In its first quarter earnings results, Challenger has announced a 1 per cent rise in group assets under management (AUM) to $128 billion.
The group attributed the AUM increase to funds under management (FUM) growth in its funds management business and positive investment market movements.
Namely, funds management FUM was $119 billion at the end of September, an increase of $1.3 billion or 1 per cent for the quarter.
Breaking this down, Fidante’s FUM was $101 billion, also a 1 per cent increase over the period.
“FUM growth for the quarter included positive investment market movements of $3.4 billion, partially offset by net outflows of $1.9 billion and client distributions of $500 million. Net outflows were primarily driven by redemptions of fixed-income mandates,” the group said in an ASX listing on Wednesday.
Meanwhile, Challenger Investment Management (CIM) FUM was $18 billion and increased by $233 million or 1 per cent for the quarter, primarily driven by net flows of $330 million from third-party clients.
Managing director Nick Hamilton said this growth comes on the back of continued business momentum and progress on strategic initiatives
“Challenger continues to execute a range of strategic initiatives that will strengthen and broaden the business,” Hamilton said.
“Our strategic investment to re-platform the customer registry and technology for the annuity business is progressing to schedule. Once launched, the benefit from making our retirement products easy to access will be essential for our growth strategy.”
According to the managing director, Challenger remains “on track” to launch this function this financial year.
Last month, the group announced it entered an agreement to appoint State Street to provide its investment administration and custody services.
Challenger, Fidante and its affiliates will benefit from State Street’s advanced technology, capability and scale that integrates front, middle and back office functions with custody services.
“As more Australians transition to retirement and with the market now developing solutions consistent with their unique needs, we see significant opportunities for Challenger to continue achieving strong growth across our range of retirement income and other investment products,” Hamilton said.
Moreover, Challenger said its life business remained strongly capitalised with a PCA ratio 1.61 times the minimum regulatory requirement, following the payment of the final 2024 dividend.
Total life sales decreased 14 per cent to $2.4 billion over the quarter, which incorporates the impact of a $619 million group lifetime annuity policy win in 1Q24.
Excluding this, total life sales increased 10 per cent, driven by retail lifetime and Japanese (MS Primary) annuity sales growth and strong Challenger Index Plus sales.
Namely, retail lifetime annuity sales increased 26 per cent to $275 million and Japanese annuity sales were up 74 per cent to $244 million over the quarter.
However, the group said that its retail fixed term annuity sales decreased 22 per cent to $564 million as Challenger maintained its “disciplined approach to pricing shorter duration business”.
Challenger reaffirmed its FY2024–25 normalised net profit after tax guidance of between $440 million and $480 million.
