Challenger down but not out
A significant fall in funds under management (FUM) and income in Challenger Financial’s funds management business, as well as investment losses in its life business, has contributed to the group posting a net annual loss in 2009.
The group posted a net loss for the 12 months ended June 30 of $90.7 million, compounding a loss of $44.2 million recorded in the previous corresponding year.
It posted a normalised net profit, which excludes mark-to-market movements and significant items, of $218.9 million, up 0.5 per cent, and underlying operating cash flow for the year was $287 million.
Unlisted FUM in the funds management business fell 29 per cent to $13.6 billion and listed FUM fell by 14 per cent to $2.5 billion, while net income fell by 39 per cent to $114 million.
The reduction in FUM were partially addressed through aggressive cost reductions of 19 per cent in the year, giving the business operating leverage to a sustained equity market recovery, according to chief executive Dominic Stevens.
He said “strong performances above benchmark” were delivered by several of the boutique funds and a number of Challenger's in-house funds managers.
“The group is very well capitalised and capable of moving quickly on opportunities expected to arise for life and funds management.
"Despite testing market conditions, we finished the year with an increase in normalised profits and enviable cash and capital balances to fund future growth," he added.
This lower contribution from funds management due to market-linked movements in the year to June 30, 2009, was offset by growth in the steadfast life and mortgage divisions of 23 per cent and 36 per cent.
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