Challenger Releases Q3 Results; Dip In Australian And Japanese Annuity Sales

Challenger Releases Q3 Results; Dip In Australian And Japanese Annuity Sales

 Challenger Limited (ASX: CGF), a multi-faceted financial services organization, announced its Q3 FY2019 performance on 17 April 2019.

During the period, there was an increase in total assets under management (AUM) by 4% ($3 billion) to $81 billion, influenced by the rebound in investment markets. Fidante Partners’ FUM increased by 5% to $59.3 billion during the quarter. Fidante Partners’ net cash outflow was of $46 million with equity inflows offset by lower margin fixed income outflows. There was an increase in the Challenger Investment Partners’ FUM by 1% to $18.8 billion during the quarter.

Based on the Q3 performance, the managing director and Chief Executive Officer of CGF stated that Challenger was able to make good progress implementing strategies to build further resilience through an expanded relationship with MS&AD in Japan and new domestic distribution relationships in spite of lower Japanese sales and industry disruption continued to impact sales.

He also highlighted that annuity sales marked a dip owing to lower Japanese sales and disruption in the Australian financial advice market. The total annuity sales of $662 million plunged by 13% pcp. The Australian annuity sales dipped by 7% and Japanese annuity sales by 49% pcp. Although, during the period, the company entered into a new agreement with MS Primary which significantly increased the Japanese sales as well as the Japanese product offering.

However, other segments of the advice industry witnessed immunity with strong sales growth by independent financial advisers. This indicated the evolution of advice industry over the past 12 months. The evolution of the advice industry will also support the strategy of the company to expand CGF’s distribution reach through the IFA’s.

Besides, the significant expansion of the strategic relationship with MS&AD is also progressing well.

The total Life net cash outflow was of $170 million. It represents an annuity net inflow of $66 million which got counterbalanced by of $236 million net institutional outflows. Thus, the total Life net book growth declined by 1.2% for the quarter.


As per the guidance provided by the company in February 2019, it reaffirms that the normalized net profit before tax will be in the range of $545 million and $565 million in FY19.

The  IH FY2019 results of the company could be read here.

Today, the company also announced that it ceases to exist as substantial holder of Link Administration Holdings Limited.

On 16 April 2019, the company announced that UBS Group and its related bodies corporate ,which earlier had 30,590,568 votes of challenger along with 5.01% voting power, now owns increased 37,894,708 votes along with 6.20% voting power.

In the last ten years, the stock has generated a return of 345.70%. At present, the shares of CGF are trading at A$7.770, down by 2.387% as compared to its previous closing price. Challenger Limited holds a market capitalization of A$4.87 billion and approximately 611.6 million outstanding shares.


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