FY21 Financial results

Providing our customers with financial security for a better retirement 10 August 2021

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Overview

Providing our customers with financial security for a better retirement

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FY21 business performance Richard Howes – Managing Director and Chief Executive Officer Financial results Rachel Grimes – Chief Financial Officer Financial outlook Regulatory reform update Corporate strategy and priorities Richard Howes – Managing Director and Chief Executive Officer

FY21 – 30 June 2021

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2

Highlights

Providing our customers with financial security for a better retirement

Profit within guidance range

Recovery of unrealised investment losses

Strong business momentum and clear plan for long-term growth Life – Record sales driven by diversification strategy

Funds Management – Diversified client base and product offering supporting ongoing growth Bank acquisition – Expanding customer reach to accelerate medium-term growth

Outlook – strong profit growth into FY22 Clear plan for long-term growth

FY21 – 30 June 2021

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3

FY21 performance

Richard Howes Managing Director and Chief Executive Officer

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FY21 performance

Profit within guidance range Strong business momentum and clear plan for long-term growth

 FY21 profit delivered within guidance

 Recovery of unrealised investment losses

 Record Life sales and very attractive asset growth

 Continued FM growth and investment performance

 Bank acquisition completed , strategy to unlock new market

 Clear plan for long-term growth with sustainable ROE

$396m within guidance range

>$500m of investment gains

$7bn Life sales

+30% FUM growth

Entering term deposit market

Pathway to 12% target

FY21 – 30 June 2021

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5

Life performance Clear leader in retirement income Record sales driven by diversification strategy

Sales +35% – growth in all key segments

Life sales ($m)

FY21 sales $6.9bn +35%

Life book growth (%)

FY21 book growth +14.4%

• Retail +19%

• adviser disruption stabilising

• IFA and emerging group sales up 35%

• direct retail sales up 16%

• 1

• ‒ 91% customer satisfaction

• Institutional +53%

• solutions evolving to provide clients flexibility

• 125% increase in profit-for-member fund AUM

• investing in new partnerships for 2030 vision

• Japan +6%

• exceeded agreed minimum target by 18%

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+35% 14.4%
+6% 3.4% 2.1%
15.0%
12.1%
+53%
Life annuity
and other
liabilities
$17.3bn
+19%
FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21
Retail Institutional Japan
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FY21 – 30 June 2021

1. Fifth Quadrant, February 2021. Net Promoter Score (NPS) of 35%; 91% overall satisfaction with Challenger; and 60% of customers rate their experience with Challenger better than other financial institutions.

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66

Funds Management performance Australia’s 3[rd] largest1 and one of the fastest growing active managers Record flows driven by diversified client base and product offering

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2
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• 2

• One of the fastest growing active managers Fidante Partners retail – $4bn net flows • Extensive reach with 900+ dealer groups • 3 High level of ‘buy’ recommendations

• • Zenith Partners ‘Distributor of the Year’ • 2 #1 active manager for retail net flows

Fidante Partners institutional – $10bn net flows

• Extensive reach – 45 of top 50 super funds are clients

• 4

• Superior investment performance – 92% outperformance

• Further expansion into offshore markets

CIP Asset Management – $2bn net flows

• Market leader in domestic private lending

• Won first 3[rd] party Japanese real estate mandate

Net flows ($bn) FUM ($bn) FY21 net flows $16bn FY21 $106bn +30%

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105.8
~20% of 5
opening FUM
16.1 81.4
78.0 79.0
66.9
6.2
5.3
2.5
-2.4
FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21
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FY21 – 30 June 2021

1. Consolidated FUM for Australian Fund Managers – Rainmaker Roundup, March 2021.

2. Plan For Life Wholesale Trust Data, September 2020, December 2020 and March 2021. 3. 78% of Fidante Partners funds have a buy rating.

3. 92% outperformance of mandates over 3 year period.

