Half Year 2025 Challenger Ltd Earnings Call Transcript
Key Points
- Challenger Ltd (ASX:CGF) reported a strong first half of 2025 with higher earnings of $225 million, driven by momentum in Life and growth in Funds Management.
- The company achieved a 12% increase in interim dividend, reflecting confidence in the business and alignment with FY25 earnings guidance.
- Challenger Ltd's strategy to remix sales towards longer-duration business has improved the quality of its annuity book, with 80% of total annuity liabilities now for terms of three years or more.
- Funds Management saw a strong recovery in equity flows and private credit offerings, with Fidante achieving 95% outperformance over five years.
- The company is strongly capitalized, maintaining a PCA ratio in the top half of its range, supporting future growth and market volatility navigation.
- The statutory net profit after tax was significantly lower than the normalized result due to non-cash accounting adjustments and property valuation reductions.
- Challenger Ltd experienced a decrease in term sales by 12%, attributed to challenges with longer-duration term sales amid an inverted yield curve.
- The COE margin moderated by 9 basis points to 3.1% this half, reflecting tighter fixed income credit spreads and lower property yields.
- The company faces challenges in the institutional fixed income strategies, resulting in total net outflows of $3.1 billion.
- There is a notable difference between normalized and statutory profits, raising concerns about the sustainability of return assumptions, particularly in the alternatives portfolio.
Good morning, everybody, and welcome to those in person and online to Challenger's 2025 half year results briefing. I'm Mark Chen, Challenger's General Manager of Investor Relations. We're coming to you today from at 5 Martin Place in Sydney. Traditional custodians of the land on which we are hosting this event today and pay my respects to elders present and emerging.
Today's presentation will be provided by our Chief Executive Officer, Nick Hamilton; and Chief Financial Officer, Alex Bell. It will then be followed by a Q&A session. You can ask a question either in person in the room via the online portal or the telephone.
Just a few words prior to passing over to Nick. As you will see from today's presentation, we delivered a very strong 2025 half year performance. and continue to successfully execute our strategy. Specifically, we are delivering against our financial targets with double-digit earnings growth and ROE that is now above our target and remain strongly capitalized. Our strategy to remix sales towards
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