium Revenue
Premium revenue from insurance contracts*
248,401
169,932
230,919
156,872
Less: Outward reinsurance expense
(184,700)
(123,321)
(184,700)
(123,321)
63,701
46,611
46,219
33,551
* NobleOak’s in‑force premium as at 30 June 2022 in active benefit funds was $254,591,855 ($182,077,356 as at 30 June 2021).
In‑force premium in closed benefit funds as at 30 June 2022 was $11,685,662 ($17,628,636 as at 30 June 2021). From 1 June 2020,
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 premium 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.
premium revenue
Premium revenue arises in respect of life insurance contracts and it is recognised on a due basis subject to the
rules governing each Benefit Fund. 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.
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.
(ii) Investment Income
Interest revenue
Decrease in market value of investments
Dividends received
Consolidated
the Company
2022
$’000
2021
$’000
2022
$’000
2021
$’000
248
(123)
56
181
146
(353)
–
(207)
233
(123)
1,056
1,166
132
(353)
1,000
779
NobleOak Life Limited AnnuAl RepoRt 2022
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noteS to tHe FInAnCIAl StAteMentS
continued
Interest revenue
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the
financial asset.
Consolidated
the Company
2022
$’000
2021
$’000
2022
$’000
2021
$’000
(iii) Net commissions
Commissions received from reinsurers
112,285
112,246
112,285
112,246
Commissions paid to distributors
(97,188)
(99,200)
(97,188)
(99,200)
15,097
13,046
15,097
13,046
Commission revenue
Commission revenue is recognised when all service obligations are complete and revenue is receivable
from reinsurers.
Commission expenses
Commission expense is recognised when all service obligations are complete and expense is payable to distributors.
(iv) Fees & other revenue
Management fees & administration fees
Management fee revenue
Consolidated
the Company
2022
$’000
2021
$’000
2022
$’000
2021
$’000
4,422
4,422
4,044
4,044
14,068
14,068
9,916
9,916
Management fee revenues are recognised in the period in which the services are performed and obligations satisfied.
All revenue is stated net of the amount of goods and services tax (GST).
2.2 expense items
(i) Claims Expenses
Claims payments
Claims expense reserve
Gross claims expense
Consolidated
the Company
2022
$’000
2021
$’000
2022
$’000
2021
$’000
51,712
18,672
70,384
33,254
15,018
48,272
51,712
18,672
70,384
33,254
15,018
48,272
Reinsurance recovery on paid claims
(45,955)
(28,958)
(45,955)
(28,958)
Reinsurance recovery reserve
Reinsurance recovery
(14,944)
(13,392)
(14,944)
(13,392)
(60,899)
(42,350)
(60,899)
(42,350)
Claims expense – net of reinsurance recoveries
9,485
5,922
9,485
5,922
NobleOak Life Limited AnnuAl RepoRt 2022
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noteS to tHe FInAnCIAl StAteMentS
continued
Claim payments 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.
Reinsurance claims recovery is recognised for claims ceded to reinsurers under reinsurance contracts.
Claim expense reserve is an actuarial estimate for future claim payments.
(ii) Policy Acquisition Costs
Commission
Marketing & promotion
Salary & employee costs
Other variable costs
Consolidated
the Company
2022
$’000
2021
$’000
2022
$’000
2021
$’000
14,971
11,991
6,418
11,790
45,170
10,970
12,001
5,919
9,659
11,896
11,991
6,418
11,790
8,091
12,001
5,919
9,658
38,549
42,095
35,669
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.
(iii) Administration expenses
Administration expenses include the
following expenses:
Salary & employee costs (incl. Board costs)
11,063
10,256
Marketing & Promotion – Brand and non lead
Management fees
Depreciation & amortisation
Other expenses
383
–
1,571
8,952
21,969
932
95
1,240
6,833
19,356
8,224
383
3,159
787
5,945
18,498
7,110
932
3,898
683
4,309
16,932
(iv) IPO expenses
IPO expenses
Consolidated
the Company
2022
$’000
2021
$’000
2022
$’000
2021
$’000
2,808
2,808
1,900
1,900
2,808
2,808
1,900
1,900
Costs that relate to the stock market listing on 22 July 2021, or otherwise not incremental and directly attributable
to issuing new shares, are recorded as an expense in the statement of comprehensive income in the period incurred.
NobleOak Life Limited AnnuAl RepoRt 2022
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noteS to tHe FInAnCIAl StAteMentS
continued
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:
• 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;
•
Investment expenses are apportioned to the classes of business on the mean balance of assets under
management; and
• 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 allocation.
(v) Remuneration of auditors
Auditor of the parent entity
Audit and review of financial reports
Audit of APRA and ASIC regulatory return
Consolidated
the Company
2022
$
2021
$
2022
$
2021
$
330,100
36,900
318,100
38,900
281,100
29,340
269,100
29,340
Total remuneration for audit services
367,000
357,000
310,440
298,440
Other non audit services –
investigative accountants report
Other non audit services – taxation due diligence
Total remuneration for non audit services
–
–
–
512,528
213,299
725,827
–
–
–
512,528
213,299
725,827
Total remuneration
367,000
1,082,827
310,440
1,024,267
NobleOak Life Limited AnnuAl RepoRt 2022
71
noteS to tHe FInAnCIAl StAteMentS
continued
2.3 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 information reported to the Group’s Board of Directors, being the chief operating decision maker, for the
purpose of resource allocation and assessment of performance is focused on the products and services of each
reporting segment.
The principal operating segments within the insurance operations of NobleOak are as follows:
(a) Direct Business
The term ‘Direct’ reflects the life insurance protection products that are sold directly to customers under the
NobleOak brand. This segment also includes the results of the management fund, whose function is to recognise
the expenses incurred and investment income of the Group (net of allocation to the other segments), as well as
one small closed fund, Funeral Fund, which is held for the Druids members.
Products sold under the direct branded Premium Life Direct or My Protection Plan include term life, total and
permanent disability, trauma, income protection and business expenses.
(b) partnerships
The term ‘Strategic Partnerships’ reflects the life insurance protection products which are sold to customers
primarily through advisors under our partner brands. Currently, NobleOak is the issuer of life insurance policies
for PPS Mutual (established 2016), Avant Mutual (established 2017) and NEOS (established 2018).
(c) Genus
The term ‘Genus’ refers to life insurance administration services performed by the Group company Genus Life
Insurance Services Pty Ltd. Genus took on the administration of the run‑off of life and funeral insurance protection
products written through Freedom Insurance Group following it ceasing operations in 2019. Genus also took
on the administration of the run‑off of life insurance policies written through A&G following the purchase of
administration rights in August 2021.
Genus provides administration services to the policyholders of the portfolios and receives revenue from the
insurer/reinsurer. The segment also includes the residual results of the Freedom and Reward Benefit Funds.
