Challenger Limited · ASX:CGF
Challenger — Challenger Financial Services Group — Shareholder Meeting (November 2009)
19 slides from Challenger's shareholder meeting presentation, Nov 12, 2009
Slide 1: Challenger Annual General Meeting: Chairman's Address
CHALLENGER FINANCIAL SERVICES GROUP ANNUAL GENERAL MEETING CHAIRMAN’S ADDRESS 12 NOVEMBER 2009 10:30AM MUSEUM OF CONTEMPORARY ART 140 GEORGE STREET THE ROCKS, SYDNEY Chairman’s Address Our Annual General Meeting is the only opportunity we have each year to discuss our past performance and future pla
Slide 2: Chairman's Address: crisis response, capital and dividend
through the other side in a better financial position than many of our global peers. What’s more, this was being achieved without the benefit of the government guarantees given to the banks, and without the need to dilute shareholders by raising equity at deeply discounted prices. Challenger’s respo
Slide 3: Capital surplus, Mortgage Management sale and remuneration
exceptionally strong cashflows meant that we could report a regulatory capital surplus of approximately $530 million as at 30 June, a figure which we more recently reported had reached around $800 million. The other event contributing to today’s very strong cash and capital position is of course the
Slide 4: Board composition and director numbers
exception of your Managing Director Dominic Stevens. The reduction in director numbers from nine to six was significant enough to prompt a review of Board sufficiency because in order to provide a high standard of corporate governance, the Board must of course be adequately and appropriately resourc
Slide 5: Swift action: de-risking, annuity transfers and share buyback
• Selling the non-core financial planning division in mid 2008 • De-risking our balance sheet through investing in high-grade fixed income assets • Growing our asset base and market share through the AXA and Metlife annuity book transfers. • Finally reducing costs in our business via the amalgamatio
Slide 6: Demographic trends supporting retirement focus
Looking out over the longer term Challenger has identified key trends that support its strategic focus on the retirement space Firstly there are significant demographic changes that are taking place in Australia and around the world. That is, developed nations have ageing populations. By way of illu
Slide 7: Australia's equity over-allocation in retirement
market, which encouraged 70 year olds into holding the same equities exposure as a 30 or 40 year old should have. Australia’s outlier status hasn’t gone unnoticed abroad Earlier this year, international authorities such as the OECD and the International Monetary Fund highlighted the fact that Austra
Slide 8: Benefits of annuities and recent sales
annuity, which carries: • No product or investment management fees • No complexity – there are no expensive bells and whistles - just guaranteed cash flows from an A rated, APRA-regulated Life company • Strong returns – our term-certain annuities offer returns greater than bond funds. Current rates
Slide 9: Hand back to Chairman
Thank you and I’ll now hand back to your Chairman Peter Polson.
Slide 10: Challenger AGM: Chairman Peter Polson
Challenger AGM Chairman – Peter Polson
Slide 11: Dominic Stevens, Chief Executive Officer
Dominic Stevens Chief Executive Officer Challenger Annual General Meeting 2009
Slide 12: Resilience through the GFC
Resilience through the GFC • Swift and early action • Underlying earnings remain strong • No discounted dilutive equity issuance • Sale of Mortgage Management • Streamlined and foc focussed ssed strateg strategy • Capitalising on Investment Management tailwinds
Slide 13: Mandated growth in investment management
Mandated growth in investment management U.K. Switzerland Australia 14.4% Canada Mexico Japan Taiwan 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% Average CAGR in local currency Source: Watson Wyatt /Pensions + Investments global 300 ranking 2009, 2003 -2008 average annualised growth by country.
Slide 14: Post retirement is growing faster
Post retirement is growing faster Post-retirement Super and Non Non-Super Super Market Growth Estimates 5,000,000 15.9% 4,500,000 Super Retirement (CAGR: 15.9%) Super Accum (CAGR: 9.1%) 4,000,000 Non Super (CAGR: 8.7%) 3,500,000 9.1% 3 000 000 3,000,000 2,500,000 2,000,000 1,500,000 8.7% 1,000,000 5
Slide 15: The importance of annuities
The importance of annuities • Focus of debate – Retirement age and beyond – Tolerance for risky assets in retirement • As we age our risk tolerance reduces • Accepted p g globally, y less locally y however – John Bogle, Vanguard – ideal system includes mandatory annuity – IMF – Australia over-alloca
Slide 16: The need for policy action to address ageing populations
The need for p policy y action to address ageing populations Hypothetical Ratings Outcomes under No Policy Change Scenario 2007 2020 2030 2040 AAA Australia AA Australia A Australia BBB Spec. Grade Australia Source – S&P Global Graying Report 2007
Slide 17: The relevance of annuities
The relevance of annuities “This will be the first comprehensive review into Australia’s compulsory $1.1 trillion superannuation system, focussed on removing unnecessary costs, fees, commissions and complexity and boosting returns and retirement incomes”. Jeremy Cooper, Deputy Chairman of ASIC 3 • n
Slide 18: Challenger annuity sales growing
Challenger annuity sales growing 300 Impact of ~30% GFC/deposit growth guarantee 250 Impact of social security changes 200 $m 150 100 50 0 Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09
Slide 19: The opportunity
The opportunity • We have an enviable cash and capital position • Significant future growth opportunities in Funds Management and Life • In Life, market leadership and growing sales in annuities – a relevant product for the new environment – an internationally accepted solution for major public poli
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