This morning, Challenger Ltd (ASX: CGF) revealed its financial results for the six month period to 31 December 2017.

Challenger is a fund manager and an annuity provider for Australian retirees.

The results below are comparing against the six month period to 31 December 2016. Here are some of the main points:

  • Statutory net profit after tax (NPAT) down 3%
  • ‘Normalised’ NPAT up 6%
  • Group assets under management (AUM) increased by 18% to $76.5 billion
  • Life annuity sales up 21% to $3.3 billion
  • Dividend per share up 3% to 17.5 cents

The difference between the statutory NPAT and the ‘normalised’ NPAT is the growth or decline in Challenger’s assets and liabilities. In this report Challenger had a ‘negative investment experience’ of $17 million.

Challenger CEO Brian Benari said “In these results we are seeing the benefits from diversifying our distribution channels and product offering, which is driving increased sales. At the same time, we are reweighting to longer term business, which is reducing the proportion of annuities reaching maturity and maximising our returns to shareholders. This is underpinning our future growth.”

There has been particularly strong demand for products such as our new Challenger Guaranteed Index Plus Fund, which is targeted at Australian super funds, and our CorePlus aged care annuity. – Benari

The company said that Challenger Life remains strongly capitalised with $1.3 billion of excess regulatory capital. This is 1.49 times the ‘Prescribed Capital Amount (PCA) ratio set by APRA and is above the mid-point of Challenger’s target range of 1.3 times to 1.6 times.

In September 2017 Challenger’s range of annuity products were launched on AMP Limited’s (ASX: AMP) adviser portal to their retail and corporate superannuation clients.

Challenger is targeting the launch onto BT Investment Management Ltd’s (ASX: BTT) Panorama platform in the June 2018 quarter.

…sales in Japan through our relationship with Mitsui Sumitomo Primary Life Insurance Company Limited (MS Primary) contributed 17% of Challenger Life’s annuity sales in the half,’ Mr Benari added.


The company said that it is well positioned to deliver on its growth strategy with new product offerings, expanded distribution networks and efficient operations.

Management said that it’s on track to achieve its guidance of ‘normalised’ NPAT guidance of between $545 million and $565 million, representing growth of 8% to 12% compared to FY17.

Challenger continues to aim for a pre-tax ‘return on equity’ of 18% over the medium term.

Challenger shares were trading down 3.3% at $12.42 Tuesday morning, according to Google Finance.

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