4. FY21 net flows of $16.1bn represent ~20% of FY20 FUM.

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77

Bank acquisition update

Extending customer reach to accelerate medium-term growth

Scalable Transaction update digital savings  APRA approval received and loans bank  Acquisition completed Providing Challenger access to term deposit market Integration well progressed Expanding secure retirement income offering with familiar • Forming distribution partnerships to build early momentum deposit product Attract new customers and • Investing in capability with focus on lending, risk and compliance accelerate direct to customer capability • Migrating to Challenger brand in FY22 • Developing sales pipeline

FY21 – 30 June 2021

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8

Sustainable ROE target 1

Focus on risk adjusted returns Clear pathway to ROE target in FY22

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Normalised ROE (pre-tax)
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ROE target reset for enhanced risk settings

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12.0%
11.2%
FY21 ROE target
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Pathway to RBA cash rate +12% target

• Benefit of cash and liquids already deployed in FY21

• 2

• • FY22 guidance (mid-point) delivers cash +12% ROE

Pathway to higher ROE

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Potential ROE tailwinds
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Rising interest rates

Credit spread normalisation Lower annuity pricing (relative to swap rate) Ongoing growth in Funds Management Scaling recently acquired Bank

FY21 – 30 June 2021

1. Normalised pre-tax Return on Equity (ROE) target – RBA cash rate plus margin of 12%.

2. Mid-point of guidance range generates Group ROE in line with ROE target.

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9

Financial results

Rachel Grimes Chief Financial Officer

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FY21 earnings snapshot

Profit within guidance range Statutory NPAT includes reversal of pandemic related market losses

FY21 Change	FY21 Change	FY21 Change
Net income	$682m	-14%
Expenses	($281m)	-1%
EBIT	$401m	-22%
Interest & borrowing	($5m)	-23%
Normalised NPBT $396m -22%
Normalised tax	($117m)	-28%
Normalised NPAT 1	$279m	-19%
Investment experience Significant items	$319m ($5m)	n/a -49%
Statutory NPAT 1 $592m +$1bn
Group AUM $110bn +29%
Normalised EPS 2 41.5cps -27%
Normalised ROE 11.2% -360bps
Dividend 20.0cps +14%

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Normalised NPBT Statutory NPAT
$396m – down 22% $592m – up $1bn
Life EBIT -24% Reversal of unrealised
FM EBIT +23% FY20 investment losses
592
507
370
396 FY21 guidance $390m to $440m
223
228
196 200 FY20 FY21 2H20 1H21 2H21
-416
FY20 FY21 2H20 1H21 2H21
-636
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FY21 – 30 June 2021

1. Normalised profit framework and a reconciliation to statutory net profit after tax is disclosed in the 2021 Financial Report – Operating and Financial Review Section 8.

2. Normalised EPS based on basic share count. Dilutive share count represents theoretical dilution as it assumes Capital Notes (i.e. hybrid debt) and subordinated debt fully converts into equity. It is Challenger’s intention to repurchase Capital Notes and not allow them to convert into equity, as demonstrated with the replacement of Capital Notes 1 issued in 2014 with a new instrument in November 2020.

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11

Investment Experience $455m Positive experience across all asset classes Reversal of unrealised pandemic related market losses

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Fixed income +$383m Property +$55m 55
2H20 FY21
383
• •
2H20: -$536m (2/3 [rds] unrealised) 2H20: -$212m (largely unrealised)
• FY21: spreads back to pre- • FY21: All properties independently
2H20 FY21 pandemic levels driving reversal valued – revaluations exceed 2%
-175
2H20 unrealised of unrealised losses pa growth assumption 2H20 unrealised
-331
Assets
+$542m
Equities and Infra. +$57m Alternatives +$47m
47
57 • 2H20: -$377m – largely realised • 2H20: -$104m (½ unrealised)
• FY21: Gains across both • FY21: Strong absolute return -51
-28 equities and infrastructure fund gains – unrealised
2H20 unrealised losses revered 2H20 unrealised
2H20 FY21 2H20 FY21
Policy liabilities 2 -$87m – driven by illiquidity premium (-$183) and policy liability gain (+$96m)
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FY21 – 30 June 2021

1. All investment experience numbers quoted pre-tax.

2. Comprises -$183m as a result of illiquidity premium adjustment and $96m gain on policy liabilities. Policy liability gain reflects changes to bond yields and interest rates used to hedge policy liabilities, expected inflation rates and expense assumptions on policy liabilities. The policy liability gain was significant in FY21 as a result of the significant relative movements in the yields on inflation instruments and semi-government securities held for hedging purposes.

