Challenger is looking to provide a deferred lifetime annuity (DLA) as growing demand for long-term retirement products continues.
Challenger's results for the 2013 March quarter showed a continuing boost in its life business as a result of a growth in long-term annuities sales.
"In this last quarterly period it is interesting to note that 18 per cent of the annuities Challenger wrote have been lifetime annuities," Challenger chief executive Brian Benari told InvestorDaily.
"The prior six months it was 10 per cent and prior to that it was absolutely minimal, so the market is changing as people are looking more and more towards having an annuity that runs for their full life. That's the key message I think."
The government recently proposed a new superannuation policy, which included changes to the tax treatment of DLAs in a bid to alleviate longevity risk for retirees.
Mr Benari told InvestorDaily in October 2012 that legislation was a barrier to the development of deferred lifetime annuity products.
"The government has now cleared the way for the issuance of deferred annuities going forward, so what that does is add another string to our bow," Mr Benari said.
"The next step for us is the issuances of deferred annuities . so our focus is now on ensuring that we're well positioned to start offering those products from the [July 1 2014] start date."
Challenger Life's assets under management reached $10.2 billion at the end of March.
Retail annuity sales for the quarter hit $354 million, broadly in line with sales in the prior corresponding period.
The company's funds management business also saw strong growth in the quarter with funds under management (FUM) reaching 37.8 billion, up 29 per cent for the 12 months and 7 per cent for the quarter, driven by strong net flows and positive markets.
Mr Benari said he expects demand to continue in the annuities sector with Australia only at the beginning of the baby boomer retirement cycle.
"The first baby boomer started retiring in 2011. There is a 20-year retirement cycle and we're right at the very beginning of it," Mr Benari said.
"We will be a beneficiary of that for an extended period of time."
