Slides
Page 1
For personal use only
Page 2
Acknowledgement of country Challenger acknowledges the Traditional Owners of Country throughout Australia and we pay our respects to Elders past and present. We recognise the continuing connection that Aboriginal and Torres Strait Islander peoples have to this land and acknowledge their unique and rich contribution to society. For personal use only
Page 3
Overview 1 Business and strategy update Nick Hamilton – Managing Director and Chief Executive Officer 2 Financial results and outlook Alex Bell – Chief Financial Officer 3 Looking ahead Nick Hamilton – Managing Director and Chief Executive Officer For personal use only
Page 4
Business and strategy update 1 Nick Hamilton Managing Director & Chief Executive OfficerFor personal use only
Page 5
Key points 01 Financial strength – driving returns for shareholders, operational efficiency, gains across all investment asset classes 02 03 Capital flexibility – strongly capitalised with excess liquidity, dividend growth and $150m on-market buy-back announced 1 Enabling growth – winning key retirement partnerships, integrating with advice technology platforms, expanding offshore reinsurance 1. Subject to market conditions and regulatory approval. For personal use only
Page 6
1.58x CLC PCA Ratio2 0.03x 33.3cps Normalised EPS 2% FINANCIAL PERFORMANCE SHAREHOLDER OUTCOMES 1H26 financial performance Driving value for shareholders 6 CAPITAL FLEXIBILITY $339m Statutory NPAT 369% 11.4% Normalised ROE1 Above FY26 target 15.5cps Interim dividend 7% $4.7bn Regulatory capital base 5% All growth rates compare the year ended 31 December 2025 against the year ended 31 December 2024 (the prior corresponding period or pcp), unless otherwise stated. 1. Normalised Return On Equity post-tax. 2. 1H26 PCA ratio down 0.03x (1H25 1.61x). For personal use only
Page 7
7 1. APRA superannuation statistics September 2025. 2. APRA Monthly authorised deposit-taking institution statistics, November 2025. 3. Based on # Australians aged 65 retiring each day. Australian Bureau of Statistics, December 2024, National, state and territory population statistics. 4. Based on Australians aged 60+ years in Challenger’s Happiness Index research, February 2025. 5. NMG, Managed Funds Review September 2025. WORLD CLASS SAVINGS SYSTEM $4.5tr Assets in retirement1 OFFSHORE OPPORTUNITIES $1.7tr Deposits held by Australian households in ADIs2 $200bn Private credit market6 AGEING POPULATION GROWING DEMAND FOR INCOME 78% Australians would be happier with a guaranteed income for life4 $35bn Yearly net flows into Australian Fixed Income & Private Debt5 780per day Australians retiring3 >35% South Korea, Hong Kong and Japan population aged 65+ years in 20507 Growing demand for income and financial security Tailwinds to support growth 6. ASIC (22 September 2025), “Private credit in Australia” (REP 814). https://www.asic.gov.au/regulatory-resources/find-a-document/reports/rep-814- private-credit-in-australia/ 7. OECD/WHO (2024), Health at a Glance: Asia/Pacific 2024, OECD Publishing, Paris, https://doi.org/10.1787/51fed7e9-en. 8. Challenger internal estimates, includes Hong Kong, Japan, Korea and Singapore. US$315bn Addressable Asian reinsurance market8 For personal use only
Page 8
Customer innovation Award winning products Trusted retirement brand and offering Modern customer technology Distribution Expansive distribution footprint Integration with leading super funds and advice Strategic partnerships Asset origination Originating high-quality assets for Life Asset and liability matching engine Investment excellence Experts in balance sheet management Growing our higher income solutions Leading multi-affiliate platform Capital Resilience through the cycle Capital flexibility 8 Challenger’s competitive advantages Competitive advantages 1H26 Progress Longer dated sales +12% Customer uplift – ALIP1 live, portals and APIs live in 2H26 $5.9bn origination volumes Whole loan origination transactions Challenger IM external AUM +38% CAGR2 / new LiFTS notes platform Positive total returns – all Life’s asset classes A+/A- S&P credit rating upgrade3 +7% Dividend growth $150m buy-back4 Using our advantages to shape the retirement system with our partners and drive future growth 1. Accenture Life Insurance and Annuity Platform. 