Challenger: Accelerating growth coming at lower margins

Research evidence excerpt

Challenger: Accelerating growth coming at lower margins

Global Research

29 July 2026ab

Challenger Equities

AustraliaAccelerating growth coming at lower margins

Diversified Financial

12-month rating Neutral

Downgrading to Neutral given downside risks to margin expectations Prior : Buy

CGF's structural growth story is rapidly evolving. Alongside steady retail retirement 12m price target A$11.30

income product uptake, large-scale institutional opportunities have emerged. In Prior : A$11.00

particular, CGF's recent $750m inaugural TABN issuance - the first of a planned $6bn

Price (28 Jul 2026) A$10.54

program - combined with creation of its new Bermudan-based Calix Re entity to house

expanded offshore reinsurance opportunities could potentially add >$8bn or 30%+ to RIC: CGF.AX BBG: CGF AU

AUM over the next 3-5 years. However, while plans to back growth with lower capital

Trading data and key metrics

intensity fixed income assets under APRA's new capital rules ensures ample self-funding

52-wk range A$10.75-7.38

capacity, we expect significantly lower front book margins whilst still meeting ROE

hurdles. As a result, despite improved growth appeal, with Consensus expecting Market cap. A$7.23b/US$5.04b

margins to rise, we see shorter-term EPS risks and downgrade to Neutral. Shares o/s 686m (ORD)

Free float 96%

UBSe Life AUM growth outlook lifts to 10% CAGR from FY26-29E Avg. daily volume ('000) 1,590

With CGF receiving $1.75bn of demand for its first $750m Term Annuity Backed Note Avg. daily value (m) A$15.1

(TABN) issuance (3yr fixed/floating), it appears well placed to deliver on its $6bn TABN Common s/h equity (06/26E) A$4.12b

program target over the medium-term. In regards to offshore annuities, with its current P/BV (06/26E) 1.7x