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Challenger Ltd - Stock Quote CGF

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Morningstar's Challenger Ltd Stock Analysis

Currency in AUD
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Economic Moat


Capital Allocation


Challenger to Cycle Off Challenging Times With Favourable Thematics and Solid Assets

Shaun Ler Equity Analyst

Analyst Note

| Shaun Ler |

No-moat Challenger had a solid first half, with normalised NPAT up 21% from the prior period to AUD 238 million. The annuity book and assets under management, or AUM, both grew and margins were stable. Product sales of AUD 4.9 billion equaled the whole of fiscal 2017--pre-Royal Commission disruptions. Net funds management inflows were AUD 900 million. Lower interest on annuities supported margins. AUM growth outpaced cost growth, which lowered the group cost/income ratio by 0.9% to 38.1%. But it wasn’t all roses. Maturity rates are set to grow with more sales of short-dated institutional annuities, tight credit spreads limited investment returns, and Challenger will pay higher interest on annuities in the future. All will weigh on margins.   

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Challenger Ltd's Company Profile

Business Description

Challenger’s core business is selling annuity products in the Australian retirement market and, since November 2016, selling Australian dollar-denominated annuities into Japan's large retirement market. The firm’s annuity products provide investors guaranteed regular payments over an agreed term for an up-front lump sum investment and is designed primarily to protect investors from the longevity risk of outliving their savings. Challenger also operates a funds management business, Fidante Partners, which has minority stakes in several boutique global investment managers, and CIP Asset Management, which primarily manages investments supporting its annuities business.

5 Martin Place, Level 2
Sydney, NSW, 2000, Australia
T +61 299947000
Sector Financial Services
Industry Insurance - Life
Most Recent Earnings
Fiscal Year End Jun 30, 2022
Stock Type
Employees 738