NobleOak Life Limited AnnuAl RepoRt 2022
72
noteS to tHe FInAnCIAl StAteMentS
continued
Direct
Strategic
partnerships
Genus
Consolidated
2022
$’000
2021
$’000
2022
$’000
2021
$’000
2022
$’000
2021
$’000
2022
$’000
2021
$’000
Insurance premium revenue
63,038
50,346
171,030
101,893
14,333
17,693
248,401
169,932
Reinsurance expenses
(28,002)
(23,061) (145,726) (86,902)
(10,972)
(13,358) (184,700) (123,321)
Net insurance premium revenue
35,036
27,285
25,304
14,991
3,361
4,335
63,701
46,611
Investment income
Net commissions
122
(250)
55
5,692
6,035
9,405
35
7,128
4
–
8
181
(207)
(117)
15,097
13,046
Fees & other revenue
35
(38)
–
–
4,387
4,082
4,422
4,044
Claims expense – net of
reinsurance recoveries
(7,290)
(5,284)
(2,195)
(638)
–
–
(9,485)
(5,922)
Policy acquisition costs
(25,256) (24,220)
(19,788)
(14,126)
(126)
(203)
(45,170) (38,549)
Change in net policy
liabilities (before economic
assumption changes)
Change in net policy liabilities
(economic assumption changes)
11,540
13,234
(4,550)
(2,630)
(7,977)
(2,215)
(344)
1,107
10
–
13
7,000
10,617
–
(8,321)
(1,108)
Administration expenses
(12,044)
(11,363)
(3,585)
(1,741)
(6,340)
(6,252)
(21,969)
(19,356)
IPO expenses
(Unallocated corporate costs)
–
–
–
–
–
–
(2,808)
(1,900)
operating profit
(142)
3,184
4,302
4,126
1,296
1,866
2,648
7,276
Lease Interest Expense
(34)
(88)
–
–
(13)
–
(47)
(88)
profit Before tax
Income Tax expense
profit After tax
Impact of policy liability
economic assumption
changes (post tax)
Impact of IPO expenses
(post tax)
(176)
3,096
4,302
4,126
1,283
1,866
2,601
7,188
(22)
(1,057)
(1,321)
(1,238)
(415)
(560)
(916)
(2,285)
(198)
2,039
2,981
2,888
868
1,306
1,685
4,903
5,584
1,550
241
(775)
–
–
–
–
–
–
–
–
5,825
775
1,966
1,330
underlying npAt
5,386
3,589
3,222
2,113
868
1,306
9,476
7,008
Underlying NPAT is a non‑IFRS financial measure, defined as net profit after tax excluding the impact on the
valuation of policy liability from changes in economic assumptions and IPO expenses. As economic assumptions
are driven by external economic market conditions and can generate volatility in statutory profits, disclosing an
underlying measure of profits, which excludes the impact of changes in economic assumptions and non‑recurring
costs such as those pertaining to the IPO, allows the users of financial information to better assess the underlying
performance of the business (as is contemplated by ASIC RG 230 Disclosing non‑IFRS financial information).
NobleOak Life Limited AnnuAl RepoRt 2022
73
noteS to tHe FInAnCIAl StAteMentS
continued
2.4 earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
Basic earnings per share
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 Group ($’000)
Earnings used in the calculation of basic earnings per share ($’000)
Weighted average number of ordinary shares for the purpose
of basic earnings per share
Diluted earnings per share
Consolidated
2022
2.00
1.95
2021
7.69
7.50
1,685
1,685
4,903
4,903
84,466,900
63,775,290
The earnings used in the calculation of diluted earnings per share are as follows:
Profit for the year attributable to owners of the Group ($’000)
Earnings used in the calculation of total diluted earnings per share ($’000)
1,685
1,685
4,903
4,903
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
84,466,900
63,775,290
Shares deemed to be dilutive in respect of the Premium Option Plan
and Performance Rights Plan
Weighted average number of ordinary shares used in the calculation
of diluted earnings per share (all measures)
1,844,830
1,629,351
86,311,730
65,404,641
2.5 Dividends
During FY21, the Directors resolved to determine the payment of a dividend of $0.12 per share franked to 100%.
The dividend was paid out of the Company’s pre‑existing cash reserves (prior to the IPO) on 20 July 2021.
The aggregate dividend amount of $8.2 million was paid to holders of ordinary shares in the Company as
at the Record Date of 9 June 2021. (2021: no dividends have been paid).
The Company’s current dividend policy is to generally reinvest cash flows into the business to support its ongoing
growth. Accordingly, no dividends are expected to be paid in the near term following the Company’s listing on
the ASX. However, from time to time the Company may consider paying dividends.
The payment of any future dividend by the Company is subject to the discretion of the Directors and will be a
function of a number of factors including the general business environment, the operating results, cash flows
and the financial condition of the Company, future funding requirements, capital management initiatives, taxation
considerations (including the level of Australian franking credits), any contractual, legal or regulatory restrictions
on the payment of dividends by the Company (including the need for APRA approval of dividends where the
aggregate amount of the dividend exceeds the Company’s after‑tax earnings (as reported to APRA in NobleOak’s
statutory accounts) in the financial year to which they relate) and any other factors the Directors may consider relevant.
NobleOak Life Limited AnnuAl RepoRt 2022
74
noteS to tHe FInAnCIAl StAteMentS
continued
Dividend franking account
Amount of franking credit available for use in subsequent financial years
Consolidated and Company
2022
$’000
5,308
2021
$’000
5,643
The Company’s ability to utilise the franking account credits depends on meeting Corporations Act 2001 (Cth)
requirements to declare dividends. Franked dividends are franked at a tax rate of 30%. The dividend paid in
the financial year has utilised $3.5 million of the franking credit account.
2.6 taxes
(a) The components of tax expense comprise:
Current tax
Deferred tax
(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% (2021: 30%)
Add:
Tax effect of:
Members Liability
Non‑deductible depreciation & amortisation
Non‑deductible expenses
Under provision of prior year income tax
Less:
Tax Effect of:
Deductible expenses
Non‑assessable other income
Income tax expense attributable to profit for the year
Consolidated
the Company
2022
$’000
2021
$’000
2022
$’000
2021
$’000
1,364
(448)
916
3,428
(1,143)
2,285
826
(308)
518
2,911
(1,188)
1,723
780
2,156
693
1,894
(21)
–
117
46
142
–
6
6
916
(8)
122
27
–
141
121
(109)
12
2,285
(21)
–
106
46
131
–
306
306
518
(8)
24
27
–
43
24
190
214
1,723
NobleOak Life Limited AnnuAl RepoRt 2022
75
noteS to tHe FInAnCIAl StAteMentS
continued
Income tax
The Company is subject to income tax on 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.
Current tax liabilities
Provision for income tax
Maturity analysis:
Current
Non‑current
Consolidated
the Company
2022
$’000
702
702
–
702
2021
$’000
2,104
2,104
–
2,104
2022
$’000
702
702
–
702
2021
$’000
2,104
2,104
–
2,104
The tax currently payable (or receivable) is based on taxable profit for the year less tax instalments paid.
Taxable profit differs from profit before tax as reported in the consolidated statement of profit or loss and other
comprehensive income because of items of income or expense that are taxable or deductible in other years and
items that are never taxable or deductible.
NobleOak Life Limited AnnuAl RepoRt 2022
76
noteS to tHe FInAnCIAl StAteMentS
continued
Deferred tax asset
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
Movement:
Opening balance as at beginning of year
Charged to income statement
Changes to equity
Closing balance as at end of year
Consolidated
the Company
2022
$‘000
555
1,332
453
29
582
611
2021
$‘000
555
1,384
385
29
509
70
3,562
2,932
2,932
448
182
3,562
1,789
1,143
–
2,932
2022
$‘000
555
1,170
–
–
498
611
2,834
2,344
308
182
2021
$‘000
555
1,218
–
–
501
70
2,344
1,156
1,188
–
2,834
2,344
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in
the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are
generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits
will be available against which those deductible temporary differences can be utilised. Such deferred tax assets
and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in
a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from
the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount
of its assets and liabilities.
Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.
NobleOak Life Limited AnnuAl RepoRt 2022
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noteS to tHe FInAnCIAl StAteMentS
continued
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) current tax balances arising from external transactions recognised by entities in the tax consolidated group
which occurred after implementation date; and
(ii) 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.
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.
Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of Goods and Service Tax (GST), except:
• Where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part
of the cost of acquisition of an asset or as part of an item of expense; or
• For receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables
or payables.
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.
NobleOak Life Limited AnnuAl RepoRt 2022
78
noteS to tHe FInAnCIAl StAteMentS
continued
3 Receivables, payables and investments
3.1 Receivables
Trade receivables
GST receivable
Other receivables – related party
Prepayments
Maturity analysis:
Current
Non‑current
trade receivables
Consolidated
the Company
2022
$’000
8,637
1,744
–
1,662
12,043
2021
$’000
8,986
2,513
–
2,538
14,037
12,043
14,037
–
–
12,043
14,037
2022
$’000
7,680
2,087
606
877
11,250
11,250
–
11,250
2021
$’000
7,559
3,054
213
1899
12,725
12,725
–
12,725
Trade accounts receivable are carried at amounts due and are generally settled within 30 days.
