Challenger surfs annuities wave
Challenger has acknowledged that adviser distribution has played an important role in the success of its annuities business, with the company today reporting a seven per cent increase in net profit after tax of $329 million on the back of record annuity sales.
The company declared a dividend of 26 cents per share.
Announcing its full-year results to the Australian Securities Exchange today, Challenger chief executive, Brian Benari said the company had recorded five straight years of retail annuity sales growth and, as a result, had "unambiguous expansion prospects".
"It's time to change gears so we can capitalise on the opportunities before us," he said.
Benari described lifetime annuities sales as growth as "phenomenal" hitting $613 million from only $46 million two years ago and claimed that this was in circumstances where the post-retirement market remained largely untapped.
Discussing the role of financial advisers, the Challenger chief executive said that annuities were an advised product, "so the provision of exceptional support and service to third-party financial advisers remains a top priority for the company".
He said that the company's new "Retirement on Paper" consumer advertising campaign was successfully launched in September 2013 and was creating pull-through demand for annuities with 45 per cent of financial advisers reporting recent reverse enquiry about annuities from their clients.
"To help meet this demand, Challenger is developing technology to make annuities available on investment platforms," Benari said.
He pointed to the company expecting retail annuity book growth in the new financial year of between 12 per cent and 14 per cent with Life cash earnings in the range of $535-$545 million.
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