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12

Life performance

Asset growth offset by lower margin Margin reflects more defensive portfolio settings

Record sales and move to defensive settings

 Record sales +35% and +14% book growth

 AUM growth +18% (average AUM +3%)

FY margin -72 bps – defensive settings and  higher cash balance; 2H +10bps on 1H

 Expenses stable

 EBIT -24% defensive settings; 2H +7% on 1H

 Enhanced capital levels – above 1.60x2

 Investment portfolio – recovery of unrealised investment losses

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Average AUM +3% Life EBIT $399m –
Margin -72bps down 24%
Strong book growth 2H up 7% on 1H
Lower margin from defensive
portfolio settings
Average investment assets ($bn)
Cash Operating Earnings 1 margin (%)
525
20.4
19.7
19.2 399
19.0
3.32%
2.65% 193 206
2.55%
2.60%
FY20 FY21 1H21 2H21 FY20 FY21 1H21 2H21
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FY21 – 30 June 2021

1. Life Normalised Cash Operating Earnings (COE) represents Investment yield and other income less interest and distribution expenses. 2. Target to operate at 1.60 times PCA ratio (refer to page 20).

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13

Life sales and book growth

Record Life sales driving book and investment asset growth

Record Life sales

FY21 $6.9bn +35%; 2H21 $3.5bn +2%

Life book growth +$2.2bn or +14.4% growth in liabilities

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7.0 +14.4% Annuity +8.6% Strong 2H
+6% Retail: 2H -10% Other +5.8% growth
6.0 reflecting seasonal +2.1% 2,164 providing
impacts +3.4% +9.7% earnings
5.0 316 momentum
2H +2% Institutional: 2H 475 +4.7% into FY22
4.0 +53% -55% strong term annuity
sales 709 1,455
3.0
Japan : 2H moderated
2.0 +26% – exceeded FY target
1.0 +19%
-10%
0.0
FY19 FY20 FY21 2H20 1H21 2H21
Retail $2.1bn (+19%) – IFA growth and new adviser groups
Institutional $4.0bn (+53%) – new client and product evolution Maturities
Sales
Japan $0.8bn (+6%) – exceeded minimum target
FY19 FY20 FY21 1H21 2H21
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FY21 – 30 June 2021

14

Life investment assets

Record sales driving book and investment asset growth

Life annuity and other liabilities ($bn) 1

Investment assets ($bn)

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17.3
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14.8 15.0 21%
13.9
13% 16%
12.0 15%
14%
41% 43%
37% 45%
33%
53% 48% 46% 39% 36%
FY17 FY18 FY19 FY20 FY21
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Liabilities $17.3bn +15% Driven by book growth

Index Plus liabilities +50% Sales growth (+17%) and high reinvestment rate of 91%

Lifetime liabilities 2 +11% Japan and lifetime sales +18%

Term liabilities +6% $1.1bn of institutional sales

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21.6
18.3
19.0
18.1
15.7
FY17 FY18 FY19 FY20 FY21
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Average $19.7bn up 3% Timing of book growth with strong 2H performance

Closing $21.6bn up 18% Record sales driving 14% book growth and investment market gains

Closing investment assets 9% higher than average

Challenger Index Plus liabilities Lifetime and Japan (MS Primary) annuity liabilities Term annuity liabilities

FY21 – 30 June 2021

1. Discounted Life annuity liabilities and Challenger Index Plus Fund liabilities.

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1. Lifetime annuities policy liability includes domestic lifetime and MS Primary (Japan) business.

15

Life investment assets

High quality portfolio delivering reliable and stable income No significant change to asset allocation expected in FY22

Investment assets (%)

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5% [3%] 6%
16%
FY21
$21.6bn
16%
54%
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Cash

Fixed income (investment grade) Fixed income (sub investment grade) Property Alternatives Equities and infrastructure

Fixed income 76%

• Cash gradually reduced from 16% to 6% of total portfolio

• Investment grade1 reduced from 85% to 79% (above 75% target)

• Resilient credit performance (+13 bps) with write back following recovery

Property 16%

FY21 property revaluations

Australian Office +5.9% Australian Industrial +6.1% Australian Retail -0.2% Japan +0.9%

• Australian cap rate tightened 25 bps to 5.6%

• Occupancy rate stable at 92%

• FY22 rental assumption reduced due to pandemic

Alternatives 5% – $0.4bn increase in absolute return funds

Equities & Infrastructure 3% – $0.3bn increase in low beta equity

FY21 – 30 June 2021

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1. Investment Grade (IG) represents BBB or higher.