3.2 payables
Payables – Related parties
Sundry creditors
Accruals
Deferred revenue
Other payables
Maturity analysis:
Current
Non‑current
payables
Consolidated
the Company
2022
$’000
–
21,953
3,721
2,619
346
2021
$’000
–
20,161
6,263
2,568
35
2022
$’000
1,468
21,320
2,729
–
202
2021
$’000
1,382
19,374
5,023
–
30
28,639
29,027
25,719
25,809
28,639
29,027
25,719
25,809
–
–
–
–
28,639
29,027
25,719
25,809
Trade payables and other accounts payable are recognised when the Group becomes obliged to make future
payments resulting from the purchase of goods and services.
Accruals
Accruals are recognised when the Group 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.
Deferred revenue
Deferred revenue is generated when the administration fee is received in advance. Revenue is only recognised
when it is earned.
NobleOak Life Limited AnnuAl RepoRt 2022
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noteS to tHe FInAnCIAl StAteMentS
continued
3.3 Investment
Financial instruments
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 Group 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 shareholders’
assets. Financial assets are measured at fair value through profit or loss and include bank bills and term deposits,
and Australian fixed interest bonds.
Financial liabilities
The Group has identified the following classes of financial liability: Payables and lease liabilities which are measured
at amortised costs.
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 Group’s documented investment strategy.
Financial assets held at cost:
Shares in Subsidiaries
Financial assets held at fair value through profit
or loss:
Bank bills and term deposits
Listed unit trusts
Unlisted unit trusts
Maturity analysis:
Current
Non current
Level 1
Listed unit trusts
Level 2
Bank bills and term deposits
Unlisted unit trusts
Level 3
Consolidated
the Company
2022
$’000
2021
$’000
2022
$’000
2021
$’000
–
–
3,351
151
27,561
22,417
19,222
20,486
–
–
69,200
20,486
27,561
41,639
69,200
20,486
–
20,486
27,425
22,417
19,222
72,415
27,425
44,990
72,415
20,349
–
–
20,500
20,349
151
20,500
22,417
–
22,417
–
27,561
19,222
46,783
20,486
–
20,486
27,425
19,222
46,647
20,349
–
20,349
–
–
–
–
69,200
20,486
69,064
20,349
NobleOak Life Limited AnnuAl RepoRt 2022
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noteS to tHe FInAnCIAl StAteMentS
continued
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) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
(ii) 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).
(iii) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
3.4 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 APRA the APRA). 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 payables.
The totals for each category of financial instruments are set out below in the interest rate risk note at 3.4(e).
(a) Interest rate risk
The following table details the Consolidated Group’s exposure to the interest rate risk at 30 June 2022 and 2021:
less than 1 year
Between 1 & 5 years
over 5 years
total
2022
$’000
Weighted
average
interest
rate
%
Weighted
average
interest
rate
%
$’000
Financial Assets
Cash and cash
equivalent
Receivables
Bank bills and
term deposits
Listed unit trusts
Unlisted unit trusts
Financial liabilities
Payables
Lease liabilities
30,263
12,043
27,561
7,750
1,554
79,171
28,639
556
29,195
0.6
–
1.2
1.8
2.5
0.9
–
–
–
–
–
–
14,637
8,110
22,747
–
–
–
–
–
–
1.7
2.3
1.9
–
–
–
Weighted
average
interest
rate
%
–
–
–
0.4
2.7
2.7
$’000
30,263
12,043
27,561
22,417
19,222
111,506
–
–
–
28,639
556
29,195
$’000
–
–
–
30
9,558
9,588
–
–
–
Weighted
average
interest
rate
%
0.6
–
1.2
1.8
2.5
1.2
–
–
–
NobleOak Life Limited AnnuAl RepoRt 2022
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noteS to tHe FInAnCIAl StAteMentS
continued
less than 1 year
Between 1 & 5 years
over 5 years
total
2021
$’000
Weighted
average
interest
rate
%
Weighted
average
interest
rate
%
$’000
Weighted
average
interest
rate
%
$’000
Financial Assets
Cash and cash
equivalent
Receivables
Bank bills and
term deposits
Listed unit trusts
Unlisted unit trusts
Financial liabilities
Payables
Lease liabilities
(b) Credit risk
31,842
14,037
20,486
–
–
0.3
–
0.3
–
–
66,365
0.2
29,027
1,455
30,482
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Weighted
average
interest
rate
%
0.3
–
0.3
–
–
$’000
31,842
14,037
20,486
–
–
66,365
0.2
29,027
1,455
30,482
–
–
–
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.
Credit risk associated with receivables is considered minimal. The main receivables balance is in relation
to receivables from outstanding premiums receivable, GST receivables and prepayments.
(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 3.3 to the
financial statements.
(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 held a 30‑year zero coupon bond maturing in 2035, as per the Appointed
Actuary’s advice, the bond was sold and replaced with short term deposits during the financial year.
A maturity analysis for the contractual remaining life of financial liabilities has been included in the interest rate
risk note at 3.4(a).
NobleOak Life Limited AnnuAl RepoRt 2022
82
noteS to tHe FInAnCIAl StAteMentS
continued
(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 2022, 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 1%
• Decrease in interest rate by 1%
Change in Equity
•
Increase in interest rate by 1%
• Decrease in interest rate by 1%
2022
$’000
2021
$’000
285
(285)
285
(285)
73
(73)
73
(73)
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 5.5.
(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 APRA.
These requirements are in place to ensure sufficient solvency margins for the protection of policyholders and
members. The capital adequacy position at balance date is disclosed in note 5.4.
(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 APRA and are members of large international groups with sound credit ratings.
NobleOak Life Limited AnnuAl RepoRt 2022
83
noteS to tHe FInAnCIAl StAteMentS
continued
4 other assets and liabilities
4.1 plant and equipment
Gross carrying amount
Balance at 1 July 2021
Additions
Balance at 30 June 2022
Accumulated depreciation
Balance at 1 July 2021
Depreciation expense
Balance at 30 June 2022
net book value
As at 30 June 2021
As at 30 June 2022
Consolidated the Company
$’000
$’000
1,528
31
1,559
(1,011)
(379)
(1,390)
517
169
578
31
609
(350)
(90)
(440)
228
169
Plant and equipment is recorded at cost less any accumulated depreciation and impairment losses.
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 Group 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.
Depreciation
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 10 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.
NobleOak Life Limited AnnuAl RepoRt 2022
84
noteS to tHe FInAnCIAl StAteMentS
continued
4.2 Right‑of‑use assets and lease liabilities
Right‑of‑use assets
Gross carrying amount
Balance at 1 July 2021
Additions
Balance at 30 June 2022
Accumulated depreciation
Balance at 1 July 2021
Depreciation expense
Balance at 30 June 2022
net book value
As at 30 June 2021
As at 30 June 2022
lease liabilities
Lease liabilities
Maturity analysis:
Current
Non‑current
Consolidated the Company
$’000
$’000
3,042
–
3,042
(1,698)
(849)
(2,547)
1,344
495
2022
$’000
405
405
–
405
2,209
–
2,209
(1,233)
(616)
(1,849)
976
360
2021
$’000
1,060
655
405
1,060
2022
$’000
556
556
–
556
2021
$’000
1,455
899
556
1,455
The Group has leases for its office facility on Level 1 and 7, 66 Clarence Street Sydney. With the exception of
short‑term leases and leases of low value, each lease is reflected on the balance sheet as a right‑of‑use assets
and a lease liability. Each lease generally imposes a restriction that, unless there is a contractual right for the
Group to sublet the asset to another party, the right‑of‑use asset can only be used by the Group. Leases are
either non‑cancellable or may only be cancelled by incurring a substantive termination fee. Some leases have
an option to extend to a further term. The Group is prohibited from selling or pledging the underlying leased
assets as security. For leases of office facilities, the Group must keep those properties in a good state of repair
and return the properties in their original condition at the end of the lease. Further, the Group must ensure aspects
of the right‑of‑use asset and incur maintenance fees on such items in accordance with the lease contracts.
