The Challenger Ltd (ASX: CGF) share price is under the spotlight after the business announced its FY26 first quarter update.
Challenger is Australia’s leading business in the annuity space, enabling retirees and other customers to turn a pool of capital into stable income for a certain period of time.
FY26 first quarter update
Investors need to know about the size of Challenger’s annuity sales and the progress of its assets under management (AUM).
Sales
The business reported total life sales of $2.5 billion. However, within that, there was significant growth.
Lifetime annuity sales grew by 16% to $320 million and fixed term annuity sales grew by 29% to $1.1 billion. Japanese sales were stable at $246 million. The annuity net book grew by 2.5% for the quarter, or $415 million.
Challenger said sales across its retirement income products remained strong, supported by demand for guaranteed lifetime income and an increasing number of Australians entering retirement and aged care.
Fixed term annuity sales benefited from several new mandates with superannuation funds, offsetting competition in the retail term market, where Challenger continues to remain “disciplined on pricing shorter-term annuities”.
Recently, Challenger and TAL established a key retirement partnership with Insignia Financial for the launch of MLC Retirement Boost on the MLC Expand platform.
Assets under management
The company reported that the group assets under management (AUM) for the quarter declined 2% to $120.9 billion. Within that figure, funds under management (FUM) dropped 3% to $109.6 billion.
There was FUM net outflows of $4.9 billion and client distributions of $0.6 billion, partially offset by $2.3 billion of positive investment market movements.
Net outflows were primarily driven by the partial redemption of a low-margin institutional equity mandate, partly offset by inflows across fixed-income managers.
However, Challenger Investment Management (Challenger IM) did see $350 million raised as part of the launch of Challenger IM LiFTS notes on the ASX on 11 September 2025.
In October 2025, Fidante welcomed London-based Fulcrum Asset Management to its affiliate platform.
Outlook for the Challenger share price
The business reaffirmed its expectation of normalised earnings per share (EPS) of between $0.66 to $0.72.
I expect demand for annuities could stay strong amid lower interest rates and ageing population tailwinds.
However, considering it has risen close to 50% this year, it doesn’t seem like such good value to me – there are other ASX growth shares I’d rather buy first.
