Challenger "Finale for Fidante" (Buy) Chidgey

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Challenger "Finale for Fidante" (Buy) Chidgey

Cons.

(i) stronger Channel Group AUM growth prospects vs Fidante and potential cost 06/26E 0.63 0.63 -0 0.65

synergies, (ii) medium-term returns on conditional cash payments, and (iii) potential 06/27E 0.67 0.67 -1 0.71

reinvestment of cash proceeds into Life annuity opportunities at an RBA+12% pre-tax 06/28E 0.72 0.72 0 0.76

ROE. Over time, we estimate potential EPS upside of ~3% from these combined sources.

Kieren Chidgey

Capital could be recycled into stronger Life growth Analyst

kieren.chidgey@ubs.com

Whilst capital freed up from the Channel Group transaction is only incremental relative +61-2-9324 2820

to the more significant ~$300m immediate 1-Jul-26 benefit from new Life annuity

Shreyas Patel, FIAAregulatory capital rules, CGF is clearly increasingly optimistic on redeployment for

Analyst

organic annuity book growth relative to greater capital returns as signalled at its recent shreyas-k.patel@ubs.com

Investor Day. On this front, in addition to its new Bermudan reinsurance entity, Calix Re, +61-2-9324 2821

which could expand its Japanese and offshore annuity footprint, CGF today launched its

Fraser Noye

first Term Annuity Backed Notes (TABNs) in Australia, targeting potentially ~$500m

initially (backed by 3yr term annuities) with a total programme size $6bn which would fraser.noye@ubs.com

ultimately equate to 20%+ upside to CGF's Life investment asset base (though likely at +61-2-9324 3353

slightly lower spread margins).

Price target lifted to $11.00/shr

Overall, while our near-term EPS outlook is largely unchanged (-0.1%/-1.1% FY26/27E),

our price target lifts to $11.00/shr (from $10.20) based on the avg of our DCF and P/B,

incorporating stronger long-term Life growth prospects. CGF is trading at 14.6x FY27E