Challenger posts drop in total life sales in Q3
Challenger has reported that total life sales for the quarter were $1,099 million, down $159 million or 13 per cent on the prior corresponding period (pcp) in the March qurarter.
However, strong life book growth and $2.1 billion funds management net flows during the third quarter helped deliver a three per cent increase in total assets under management (AUM) which amounted to $78.6 billion, the firm said.
Total life net book growth stood at $629 million for the quarter, up 74 per cent on the pcp, and was driven mainly by sales and a lower maturity rate as a result of the ongoing focus on long-term sales, the company said.
However, total life sales were down $159 million on the pcp due to a $166 million lower contribution from MS Primary, which represented 14 per cent of total annuity sales.
The drop was driven by a lower Japanese reinsurance quota share, the company said.
At the same time, annuity sales of $761 million, were down $119 million, lifetime annuity sales of $217 million were consistent with the pcp and Australian term annuity sales increased by 12 per cent to $435 million.
Other life sales, including the Challenger Index Plus product, was down $40 million on the pcp.
Commenting on the result, Challenger chief executive, Brian Benari, said that the company remained focused on long-term annuity sales, with 43 per cent of sales for the quarter being either lifetime or 20-year fixed rate MS Primary in Japan.
“This long-term focus is expected to reduce the annuity maturity rate by eight percentage points to 25 per cent for FY18,” he said.
According to Benari, the firm’s funds management business remained one of the fastest growing in Australia and managed to attract $2.1 billion of net inflows for the quarter, across both Fidante Partners and Challenger Investment Partners, despite growing market volatility.
Also, funds under management (FUM) increased by $2.9 billion (four per cent) for the quarter due to both strong net flows and positive investment markets ($0.8 billion).
The company said it remained on track to achieve normalised net profit before tax guidance of between $545 million and $565 million, representing growth of eight per cent to 12 per cent on FY17.
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