Challenger Life made $558 million of annuity sales in the three months to September 30 – the same figure recorded in the previous corresponding period.

Retail sales for the quarter were $481 million, compared with $509 million, and institutional sales were up to $77 million from $49 million in the previous corresponding period.

“We are fortunate to be growing our life business and can confirm we are on track to meet our 2013 retail annuity sales growth target of 15%, or $2.25 billion, plus net book growth of 10%,” Challenger CEO Brian Benari said.

“We are successfully extending the average tenure of retail annuity sales, which for the September quarter was 6.1 years, up from 5.1 years a year ago and 4.4 years two years ago.”

Mr Benari says the longer tenures increase the future rate of net book growth. “This enables greater investment in longer-dated assets that earn an illiquidity premium and is more efficient in terms of distribution and administration.”

With new Australian Prudential Regulation Authority capital requirements beginning on January 1 Challenger does not predict major changes to its reserves. It expects to hold regulatory capital of between $110 million and $125 million for the next three years.

“Challenger’s current excess capital position and ongoing organic capital generation is expected to be sufficient to meet the additional capital requirements,” Mr Benari said.