A decision to drop its final dividend tells us all we want to know about the outlook for Challenger Ltd, the Sydney-based annuities giant. The company revealed the decision in its full-year results announcement yesterday.
Investors in Challenger Ltd slowly cooled to the company’s 2018-19 result yesterday which while meeting revised guidance in June (the second downgrade in five months) saw no change in what looks like a slow outlook.
Credit Suisse calculates that the company's capital position dropped to the lower end of the target range in March because of the large expansion in sub-investment-grade credit spreads and a drop in equity markets.
The company has announced its capital position at the end of March amid a de-risking of its investment portfolio. Credit Suisse calculates investment experience losses, not disclosed, represent around 6.5% of the investment assets.
After a challenging period for Challenger, Sep Q total book growth exceeded expectations thanks to Japanese annuity sales and growth in guaranteed income products. Local fixed-term sales are holding up, Macquarie notes, despite low-interest rates.