The Group has elected to account for short‑term leases and leases of low value assets using the practical
expedients. Instead of recognising a right‑of‑use asset and lease liability, the payments in relation to these
are recognised as an expense in profit and loss on a straight‑line basis over the lease term.
NobleOak Life Limited AnnuAl RepoRt 2022
85
noteS to tHe FInAnCIAl StAteMentS
continued
The table below describes the nature of the Group’s leasing activities by type of right‑of‑use asset recognised
on the balance sheet.
Right‑of‑use
asset
no of right‑of‑
use assets
leased
Range of
remaining
terms
Average
remaining
lease term
no of
leases
within
extension
options
no of
leases with
option to
purchase
no of
leases with
variable
payments
linked to
an index
no of
leases with
termination
options
Office facilities
2
0.5 years
0.5 years
2
–
2
–
The lease liabilities are secured by the related underlying assets and the bank guarantees listed as Contingent
Liabilities in note 7.6. Future minimum lease payments as 30 June 2022 were as follows:
Within
1 year
1‑2 years
2‑3 years
3‑4 years
4‑5 years
After
5 years
total
30‑Jun‑22
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Lease Payments
Finance Charges
Net present value
563
(7)
556
Within
1 year
–
–
–
–
–
–
–
–
–
–
–
–
1‑2 years
2‑3 years
3‑4 years
4‑5 years
–
–
–
After
5 years
30‑Jun‑21
$’000
$’000
$’000
$’000
$’000
$’000
Lease Payments
Finance Charges
Net present value
946
(47)
899
563
(7)
556
–
–
–
–
–
–
–
–
–
–
–
–
563
(7)
556
total
$’000
1,509
(54)
1,455
Right‑of‑use asset
A right‑of‑use asset is recognised at the commencement date of a lease. The right‑of‑use asset is measured
at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments
made at or before the commencement date net of any lease incentive received, any initial direct costs incurred,
and except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling
and removing the underlying asset, and restoring the site or asset.
Right‑of‑use assets are depreciated on a straight‑line basis over the lease term or the estimated useful life of the
asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset
at the end of the lease term, the depreciation is over its estimated useful life. Right‑of‑use assets are subject
to impairment or adjusted for any remeasurement of lease liabilities.
NobleOak Life Limited AnnuAl RepoRt 2022
86
noteS to tHe FInAnCIAl StAteMentS
continued
lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at
the present value of the lease payments to be made over the term of the lease, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate.
Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payment that
depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a
purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination
penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in
which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method.
The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a
change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination
penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right‑of‑use asset,
or to profit or loss if the carrying amount of the right‑of‑use asset is fully written down.
4.3 Intangibles
Gross carrying amount
Balance at 1 July 2021
Additions1
Disposal
Balance at 30 June 2022
Accumulated depreciation
Balance at 1 July 2021
Disposal
Amortisation expense
Balance at 30 June 2022
net book value
As at 30 June 2021
As at 30 June 2022
Consolidated
the Company
Software
Development
and Imple‑
mentation
$’000
Goodwill‑
nobleoak
Service
limited
$’000
A&G
Admini‑
stration
Rights
$’000
Software
Development
and Imple‑
mentation
$’000
total –
Intangibles
$’000
total –
Intangibles
$’000
1,356
1,357
–
2,713
(48)
–
(299)
(347)
1,308
2,366
150
–
–
–
3,100
–
1,506
4,457
–
150
3,100
5,963
–
–
–
–
150
150
–
–
(263)
(263)
–
2,837
(48)
–
(562)
(610)
1,458
5,353
1,356
807
–
2,163
(48)
–
(299)
(347)
1,308
1,816
1,356
807
–
2,163
(48)
–
(299)
(347)
1,308
1,816
1. On 22 July 2021, NobleOak (via wholly‑owned subsidiary, Genus Life Insurance Services) entered into a binding agreement
to acquire the administration rights from Auto & General with respect to a portfolio of Budget Direct and Ozicare branded Life
Insurance policies in run‑off (A&G Portfolio). The transaction successfully completed on 25 August 2021. The total consideration
payable by Genus for the A&G Portfolio was $3.2 million, with consideration being satisfied by way of issue of ordinary shares
in NobleOak priced at $1.95 per share as disclosed in note 6.1. Subsequently, A&G rebated $0.1m through a cash payment as an
adjustment to the consideration paid.
NobleOak Life Limited AnnuAl RepoRt 2022
87
noteS to tHe FInAnCIAl StAteMentS
continued
To align with the expected run off experience, the unit of production method has been chosen whereby yearly
amortisation is determined based on the expected run off pattern of the business.
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.
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is recognised on a straight‑line basis over their estimated useful
lives which are disclosed in note 2.2. The estimated useful life and amortisation method are reviewed at the end
of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
Goodwill
Goodwill is carried at cost less accumulated impairment losses. Goodwill is calculated as the excess of the sum of:
(i) the consideration transferred;
(ii) 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. The goodwill represents goodwill in NobleOak Services Limited.
4.4 provisions
Employee benefits
Maturity analysis:
Current
Non‑current
employee benefits
Consolidated
the Company
2022
$’000
1,512
1,169
343
1,512
2021
$’000
1,283
923
360
1,283
2022
$’000
2021
$’000
–
–
–
–
–
–
–
–
Provision is made for the Group’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.
NobleOak Life Limited AnnuAl RepoRt 2022
88
noteS to tHe FInAnCIAl StAteMentS
continued
5 life insurance contracts
5.1 Accounting for life insurance contracts
principles underlying the conduct of life insurance business
The life insurance operations of the Group are conducted within separate benefit funds as required by the
Life Insurance Act 1995 (Life Act) and are reported in aggregate with the management fund in the Consolidated
and Company statement of profit or loss and other comprehensive income, Consolidated and Company statement
of financial position, Consolidated and Company statement of changes in equity and Consolidated and Company
statement of cash flows. The life insurance operations consist of the provision of life insurance. Life insurance
contracts involve the acceptance of significant insurance risk. Insurance risk is defined as significant if, and only
if, an insured event could cause an insurer to pay significant benefits in any scenario, excluding scenarios that lack
commercial substance. Insurance contracts include those where the insured benefit is payable on the occurrence
of a specified event such as death, injury or disability caused by accident or illness. The insured benefit is not
linked to the market value of the investments held by the Group, and the financial risks are substantially borne
by the Group. In accordance with AASB 1038 ‘Life Insurance Contracts’, financial assets backing policy liabilities
are designated at fair value through profit and loss. NobleOak has determined that all assets held within the
statutory funds back policy liabilities. Financial assets backing policy liabilities consist of high‑quality investments.
The management of financial assets and policy liabilities is closely monitored to ensure that investments are
appropriate given the expected pattern of future cash flows arising from the policy liabilities.
premium revenue
Premium revenue only arises in respect of life insurance contracts. Premiums with a regular due date are
recognised as revenue on a due basis. Premiums with no due date are recognised as revenue on a cash received
or receivable basis.
Unpaid premiums are only recognised as revenue during the days of grace and are included as Premiums Receivable
(part of Receivables) in the statement of financial position.
Premiums due after, but received before, the end of the financial year are shown as Life Insurance Premium
in Advance (part of Payables) in the statement of financial position.
Claims
Claims incurred relate to life insurance contracts and are treated as expenses. Claims are recognised upon
notification of the insured event. The liability in respect of claims includes an allowance (estimate) for incurred
but not reported claims and an allowance (estimate) for expected declinature of notified claims.
Claims are shown gross of reinsurance recoverable. Any reinsurance recoveries applicable to the claims are
included in receivables.
policy acquisition costs
The policy acquisition costs incurred are recorded in the statement of profit or loss and other comprehensive
income and represent the fixed and variable costs of acquiring new business. The policy acquisition costs include
commission, advertising, policy issue and underwriting costs, and related costs.
