Challenger Limited (ASX: CGF) - To expand its distribution and product offering, reflecting the success of Challenger’s strategy, the company has reported strong growth in annuity sales. Brian Benari, Challenger’s Chief Executive Officer said, “With Challenger achieving its second highest quarterly result on record, annuity sales increased by 7% on the prior corresponding period.”
Reflecting both the benefit of a lower maturity rate compared to the prior corresponding period and higher Australian annuity sales, total Life book growth for the quarter was $425 million or 3.1%. With increasing retirement savings from the growing number of retirees, continued growth in annuity sales reflects strong demand for secure income. Also, from Challenger’s expanded distribution reach, annuity sales are benefiting.
By making its full range of annuities on the fast-growing specialist Netwealth platform available, Challenger also announced plans to further expand distribution. Demonstrating strong demand for advisers, this is the fifth retail platform to launch Challenger annuities, to be able to easily include annuities in their clients’ portfolios.
Continue to benefit from higher average funds under management were the Funds management earnings, which was 14% higher than 12 months ago. Driven by both a lower annuity maturity rate and an increase in annuity sales, total Life net book growth was $425 million for the quarter. 3.1% of opening FY19 liabilities was the Life total book growth for the quarter.
Lower MS Primary (Japanese) and institutional sales, is offset by the strong growth in Australian annuity sales, total Life sales of $1,566 million were in line with the prior corresponding period. Up by $74 million or 7% on the pcp, were the total annuity sales of $1,171 million. Fixed term annuity sales, increased by 7% on the pcp, which include MS Primary. Australian fixed term annuity sales increased by $172 million or 25% on the pcp to $849 million.
Although sales were down 52% on the pcp, MS Primary sales increased 22% on the June 2018 quarter. Relative interest, reinsurance rate and foreign exchange rates are the factors Challenger’s level of MS Primary sales depends on. 6% higher than the pcp were the Lifetime annuity sales of $222 million benefiting from continued strong demand for CarePlus and confirmation of means testing treatment for lifetime income products.
Increasing by 5% on the pcp, were Net Life annuity flows for the quarter at $370 million. Of the opening FY19 Life annuity book, annuity book growth for the quarter represented 3.2%. On the pcp, sales of Other Life products were down $78 million, to $395 million.
At 30 September 2018, Life’s investment assets were at $18.3 billion, an increase of $0.3 billion for the quarter. As at October 17, 2018 the stock of CGF traded at a market price of $11.170.
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