Challenger Limited (ASX:CGF) Reports Q3 Financial Performance
Financial Performance
Challenger Limited reported total Life sales of $1.4 billion in Q3, driven by longer tenor annuity sales. Retail lifetime annuity sales reached $246 million, up 22%, while Japanese sales increased by 33% to $240 million. Fixed term annuity sales grew 15% to $505 million. The annuity maturity rate for the quarter was 5%. Challenger Life maintained a strong PCA ratio of 1.62 times. Funds Management funds under management (FUM) were $115.2 billion, a decrease of 5%, and Group assets under management (AUM) stood at $125.6 billion, down 4%.
Operational Achievements
Challenger Life executed its strategy to focus on higher quality long duration business, achieving annuity book growth of 1% for the quarter. The company secured a new partnership with NGS Super, integrating Challenger’s longevity solution into their broader Retirement Income Strategy. Significant progress was made on re-platforming Challenger Life’s core customer registry and technology, enhancing integration with advisers, platforms, and superannuation funds.
Outlook
Challenger has tightened its FY25 normalised net profit after tax guidance to a range between $450 million and $465 million, representing 10% growth on FY24.
Executive Comments
Managing Director and Chief Executive Officer, Nick Hamilton, said:
“Across our retirement business, Challenger maintained momentum through the third quarter, continuing to broaden our customer footprint while making significant progress delivering new technology for the future.
Challenger saw continued sales growth across domestic lifetime annuities and Japanese annuities, supporting our focus on longer tenor and more valuable sales. Challenger welcomes NGS Super as a new partner, as we continue to support funds to deliver best-in-class retirement solutions for their members.
Our market leading income capabilities are powered by Challenger’s highly regarded asset origination platform, which celebrates 20 years as a leader in multi-sector credit and investment excellence.
As we look forward, the re-platforming of our retirement customer technology, including customer registry, is entering an exciting phase as the build completes and we test and ready for launch.
Removing sales frictions and integrating lifetime and term income solutions seamlessly for advisers and funds will enable the next phase of our growth.
More than ever, Australians need financial confidence and certainty to live their best retirement. The benefits of a lifetime income allocation alongside an account-based pension are powerful and ensure better retirement outcomes and financial confidence.
Challenger is strongly supportive of the government and regulatory focus to deliver a retirement system for the millions of Australians approaching and in retirement. We look forward to APRA’s forthcoming changes to insurance capital standards, which will support significant growth in the lifetime income market and step change balance sheet resilience.
We welcome TAL Dai-ichi Life, a global leader in life insurance, as a material shareholder of Challenger, which recognises the strength of Challenger’s strategic position, unique capabilities and the long-term tailwinds in the Australian retirement market.”
Motley Fool contributor Aaron Shaw has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Challenger. 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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