NobleOak Life Limited AnnuAl RepoRt 2022
89
noteS to tHe FInAnCIAl StAteMentS
continued
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) Expenses that can be directly identifiable and attributable to a particular class of business are allocated
directly to that class of business;
(ii) 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.
life insurance policy liabilities
The insurance policy liabilities provisions are calculated in accordance with Prudential Standard LPS 340 Valuation
of Policy Liabilities (“LPS 340”). The valuation approach is based upon a best estimate projection of future benefit
payments, expenses, premiums and investment returns, however approximate methods may be used where the
result will not be materially different from a full valuation process.
NobleOak’s policy liabilities are calculated using:
• Projection method: is the best estimate of the present value of the liabilities under the in‑force policies.
This is the mechanism by which planned margins are recognised over the period which the services are
provided to the policyholder. If future losses are expected to arise then these are recognised immediately
through the profit and loss.
• Accumulation method: this method is an approximation to the projection method. The policy liabilities
include outstanding claims liabilities, unearned premium reserves.
As at 30 June 2022, with the exception of the Freedom Fund, Reward Fund and Funeral Fund, policy liabilities
for all other Benefit Funds were calculated using the projection method.
Both calculation methods are designed to calculate the value of life insurance policy liabilities using the Margin
on Services methodology. Under this methodology, planned profit margins and an estimate of future liabilities
are calculated separately for each related product group, with future cash flows determined using best estimate
assumptions and discounted to the reporting date. Profit margins are systematically released over the term of
the policies in line with the pattern of services to be provided. The future planned profit margins are deferred
and recognised over time by including the value of the future planned profit margins within the value of the
policy liabilities.
The assumptions used in the calculation of the insurance contract policy liabilities are reviewed at each reporting
date. Details of specific actuarial policies and methods are set out in note 5.5.
NobleOak Life Limited AnnuAl RepoRt 2022
90
noteS to tHe FInAnCIAl StAteMentS
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NobleOak Life Limited AnnuAl RepoRt 2022
91
noteS to tHe FInAnCIAl StAteMentS
continued
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NobleOak Life Limited AnnuAl RepoRt 2022
94
noteS to tHe FInAnCIAl StAteMentS
continued
5.3 policy & member liabilities
Opening balance
Increase in net claims reserve1
Decrease/(Increase) in net active lives policy
liabilities reflected in the income statement
Increase in profit share reserve (pre tax) reflected
in the income statement
Decrease in profit share reserve reflected in the
income statement (tax)
Closing balance
Gross policy liabilities
Active lives policy liabilities
Claims reserve
Profit share reserve
Total Gross Policy Liability/(Asset)
policy liabilities – Ceded to Reinsurers
Consolidated
the Company
2022
$’000
2021
$’000
2022
$’000
2021
$’000
(45,873)
(37,282)
(45,873)
(37,282)
23,728
1,626
23,728
1,626
5,097
(7,153)
5,097
(7,153)
(3,776)
(2,356)
(3,776)
(2,356)
(1,132)
(708)
(1,132)
(708)
(21,956)
(45,873)
(21,956)
(45,873)
(68,508)
(63,094)
(68,508)
(63,094)
67,093
6,887
5,472
48,421
4,244
(10,429)
67,093
6,887
5,472
48,421
4,244
(10,429)
Active lives policy liabilities
11,703
8,743
11,703
8,743
Claims reserve
Profit share reserve
(39,131)
(44,187)
(39,131)
(44,187)
–
–
–
–
Total Policy Liabilities – Ceded to Reinsurers
(27,428)
(35,444)
(27,428)
(35,444)
net policy liabilities
Net active lives policy liabilities
(56,805)
(54,351)
(56,805)
(54,351)
Net claims reserve
Profit share reserve
27,962
6,887
4,234
4,244
27,962
6,887
4,234
4,244
total net policy liabilities
(21,956)
(45,873)
(21,956)
(45,873)
1. Policy liabilities ceded to reinsurers reduced by $20m following treaty amendment in one fund to have lump sum claims settled
by reinsurers on actuarial reserving basis.
Components of net active lives policy liabilities
Future policy benefits
Future expenses and commissions
Less future revenues
Best estimate liability
Consolidated
the Company
2022
$’000
330,369
33,110
2021
$’000
199,148
16,522
2022
$’000
330,369
33,110
2021
$’000
199,148
16,522
(570,610)
(394,271)
(570,610)
(394,271)
(207,131)
(178,601)
(207,131)
(178,601)
Planned margins over future expenses
150,326
124,250
150,326
124,250
Net active lives policy liabilities
(56,805)
(54,351)
(56,805)
(54,351)
NobleOak Life Limited AnnuAl RepoRt 2022
95
noteS to tHe FInAnCIAl StAteMentS
continued
5.4 Capital Adequacy
NobleOak is subject to minimum capital regulatory capital requirements in accordance with APRA Life Insurance
Prudential Standards. NobleOak is required to maintain adequate capital against the risks associated with its
business activities and measure its capital to the ‘Prudential Capital Requirement’ (PCR).
NobleOak has in place an Internal Capital Adequacy Assessment Process (ICAAP), approved by the Directors,
to ensure it maintains required levels of capital within each of its benefit and management funds. The capital
adequacy position at balance date for NobleOak, in accordance with the APRA requirements, is as follows:
(a) Capital Base
(b) Prescribed capital amount1
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
2022
$’000
41,773
13,221
28,552
316.0%
2021
$’000
18,609
9,533
9,076
195.2%
111,158
84,039
(69,385)
(65,430)
41,773
18,609
–
–
–
–
–
–
–
–
41,773
18,609
1. The minimum level of assets required to be held in the Company, prescribed by the solvency standard referred to in Part 5
of the Life Insurance Act 1995.
NobleOak Life Limited AnnuAl RepoRt 2022
96
noteS to tHe FInAnCIAl StAteMentS
continued
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NobleOak Life Limited AnnuAl RepoRt 2022
97
noteS to tHe FInAnCIAl StAteMentS
continued
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NobleOak Life Limited AnnuAl RepoRt 2022
98
noteS to tHe FInAnCIAl StAteMentS
continued
5.5 Summary of Significant Actuarial Methods and Assumption
The effective date of the Actuarial Valuation Report on policy liabilities and solvency reserves calculation is
30 June 2022. The actuarial report was prepared by Ms. B. Cummings BEc (Hons) FIAA. The Actuarial Valuation
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 the Freedom Fund, the Reward Fund and the Funeral Fund have been calculated using an
accumulation method. Under this method the policy liability is equal to the policies’ Termination Value. There are
no deferred acquisition cost assets which require an Acquisition Expense Recovery Component.
The Termination Value has been calculated as the sum of the amount of unearned premium (where the policyholders
continue to pay premiums upon renewal), the value of incurred claim liabilities and the face value of guaranteed
and discretionary policyholder benefits 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 premium.
The Acquisition Expense Recovery Component (also known as Deferred Acquisition Cost or DAC) refers to the
costs incurred in order to acquire new business. As the benefits obtained from these costs are expected to be
long term in nature, it is reasonable to defer the recognition of these costs to align with the benefits obtained.
These acquisition costs are allocated to Risk Fund No. 1 and the Avant Benefit Fund in line with NobleOak’s
DAC Policy.
A Liability Adequacy Test (LAT) is required to ensure that future investment earnings and premium income are
expected to exceed future benefit payments and expenses. The expenses of the benefit fund include management
fees paid to the Management Fund, stamp duty whenever a premium is collected and the amortisation of the
DAC (which was described previously).
The policy liability for Risk Fund No. 1, the PPS Mutual Benefit Fund, the Avant Benefit Fund, and Neos Benefit Fund
has 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 based
upon a range of actuarial assumptions including lapse, mortality, morbidity and expense assumptions. The policy
liabilities held reflect:
• The value of expected future premiums is deducted from the value of expected future benefit and expense
payments to determine the net obligation to policy owners over the life of the contract (allowing for guaranteed
renewability); plus
• The value of expected future profits such that no profit or loss arises when a life insurance contract is issued; plus
• The value of incurred claim liabilities not recognised elsewhere within the Balance Sheet.
