Challenger boosts place in retirement and annuity space
The annuity market is growing as people seek stable retirements. Photo: Getty
Financial group Challenger is pushing ahead in the retirement income space, this week announcing record annuity sales of $2.2 billion in its half-year results.
That is a rise of 34 per cent, with sales in both the first and second quarters exceeding $1 billion.
The life insurance section of the business was on the march, achieving net book growth of $843 million, or 7.8 per cent, compared to 3.6 per cent in the first half of 2016. This included annuity net book growth of $449 million, or 4.7 per cent for the half.
Net annuity growth balances both new money inflows and outflow payments. Challenger not only achieved record annuity sales but the quality of sales improved due to a re-weighting to longer term business.
The average new business age rose to 8.7 years, up from 5.6 for for the previous corresponding period. Longer dated annuity sales, that is lifetime annuities and 20- year fixed-term annuities with MS Primary, represented 31 per cent of sales.
Challenger is also partnering with an international investment manager, Standard Life Investments, to develop a global bond products for Australian retirees which will give them access to multi currency and market investments.
“We are very pleased to be partnering with Challenger who will now distribute the fund through their highly regarded retail distribution network. There is a growing need from clients both in Australia and globally for solutions that provide a solid income base combined with excellent risk management, particularly in this low-yield, low-return environment,” Standard Life head of Australia Simone Bouch said.
Challenger’s first half results for FY 2017.
“The fund has already been well received by institutional investors here in Australia. With over $A2 billion in assets under management globally and a strong performance track record behind it, we are confident that the strategy will attract a growing Australian retail investor base,” he said.
Challenger also also announced a distribution agreement with BT Panorama which will result in term annuities, lifetime annuities and other Challenger products sold through BT’s platform from the first quarter of 2018.
Challenger CEO Brian Benari said the new initiatives would tailor with the government’s agenda to encourage the growth of the retirement products market.