2. 4-year CAGR from 1H22 to 1H26. 3. Challenger Life Company Limited – ‘A+’ rating (from ‘A’) with a stable outlook; and Challenger Limited – ‘A-’ rating (from ‘BBB+’) with a stable outlook. 4. Subject to market conditions and regulatory approval. For personal use only
Page 9
Financial results and outlook 2 Alex Bell Chief Financial OfficerFor personal use only
Page 10
10 1H26 financial performance Disciplined execution | Strong statutory NPAT performance 1. 1H26 Normalised ROE post-tax target of 10.7% being the RBA cash rate plus a margin of 12% less tax (equivalent to a Normalised ROE pre-tax target of 15.7% and assumes tax rate of ~31.4%). 2. 1H25 Normalised ROE post-tax target of 11.2% being the RBA cash rate plus a margin of 12% less tax (equivalent to a Normalised ROE pre-tax target of 16.4%). 14.5 15.5 1H25 1H26 Normalised EPS (cps) 33.3 cps +2% Normalised ROE after tax 11.4% +70 bps above target 1 225 229 1H25 1H26 11.6% 11.4% 1H25 1H26 Dividend 15.5 cps +7% Net Profit After Tax ($m) 32.8 33.3 1H25 1H26 Group ROE target1 72 339 1H25 1H26 Statutory NPAT $339m +369% Normalised NPAT $229m +2% +70 bps above target +40 bps above target Profitability Returns For personal use only
Page 11
Earnings drivers Operational efficiency driving earnings growth Income $487m +1% Cost to Income Ratio 31.7% -30bps 386 389 95 97 482 487 1H25 1H26 32.0% 31.7% 1H25 1H26 Outperforming cost to income target 32% to 34% Expenses $154m stable Life normalised cash operating earnings FM net fee income Corporate other income $154m $154m $2m ($2m) 1H25 Growth initiatives and tech costs Operational efficiencies 1H26 11 Cost to Income ratio (CTI) improved 30bps CTI ratio outperforming target (32% to 24%) FY26 CTI ratio expected to be at lower end of target range Life +1% Increase in average AUM offset by lower COE margin Funds Management +2% Increase in non-FUM income Investment in growth initiatives and technology costs driven by inflationary pressures on software licensing and data costs Offset by lower costs from realised operating efficiencies For personal use only
Page 12
$3.4bn $3.5bn 1H25 1H26 Life performance Delivering reliable spread earnings in a tight credit spread environment 1. Challenger Life Company Limited (CLC) PCA ratio represents CLC total Tier 1 and Tier 2 regulatory capital base divided by the Prescribed Capital Amount (PCA). 2. Based on annuity maturities and repayments (excluding interest payments) in the year divided by the opening period undiscounted annuity liability balance. Normalised ROE 12.7% -30 bps 12 Normalised NPAT $226 m +1% 225 226 1H25 1H26 Average net assets 1H26 1H26 v 1H25 Normalised Cash Operating Earnings (COE) $389m 1% Expenses ($61m) 3% Normalised NPBT $327m – % Normalised Tax ($102m) – % Normalised NPAT $226m 1% COE margin 2.95% (16bps) Normalised ROE post-tax 12.7% (30bps) PCA1 ratio 1.58x (0.03x) Annuity sales $3.8bn 32% Total Life sales $5.1bn 11% Maturity rate2 14% (1pp) 13.0% 12.7% Life ROE (post-tax) For personal use only
Page 13
