Challenger Limited (ASX: CGF) – Stock Plunges despite Unveiling Strong Capital Base

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Challenger Limited (ASX: CGF) has revealed its full year result wherein assets under management increased to more than $81 billion, which is up by 16%. This jump has been well supported by significant growth in Life sales and very strong fund flows in the Funds Management business, over the last five years. Normalized net profit after tax increased to $406 million up by 6%, while statutory net profit after tax, was down to $323 million representing a fall of 19%. This seems to have impacted the investors’ view on this annuity provider.

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Following the $500 million strategic equity placement to MS&AD Insurance Group Holdings, normalized pre-tax return on equity was lower at 16.5%, as forecasted. The full year dividend increased to 35.5 cents per share which is fully franked and up by 0.5 cents. With $1.3 billion of excess regulatory capital, Challenger Life finished the year strongly capitalized.

The stock was trading at a market price of $11.650 and with daily price change of -$0.8 or a percentage change of -6.43% as at August 14, 2018 (2 PM AEST). The stock has seen a performance change of -3.11% over the past 12 months.

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