Challenger reported a 19% increase in normalized pretax net income of $472 million, which was attributed to strong growth in sales and funds under management (FUM).
On Tuesday, August 16, the company confirmed that its life business recorded 14% growth and “strong” sales of $9.7 billion. Retail sales also rose 11% to $2.4 billion.
Challenger said its continued focus on working with financial advisory groups and independent financial advisors also helped national retail annuity sales increase by $240 million (11%) to $2.4 billion.
However, statutory after-tax net income fell 57% to $254 million, which Challenger said was due to “investment markets resulting in unrealized investment experience.”
The group’s assets under management (AUM) also fell 10% to $99 billion.
Challenger also announced a full year dividend of 23.0 cents per fully franked share; a 15 percent increase.
“The result reflects the underlying strength of our franchise,” said Nick Hamilton, Managing Director and CEO of Challenger.
“Our life business continues to benefit from favorable demographic and retirement trends, while higher interest rates support both annuity sales and investment returns.
“We continue to maintain a significant competitive advantage in fund management, with an exceptional range of managers and a diverse offering, ensuring we are Australia’s leading active management platform.
“Fund management increased earnings by 17%, benefiting from average WUF growth of 13% and higher margins.”
To coincide with the earnings announcement, Challenger also confirmed that it has begun a strategic review of Challenger Bank to determine whether the bank will “achieve expected earnings on schedule and align with Challenger’s strategy.”
“Since the announcement of the acquisition of the bank in December 2020, market conditions have changed and it has become clear that the bank is unlikely to realize the expected profits in the expected timeframe,” the company said in a statement. a statement.
“As a result, Challenger is reviewing the Bank’s position within the group and has begun 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 specialist finance company Apollo to meet a number of customer financing needs and provide structured, asset-backed lending solutions.
Challenger first announced that 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 new chairman, with current chairman Peter Polson due to retire on October 27, 2022.
Mr. West has served on the board as an independent non-executive director since 2018 and has over 30 years of board and financial services experience, having previously worked as CEO for Vero Insurance and CGU Insurance.
He is also the current Chairman of the Challenger Group Audit Committee and a member of the Group Risk Committee and Nominating Committee.
“It’s a privilege to be elected as Challenger’s next president,” said Mr. West.
“Challenger is a company with a strong purpose and I look forward to working alongside the Board, CEO and management team as we continue to deliver positive results for all of our stakeholders.”
Neil Griffiths
Neil is the Associate Editor for Wealth Headlines including ifa and InvestorDaily.
Neil is also the host of the ifa show podcast.
