Challenger AUM approaches $100b

Challenger’s group assets under management (AUM) rose by 13% in the first half of the 2021 financial year to $96 billion, thanks to inflows of $6.4 billion in the fund management division.

In its first half results, the firm said its group AUM reached $96 billion which had been helped by strong growth and diversification. Funds under management inflows were $6.4 billion compared to $1.9 billion in the first half of 2020.

Portfolios had become more defensive during the COVID-19 period, the firm said, with higher levels of liquidity but this would be deployed during the second half of the year.

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Total life sales increased slightly from $3.1 billion in the first half of 2020 to $3.4 billion with lifetime annuities seeing the strongest growth but life net flows fell from $0.9 billion to $0.7 billion.

“Total life sales were $3.4 billion, up 10% compared to the prior corresponding period, including record long-term annuity sales. The strong sales result reflected Challenger’s strategy of diversifying revenue streams and provides a solid basis for future earnings in the life book,” the firm said.

“Domestic annuity sales were up 11%, with the strongest growth in lifetime annuities. Domestic sales benefited from new institutional client opportunities, a stabilisation in the adviser market and greater penetration among independent financial advisers.”

The firm declared a dividend of 9.5 cents per share which it said “reflected confidence in our future business performance and the strength of our capital position”.

The company said it was on track to achieve net profit after tax of between $390 million to $440 million for the full year.

Chief executive, Richard Howes, said: “Our strategy of diversifying revenue is working with strong book growth in our Life business and industry leading organic flows in funds management.

“We remain strongly capitalised with prudent portfolio settings which are appropriate given our growing customer franchise. The investment portfolio is in good shape, with no significant credit defaults and stable property valuations during the half year. We are gradually deploying our excess cash and liquidity to enhance future returns.”

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