16

Life COE margin

More defensive portfolio settings impacted margin Product cash margin down 14 bps

Average investment assets

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Portfolio repositioned to more
defensive settings in 2H20
Fixed income up 7pts
FY21
During pandemic high
levels of cash and
11%
investment grade
24%
7% Growth assets down 7pts
31% Lower allocation to
growth assets – equities,
FY20 infrastructure and
alternatives
46%
12%
16%
53%
Cash
Fixed income (investment grade)
Fixed income (sub investment grade)
Growth assets2
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FY21 Life COE1 margin -72bps

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Change in asset mix (more defensive
settings) and lower alternative assumption
Lower interest rates – average BBSW
5bps (FY21) v 70bps (FY20)
One-off $10m
3.32% (5bps) fee in FY20
(0.45%)
(0.13%)
(0.09%) (0.05%) 2.60%
Asset mix; credit spread
movements; investment in
institutional relationships;
repricing initiatives
FY20 Normalised Return on Product Life FY21
growth shareholder spread3 Risk
funds
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FY21 – 30 June 2021

1. Life Normalised Cash Operating Earnings (COE).

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1. Growth assets represent property, alternatives, equities and infrastructure.

2. Product spread represents investment yield (policyholder) less interest expense.

17

Life COE margin

Impacted by asset mix and interest rates Product spread stable

2H21 2.65% – up 10 bps on 1H21

• 1

• • One-off early ABS repayment (2H21 impact +12 bps; FY21 impact +6 bps)

• Benefiting from deployment of cash

• Repricing initiatives reducing cost of funds

• FY22 expect ~2.5% 3 – stable on 2H21 excluding one-off fee

Long term COE margin trends

• Normalised growth contribution reduced

• Return on shareholder capital rebased reflecting lower interest rates

• Product spread stable – spread-based business model with cost of funds adjusted to provide stable net spread

Product spread 2

Life COE margin

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3.67%
3.57% 3.53%
4.69% 4.73%
4.52%
23% 3.10% FY21 2.60%
24% 20% 4.20%
3.92%
17% 2.65% 3.72%
2.55%
7%
21% 20% 7%
22% 16%
17% 18% 2.82% 2.75%
2.51%
2.40%
2.13%
1.89%
55% 56% 60% 67% 76% 75% 1.87% 1.98% 2.01% 1.80% 1.79% 1.83%
1H19 2H19 1H20 2H20 1H21 2H21 1H19 2H19 1H20 2H20 1H21 2H21
Normalised capital growth Investment yield - policyholders' funds
Investment yield – shareholders’ funds Interest expense (cost of funds)
Product cash margin Product spread
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FY21 – 30 June 2021

1. Asset Backed Security (ABS).

2. Product spread represents investment yield (policyholder) less interest expense.

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1. Mid-point of FY22 Normalised NPBT guidance range generates Life COE margin of ~2.5% (refer page 26).

18

Challenger Life regulatory capital

PCA ratio above target operating level FY22 capital intensity expected to remain stable

Challenger Life Company (CLC) excess regulatory capital ($m)

CLC capital intensity ratio

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2H20 reduced following
Release following Capital intensity ratio up
move to defensive
restructure of longevity from 10.7% to 12.1%
transactions settings and cash
13.3%
206 68 18% growth in 12.2% 12.1%
(15) (201) investment assets
(348)
552 (100)
10.7%
Net increase from (97)
Capital Notes 3 to 1H21 increased following
replace Capital
Retained earnings Notes 1 deployment of cash
1,585 (including investment 1,650 2H21 stable on 1H21
experience) and
Share Purchase Plan, FY22 expected to remain stable
net of dividends and
AT1 coupons
FY20 excess CET 1 Distribution Life Risk AT1 Other PCA PCA PCA FY21 excess 1H20 2H20 1H21 2H21
regulatory increase to fund capital increase regulatory increase increase increase regulatory
capital Bank release capital higher capital investment other capital
intensity asset growth
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FY21 – 30 June 2021

19

Capital and balance sheet strength

PCA ratio above target operating level Additional financial flexibility at Group

FY21 PCA ratio1

• Average : 1.67x up from 1.54x – reflects more defensive portfolio settings

• End of period : 1.63x in line with FY average and above preferred operating level of 1.60x

FY22 PCA ratio

• Extending PCA ratio range to 2

• 1.3x to 1.7x (from 1.3x to 1.6x) – target to operate around 1.6x

• Target surplus currently corresponds to CET1 ratio of 3

• between 0.8x to 1.2x

CLC capital ratios (times)

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1.70
1.67
1.51 1.81
1.63
1.30
1.53 1.54
1.20
1.14
1.06
FY19 FY20 FY21 FY22
PCA ratio - period end
CET1 ratio - period end
PCA ratio - period average
PCA ratio target range
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S&P credit rating

Challenger Life ‘A’ (stable outlook)

Challenger ‘BBB+’ (stable outlook)

Group Cash and debt

Cash $223m outside of Challenger Life

Group debt Nil

$400m undrawn facility

FY21 – 30 June 2021

1. The PCA ratio represents total Tier 1 and Tier 2 regulatory capital base divided by the Prescribed Capital Amount.

2. This ratio may change over time.

3. The target surplus produced by internal capital models currently corresponds to a CET1 ratio of between 0.8 times to 1.2 times. This ratio may change over time.

