Challenger has predicted that it will become the highest-selling lifetime annuity provider in the industry as well as selling more lifetime annuities in 2013 than the entire industry did in any year, with the exception of 2004.
Challenger has targeted $240 million in lifetime annuity sales for the 2013 financial year, stating that the ageing Australian population was driving a 20-year growth cycle in lifetime annuities.
Challenger chief executive Brian Benari said the uptake of its Liquid Lifetime and Care Annuities was highly driven by the products’ ability to provide investors with access to capital – which was not a feature of traditional lifetime annuities.
Benari said this shift has meant that investors were considering the capital protection and guaranteed monthly income aspects of annuities again, and that the demographic shifts meant more growth in the market.
“Structural demand drivers have kept us committed to developing the lifetime annuity market in Australia. There’s clearly room for wealth managers willing to invest shareholder capital to protect customers from the risks of retirement,” Benari said.
The higher lifetime annuities sales have also prompted Challenger to purchase part of a $602 million portfolio of half-stakes in six shopping centres in NSW and Victoria, as part of its underlying investment portfolio.
“The more lifetime annuities we sell, the more we’re able to finance long-term assets like commercial property and infrastructure. Annuity providers are uniquely positioned to contribute to economic growth in this more direct way,” Benari said.
