Challenger reports record annuities growth of $2.2b

Challenger Limited is looking to the Government's post-retirement policy agenda to help drive further growth.

Challenger pointed to the direction of Government policy including the development of Comprehensive Income Products for Retirement (CIPRS) at the same time as announcing record annuities sales of $2.2 billion in its half-year results announcement to the Australian Securities Exchange (ASX) today.

In doing so, the company pointed to the success of its strategy to drive growth by expanding both its product set and distribution networks including a distribution agreement with BT and a new product partnership with Standard Life Investments.

The company's announcement to the Australian Securities Exchange (ASX) said total group assets under management (AUM) were $64.7 billion, as at 31 December 2016, up 12 per cent on the prior corresponding period — something which had delivered an eight per cent increase in normalised NPAT to $197 million.

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It said statutory NPAT was $202 million (1H16 $234 million), down on the prior corresponding period largely due to a significant one-off item in 1H16 being profit from the sale of Kapstream Capital.

The board declared a higher interim dividend of 17 cents per share, up six per cent.

Commenting on the result, Challenger chief executive, Brian Benari said the interim results demonstrated strong momentum in both the life and funds management businesses.

"During the first half we achieved record annuity sales, strong growth in funds under management and a record low cost to income ratio," he said.

"Importantly, we also paved the way for future growth by expanding our distribution relationships and our product offering. This is enabling us to make the most of the opportunities arising from the rapid growth in the retirement income market."

He said that in addition to eight new distribution and product initiatives commenced during the half, the company was announcing a new relationship with BT Financial Group which would see it work towards offering Challenger annuities through the BT Panorama platform.

"We are also announcing a new product relationship with Standard Life Investments to launch a new retirement product in Australia," he said.

The ASX announcement said that through the BT relationship announced today, Challenger, and BT Financial Group would work towards offering Challenger term annuities, Lifetime annuities and CarePlus through BT Panorama in the first quarter of next financial year.

It said this aligned with the expected date that Challenger annuities would be offered on the AMP platforms.

"Once both of these distribution relationships have come online, Challenger annuities will be represented on investment and administration platforms used by two-thirds of financial advisers in Australia," it said.