13 COE margin an outworking of tight credit spread environment and higher allocation to liquids | New business meeting or exceed ROE target Life COE margin Margins 1H26 1H26 v 1H25 Investment yield 6.28% -39 bps Other income 0.28% +1 bps Interest & distribution expense (3.65%) +22 bps Normalised growth 0.04% - Life COE margin 2.95% -16 bps Average Life investment assets $26.1bn +6% Cash and equivalents $3.3bn +28% 1. Challenger internal data for Australian A & BBB primary non-conforming RMBS spreads. 2. JP Morgan CLOIE A DM - post crisis duration weighted to worst. 3. ICE BofA BBB Corporate Bond Index. 0% 1% 2% 3% 4% 5% 6% 7% 8% 2016 2018 2020 2022 2025 A BBB 0% 1% 2% 3% 4% 5% 6% 7% 8% 2016 2019 2022 2025 Domestic RMBS ‘A’ & ‘BBB’ spreads1 ‘A’ CLO spreads 2 ‘BBB’ Corporate spreads 3 0% 1% 2% 3% 4% 5% 6% 7% 8% 2016 2019 2022 2025 For personal use only
Page 14
1. Book growth percentage represents net flows for the period divided by opening liability balances for the financial year. 2. Includes CarePlus sales of $0.4bn. 14 $2.9bn $3.8bn $1.7bn $1.3bn $4.6bn $5.1bn 1H25 1H26 Life annuity sales Index Plus Strong lifetime annuity sales2 $0.7bn Record offshore reinsurance sales $0.7bn12% 13% Total Life sales $5.1bn 7.4% Annuity book growth 1 11% $0.6bn $0.7bn $0.6bn $0.7bn $1.2bn $1.4bn 1H25 1H26 Lifetime Offshore reinsurance +12%+11% Life sales Strong book growth driven by annuities | Continued momentum in longer duration sales Strong 1H26 Sales performance Life sales Longer duration annuity sales For personal use only
Page 15
1. COE investment yield includes investment yield and normalised capital growth. 2. Total return includes COE investment yield and asset experience. 3. All comparisons 1H26 versus 2H25. 4. Investment grade represents BBB or higher. 5.6% 8.8% 7.3% 10.0% 6.3%6.3% 9.9% 10.0% 17.6% 7.5% Fixed income Alternatives Property Equities & Infrastructure Total weighted average COE Investment yield Total return EQUITY & INFRA 2%, - FIXED INCOME 74%, - 76% investment grade4 Weighted average credit rating ‘A’ ALTERNATIVES 14%, +1PP PROPERTY 10%, -1PP • Holding more liquid assets $3.3bn cash & equivalents (1H25/2H25 $2.6bn/$3.2bn) • Increase in IG ABS and decrease in HY corporate credit • Weighted average capitalisation rate 6.80%, down 7bps • 4 direct property sales at around carrying value • Increase in absolute return funds and reduction in general insurance and life insurance Life investment portfolio Positive asset experience across all asset classes | Balance sheet growth driven by strong Life book growth 1H26 Performance by asset class Annualised, pre-tax Life investment assets3 $26.5bn +4% 15 1 2 For personal use only
Page 16
15.7 17.2 Income margin (bps) 119.8 111.6 121.0 116.2 1H25 1H26 Closing FUM Funds Management performance Earnings growth driven by operational efficiencies 1. Includes $2.9bn FUM derecognition following the completion of the distribution agreement with Ares and $12.6bn FUM recognition following the acquisition of a substantial minority stake and securing exclusive distribution rights across Australia, New Zealand and Asia for Fulcrum Asset Management. Fidante $94bn -8% Challenger IM $18bn +2% Net income +2% Expenses -5% 16 1H26 1H26 v 1H25 FUM-based income & transaction fees $96m 8% Performance fees $1m (80%) Net income $97m 2% Expenses ($54m) (5%) Normalised NPBT $42m 12% Normalised Tax ($13m) 22% Normalised NPAT $29m 7% FUM-based margin 14.4bps 0.5bps Income margin 17.2bps 1.5bps Normalised ROE post-tax 16.2% (1.6pp) Cost to income ratio 56.2% (3.8pp) Average FUM1 $111.6bn (7%) Average FUM $112bn -7% Normalised NPAT $29m +7% 27 29 1H25 1H26 For personal use only
Page 17
$95.5bn $98.0bn ($4.3bn) ($5.0bn) $0.5bn $0.1bn $10.1bn $1.0bn 2H25 Australian Equities Global Equities Fixed income - Public Alternatives FUM recognition Distributions & Market movements 1H26 Total net flows $1.5bn Institutional net flows $2.7bn Added to affiliate platform One of the largest active managers 1 1. Calculated from Rainmaker Roundup, September 2025 data. 2. Externally rated as either ‘Recommended’ or ‘Highly Recommended’ by research houses (Lonsec, Zenith and Morningstar) as at 31 December 2025. 3. Includes $12.6bn FUM recognition following the acquisition of a substantial minority stake and securing exclusive distribution rights across Australia, New Zealand and Asia for Fulcrum Asset Management. 4. Includes $2.9bn FUM derecognised in 1H26 following the completion of the distribution agreement with Ares Management Corporation. Products recognised as high quality – Recommended or Highly recommend 2 $15bn83% Alternatives FUM3 15% of total FUM 17 3,4 Fidante Expanding alternatives offering Market leader Expanding alternative offering Funds Under Management For personal use only