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20

Funds Management performance

Record results

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Record growth and financial results Average FUM FM EBIT
$93bn +15% $71m +23%
 FUM closing +30% (average FUM +15%)
Fidante +19% Income +7%
CIPAM +2% Expenses -2%
 Improving income quality – FUM-based
income +16% and performance and Closing 14% above FY average Capturing operating leverage
transaction fees -$10m
99.2
92.7
85.9
 Expense control -2% 80.6 71.0
57.7

Operating leverage with EBIT +23% 35.3 35.7
 Excellent investment performance with 92%1
of FUM outperforming benchmark over 3 years
FY20 FY21 1H21 2H21 FY20 FY21 1H21 2H21
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FY21 – 30 June 2021

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1. 92% outperformance of mandates over 3 year period.

21

Funds Management Superior investment performance supporting record flows

Record net flows ($m)

Fidante Partners investment performance

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16.1 Fidante Partners
FY21 flows
77% Fixed
6.2 income
5.3
2.5
21% Equities
-2.4
FY17 FY18 FY19 FY20 FY21
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CIP Asset Management (CIPAM) Fidante Partners institutional Fidante Partners retail

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Quartile performance1 Relative to benchmark2
8% 4% 9%
21%
25% 21%
92% 96% 91%
63%
42% 42%
3 years 5 years Since 3 years 5 years Since
inception inception
2nd quartile % of FUM outperforming benchmark
1st quartlie
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FY21 – 30 June 2021

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1. Mercer as at June 2021.

2. As at 30 June 2021. Percentage of Fidante Partners Australian boutiques meeting or exceeding performance benchmark.

2222

Funds Management

Record flows driving significant FUM and income growth FUM-based margin expanding

Funds Management income margin

Funds Under Management ($bn)

Total FUM +30%

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19.4 19.6
18.3
16.1 16.3
15.7
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FY19 FY20 FY21
Total income margin FUM based income margin
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105.8
F​idante +36%
+10%
FUM increased
78.0 79.0 81.4 in all but one
boutique
66.9
4 boutiques with
FUM >$10bn
(FY20 1 boutique)
+36%
CIPAM +10%
FY17 FY18 FY19 FY20 FY21
Fidante Partners CIP Asset Management Average FUM
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• Total income margin reflects lower performance and transaction fees

• FUM-based margin expanding with higher margin retail and offshore offsetting product mix

• FUM growth accelerating

• FY21 +30% with 2/3’rds of growth from net flows

• Closing FUM 14% higher than FY21 average

FY21 – 30 June 2021

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2323

Dividend

In line with payout target

Fully franked dividends (cps)

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40
34.5 35.5 35.5
30
17.5 18.0 18.0
20.0
20 17.5
10.5
10
17.0 17.5 17.5 17.5
9.5
0
FY17 FY18 FY19 FY20 FY21
Interim Final
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FY20 no final dividend – early stages of pandemic FY21 20.0cps – reflects lower earnings from more defensive settings

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1
Dividend payout ratio
60%
54.2%
52.1%
50.4%
48.2%
50%
40%
31.0%
30%
20%
FY17 FY18 FY19 FY20 FY21
Normalised dividend payout ratio
Normalised dividend payout ratio target
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Dividend payout ratio 48.2%

• Return to target payout ratio range

• DRP in place – no discount

FY21 – 30 June 2021

1. Normalised dividend payout ratio based on normalised EPS.

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24

Financial outlook Regulatory reform update Corporate strategy and priorities

Richard Howes Managing Director and Chief Executive Officer

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FY22 guidance and targets Earnings to benefit from business growth Enhanced risk settings with focus on risk adjusted returns

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Normalised net profit before tax guidance range $430m to $480m 1
$430m $480m
Mid-point of range ($455m)
represents best estimate
(+15% increase on FY21)
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Mid-point of guidance range represents best estimate and based on:

Mid-point of guidance range generates:

• Defensive investment portfolio settings maintained

• Group ROE in line with revised target

• No material contribution from Bank acquisition

• Life COE margin (~2.5%)

Normalised pre-tax Return on Equity (ROE) – RBA cash rate plus margin of 12%

2,3

Dividend payout ratio – 45% to 50% normalised dividend payout ratio

CLC 4 excess regulatory capital – Remain strongly capitalised and operate around 1.60 times PCA5

FY21 – 30 June 2021

1. The COVID-19 situation and its impact on investment markets creates an inherently uncertain environment. This could, among other things, impact the investment returns and therefore impact guidance.

