Slide 1: Investor Roadshow Presentation
Investor Roadshow Presentation iS aK March 2007 challenger Chailenger Group 31 December 2008 Challenger strategy To be an innovative and contemporary financial services organisation Based around: Growing fee based income streams _ Operating where we have a comparative advantage : Targeting growth ma
Slide 2: Record 1H07 statutory performance
Challenger Group 31 December 2068 Contemporary business delivering value _ OPERATING INMARKETSGHOWING. 16, AVEAR | Leveraging Challengers core competencies and capabilities Mortgage Management Asset Managerrent BUSINESSES > Funds Management Financial Planning INVESTMENT OUTCOMES: ARONA = 18% DOUBLE
Slide 3: Creating value for shareholders
Challenger Group 31 December 2608 Creating value for shareholders 20.00 40.0% 35.0% 25.00 20.0% 20.00 4 25.0% g Es 15.00 & E e 20.0% 10.00 15.0% 5.00 10.0% T T T T 0.00 5.0% a f f 4H 05 208 HOG FOB iH OF tH O05" 2H 05 1H 06 2H OS THOF :NPAT Basic EPS (FS: wWRetum on Nat Tangible Assets (RONTA) annua
Slide 4: Growth in divisional contribution to EBIT
Growth in divisional contribution to EBIT Statutory/Historic Cost EBIT Statutory EBIT Historic Cost Challenger Group 31 December 2608 tt 143% WH OS 4407 Funds Management Mortgage Management Asset Management fs 8 40% Financial Planning T 143% WHO tH O7 tt 80% $ miftion a 20 46 66 80 400° «1280140 10@
Slide 5: Divisional Performance December 2006
Divisional Performance 31 December 2006 Divisional contribution Financials (EBIT) Funds Management Mortgage Management 2.4% t Assei Management 50.6% ? Financial Planning 500% Corporate — 51 0% ? Group EBT 517% NPAT T33% * . annualised 2. a8 at 1 July 2006 Funds Management 31 December 2006 Key perfor
Slide 6: Funds Management: Alpha performance building momentum
Funds Management 31 December 2006 Alpha performance building momentum Continued solid alpha generation: across asset sectors - across strategies Strong growth against industry FUM illustrating distribution footprint continuing to broaden rs Continued growth in “Buy ratings and platform presence Alph
Slide 7: Mortgage Management: Cyclical macro environment
Mortgage Management 31 December 2006 Cyclical macro environment Repayments & discharges versus fixed rate lending Slowing growth driven by: 125 Fear of rising interest «#8 =i rates driving shift into ia” : fixed rate products ts 3 Concern over 28 household debt levels a Sep 65 Ox Dec 05 Gir Mar 06 O
Slide 8: Asset Management Key Performance Trends
Asset Management 31 December 2006 Key Performance Trends Statutory 35% 60 180 20% *60 5.0 140 28% 40 120 20% : § & ‘00 § = = 20 = E 6 wo = co 15% * ad 20 60 10% 4c a, 0 5% 20 i a o% oo 0 "eS (HOS «10S «= 2MOs. “Ho? HOS = PHOS 1HOS HS THO? SEE Net Income Expenses TSEESpread Assets WHBia Spociationd F
Slide 9: Transfer of MetLife Portfolio
Asset Management 31 December 2006 Transfer of MetLife Portfolio MetLife Insurance Limited (‘MetLife’) will transfer its Australian annuity, allocated pension and personal superannuation portfolio to Challenger The portfolio is almost $2 billion Supporting assets include: Approximately $1 billion inv
Slide 10: Enhanced financial strength leverages capabilities
Asset Management 31 December 2006 Enhanced financial strength leverages capabilities Asset Management has capabilities to optimise yield from assets Increased balance sheet scale leverages Asset Management's skills and capabilities Origination Structuring Transacting / Managing Assets Asset Manageme
Slide 11: Capital management disciplines
Challenger Group 31 December 2608 Capital management disciplines Disciplined approach to Dividends - cents per share {eps} deployment of capital Priority for usage of surplus 12.04 @ Payout ratio continues to be investment in won| F 30% businesses generating RONA of 18% or greater 804 Minimum 30% an
