Why the Clearview (ASX:CVW) share price is surging up today

The Clearview Wealth Ltd (ASX: CVW) share price has climbed higher today following a positive update on its Q1 FY21 performance.

The Clearview share price shot up 6% to an intra-day high of 35 cents early trading, before retreating to sit at 34 cents at the time of writing, up 3.03%.

About Clearview

Clearview is a financial services company with businesses that specialise in life insurance, wealth management and financial advice solutions.

The company has a network of experienced and accredited financial planners based throughout Australia. The main function of Clearview is to give financial advice on wealth accumulation, retirement strategies and on life insurance.

Robust Q1 performance

For the period ending September 30, the diversified financial services company provided a robust Q1 FY21 business update.

Underlying net profit after tax (NPAT) increased to $6.9 million in Q1, a jump of 355% on the prior corresponding period. The result was underpinned by continued growth of in-force life insurance portfolios to $276 million, up 8%.

Clearview noted the material improvement in profitability, driven by strong underlying claims performance in its life insurance segment. The increase represented $1.7 million in claims experience profit.

Lapses were higher than expected, however retention strategies employed by the company reduced the amount to a $0.3 million loss.

The fallout of COVID-19 is likely to further increase individual income protection claims, coming from secondary economic impacts (social and health challenges).

Clearview recorded a healthy balance sheet and recurring revenue base. Its net shareholder cash position stood at $281 million and is being investment conservatively.

Looking ahead

Clearview reiterated it was on track in the first quarter to meet its medium-to-long term performance objectives. The group is forecasting a NPAT guidance of between $20 million–$24 million for FY21.

The company sees FY21 as a base transitional year, in which the industry has shifted to rational pricing and sustainable product features. Clearview will focus on building customer loyalty, enhance product offering and investments in technology for ease of client use.

It is expected these measures will improve in underlying profit margins and return on capital.

Is the Clearview share price a buy right now?

The positive Q1 result is good news for Clearview shareholders after a disappointing run over the last two years. The company’s shares have fallen heavily since reaching as high as $1.60 in early 2018 to price at just 35 cents today. This is a downhill trend of almost 80% which began well before the pandemic brought the market down in March this year.

Despite the strong recent performance, I will be saving my money for other opportunities in the market that present a better risk/reward option.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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