Challenger profits rise with annuity sales growth

Challenger has strengthened its ties with superannuation funds as record annuity sales helped lift full-year earnings. The retirement income specialist is positioning itself for further growth as more Australians move into retirement.

The company reported a statutory net profit after tax of $506 million for FY26, up from $192 million a year earlier. Normalised earnings per share increased 3 per cent to 68.1 cents.

NPAT was supported by stronger underlying earnings and favourable asset and liability experience. Annuity sales climbed 19 per cent to $6.2 billion, with the annuity book growing 10.7 per cent.

Managing director and chief executive Nick Hamilton said Challenger’s strategy was gaining momentum, particularly through closer integration with the super sector. He noted that partnerships across the retirement ecosystem are expanding the firm’s reach.

Challenger’s FY26 result reflects the successful execution of its strategy and the growing momentum across its business. The company delivered strong earnings, increased annuity sales and continued to invest in the strategic priorities that will support its future growth.

Growth in Challenger’s domestic annuity business was partly driven by institutional mandates from superannuation funds. Domestic annuity sales increased 17 per cent to $4.9 billion.

Fixed-term annuity sales rose 19 per cent, supported by several new superannuation fund mandates. Lifetime annuity sales increased 13 per cent as demand for guaranteed retirement income products remained strong.

The company’s CarePlus lifetime annuity also recorded its highest annual sales since launching in 2015.

Beyond its domestic business, Challenger reported record offshore reinsurance annuity sales of $1.2 billion, up 25 per cent. The company launched the first issuance under its new $6 billion Challenger Annuity-Backed Notes program to support future annuity book growth and diversify funding sources.

Challenger announced the proposed merger of its multi-affiliate funds management business, Fidante, with Channel Capital, subject to regulatory approval. The transaction would create a more focused retirement business while retaining a 45 per cent stake in the merged entity.

As the population ages, retirement income products are becoming increasingly important. Challenger’s growth strategy is centered around meeting this demand, and its partnerships with superannuation funds are a key part of this effort.

Hamilton said the group’s capital position supported additional returns to shareholders. The Board has determined a fully franked full-year dividend of 31.5 cents per share and a special dividend of 1.5 cents per share.

Challenger has also announced the upsize of its on-market share buy-back program to $450 million, delivering further returns to shareholders.

Nick Hamilton