Where a DAC exists, this method results in the DAC being implicit within the cash‑flows and thus the DAC is not
explicitly held on the balance sheet. The LAT is also implicit within the projection method of determining policy
liabilities. A deficiency reserve is required only if the projected future value of premiums and investment income
are not sufficient to meet the projected future value of benefit and expense payments. The application of the
projection method for Risk Fund No. 1, the PPS Mutual Benefit Fund, the Avant Benefit Fund and the Neos Benefit
Fund will result in profits emerging in line with proportion to premiums.
NobleOak Life Limited AnnuAl RepoRt 2022
99
noteS to tHe FInAnCIAl StAteMentS
continued
Disclosure of Material Assumptions
The following table summarises the 30 June 2022 best estimate assumptions adopted for determining
policy liabilities.
30 June 2022 Best estimate Assumptions
RF1
ppS
Avant
neos
lump Sum Industry Standard table
AlS 2014‑18
AlS 2014‑18
AlS 2014‑18
AlS 2014‑18
Death Standalone
Death with Rider
TPD
Trauma
85%
85%
110%
100%
80%
80%
90%
80%
90%
90%
110%
100%
90%
90%
110%
90%
IDII Industry Standard table1
ADI 2014‑18
ADI 2014‑18
ADI 2014‑18
ADI 2014‑18
Legacy Incidence
Legacy Terminations
85%
100%
80%
120%
100%
100%
90%
115%
IDII Industry Standard table2
ADI 2014‑18
ADI 2014‑18
ADI 2014‑18
ADI 2014‑18
Incidence
Terminations
lapse Assumptions3
100%
80%
100%
110% to 120%
110% to 120%
110% to 120%
N/A
N/A
Stepped premium: lapses under age 55
5% to 12%
4% to 13%
2% to 12%
5% to 10%
Stepped premium: lapses over age 55
8% to 20%
17% to 28%
N/A
17% to 28%
Level premium: lapses under age 55
Level premium: lapses over age 55
Indexation Assumptions
Pre‑claims
Post‑claims
Short‑term CPI overlay4
Discount Rates
Shock lapses for repricing
Maintenance expense ratio
N/A
N/A
3%
3%
5.5% and 4.5%
4% to 9%
1% to 7%
6% to 11%
11% to 28%
N/A
11% to 28%
3%
3%
N/A
3%
3%
N/A
3%
3%
N/A
0% to 4%
0% to 4%
0% to 4%
0% to 4%
+1% to 3% +0.8% to 1.3%
n/A
n/A
5% to 9%
42% to 51%
30% to 34%
28% to 42%
In some instances, the above documented assumption ranges may reflect minor differences to the underlying assumptions adopted
as a result of rounding impacts.
1.
Incidence and termination assumptions for the Legacy IDII benefits (last sold 30 September 2021).
2. Incidence and termination assumptions for the Current IDII benefits sold from 1 October 2021.
3. Separate age‑based multiplicative lapse rate loadings also apply to the NEOS Fund.
4. Short‑term CPI overlay assumptions were adopted for the 30 June 2022 year end policy liability valuation of 5.5% in year 1
and 4.5% in year 2.
NobleOak Life Limited AnnuAl RepoRt 2022
100
noteS to tHe FInAnCIAl StAteMentS
continued
Sensitivities
NobleOak conducts sensitivity analyses to quantify the exposure to risk of changes in the key underlying variables.
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 2022 in respect of the key
variables would have impacted on the net profit and equity.
Claims Reserves2
Increase by 25%
Decrease by 25%
lapse Rate2
Increase by 25%
Decrease by 25%
policy liability Discount Rate1
Increase of 1%
Decrease of 1%
Change
in profit
after tax
$’000
Change in
equity
$’000
(4,351)
(4,351)
–
–
–
–
–
–
(2,290)
2,600
(2,290)
2,600
1. The discount rate sensitivity reflects a 50bps parallel shift of the 30 June 2022 yield curve, and is thus dependent upon the shape
of the yield curve at the valuation date. The shape of the yield curve will differ in comparison to both prior and future periods.
The impact of discount rate changes are recognised as profit or loss in the current period.
2. The impact of non‑economic assumption changes (such as claims and lapses) do not impact current period profit or loss, but are
instead recognised in future periods where benefits are not in loss recognition (or have not become loss making as a result of the
assumption change). If benefits are in loss recognition (or have become loss making) as a result of changes to non‑economic assumptions,
the impact of these non‑economic assumption changes are capitalised in current period profit or loss.
NobleOak Life Limited AnnuAl RepoRt 2022
101
noteS to tHe FInAnCIAl StAteMentS
continued
5.6 Critical accounting judgements and estimates
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.
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.
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 5.5.
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.
CoVID‑19
In response to COVID‑19, with the support of our appointed actuary, NobleOak has prepared scenarios which
consider the implications of unfavourable claims experience, reduced sales and increased lapses on the portfolio.
In line with the rest of the industry, NobleOak expects increases to income protection and mental health claims
from the indirect effects of the pandemic.
The calculated stress testing scenarios which have been used are based on two possibilities. Scenario one is that
the Federal Government’s measures are highly successful, with the economy having a relatively swift return to
strength, with Scenario Two being a more material impact to the economy.
The results for the year ended 30 June 2022 include additional best estimate reserves for potential COVID‑19
related claims. The implications of the pandemic however, remain highly uncertain.
NobleOak Life Limited AnnuAl RepoRt 2022
102
noteS to tHe FInAnCIAl StAteMentS
continued
6 Capital structure
6.1 Share capital
(a) Issued share capital
Fully paid ordinary shares
Movement in issued share capital
ordinary Shares
Opening Balance 1 July 2020
Ordinary Shares – Employee Options(i)
Ordinary Shares – Long‑Term Incentives(ii)
Ordinary Share – Sophisticated investors(iii)
Ordinary Shares – Staff share scheme(iv)
Less Transaction cost
Balance at 30 June 2021
Ordinary Shares – IPO(v)
Ordinary Shares – IPO – Employee Gift Offer(vi)
Ordinary Shares – Auto & General(vii)
Ordinary Shares – Long‑Term Incentives(viii)
Less Transaction cost (post tax)
Balance at 30 June 2022
Consolidated
the Company
2022
$’000
95,323
2021
$’000
62,451
2022
$’000
95,323
2021
$’000
62,451
Company & Consolidated
number
of Shares
59,417,530
15,000
57,733
8,434,028
50,505
67,974,796
15,893,527
53,248
1,641,025
172,570
85,735,166
Issue price
1.05
1.55
1.80
1.80
1.95
1.95
1.95
1.30
$ Value
(‘000)
47,120
16
89
15,181
91
(46)
62,451
30,992
105
3,199
224
(1,648)
95,323
(i) Options issued to employees in the 2016 Premium Options Plan (staff) have been exercised in July 2020.
(ii) Ordinary Shares issued to CEO with performance criteria under the 2017 Long Term Incentive Plan on 1 September 2020.
(iii) Ordinary Shares issued to sophisticated investors from capital raising activities undertaken in December 2020.
(iv) Ordinary Shares issued to employees under the Employee Share Plan in January 2021.
(v) Ordinary Shares issued to shareholders under IPO on 22 July 2021.
(vi) Ordinary Shares issued to employees under the IPO Employee Gift Offer on 22 July 2021.
(vii) Ordinary Shares issued to Auto & General (A&G) as consideration for the acquisition of the administration rights from A&G
with respect to portfolio of Budget Direct and Ozicare branded Life Insurance Policies in run‑off. In accordance with AASB 2
Share‑Based Payments, the equity‑settled share‑based payment transaction was measured at grant date (22 July 2021),
and shares are subject to a 12 month escrow period.
(viii) Ordinary Shares issued to CEO and CFO with performance criteria under the 2018 Long Term incentive plan on 25 October 2021.
