Challenger surfs post-retirement change wave
Challenger has continued to surf the wave of interest in post-retirement product development, reporting a two per cent increase in full-year normalised net profit after tax to $334 million and an extraordinary 266 per cent surge in funds management net flows.
The degree to which the upturn in interest in post-retirement product development had assisted Challenger was made clear by chief executive, Brian Benari, who referenced a "sea change" having occurred in Australia over the past 12 months "in attitudes towards retirement income, with increased attention by policymakers, the media and the superannuation industry".
"The superannuation industry is starting to move ahead of potential regulatory reform with forward-looking super funds and platforms just getting on with making retirement income solutions more accessible to financial advisers and retirees," he said.
Benari pointed to the fact that the company had announced a full year dividend up 15 per cent to 30 cents per share, and said that dividends had more than doubled over the last five years.
"Challenger's annuities business today has the nature and scale that allows us to maximise our shareholder returns, particularly return on equity, through optimising both our volume and margin mix," he said.
Dealing specifically with the annuities business, Binari noted that total life product sales reached a record $3.7 billion, up nine per cent over last year.
He used today's release to the Australian Securities Exchange (ASX) to announce the launch of a new annuity product, CarePlus, saying the company had engaged with its customers and financial advisers to develop the product which he expected to be popular with aged care retirees.
Discussing the outlook, Benari said that as the retirement system evolved, Challenger was seeing positive long-term developments including a growing industry trend to make retirement income solutions more accessible, allowing financial advisers to build more comprehensive retirement products.
"While it will take time to build momentum we expect to see high quality flows beginning in Financial year 16 through these distribution opportunities," he said.
Benari said that, consequently, the company was providing life cash operating earnings guidance of $585 million to $595 million for the financial year 2016 and this was after revising its equities normalised growth assumption downwards to reflect current market conditions.
Recommended for you
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.
Following yesterday’s news about First Sentier Investors closing four investment teams, a second global asset manager has announced it is closing its only dedicated Australian fund.
