Rate rises suit buoyant Challenger

Mike Taylor

Managing Editor/Publisher, Financial Newswire

14 February 2023

Australia’s rising interest rate environment may not suit home owners but it has certainly helped Challenger Limited post a solid first half net profit up 5% to $250 million.

The company’s performance was driven in large measure by Challenger Life, with the company acknowledging that higher interest rates helped drive margin expansion and an acceleration of annuity sales.

“Demand is being driven by higher annuity pricing, which is the highest it has been in a decade, with customers attracted to longer-duration fixed term products,” Challenger told the ASX.

It said total Life sales were up 11% to $5.5 billion, driven by exceptional growth in retail annuity sales up 89% to $2.1 billion with retail sales also benefiting from strong investment rates with 68% of fixed term maturities invested into a new product.

Commenting on the result, Challenger managing director and chief executive, Nick Hamilton said the company had been positioned to benefit from rising interest rates, which had stimulated demand for retail annuities, particularly longer-dated products.

The board declared an interim dividend of 12 cents per share, fully franked.