In its first-quarter earnings results, Challenger reported a 1% rise in group assets under management (AUM) to $128 billion.

The group attributed the increase in AUM to growth in funds under management (FUM) in its fund management business and positive movements in the investment market.

Namely, FUM for fund management was $119 billion at the end of September, an increase of $1.3 billion, or 1%, for the quarter.

Breaking that down, Fidante's FUM was $101 billion, also up 1% for the period.

“FUM growth for the quarter included positive investment market movements of $3.4 billion, partially offset by net outflows of $1.9 billion and customer distributions of $500 million. Net outflows were primarily due to redemptions of fixed income mandates,” the group said in an ASX listing on Wednesday.

Meanwhile, Challenger Investment Management's (CIM) FUM was $18 billion, up $233 million, or 1%, for the quarter, driven primarily by net inflows of $330 million from third-party clients.

Managing director Nick Hamilton said this growth comes on the back of continued business momentum and progress on strategic initiatives

"Challenger continues to execute a set of strategic initiatives that will strengthen and expand the business," Hamilton said.

“Our strategic investment to re-platform the customer registry and annuity business technology is progressing on schedule. Once launched, the benefit of making our retirement products easy to access will be essential to our growth strategy.”

According to the managing director, Challenger remains "on track" to launch this feature this financial year.

Last month, the group announced that it had entered into an appointment agreement with State Street to provide its investment administration and custodial services.

Challenger, Fidante and their affiliates will benefit from State Street's advanced technology, capabilities and scale, which integrate front, middle and back office functions with custodial services.

"As more Australians move into retirement and the market now develops solutions to match their unique needs, we see significant opportunities for Challenger to continue to deliver strong growth across our range of post-retirement income and other investment products," Hamilton said.

What's more, Challenger said its life insurance business remains highly capitalized with a PCA ratio of 1.61 times above the minimum regulatory requirement, after paying the last dividend in 2024.

Total life sales fell 14 percent to $2.4 billion in the quarter, which included the effect of a $619 million group life annuity policy gain in 1Q24.

Excluding that, total life sales increased 10 percent, led by growth in whole life retail annuity sales and Japan (MS Primary) and strong Challenger Index Plus sales.

Namely, retail life annuity sales increased 26 percent to $275 million, and Japan annuity sales increased 74 percent to $244 million in the quarter.

However, the group said its fixed-term annuity retail sales fell 22% to $564 million as Challenger maintained its "disciplined approach to pricing shorter-term business".

Challenger confirmed its normalized net profit after tax guidance for the 2024-25 financial year. between $440 and $480 million.