Challenger Financial: Dominant player in a solid market

Despite a 30% fall last year, Challenger Financial (CGF) got some attention in the survey. It has a market share in excess of 70% of the annuities (retirement income) market in Australia. Challenger's alliance with MS Primary in Japan is starting to bear fruit, with 15% of annuity sales ($0.6B) originating through this channel in FY18. And over the next three years, it will see the introduction of Compulsory Income Products for Retirement (CIPRs), which will require super funds to offer income solutions to retirees with $100,000 or more. Bell Potter included this stock in the ten picks for their most favoured stocks for 2019, encapsulating their rationale in saying it is:

"A financial group comprising a Life Company, which specialises in retirement income products and annuities and accounts for most of the group’s earnings, and a funds management business. As baby boomers continue to move into retirement, it is inevitable that annuities will become a major and rapidly growing product".