The Federal Court of Australia has approved the transfer of the Axa annuity business, consisting of cash and fixed income assets, to Challenger Life.
The transaction sees Challenger add 17,000 new customers and $1.25 billion of assets to its portfolio, bringing the total size of its annuity book to $5.1 billion.
The deal is expected to be completed on November 28, 2008.
Axa closed the annuity business to new clients in September last year, a move sparked by changes to the Federal budget of 2006 when some benefits for purchasing long-term annuities were abandoned.
"This simplifies our business significantly and will enable us to focus on our core wealth management and financial protection business," Axa Australia chief executive Warren Lee said yesterday.
The transfer was announced in June this year, and is part of a larger transaction in which Axa takes over Challenger's financial advising business Genesys Wealth Advisers.
Some financial advisers have raised concerns about the deal because of Challenger's lower credit rating, arguing their clients will not be properly compensated for their exposure to a higher credit risk.
However, both companies deny clients will be worse off as a result of the transaction and point to an independent actuary report that confirms their argument.
The annuity business reported an operating profit of $2.4 million over 2007.
