The Challenger Ltd (ASX: CGF) share price will be one to watch on Wednesday following the release of its first quarter update.
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How did Challenger perform in the first quarter?
For the three months ended 30 September, Challenger reported a 4% increase in assets under management to $89 billion.
This was driven by a 4% lift in Life investment assets, which benefited from positive investment experience and a 46% increase in annuity sales compared to the prior corresponding period to $1,233 million. The latter was the result of strong growth in both Australian and Japanese (MS Primary) sales.
Also growing during the first quarter was the company's funds under management (FUM). Challenger's FUM increased 5% for the quarter, including $3.6 billion of net inflows.
Successful strategy.
Challenger's Managing Director and Chief Executive Officer, Richard Howes, commented: "Challenger's performance in the first quarter demonstrates the success of our strategy to diversify our business geographically and across customer segments. Our record annuity sales reflect strong growth in the contribution from Japan as well as domestic institutional and retail annuity sales."
"Our Funds Management business further solidified its spot as the fastest growing asset manager in Australia. Total funds under management rose 5% during the quarter, driven by exceptional net flows across both Fidante Partners and CIP Asset Management," he added.
Mr Howes also revealed that the company has taken advantage of market conditions to generate strong investment returns.
"We have maintained our strong capital position and prudent portfolio settings, while taking advantage of market conditions to redeploy almost $1 billion of Life's cash and liquids into investments generating attractive returns in excess of 20%," he explained.
Outlook.
The company has reaffirmed its guidance for FY 2021.
It continues to expect FY 2021 normalised net profit before tax in the range of $390 million and $440 million.
However, its earnings are expected to be weighted toward the second half of FY 2021. Management advised that this reflects the majority of rental abatements supporting Life's property tenants recognised in the first half and the progressive deployment of Life's cash and liquids over the year.
