Challenger Boosts Dividend and Launches $150M Buy-Back on Annuity Sales Surge

Solid Financial Performance Amid Market Challenges

Challenger Limited has delivered a resilient first half for FY26, posting a 2% increase in normalised net profit after tax (NPAT) to $229 million. This modest growth comes despite a backdrop of tight credit spreads, geopolitical uncertainty, and inflationary pressures. The company’s statutory NPAT surged to $339 million, a significant jump from $72 million in the prior corresponding period, buoyed by positive asset experience across investment classes.

Normalised earnings per share rose slightly to 33.3 cents, while the post-tax return on equity comfortably exceeded targets at 11.4%. Challenger’s disciplined expense management and active investment portfolio adjustments have underpinned these results, reflecting a business well attuned to current market dynamics.

Annuity Sales Drive Growth and Book Expansion

The standout feature of Challenger’s half-year performance was a 32% jump in annuity sales, reaching a record $3.8 billion. Domestic annuity sales alone climbed 37%, supported by strong demand for both fixed term and lifetime annuities. This growth translated into a 7.4% increase in the annuity book, contributing to overall Life book growth of 5.8%. Offshore reinsurance annuity sales also expanded by 13%, highlighting Challenger’s successful international push, particularly through its Bermuda reinsurance platform partnership with MS Primary.

Capital Strength and Shareholder Returns

Challenger’s capital position remains robust, with a Prescribed Capital Amount (PCA) ratio of 1.58 times the regulatory minimum, providing ample flexibility for growth and capital management. Reflecting this strength, the company declared a fully franked interim dividend of 15.5 cents per share, a 7% increase from the previous period. Additionally, Challenger announced an on-market share buy-back program of up to $150 million, signaling confidence in its financial footing and future prospects.

Strategic Partnerships and Market Positioning

Challenger is actively expanding its footprint in the retirement income market through strategic collaborations. Partnerships with Insignia Financial and BT aim to broaden access to lifetime income solutions, integrating retirement income products into superannuation platforms and wealth management tools. The company is also leveraging advice technology platforms like Iress XPlan and Informed Financial Future to scale retirement advice delivery, enhancing customer reach and product accessibility.

On the funds management front, Challenger’s Fidante division reported a 7% increase in normalised NPAT, driven by higher fee income and operational efficiencies. Fidante’s recent minority stake acquisition in London-based Fulcrum Asset Management strengthens its alternatives offering, catering to growing client demand for diversified income strategies.

Outlook and Market Position

Challenger reaffirmed its full-year guidance, targeting normalised basic EPS between 66 and 72 cents per share. With a strong first half behind it and momentum in strategic initiatives, the company is well positioned to capitalise on the evolving retirement income market. Upcoming regulatory changes to capital settings for longevity products and expanding super fund partnerships are expected to further support growth and financial resilience.

Overall, Challenger’s 1H26 results reflect a company navigating market headwinds with strategic clarity and financial discipline, setting the stage for continued progress in a competitive sector.