Challenger Earnings Beat Estimates, Triggering Share Gain

Challenger Ltd. reported full-year profit that beat analysts’ estimates, helped by demand for life insurance products aimed at retirees that the Australian investment manager expect will increase 25 percent.

Net income in the 12 months to June 30 fell to A$261.4 million ($271 million) from A$282.5 million a year earlier, the Sydney-based company said in a statement today. Analysts had forecast annual profit of A$254.6 million.

The shares rose the most in a year after Chief Executive Officer Dominic Stevens predicted sales of so-called annuities will climb 25 percent in the 12 months through June 2012 as Australia’s rising population of retirees buy life insurance products that generate a fixed income. Total assets under management climbed 17 percent to A$27.9 billion.

Growth in annuities “is sustainable because baby boomers controlling 60 percent of the assets in our trillion dollar super system are beginning to retire,” Stevens said in today’s statement.

The shares rose as much as 4.7 percent in intra-day trading, the most since Aug. 23, 2010, and were 3.1 percent higher at A$4.64 as of 10:11 a.m. in Sydney. The benchmark S&P/ASX 200 index is little changed today.

Challenger expects cash earnings for its life business to increase 7 percent to A$430 million in the current fiscal year, the company said today.

To contact the reporter on this story: Jacob Greber in Sydney at jgreber@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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