Slide 12: Financial highlights
oh challenger % = ead Challenger Group 31 December 2006 Financial highlights Statutory Assets under Management Net Income % Expenses — . : - & 74.8% ft refer appendix 2 for analysis of the profit result allowing for CIF impacts and other adjustments in each of the respective periods _, ‘adjusted to
Slide 13: Financial summary
Challenger Group 31 December 2608 Financial summary Statutory 180 160 4 (28) 140 4 (43) 120 4 160 4 E ao 80 4 eo 4 40 4 20 4 34 NPAT 1HO6 Net Income Expenses. interest Tax NPAT 1HO7 Sie: 7 challenger {4 Challenger Group 31 December 2008 Financial highlights Historic cost Net income $235m $135m Expen
Slide 14: Financial summary
Financial summary Historic cost Challenger Group 31 December 2608 166 140 3) 120 (12) 100 80 60 40 26 0 Lae i NPAT 1HOG Net Income Expenses interest Tax NPAT 1HO7 ae a challenger %..% Challenger Group 31 December 2008 Historic Cost 250 70% 60.8 860 200 + 60% a S00 50.0 250 F 50% 250 40. « 200 L dove
Slide 15: Funds Management: Strong FUM flow underpins result
Funds under Funds Management 31 December 2006 Strong FUM flow underpins result Management" $t2.9bn $t1.9bngy t 20.2% t Net Income $50m $4omig t 10.0% Expenses $33m $35m ? 15.2% ? a on _— - soon —— ; 27.0% “100% -7.4% RONA? Net Assets* $i3im $i3im 28 ‘. includes boutique partnerships segregated manda
Slide 16: Mortgage Management: Established and resilient portfolio
Mortgage Management 31 December 2006 Established and resilient portfolio Commercial mortgages | under management “ee Net Income $63m t 1.4% e — se . om - con ss a" sos ERT Siam # RONA' 28.9% Not Assets! $360m + . annualised 2. as at 1 July 2006 challenger 63 Asset Management 31 December 2006 Focused
Slide 17: EBIT Contribution
EBIT Contribution Asset Management 31 December 2006 Statutory 16a 120 4 ae § million EBIT 1H06 = Net rentals & Capital gains Annuity yields valuations Net fee Expenses EBIT 1HO7 income challenger 2 Asset Management Historic Cost Net income $92m Expenses $29m EBIT $63m 22.5% $564m * ~ annualised 2. a
Slide 18: Spread business securing opportunities for continued growth
Asset Management 31 December 2006 Asset Management Historic Cost 140 420 4 406 4 $ million ‘The CIF deconsolidation income components are: + investment income $8m + Realised gains f4m + Fees received $1m EBIT 1HO6 invest. Realised interest paid Net fee Expenses EBIT 1H67 income Gains & selling incom
Slide 19: MetLife transaction overview
Asset Management 31 December 2006 MetLife transaction overview Assets and liabilities will be transferred under Part 9 of the Life Insurance Act Targeted to complete on to 30 June 2007 The transfer also involves Challenger taking over all the shares of MetLife Trustee Pty limited (the MetLife Supera
Slide 20: MetLife asset allocation plan
Asset Management 31 December 2006 MetLife asset allocation plan CL2 works within the bounds of a target Asset Allocation Plan: 30/30/30/10 Following transfer there will be an initial shift in the allocations: Property §0/20/20/10 30% . e Equities Future asset allocation will be 0% \ reviewed against
Slide 21: Investing today to develop contemporary, scalable platforms
Corporate 31 December 2006 Investing today to develop contemporary, scalable platforms for tomorrow Investment in support services lifting expenses $5m relating to: management reporting tools automated reconciliations new HR system process re-engineering > As well as: clearing tax backlogs capital m
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Slide 50: Disclaimer
— ie SAMMI hl Tan AVA MNNI II 2 MONA ni i a 7 ices ial Serv form and does not inanc bout Challenger Fi ion a | background informat ion is general this presentati t at the date of the presentat in is curren : The material Disclaimer ion given in summary formati is in J#t ion d purport to be complete.