Challenger reports 'strong' life book growth and announces new chair

Challenger has announced a 19 per cent increase in normalised net profit before tax of $472 million which has been attributed to strong sales and funds under management (FUM) growth.

On Tuesday (16 August), the company confirmed that its life business recorded book growth of 14 per cent and "strong" life sales of $9.7 billion. Retail sales also increased by 11 per cent to $2.4 billion.

Challenger said its continued focus on working with financial advice groups and independent financial advisers has also helped domestic retail annuity sales increase by $240 million (11 per cent) to $2.4 billion.

However, statutory net profit after tax fell by 57 per cent to $254 million which Challenger said was due to "investment markets resulting in unrealised investment experience".

Group assets under management (AUM) was also down 10 per cent to $99 billion.

Challenger also reported a full-year dividend of $0.23 per share fully franked; an increase of 15 per cent.

“The result reflects the underlying strength of our franchise," Challenger managing director and CEO Nick Hamilton said.

"Our life business continues to leverage favourable retirement and demographic trends while higher interest rates are supportive for both annuity sales and investment returns.

“We continue to maintain a significant competitive advantage in funds management, with an exceptional range of managers and diversified offering, ensuring we have Australia’s leading active manager platform.

“Funds management grew earnings by 17 per cent, benefiting from average FUM growth of 13 per cent and higher margins.”

To coincide with the results announcement, Challenger has also confirmed that is has commenced a strategic review of Challenger Bank to consider if the bank "will realise the expected benefits in the timeframe anticipated, and its alignment with Challenger’s strategy".

"Since announcing the bank acquisition in December 2020, market conditions have changed and it is becoming apparent the bank is unlikely to realise the expected benefits in the timeframe anticipated," the company said in a statement.

"As a result, Challenger is reviewing the Bank’s position within the group and has commenced a strategic review of the business.

"Challenger is considering all options in relation to the Bank and has appointed Gresham Partners to assist."

Challenger has also confirmed a joint venture with specialty finance company Apollo with an aim to address a number of client financing needs and provide structured and asset-backed lending solutions.

Challenger first announced it had entered into a non-binding Memorandum of Understanding with Apollo in February.

Meanwhile, Challenger has announced that Duncan West will take over as its new chair, with current chair Peter Polson set to retire on 27 October 2022.

Mr West has served on the board as an independent non-executive director since 2018 and has over 30 years' board and financial services experience, previously working as CEO for Vero Insurance and CGU Insurance.

He is also the current chair of Challenger's group audit committee and a member of the group risk committee and nomination committee.

“It is a privilege to be elected as the next Chair of Challenger," Mr West said.

"Challenger is a company with a strong purpose and I look forward to working alongside the board, CEO and leadership team as we continue to deliver positive outcomes for all our stakeholders."

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.