NobleOak Life Limited AnnuAl RepoRt 2022
103
noteS to tHe FInAnCIAl StAteMentS
continued
(b) Share‑based payment reserve
Opening Balance 1 July 2020
2016 Premium Option Plan (Staff) exercised(i)
Option Plan 2019 – IPO(iii)
Ordinary Shares – 2017 Long‑Term Incentive Rights(ii)
Ordinary Shares – 2018 Long‑Term Incentive Rights(iv)
Ordinary Shares – 2019 Long‑Term Incentive Rights(v)
Ordinary Shares – 2020 Long‑Term Incentive Rights(vi)
Option Plan 2021 – IPO(vii)
Balance 30 June 2021
Ordinary Shares – 2018 Long‑Term Incentive Rights(iv)
Ordinary Shares – 2019 Long‑Term Incentive Rights(v)
Ordinary Shares – 2020 Long‑Term Incentive Rights(vi)
Ordinary Shares – 2021 Long‑Term Incentive Right(viii)
Option Plan 2021 – IPO(vii)
Balance 30 June 2022
number of
options/
Rights
$ Value
(‘000)
1,175,586
(35,000)
(930,660)
(58,313)
66,847
52,059
132,046
731,312
1,133,877
(159,750)
113,747
162,201
124,116
505
–
(179)
(90)
168
125
256
86
871
(312)
188
199
242
295
1,374,191
1,483
options/rights plan
number
Grant date
expiry date
exercised/expired
(1) 2016 Premium Option Plan (Staff)(i)
(2) 2017 Performance Rights Plan(ii)
35,000
58,313
01/12/2016
03/11/2017
01/07/2020
N/A
(3) Option Plan 2019 – IPO(iii)
1,225,468
01/06/2019
31/12/2022 & 31/12/2023
(4) 2018 Performance Rights Plan(iv)
159,750
24/06/2019
Current
(5) 2019 Performance Rights Plan(v)
(6) 2020 Performance Rights Plan(vi)
(7) Option Plan 2021 – IPO(vii)
(8) 2021 Performance Rights Plan(viii)
224,516
294,247
731,312
124,116
N/A
N/A
N/A
20/12/2019
06/11/2020
26/02/2021
01/11/2022 & 01/11/2023
20/07/2021
N/A
exercise
price ($)
1.045
Nil
1.30
Nil
Nil
Nil
1.80
Nil
(i) Options issued under the 2016 Premium Option Plan have been exercised and the plans have now expired.
(ii) 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. During the 2021 year ordinary shares were issued to CEO with performance criteria and the plan has been finalised.
(iii) Options issued on 1 June 2019 to executives and senior management were forfeited as the planned objectives were not achieved.
(iv) 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. During the 2022 year ordinary shares were issued to CEO and CFO with performance criteria and the plan has
been finalised.
(v) A 2019 Long‑term incentive plan was established for key executives. The plan is based on the outcome of 3 years results ending
30 June 2022. This reserve is a provision for the potential shares earned to date based on current year’s results. During the 2022
year the expected rights issue increased from that estimated in 2021.
(vi) A 2020 Long‑term incentive plan was established for key executives. The plan is based on the outcome of 3 years results ending
30 June 2023. During the 2022 year the expected rights issue increased from that estimated in 2021.
(vii) Options issued on the 26 February 2021 to executives and senior management and vest in 2022 and 2023 are dependent on
achieving the planned objectives.
(viii) A 2021 Long‑term incentive plan was established for key executives. The plan is based on the outcome of 3 years results ending
30 June 2024. This reserve is a provision for the potential shares earned to date based on current year’s results.
NobleOak Life Limited AnnuAl RepoRt 2022
104
noteS to tHe FInAnCIAl StAteMentS
continued
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 Group’s estimate of equity instruments that will eventually
vest, with a corresponding increase in equity. At the end of each reporting period, the Group 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.
6.2 Accumulated profits
Balance at beginning of financial year
Net profit from operation after income tax
Dividends
Balance at end of financial year
7 other disclosures
7.1 Related party disclosures
Consolidated
Company
2022
$’000
21,298
1,685
(8,157)
14,826
2021
$’000
16,395
4,903
–
21,298
2022
$’000
20,717
1,791
(8,157)
14,351
2021
$’000
16,126
4,591
–
20,717
(a) Key management personnel remuneration
The compensation of the Directors and Key Personnel is set out below.
non‑executive Directors
Short‑term employee benefits
Post‑employment benefits
Share‑based payments
executive Directors and Key personnel
Short‑term employee benefits
Post‑employment benefits
Share‑based payments
total
Consolidated
2022
$’000
2021
$’000
713
18
–
731
1,245
47
578
1,870
2,601
614
27
–
641
1,168
44
493
1,705
2,346
NobleOak Life Limited AnnuAl RepoRt 2022
105
noteS to tHe FInAnCIAl StAteMentS
continued
(b) options issued to key management personnel
An option plan dated 26 February 2021 was established for key personnel and is based on the achievement of
specific goals, Anthony Brown was issued with 273,084 options and Scott Pearson was issued with 209,408
options under this plan that vest on achieving the specific events in 2022 and 2023.
(c) performance Rights plan
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 Group. This program issues performance rights each
year to eligible personal 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 and Scott Pearson have been:
Year
2019
2020
2021
2022
Full entitlement
Accrued to
balance date
331,245
448,250
395,897
432,894
224,516
185,774
71,482
N/A
(d) 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.
7.2 Interests in subsidiaries
The subsidiaries listed below have 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
NobleOak Services Limited
Genus Life Insurance Services Pty Ltd
NobleOak Aspire Pty Ltd
Sydney, Australia
Sydney, Australia
Sydney, Australia
Ownership Interest
Held by the Group
2022
%
100%
100%
100%
2021
%
100%
100%
100%
Subsidiaries 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.
NobleOak Life Limited AnnuAl RepoRt 2022
106
noteS to tHe FInAnCIAl StAteMentS
continued
7.3 notes to the consolidated statement of cash flow
(a) Reconciliation of cash and cash equivalents
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:
Cash and cash equivalents(i)
Consolidated
the Company
2022
$’000
30,263
2021
$’000
31,842
2022
$’000
27,183
2021
$’000
29,058
(i) The Consolidated balance includes restricted cash held in the trust account of the subsidiary, as a Trustee of My Protection Plan
of $420,905 (2021: $435,961)
(b) Reconciliation of profit for the year to net cash flows from operating activities
Profit after tax
Depreciation and amortisation of non‑current assets
Expense related to Share‑based Payment Reserve
Lease interest expense
Decrease in market value of investments
Consolidated
the Company
2022
$’000
1,685
1,790
612
47
123
2021
$’000
4,903
1,240
366
88
353
2022
$’000
1,791
1,006
612
34
123
2021
$’000
4,591
683
366
64
353
Decrease/(Increase) in policy liabilities
23,917
(8,591)
23,917
(8,591)
Decrease/(Increase) in assets:
Receivables
Other assets
Increase/(Decrease) in liabilities:
Payables
Provisions
Current tax liabilities
net cash from operating activities
1,994
(630)
314
(2,788)
1,475
(490)
1,435
(2,558)
(388)
229
(1,402)
27,977
5,409
(185)
(1,829)
(720)
(90)
–
(1,402)
26,976
6,630
(600)
(1,829)
544
NobleOak Life Limited AnnuAl RepoRt 2022
107
noteS to tHe FInAnCIAl StAteMentS
continued
7.4 Information on the Group’s operations
The Group operates primarily in life insurance industry. The Group’s operations are located in New South Wales
and its customers are located in each State and Territory of Australia.
7.5 Additional information
NobleOak Life Limited is a public company limited by shares, incorporated in Australia. If the Group 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
7.6 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.
The Company has provided indemnity in favour of the insurer or reinsurer if its subsidiary Genus breaches the
Freedom administration arrangements (other than those relating to remediation) and the insurer or reinsurer
suffers loss. The indemnity is up to a limit of $1.0 million for all indemnified breaches during the three years
from 1 June 2019 and in each subsequent three‑year period (if any) of the administration agreement.