Page 18
18 38% 4-year CAGR 1. As at 31 December 2025 and excludes ~$0.7bn of FUM relating to Japanese real estate holdings managed by Challenger Kabushiki Kaisha (CKK). Private opportunities Public opportunities Financial Credit Securitised Credit Investment Grade Corporate Bonds High Yield Bonds 44% 48% 41% 38% 32%45% 39% 45% 45% 43% 11% 13% 13% 10% 6% - - - 7% 6% 13% $0.8bn $1.1bn $1.5bn $2.3bn $3.1bn 1H22 1H23 1H24 1H25 1H26 Credit Income Fund Multi-sector Private Lending Fund Private Lending Opportunties Fund Global ABS Fund CIM LiFTS Note 65% 61% 35% 39% $16.3bn $17.4bn 1H25 1H26 Asset Backed Finance Commercial Real Estate Lending Leveraged Buyout Debt Whole Loan Portfolio Lending Challenger Investment Management Product innovation and growing investment capability Challenger IM Fixed Income Portfolio1 Challenger IM Third Party Funds’ FUM $5.9bn Deployed investments $2.5bn Private credit originations For personal use only
Page 19
1.19x CET1 ratio Unchanged $1.7bn Excess capital over PCA 2% $4.7bn Regulatory capital base 5% A+ /A- CLC/Challenger S&P credit rating with a stable outlook Upgraded Capital and liquidity strength Strongly capitalised with available liquidity to capitalise on changing market conditions 19 $3.3bn Cash and cash equivalents 28% 1.58x CLC PCA Ratio1,2 0.03x 1. The PCA ratio represents total Tier 1 and Tier 2 regulatory capital base divided by the Prescribed Capital Amount. 2. Challenger does not target a specific PCA ratio and the target PCA ratio range is a reflection of internal capital models, not an input to them and reflects asset allocation, business mix, capital composition and economic circumstances. The target surplus produced by these internal capital models currently corresponds to a PCA ratio of between 1.30 times to 1.70 times. This range may change over time and different constraints can apply including CET1 requirements. For personal use only
Page 20
ORGANIC GROWTH Invest in core businesses 5.8% Life book growth Investment in scalable platforms – customer technology uplift and investment operations Expand offshore reinsurance platform DIVIDENDS Seeking to grow dividends over time Dividend policy 30% to 50% payout ratio 15.5c interim dividend (up 7%) 46.5% dividend payout ratio CAPITAL RETURN Return excess capital above growth needs to shareholders $150 million on-market buy-back announced1 INORGANIC GROWTH Enhance core businesses 22% stake in 20 Delivering shareholder value Disciplined capital management Focusing on maximising shareholder returns 1. Subject to market conditions and regulatory approval. For personal use only
Page 21
APRA capital standard changes A reminder of what to expect on Day 1 1.58x PCA Ratio 31 December 2025 Current tight spread environment 1.74x Pro forma PCA Ratio 31 December 2025 CLC total regulatory capital CET1 stable as Standard ILP approach applies due to tight credit spread environment and risk allowance floor of 45% PCA requirement Lower Asset Risk Charge driven by increase in liability offset within credit spread stress charge CLC total regulatory capital CET1 would increase in a normalised credit spread environment as Advanced ILP approach would apply PCA requirement Lower Asset Risk Charge driven by increase in liability offset within credit spread stress charge If spreads matched long-term average spreads 1.82x Pro forma PCA Ratio 31 December 2025 1. Refer to Appendix A for modelling assumptions used. PCA Ratio – Current standards Pro forma PCA ratio – Proposed standards1 21 For personal use only
