Challenger Limited · ASX:CGF
Challenger — Investor Presentation (February 2025)
27 slides from Challenger's investor presentation, Feb 18, 2025
Slide 1: Financial Results 1H25
challenger £2 Financial Results 1H25 18 February 2025
Slide 2: Acknowledgement of country
Acknowledgement of country Challenger acknowledges the Traditional Owners of Country throughout Australia and we pay our respects to Elders past and present. We recognise the continuing connection that Aboriginal and Torres Strait Islander peoples have to this land and acknowledge their unique and r
Slide 3: Overview
1 Business and strategy update Nick Hamilton – Managing Director and Chief Executive Officer Overview 2 Financial results and outlook Alex Bell – Chief Financial Officer 3 Key priorities Nick Hamilton – Managing Director and Chief Executive Officer
Slide 4: Business and strategy update
1 Business and strategy update Nick Hamilton
Slide 5: Strong financial performance and executing strategy
Strong financial performance and executing strategy Delivering against targets and investing for future growth Delivering financial Executing Building performance strategy for the future Normalised profit & EPS growth Remixed to longer tenor Life Broadening product book range and deepening ROE above
Slide 6: Delivering strong financial performance
Delivering strong financial performance Double digit earnings, EPS and dividend growth NORMALISED NPAT NORMALISED ROE POST-TAX NORMALISED EPS (CPS) DIVIDEND (CPS) $225M +12% 11.6% +120bps 32.8 CPS +12% 14.5 CPS +12% 3YR CAGR +11% 3YR GROWTH +350 BPS 3YR CAGR +10% 3YR CAGR +8% $417m 48.3% 11.6% 45.0%
Slide 7: Successfully executing strategy
Successfully executing strategy Generating long-term sustainable growth Life customer technology • Customer • Leading retirement New brand campaign excellence Scalable platform Retirement brand Investment administration • Scalable platforms and efficiency leader • Pre- and post- New UniSuper lifetim
Slide 8: Building for the future
Building for the future Supporting long-term growth and generating further efficiency gains CURRENT PROBLEM SOLUTION S T R AT E G I C PROGRESS S TAT E BENEFITS Make it easier to do business Challenger public website Over last three years: with Challenger and create a upgrade completed seamless user
Slide 9: Financial results and outlook
2 Financial results and outlook Alex Bell
Slide 10: 1H25 financial highlights
1H25 financial highlights Delivering strong growth and shareholder returns LIFE SALES RETAIL LIFETIME SALES2 $ 225m ▲12% Normalised NPAT $ 72m ▲28% Statutory NPAT $ 4.6bn $ 583m ▼12% ▲24% 11.6% ▲120bps Normalised ROE1 AUM CLC PCA RATIO 32.8cps ▲12% Normalised EPS 14.5cps ▲12% Dividend per share $ 13
Slide 11: Delivering higher sustainable ROE
Delivering higher sustainable ROE ROE above target N O R M AL I S E D G R O U P R O E ( P O S T- TAX ) 1 H 2 5 11 . 6 % + 1 2 0 B P S ROE DRIVERS 1H25 drivers 11.3% 11.2% 11.1% 11.6% Continued momentum in Life NCOE 11.2% Higher Funds Management contribution 10.4% 10.8% (12% of Normalised NPAT) 9.5%
Slide 12: Structural reduction in expense base
Structural reduction in expense base Management actions to structurally reduce expenses and capture operating leverage EXPENSES ($M) C O S T T O I N C O M E R AT I O $154M 32.0% -260BPS Structural reduction 39.3% in expense 38.5% base 38.1% 36.9% Reduction driven by cost optimisation and 34.6% opera
Slide 13: Normalised to statutory earnings reconciliation
Normalised to statutory earnings reconciliation Accounting timing differences and returns on property and alternatives less than expected Life accounting -$61m Property -$48m Alternatives -$54m Timing Revaluation below Underperformed return differences long-term growth assumption assumption Property
Slide 14: Life performance
Life performance Higher earnings driven by NCOE and operating leverage 1H25 CHANGE NORMALISED ROE POST-TAX +50 BPS Normalised Cash Operating Earnings (COE) $386m 7% LIFE NORMALISED NPAT +7% LIFE PCA RATIO1 +0.11x Expenses ($60m) 2% 12.9% 13.0% Normalised NPBT $327m 8% 12.5% 226 225 Normalised Tax ($
