Challenger’s 1H26 Normalised NPAT Rises 2%, Statutory Profit Soars 369%

Strong Financial Performance Amid Market Challenges

Challenger Limited has delivered a robust first half of fiscal 2026, reporting a normalised net profit after tax (NPAT) of $229 million, marking a 2% increase compared to the prior corresponding period. This steady growth was underpinned by the Life division’s record annuity sales, which soared 32% to $3.8 billion, reflecting strong domestic demand and expanding offshore reinsurance partnerships.

The statutory net profit after tax saw an even more dramatic rise, surging 369% to $339 million. This leap was largely driven by favourable asset and liability experience, highlighting the company’s effective portfolio management amid fluctuating market conditions.

Life Division Leads with Record Annuity Sales

The Life business, Australia’s largest provider of annuities, demonstrated exceptional momentum with total Life sales increasing 11% to $5.1 billion. Domestic fixed term annuity sales grew by 46%, buoyed by new superannuation fund mandates, while lifetime annuity sales rose 12%, supported by products tailored for retirement and aged care markets such as CarePlus.

Challenger’s strategic offshore reinsurance partnership with Mitsui Sumitomo Primary Life Insurance Company Limited (MS Primary) in Japan also contributed to record offshore annuity sales, which increased 13% to $695 million. This partnership not only diversifies Challenger’s distribution channels but also taps into Japan’s rapidly ageing population, a key growth market for longevity products.

Funds Management Maintains Stability Despite Market Headwinds

Challenger’s Funds Management segment reported a 7% increase in normalised net profit after tax to $29 million, despite a 5% decline in average funds under management (FUM) to $112 billion. The business benefited from higher transaction and placement fees, offsetting lower FUM-based revenue and performance fees. Fidante and Challenger Investment Management continue to expand their offerings, with recent strategic additions such as Fulcrum Asset Management enhancing the alternatives platform.

Capital Strength and Strategic Initiatives

Reflecting confidence in its financial position, Challenger announced a $150 million on-market share buy-back program, subject to market conditions and regulatory approval. The company’s capital ratios remain robust, with a Prescribed Capital Amount (PCA) ratio of 1.58 times and a Common Equity Tier 1 (CET1) ratio stable at 1.19 times.

In November 2025, S&P Global Ratings upgraded Challenger Life Company’s financial strength rating to ‘A+’ and Challenger Limited’s issuer credit rating to ‘A-’, both with stable outlooks. The upgrades acknowledge Challenger’s market leadership, improved regulatory settings, and strong retirement savings trends.

Embracing Regulatory Reforms and Technology Enhancements

Challenger is actively supporting regulatory reforms aimed at enhancing retirement income products and capital frameworks, including APRA’s proposed capital settings for longevity products. These reforms are expected to reduce capital volatility and promote innovation in lifetime income solutions.

Technology investments are also a key focus, with a partnership with Accenture underway to re-platform the Life business’s core customer registry and technology infrastructure. This upgrade aims to improve adviser integration, customer experience, and operational efficiency, supporting scalable growth.

Strategic partnerships continue to expand, including collaborations with Insignia Financial and BT to deliver innovative retirement income solutions through leading platforms, and with Iress Ltd and OPEX Consulting to integrate retirement income modelling into financial advice technology.