Challenger has reported a 4% growth in group assets under management to $89 billion for the three months to the end of September, driven by record quarterly annuity sales and funds management net flows.
The firm said in an announcement to the Australian Securities Exchange (ASX) that it had managed to make significant progress by deploying Challenger Life’s cash and liquids balance into higher returning investments.
This would enhance both future earnings and return on equity and the results were also driven by strategy aimed at diversification of the business both geographically and across customer segments.
“Our record annuity sales reflect strong growth in the contribution from Japan as well as domestic institutional and retail annuity sales,” managing director and chief executive Richard Howes said.
“Our funds management business further solidified its spot as the fastest growing asset manager in Australia. Total funds under management rose 5% during the quarter, driven by exceptional net flows across both Fidante Partners and CIP Asset Management.”
Life total life net inflows for the quarter were $114 million, including annuity net inflows of $100 million and other life inflows of $14 million while Life’s annuity book growth and total book growth was 0.83% for the quarter, with total Life sales ($1,577 million), down 11% compared to the prior corresponding period reflecting higher annuity and lower institutional sales, the firm said.
At the same time, funds management FUM was up 5% for the quarter, including $3.6 billion of net inflows.
However, Australian fixed term sales had been impacted over the past few years by structural changes in the Australian wealth management and financial adviser market following the Royal Commission, particularly the reduction in advisers at the wealth management operations of the major banks.
Fidante Partners’ FUM was $65.2 billion, which represented an increase of $2.8 billion or 5% for the quarter, driven by strong net inflows of $2.3 billion and positive investment markets net of distributions of $0.5 billion. Following this, CIP Asset Management FUM was $20.0 billion, up $1.0 billion or 5% for the quarter where the increase in FUM was driven by net inflows of $1.2 billion, across both life and new third party clients.
As far as the future outlook was concerned, Challenger reaffirmed its FY21 normalised net profit before tax guidance range of between $390 million and $440 million.