Slide 15: Life sales
Life sales Record lifetime and Japanese annuity sales LIFE SALES ANNUITY SALES offset by lower shorter duration sales $3.3bn $3.3bn Total Life sales $4.6bn Aware $619m $2.9bn Aware $619m $2.9bn Super DB Super DB Record retail lifetime annuity $2.7bn +24% sales $583m (+24%) $2.0bn Record Japanese ann
Slide 16: Life sales
Life sales Executed sales remix strategy to improve R E TAI L L I F E TIM E S AL E S P O L I C Y L I AB I L I T Y P R O F I L E book quality 1 15.2bn Continuing to grow longer dated 1 14.0bn annuity sales $583m 20%2 16% 2 ‒ Retail lifetime sales +164% compared to 1H22 $469m 3YR+ 37% Growing adviser
Slide 17: Life ROE and COE margin
Life ROE and COE margin Continue to grow ROE COE margin reflects timing of distributions, tighter credit spreads and lower rental income C O E M AR G I N & L I F E R O E 1 H 2 5 C O E M AR G I N Investment yield1 6.71% COE margin 1H25 to 2H24 -9 bps 12.9% 13.0% • Timing of cat bond distributions: -3
Slide 18: Life investment portfolio
Life investment portfolio Diversified balance sheet providing financial resilience No material change to asset allocation expected L I F E AU M 1 $24.7bn $24.6bn 23.5bn 2% 2% 1% 11% 11% 13% 13% 14% FIXED INCOME ALTERNATIVES PROPERTY EQUITY & 10% INFRASTRUCTURE 73%, -1pp 14%, +1pp 11%, stable 2%, sta
Slide 19: Capital management
Capital management Strongly capitalised and capital resilience PCA RATIO1 CAPITAL FLEXIBILITY 12.9% 13.0% 12.5% PCA target range 1.3x to 1.7x2 1.7x 1.67x 11.0% 1.61x 10.0% 1.59x 1.59x 1.50x $1.8bn $1.7bn $1.6bn $1.6bn $1.4bn 1.3x 1H23 2H23 1H24 2H24 1H25 1H23 2H23 1H24 2H24 1H25 Excess capital Life
Slide 20: Funds Management performance
Funds Management performance Strong operating leverage driving earnings growth 1H25 CHANGE AVERAGE FUM FM NORMALISED NPAT FUM-based income & transaction fees $88m 7% $120BN +20% $27M +37% Performance fees $7m 35% Fidante $103bn +24% Net income +9% Net income $95m 9% CIM $17bn +1%1 Expenses -3% Expen
Slide 21: Funds Management
Funds Management FUM benefiting from positive market movements F I D AN T E P E R F O R M AN C E R E L AT I V E F U N D S U N D E R M AN AG E M E N T T O B E N C H M AR K 1 Total FM net outflows $3.1bn $121.0bn $2.6bn $7.6bn $117.4bn Since inception 90% $0.1bn ($5.8bn) $114.2bn $0.9bn 5 Years 95% In
Slide 22: Challenger Investment Management
Challenger Investment Management Proven alternative credit platform CIM FIXED INCOME PORTFOLIO1 A differentiated private lending investment platform Public opportunities Private opportunities ‒ Mid-market corporate lending Financial Credit Asset Backed Finance Securitised Credit $16.3bn Commercial R
Slide 23: FY25 guidance and targets
FY25 guidance and targets Reaffirming earnings guidance and targets N O R M AL I S E D N PAT G U I D AN C E T H R O U G H T H E C Y C L E TAR G E T S $480m Normalised ROE Cost to income ratio Midpoint 10% higher $417m $440m than FY24 ~11.2%1 (post-tax) 32% to 34% $364m $322m Dividend payout ratio CL
Slide 24: Key priorities
3 Key priorities Nick Hamilton
Slide 25: Key priorities
Key priorities Continue to deliver financial performance and execute strategy Delivery of new core platforms – Continue to grow longer dated customer experience & investment annuity sales – institutional and operations retail channel Invest and grow asset Meeting more customer needs – origination pl
Slide 26: Key points
1 2 Strong financial Successfully executing performance & delivering strategy against targets Key points 3 4 Strengthening Investing in the relationships across business to drive customer channels growth 26
Slide 27: Important note
IMPORTANT NOTE The material in this presentation is general background information about Challenger Limited group’s This document may contain certain ‘forward-looking statements’. The words ‘forecast’, ‘expect’, ‘guidance’, activities and is current at the date of this presentation. It is informatio