Challenger reports strong Q1FY18

Challenger reported an increase in assets under management in its first quarter 2018 update, which it said was driven by strong results in both life and funds management in the September quarter.

The firm’s total group assets under management was $73.5 billion at 30 September, up five per cent in the quarter.

Funds management achieved flows of $3.8 billion for the quarter across both Fidante Partners and Challenger Investment Partners. Fidante Partners’ funds under management (FUM) increased by $2.7 billion, or five per cent, to $53.7 billion.

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Challenger Investment Partners’ FUM was up eight per cent at $17.3 billion for the quarter. Net inflows for the quarter were $1.4 billion, driven by growth in fixed income managed on behalf of the life business due to book growth and, Japanese general insurer company, MS&AD Insurance Group Holdings’ equity placement.

Total life net book growth was up 57 per cent on the prior corresponding period to $523 million for the quarter. Total life sales for the quarter were $1.57 billion, up 45 per cent on the prior corresponding period.

This comprised annuity sales of almost $1.1 billion and other life sales of $473 million.

Annuity sales increased by six per cent on the prior corresponding period, and were up 17 per cent on the June 2017 quarter.

Long-term sales, including lifetime annuities and 20-year maturity MS Primary (Japanese) business, accounted for 38 per cent of the September 2017 quarter sales, up from 29 per cent in the prior corresponding period.

Challenger chief executive, Brian Benari said: “In our life business, we’ve continued to focus on driving sustainable book growth with strong sales of long-term annuities, underpinning future performance”.

“We will realise the benefits of this strategy as scheduled maturities continue to fall through 2018 and beyond,” he said.

“We’ve also continued to expand our distribution reach in Australia, going live with our AMP platform arrangements in the quarter, which makes it easier for advisers to include annuities in clients’ portfolios.”

Benari said this was supported by AMP’s model portfolio allocation of 25 per cent to a lifetime annuity.

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