FAQs on Challenger and the changing market


FAQs on Challenger and the changing market

02 Apr, 2020

Below we provide answers to common questions asked about Challenger.
Q.  How is Challenger performing and what does this mean for my annuity?

A.  The best way to understand Challenger, and how its performed is to have a look at our half year results, released on 9 February 2021. You can find them here.

Our half year result was issued to shareholders via the ASX. It demonstrates Challenger’s strong capital position and shows  that, despite the significant share market volatility during recent times, Challenger continues to hold significantly more capital than we are required to hold by the regulator, the Australian Prudential Regulation Authority (APRA).

Most importantly, these announcements do not affect our annuity customers who continue to have certainty and peace of mind during this time, knowing they have a guaranteed income stream in retirement, regardless of how the share market performs.

Q.  Is my money safe?

A.  Yes. Challenger is regulated under the Life Insurance Act which is supervised by the Australian Prudential Regulation Authority (APRA). APRA actively monitor our investments to ensure we can continue to meet our promise to our customers both now and in the future.

Challenger holds significantly more capital than the amount required by the regulator. So even if there is an unfortunate event or a share market downturn, investments in a Challenger annuity and future payments are still guaranteed.

Our annuities provide our customers with certainty knowing they have a guaranteed income stream in retirement, regardless of how the share markets perform.

Q.  How do you invest my money?

A.  When you invest in a Challenger annuity your capital investment goes into a fund along with the capital received from other annuity investors. This fund is known as the statutory fund, and all regular payments to our annuity investors are paid from this fund.

We are also required by APRA to invest our own money into the fund. APRA actively monitors the statutory fund’s investments, to ensure that we can meet the promises that we have made to you.

Q.  What has Challenger done to manage money in the statutory fund during recent volatility?

A.  We have actively managed our investment portfolio to reduce our capital intensity and manage risk arising from the increased market volatility. We have shifted to a higher weighting of investment grade fixed income.

It is important to note that changes in our investment portfolio have no impact on our promise to our annuity customers who continue to enjoy guaranteed income, regardless of how markets perform.

Q.  I’m concerned about market volatility.

A.  You can be confident that market volatility does not affect your Challenger annuity in any way – you will continue to receive the same payments, and this is guaranteed for the life of your product.

Please read the PDS and get in touch with us if you want to discuss this further.