Investment management firm Challenger had revised its retail annuity sales growth target to 30 per cent from 25 per cent for the 2012 financial year, the company’s new chief said yesterday.
The decision was made on the back of the enormous long-term upside for those able to capture and keep a leadership position in the retirement incomes market, Challenger chief executive and managing director Brian Benari said.
“The number of retiring baby boomers grows each year, as does the pool of capital moving from super accumulation into the drawdown phase, which is expected to be $53 billion this year,” he said.
Total annuity sales hit a record $1.27 billion for the six months to 31 December 2011, an increase of 74 per cent on the first half of fiscal 2011.
Interim retail annuity sales were up on the prior corresponding period by 38 per cent at $983 million, with institutional product sales at $288 million.
Benari said the flows were balanced between Challenger’s fixed income and equities strategies, where demand for the products would directly support growing annuity sales.
“The baby boomer generation will remain a prominent part of our target market until at least 2030 and [it is] where we’re focusing our energies,” he said.
“Retirees are demanding greater certainty and product simplicity.
“The build out of our capabilities is clearly paying dividends as can be seen in the sales results, but not only just the life business but also the funds management business.”
Funds under management grew by $1.4 billion in the six months to $16.2 billion, returning to pre-global financial crisis levels, with the company’s boutique partnerships performing strongly.
Challenger will formally launch its new product, a platform-based guaranteed income fund (RCV0) series based on feedback from advisers, in early May. After increased interest, two arrangements of annuity white labelling have been completed, while another is yet to be finalised.
The company announced statutory net profit after tax of $20 million for the period, down from $117.9 million a year earlier. Normalised net profit after tax rose by 5.3 per cent to $126.7 million.
Benari was appointed to lead the company at close of business on Friday, succeeding Dominic Stevens. Stevens will remain with Challenger until July.
