Challenger Ltd Tumbles After CEO Transition

  • Oct 26, 2018 AEDT
  • Team Kalkine
Challenger Ltd Tumbles After CEO Transition

On 26 October 2018, Challenger Ltd (ASX: CGF) announced that Mr. Brian Benari is retiring from the role of  Managing Director and Chief Executive Officer and the Board has appointed Mr. Richard Howes as the new CEO of the company. Following this news, the share price of the company decreased by 2.78 percent as on 26 October 2018 (12:45 PM AEST).

Mr. Richard Howes is the current Chief Executive of Distribution, Product and Marketing and he has held a number of senior executive positions at Challenger during his 15 years with the company. According to the Company’s chairman, Mr. Richard Howes is having wealth of knowledge, combined with the right capabilities and passion which will help in taking this investment management company to go forward.

After announcing about the Mr. Brian Benari’s retirement and appointment of Mr. Richard Howes, the chairman of the company discussed about the strategic progress and financial results of the company in FY 2018. He informed that the company has made excellent progress in FY 2018 by implementing its strategies. The company witnessed significant growth in assets under management, which increased by 16% to more than $81 billion, providing a solid underpinning for future earnings. 

During FY 2018, the company maintained a strong capital position, ensuring that the company is in good position to fund future growth. This was further strengthened by the equity placement to MS&AD during FY 2018, which also supported broader strategic relationship with the MS&AD group. The company continued to diversify and grow its highly differentiated business model, strengthening its significant competitive advantage. The Statutory net profit after tax was $323 million in FY 2018 which includes mark-to-market gains and losses on company’s investment assets and policy liabilities. The Board declared a fully franked full year dividend of 35.5 cents per share for 2018. The chairman also pointed that dividends to shareholders have increased by 37 percent over the past five years. The company has delivered strong returns for shareholders over many years and total shareholder return has been 233% since 2013 and these significantly outperformed the key ASX indices over the past decade.

Mr. Brian Benaris gave his last speech as CEO on 26 October 2018, and he discussed about the implementation of the company’s clear strategy for growth. He gave update on the three particular aspects of the strategy that the company is focused on. Firstly, the significant growth in the company’s distribution reach, which demonstrates company’s success mainstreaming annuities. Secondly, the progress of government reforms designed to address the need for reliable income in retirement and third, how the company is growing funds management with new boutiques, strategies and distribution initiatives.

While discussing about the Outlook of the company, he informed that in FY19 the company is targeting growth in normalized net profit before tax of between 8% and 12% on FY18. The company is expecting normalized return on equity to increase following the deployment of higher levels of capital from the MS&AD equity placement in August 2017, however it is not expected to reach the 18% target in the 2019 financial year.

CGF’s shares traded at $10.470 with a market capitalization of circa $6.58 billion as on 26 October 2018 (AEST 12:45 PM).


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