Challenger has tightened its full-year earnings guidance range, with the midpoint representing 10% growth on the previous year.

It expects normalised net profit of $450-$465 million, after in February predicting a $440-$480 million range.

“Across our retirement business, Challenger maintained momentum through the third quarter, continuing to broaden our customer footprint while making significant progress delivering new technology,” CEO Nick Hamilton said.

The Challenger Life annuity book grew 1% in the quarter, driven by increased sales and a moderating maturity rate.

Annuity sales increased 20% to $1 billion, with strong growth in long-duration retail lifetime and MS Primary Japanese annuities. Longer-duration sales are expected to improve book quality and returns.

The Australian Prudential Regulation Authority plans to consult on capital settings for annuity products as it works to help life insurers increase the availability of retirement products.

“We look forward to APRA’s forthcoming changes to insurance capital standards, which will support significant growth in the lifetime income market and step-change balance sheet resilience,” Mr Hamilton said.

TAL Dai-ichi Life has agreed to buy a 15.1% stake in Challenger, which Mr Hamilton says is a recognition of the company’s strong strategic position, “unique capabilities and the long-term tailwinds in the Australian retirement market”.