Page 22
0% 20% 40% 60% 80% 100% Fixed Income Alternatives Property Equity & Infrastructure CHANGES TO ASSET ALLOCATION OVER TIME % of Fixed income % of Growth assets 3% - 12% 25% - 30% 30% - 40% 25% - 30% Capital intensity % by asset class Spread income Low volatility and steady growth Fee income High growth, capital light Investment gains Variable but positive through cycle Principal investments Group balance sheet investments ROE and EPS Less capital intensive Lower volatility expected due to lower allocation to growth assets 1H26 RETURN BY ASSET CLASS 1 Fixed Income Real Estate Alternatives Equity & Infrastructure Normalised ROE target2 1. Illustrative only and based on net asset return on CET1 (pre-tax) excluding expenses. 2. Represents Normalised ROE target (pre-tax) of RBA cash rate plus a margin of 12% excluding expenses. Offshore reinsurance APRA capital standard changes What to expect over time – building blocks of shareholder value Directional change in building blocks of shareholder value 22 For personal use only
Page 23
1. 1H26 Normalised ROE (post-tax) target of 10.7% being the RBA cash rate plus a margin of 12% less tax (equivalent to a Normalised ROE pre-tax target of 15.7% and assumes tax rate of ~31.4%). 2. Normalised dividend payout ratio represents dividend per share divided by normalised earnings per share (basic). 3. Challenger does not target a specific PCA ratio. The target PCA ratio range is a reflection of internal capital models, not an input to them and reflects asset allocation, business mix, capital composition and economic environment. The target surplus produced by these internal capital models currently corresponds to a PCA ratio of between 1.30 times to 1.70 times. This range may change over time and different constraints can apply including CET1 requirements. 66cps to 72cps Normalised ROE RBA cash rate +12% after tax1 Cost to income ratio 32% to 34% Dividend payout ratio 30% to 50%2 CLC PCA ratio 1.30x to 1.70x3 On track to achieve FY26 guidance with 1H26 Normalised Basic EPS of 33.3cps FY26 guidance and targets Reaffirming earnings guidance and targets under current prudential settings Normalised Basic EPS guidance Consistent through the cycle targets 23 For personal use only
Page 24
Looking ahead 3 Nick Hamilton Managing Director & Chief Executive OfficerFor personal use only
Page 25
Customer innovation In-platform annuity integrations live Customer portals and APIs live Continue growing long duration sales Distribution Execute announced retirement partnerships Support Iress Xplan retirement tools launch Expand MS Primary reinsurance partnership Asset origination Expand whole loans and servicing platform Continue exploring proposed Pepper Money transaction Investment Excellence Launch #2 LiFTS note issue Deliver offshore reinsurance expansion Capital Maintain capital strength and flexibility Implement APRA capital reforms Commence buy-back 1 25 Challenger’s competitive advantages Key priorities 1. Subject to market conditions and regulatory approval. For personal use only
Page 26
Key points 01 Financial strength – driving returns for shareholders, operational efficiency, gains across all investment asset classes 02 03 Capital flexibility – strongly capitalised with excess liquidity, dividend growth and $150m on-market buy-back announced 1 Enabling growth – winning key retirement partnerships, integrating with advice technology platforms, expanding offshore reinsurance 1. Subject to market conditions and regulatory approval. For personal use only
Page 27
Appendix AFor personal use only
Page 28