7.7 Subsequent events
On 1 August 2022, the Group entered into a lease agreement for its new primary office premises on Level 4,
44 Market Street, Sydney for a lease term of 7 years commencing 1 February 2023. The annual rent for the first
year is $1.3 million.
NobleOak Life Limited AnnuAl RepoRt 2022
108
DIReCtoRS’ DeClARAtIon
The Directors of the Group declare that the attached financial statements and notes are in accordance with the
Corporations Act 2001 and:
(a) 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);
(b) give a true and fair view of the financial position as at 30 June 2022 and the performance for the year ended
on that date;
(c) in the opinion of the Directors there are reasonable grounds to believe that the Group will be able to pay
its debts as and when they become due and payable;
(d) the allocation and distribution of the surplus of the Benefit Funds of the Group 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 Group 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, 30 August 2022
Stephen Harrison
Chair
NobleOak Life Limited AnnuAl RepoRt 2022
109
InDepenDent AuDItoR’S RepoRt
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Tel: +61 2 9322 7000
Fax: +61 2 9322 7001
www.deloitte.com.au
Independent Auditor’s Report to the Members of NobleOak
Life Limited
Report on the Audit of the Financial Reports
Opinion
We have audited the financial reports of NobleOak Life Limited (the “Company”) and its subsidiaries
(the “Group”) which comprise the Group and the Company’s statements of financial position as at 30
June 2022, the statements of profit or loss and other comprehensive income, the statements of
changes in equity and the statements 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 reports of the Group and the Company are in accordance
with the Corporations Act 2001, including:
• Giving a true and fair view of the Group and the Company’s financial position as at 30 June 2022
and of their financial performance for the year then ended; and
• 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 & Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial reports 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 directors of the Company (the “directors”), would be in the same terms if given to the
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.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the Group for the current period. These matters were addressed in
the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Liability limited by a scheme approved under Professional Standards Legislation.
NobleOak Life Limited AnnuAl RepoRt 2022
110
InDepenDent AuDItoR’S RepoRt
continued
Key Audit Matter
Insurance policy liabilities
As at 30 June 2022 the Group’s life insurance policy
liabilities totalled $5.5 million, calculated based on
recognised actuarial methods and assumptions, as
disclosed in Note 5.3. The actuarial methods adopted
for the funds are:
• Open funds: Projection method
• Closed funds: Accumulation method
There is a high degree of management judgment and
estimation uncertainty associated with the valuation
of the policy liabilities.
Key areas of judgement include:
• Lapse rates including partial lapses;
• Discount rates;
• Claims assumptions including mortality,
morbidity and incidence assumptions;
• Expense allocation assumptions;
• Economic assumptions – inflation and
indexation; and
• Ongoing impact of COVID-19.
How the scope of our audit responded to the Key
Audit Matter
In conjunction with our actuarial specialists our
procedures included, but were not limited to:
policy
liabilities
to calculate
to
• Assessing the appropriateness of valuation
methodology, the valuation process and the
valuation model used
the
insurance
ensure
compliance with APRA’s Life Prudential
Standard 340, Valuation of Policy Liabilities
and AASB 1038 Life Insurance Contracts;
• Evaluating the design, implementation and
operating effectiveness of relevant controls
relating to the policy valuations;
• Testing on a sample basis, the completeness
and accuracy of the underlying data used in
the calculation of the policy liability by tracing
premiums, claims estimates and claims
payments to third party evidence;
• Assessing the valuation methodology and key
assumptions (including lapse rates, discount
rates, mortality, morbidity, incidence, expense
ratios, economic and the ongoing impact of
COVID-19) by;
• Understanding if the methodology adopted
aligns with common industry practice and if
methodology has changed, understanding
the rationale behind the change and
considering whether such change
is
reasonable;
• Evaluating key internal assumptions in the
year against the company’s experience and
their alignment with industry benchmarks;
• Evaluating key economic assumptions
against market movements and industry
practice. This includes the discount rates
and CPI rates, which are used to discount
cashflows and index cashflows respectively;
and
• Understanding
the
rationale behind
management’s decision to make changes to
the COVID-19 reserves.
NobleOak Life Limited AnnuAl RepoRt 2022
111
InDepenDent AuDItoR’S RepoRt
continued
Key Audit Matter
How the scope of our audit responded to the Key
Audit Matter
• Reviewing the reasonableness of the year’s
changes in reserves and analysis of profit
conducted by management by confirming that
are directionally
changes
consistent with assumption changes and other
changes, for example movement in underlying
data the company’s experience; and
reserves
in
• Assessing
disclosures
statements.
the
the
appropriateness of
in Note 5.3 to the financial
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group and Company’s annual report for the year ended 30 June 2022, but
does not include the financial reports and our auditor’s report thereon.
Our opinion on the financial reports 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 reports, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
reports 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.
Responsibilities of the Directors for the Financial Reports
The directors are responsible for the preparation of the financial reports that give a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial
reports that give a true and fair view and are free from material misstatement, whether due to fraud
or error.
In preparing the financial reports, the directors are responsible for assessing the ability of the Group
and the Company to continue as going concerns, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate
the Group or the Company or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Reports
Our objectives are to obtain reasonable assurance about whether the financial reports as a whole are
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 the financial reports.
NobleOak Life Limited AnnuAl RepoRt 2022
112
InDepenDent AuDItoR’S RepoRt
continued
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 reports, 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 or the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the 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 or the Company’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 reports 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 or
the Company to cease to continue as going concerns.
• Evaluate the overall presentation, structure and content of the financial reports, including the
disclosures, and whether the financial reports represent 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 Group 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 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.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the Group financial report of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
NobleOak Life Limited AnnuAl RepoRt 2022
113
InDepenDent AuDItoR’S RepoRt
continued
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 38 to 55 of the Directors’ Report for the
year ended 30 June 2022.
In our opinion, the Remuneration Report of NobleOak Life Limited, for the year ended 30 June 2022,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance
with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Max Murray
Partner
Chartered Accountants
Sydney, 30 August 2022
NobleOak Life Limited AnnuAl RepoRt 2022
114
SHAReHolDeRS’ InFoRMAtIon
Substantial Shareholders
As at 24 August 2022, the following entities have notified NobleOak that they are substantial holders with holdings
reflected below as per their respective notices.
Rank
name
1
2
3
4
5
6
7
8
9
Samuel Terry Asset Management Pty Ltd as Trustee for Samuel Terry
Absolute Return Fund
Magellan Financial Group Limited and its related bodies corporate
NobleOak Life Limited (1)
Private Portfolio Managers Pty Ltd
Ethical Partners Funds Management Pty Ltd
UniSuper Limited as trustee for UniSuper and UniSuper Management
Pty Limited
Anthony Ross Brown & his associate Brohok Investment Co Pty Ltd (2)
Gordon Group
Scott Gant in his personal capacity as well as director of entities listed
no. of shares
as per notice
% of issued
capital
12,088,205
14.10%
9,611,711
8,806,318
7,378,446
7,371,483
7,049,853
5,384,914
5,363,718
4,638,168
11.21%
10.29%
8.85%
8.60%
8.22%
6.42%
6.39%
5.53%
(1) NobleOak has a technical “relevant interest” in its own shares under s 608(1)(c) of the Corporations Act 2001 (Cth), and a substantial
holding, as notified to the ASX on 7 September 2021. However, as notified at that time, the Company has no right to acquire these
shares or to control the voting rights attaching to those shares. Additional information can be found in the table entitled Shares Under
Voluntary Escrow.
(2) Mr Brown and his associate’s relevant interest is included in the substantial shareholding disclosed by NobleOak Life Limited
in row 3 above.
NobleOak Life Limited AnnuAl RepoRt 2022
115
SHAReHolDeRS’ InFoRMAtIon
continued
twenty largest Shareholders (as at 24 August 2022)
Rank
name
no. of shares
as per notice
% of issued
capital
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
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