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Challenger Reports 29% Growth in Life Sales

Challenger Reports 29% Growth in Life Sales
Both term and lifetime annuity sales continue to benefit from the recent launch of Challenger annuities on the Colonial and VicSuper platforms. Lifetime sales from the Colonial platform grew 40% for the period, from 21% in 1H16.
Apr 21, 2016 By Kaivalya Kandarpa Tags: CGF

Challenger Limited (ASX:CGF) reported upbeat results for the March quarter and confirmed its guidance for FY16 as it aims to generate Cash Operating Earnings between $585 million and $595 million.

Total Life sales were recorded at $864 million (up 29%), comprising of $575 million from annuity sales, up 22% on pcp and $289 from Lifetime annuities, which expanded 63% on pcp. Challenger achieved Life annuity net book growth of 1.6% or $135 million during the quarter.

Challenger’s Chief Executive Officer Brian Benari commented on the company’s progress: “The key stand out is the step up in lifetime annuity sales which accounted for 23% of sales in the quarter and benefitted from our move to embed annuities on platforms. This resulted in flows through Colonial First State, being up more than 100% on the same period last year.”

Funds Management FUM includes both the Fidante Partners multi-boutique funds management business and Challenger Investment Partners’ fixed income and commercial property mandates.

Fidante Partners’ FUM was $41.5 billion, unchanged from the previous quarter, as net inflows of $0.6 billion were offset by negative market movements.

Challenger’s total group assets and funds under management (FUM) remained stable as at $57.4 billion. Inflows of $1 billion from a range of boutiques were offset by a one-off $0.4 billion outflow after the previously announced closure of Metisq Capital.

Challenger Investment Partners’ FUM was also unchanged for the quarter at $13.1 billion as net inflows of $0.2 billion across both property and fixed income were counterbalanced by fixed income market movements.

Both term and lifetime annuity sales continue to benefit from the recent launch of Challenger annuities on the Colonial and VicSuper platforms. Lifetime sales from the Colonial platform grew 40% for the period, from 21% in 1H16.

Challenger confirms its FY16 guidance for Life’s Cash Operating Earnings between the range of $585 million to $595 million and the company aims to raise 18% pre-tax normalised return on equity target.

CGF has risen 5.4% since the announcement and was last traded at $9.10 as at 1:20 PM (AEST).

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Kaivalya Kandarpa Author: Kaivalya Kandarpa Apr 21, 2016

Kaivalya is an equity analyst and a client advisor at Wise-owl. She specialises in fundamental and technical analysis for large and mid-cap companies. Having completed her bachelor's degree in Business Administration majoring in Finance, Kaivalya has a comprehensive understanding of international stock market movements. She tracks local and overseas markets and compiles analytical reports for various industries.

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