IMPACTS Item Comment Standard Illiquidity Premium Illiquidity Premium: 0.25% (Yrs 0-10); 0.20% (Yr 10+) Advanced Illiquidity Premium Reference Index Bloomberg US Corporate Statistics Index (LUACSTAT) Credit spread = 0.78% Risk Allowance Long-term LUACSTAT spread = 1.29% (based on year 1990 onwards) Risk allowance = 45% x 1.29% = 0.58% Illiquidity Premium 0.78% - 0.58% = 0.20% (subject to a floor of the Standard Illiquidity Premium) Standard Illiquidity Premium dominates over the first 10 years, with Advanced Illiquidity Premium dominating beyond that point Long-term illiquidity premium implementation period Maximum cashflow matching term = 30 years Advanced Illiquidity Premium cap of 0.50% after 30 years does not apply at 31 December 2025 Asset Risk Charge (LPS 114) Calculation based on the credit ratings of index constituents Average credit spread increase of index = 1.37% Credit spread increase with LPS 114 Adjustment Factors = 0.81% Products included All illiquid products including lifetime and fixed term annuities Assumed application of draft capital standards As at 31 December 2025 28 For personal use only
Page 29
The material in this presentation is general background information about Challenger Limited group’s activities and is current at the date of this presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered with professional advice when deciding if an investment is appropriate. Challenger also provides statutory reporting as prescribed under the Corporations Act 2001. The 2026 Interim Financial Report is available from Challenger’s website at www.challenger.com.au/about-us/shareholder-centre. This presentation is not audited. The statutory net profit after tax has been prepared in accordance with Australian Accounting Standards and the Corporations Act 2001. Challenger’s external auditors, Ernst & Young, have reviewed the statutory net profit after tax. Normalised net profit after tax has been prepared in accordance with a normalised profit framework. The normalised profit framework is disclosed in Note 4 Segment Information of Challenger Limited 2026 Interim Financial Report. The normalised profit after tax has been subject to a review performed by Ernst & Young. Any additional financial information in this presentation which is not included in Challenger Limited 2026 Interim Financial Report was not subject to independent review by Ernst & Young. This document may contain certain ‘forward-looking statements’. The words ‘forecast’, ‘expect’, ‘guidance’, ‘intend’, ‘will’ and other similar expressions are intended to identify forward-looking statements. Forecasts or indications of, and guidance on, future earnings and financial position and performance are also forward- looking statements. You are cautioned not to place undue reliance on forward looking statements. While due care and attention has been used in the preparation of forward-looking statements, forward-looking statements, opinions and estimates provided in this announcement are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance and may involve known and unknown risks, uncertainties and other factors, many of which are outside the control of Challenger. Actual results, performance or achievements may vary materially from any forward-looking statements and the assumptions on which statements are based. Challenger disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise. Past performance is not an indication of future performance. While Challenger has sought to ensure that information is accurate by undertaking a review process, it makes no representation or warranty and (to the maximum extent permitted by law) accepts no liability as to the accuracy or completeness of any information or statement in this document. Unless otherwise indicated, all numerical comparisons are to the prior corresponding period. IMPORTANT NOTEFor personal use only