Challenger’s total life net flows have jumped $766 million over the first quarter of the financial year, thanks to a strong performance in Japanese annuities and other life sales. The overseas performance contributed 5.2% growth to their life book, offsetting disappointing results at home.

Challenger’s sales of domestic annuities have dropped 11% to $78 million. The company continues to blame fallout from the Hayne royal commission, which has caused a “significant reduction in financial adviser numbers and increased movement by advisers across licensees”.

“Major advice hubs have also been subject to client remediation projects and, in some cases, business sales and restructures. This has led to lower new client acquisitions which is impacting Challenger annuity sales,” the company says.

Japanese MS&AD Group annuity sales now represent 26% of total annuity sales, compared to just 5% in the June 2019 quarter.

Sales of Challenger’s two lifetime annuity products were down, affected by financial advice disruption and new pension means test rules. Australian fixed term sales were up $79 million to $529 million.

Challenger is still targeting a before-tax profit of $500 to $550 million over the next financial year, unchanged from its previous forecasts.