Challenger’s NPAT Soars 369% as Annuity Sales Hit Record High

Robust Earnings Growth Amid Market Challenges

Challenger has delivered a robust financial performance in the first half of the 2026 financial year, with statutory net profit after tax (NPAT) soaring 369% to $339 million. This remarkable jump reflects disciplined execution across its Life and Funds Management divisions, operational efficiencies, and strong investment returns across all asset classes despite a challenging environment marked by tight credit spreads, geopolitical uncertainty, and inflationary pressures.

Normalised NPAT, which smooths out one-off items, rose a more modest but steady 2% to $229 million, while normalised earnings per share (EPS) also increased by 2% to 33.3 cents. The company’s return on equity (ROE) remains healthy at 11.4%, comfortably exceeding its target, underscoring Challenger’s ability to generate shareholder value consistently.

Annuity Sales Drive Life Book Expansion

Life insurance sales grew 11% to $5.1 billion, fuelled by record domestic annuity sales which surged 37% to $3.1 billion. This growth was supported by strong demand for both fixed-term and lifetime annuities, reflecting investors’ appetite for guaranteed income solutions amid uncertain markets. The annuity book expanded by 7.4%, contributing to overall Life book growth of 5.8%. Offshore reinsurance sales also hit a record $695 million, up 13%, highlighting Challenger’s expanding footprint in international markets.

Funds Management also showed steady progress, with funds under management (FUM) increasing 3% to $116.2 billion. The launch of the Challenger IM LiFTS Notes, an innovative fixed-term income product listed on the ASX, signals the company’s commitment to broadening its income solutions and enhancing investor accessibility. Additionally, Fidante’s acquisition of a minority stake in London-based Fulcrum Asset Management strengthens Challenger’s alternatives capabilities and global reach.

Strong Capital Position and Shareholder Returns

Challenger Life Company Limited maintains a strong capital position with a Prescribed Capital Amount (PCA) ratio of 1.58 times the Australian Prudential Regulation Authority’s minimum requirement, holding $1.7 billion in excess capital. This financial strength underpins the company’s flexibility to pursue growth opportunities and manage risks effectively.

Reflecting confidence in its outlook and capital base, Challenger announced an on-market share buy-back program of up to $150 million, subject to market conditions and regulatory approval. The Board also declared a fully franked interim dividend of 15.5 cents per share, representing a payout ratio of 46.5%, well within its target range.

Strategic Partnerships and Market Positioning

Challenger is actively expanding its partnerships with superannuation funds, wealth managers, and advice technology platforms to scale retirement income solutions. Notable collaborations include alliances with Insignia Financial, BT, TAL, and technology providers IRESS Xplan and Informed Financial Future. These partnerships aim to streamline advice processes and integrate lifetime income products earlier in the retirement planning journey.

With APRA’s updated capital settings imminent and a growing focus on lifetime income solutions, Challenger is positioning itself as a market leader in Australia’s evolving retirement income landscape. The company’s strategic initiatives and strong execution momentum set a solid foundation for future growth.

Outlook

Challenger is targeting a full-year normalised basic EPS between 66 and 72 cents per share, implying normalised NPAT of $455 million to $495 million for FY26. The strong first half performance puts the company on track to meet these guidance figures, reinforcing investor confidence in its growth trajectory and capital management strategy.