First quarter AUM annuity sales and Net Flows (1)
Continued momentum in growing longer duration business
- Group assets under management (AUM) $107 billion, up 3% for the quarter Total Life sales $2.8 billion, up 2%
- Record annuity sales $2.1 billion, up 17%
- Lifetime annuity2 sales $837 million, up 365%
- Challenger Index Plus sales $691 million, down 26%
- Challenger Life remains well capitalised with a PCA ratio of 1.52 times3
- Funds Management funds under management (FUM) $98 billion, up 3% for the quarter excluding the derecognition of Challenger’s Australian real estate business (CRE) following its sale to Elanor4
Challenger Limited (ASX:CGF) today reported its first quarter annuity sales, net flows and AUM. Total Life sales were $2.8 billion driven by record quarterly annuity sales and Group AUM was up 3% for the quarter.
Managing Director and Chief Executive Officer, Nick Hamilton said:
"Challenger has started FY24 well, demonstrating our progress in executing a range of strategic initiatives to drive growth and extend the duration of annuity business to improve book quality.
“Our Life business delivered another strong performance, with annuity sales driving book growth of 4.2%. In particular, sales of lifetime and longer duration annuity business were exceptional, supported by rising demand for guaranteed income.
“There is a significant opportunity for our business to support superannuation funds to help meet their members’ needs in retirement. In July, Challenger was selected as Aware Super’s partner to provide a de-risking solution for its defined benefit fund that included a group lifetime annuity to the value of $619 million. The win highlighted the depth of Challenger’s capability and strength of our investment and longevity risk solutions.
“We’re making great progress in ensuring it’s easier for customers, clients and advisers to do business with us. Challenger officially launched fixed term annuities ‘in’ the Netwealth platform in September, which provide advisers and their clients with a seamless and contemporary experience to access fixed term annuities directly and invest both superannuation and non-superannuation monies.
“We are investing to maintain our position as Australia’s leading retirement income brand. Earlier this month, we announced our brand sponsorship partnership with the Professional Golfers Association of Australia (PGA), including WPGA Tour Australasia, and Golf Australia. With over nine million passionate golf fans in Australia, and being a sport of choice for those aged 45 and over, this is a fantastic opportunity to amplify brand awareness and engagement with our customers and our broader target audience – those preparing for and in retirement.”
1 All commentary compares the September 2023 quarter against the September 2022 quarter (the prior corresponding period or pcp), unless otherwise stated.
2 Lifetime sales includes CarePlus, a product that pays income for life and is specifically designed for the aged care market.
3 PCA ratio represents total Challenger Life Company Limited (CLC) Tier 1 and Tier 2 regulatory capital base divided by the Prescribed Capital Amount (PCA) and is as at 30 September 2023.
4 Challenger completed the sale of its Australian real estate business (CRE) to Elanor Investors Group (ASX:ENN) (Elanor) for total consideration of $38 million (before tax, transaction costs and other adjustments and subject to certain milestones being met) on 7 July 2023. Following completion, the Funds Management business derecognised $3,253 million of funds under management. The derecognition of CRE is expected to be EPS neutral for Challenger in the first year after completion. Challenger’s holding in Elanor is ~14% of Elanor securities on issue on a non-diluted basis and subject to certain milestones being met.