2. Normalised dividend payout ratio represents dividend per share divided by normalised earnings per share (basic).

3. Dividend subject to market conditions and capital management priorities. 4. Challenger Life Company Limited (CLC).

4. CLC maintains a target level of capital representing APRA’s Prescribed Capital Amount (PCA) plus a target surplus and does not target a fixed PCA ratio. The target PCA ratio range is currently 1.30 times to 1.70 times with a preferred operating level of 1.60 times.

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26

Industry leader benefiting from long-term tailwinds With clear plan for sustainable growth

Industry leader

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Long-term tailwinds

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Market leading positions

• 1 annuity provider and brand

• 3[rd] largest active fund manager

• 1 Australian fixed income manger

Relevant products and capability

• Differentiated product range

• Leading investment performance

• Excellent customer experience

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Market dynamic

• Superannuation system growth

• Assets in retirement segment growing

• Growing demand for defensive assets

Favourable demographics

• ‘Baby-Boomers’ retirement cycle

• Older and healthier retirees

• Focus shifting to drawdown phase

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Leading distribution

• Rated #1 retail franchise

• 90% of top 50 super funds are clients

• Japanese annuity partnership

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Regulatory tailwinds

• Super contribution rate increase

• Government enhancing retirement phase

• • Retirement Income Covenant due 2022

FY21 – 30 June 2021

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27

Regulatory reforms support long term growth Retirement Income Covenant on track for 1 July 2022

2022 and beyond

• APRA, ASIC and ATO requirements and guidance

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----- Start of picture text -----

The Government is progressing
requirements and guidance
a range of reforms to enhance New means test rules to 2021/2022 Budget • Technology, competition and data
the retirement phase of the support the use of lifetime measures announced advancements to drive innovative
superannuation system. income products solutions over time
2017 2018 2019 2020 2021 2022 Next
New retirement income product RIC will codify requirements for superannuation
rules to remove barriers to trustees to improve retirement outcomes for
product innovation individuals, while enabling choice and
----- End of picture text -----

RIC will codify requirements for superannuation trustees to improve retirement outcomes for individuals, while enabling choice and competition in the retirement phase.

Treasury position paper, 19 July 2021

The RIC1 will require trustees to have a retirement income strategy that ensures they identify and recognise the retirement income needs of their members and that they have a plan to build the fund’s capacity and capability to service those needs.

• Covenant creates new obligation on trustees to formulate and give effect to a retirement income strategy

• Strategy to set out trustee’s plan to assist members achieve and balance three objectives: 1. Maximise retirement income;

• Manage risks to the sustainability and stability of retirement income; and

• Allow some flexible access to retirement savings.

• Trustees to have their retirement income strategy in place by 1 July 2022

FY21 – 30 June 2021

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1. Retirement Income Covenant (RIC).

28

Corporate strategy

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FY21 – 30 June 2021

29

FY22 strategic priorities Clear plan for long-term sustainable growth

Broaden customer access across multiple channels	Expand range of financial Leverage the combined Strengthen resilience	Expand range of financial Leverage the combined Strengthen resilience	Expand range of financial Leverage the combined Strengthen resilience
	~~products and services for~~ a better retirement	~~capabilities of the~~ Group	~~and sustainability of~~ Challenger
• Build on Bank’s direct customer base • Establish and deepen Life’s institutional relationships • Attract FM clients through offshore offices	• Build momentum in new Fidante boutique and partnerships and CIPAM credit offerings • Ongoing product development to evolve Life’s offering • Establish bank brand and generate early momentum in term deposit market	• Leverage Group IT and operations to integrate Bank including digital connection to aggregator sites • Embed ESG capability across FM and Life investment platforms • Maintain strong investment performance across Group	• Maintain high employee engagement and entrenched risk culture • Maintain strong capital position • Continue to focus on risk adjusted returns

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FY21 – 30 June 2021

30

Highlights

Providing our customers with financial security for a better retirement

Profit within guidance range

Recovery of unrealised investment losses

Strong business momentum and clear plan for long-term growth Life – Record sales driven by diversification strategy

Funds Management – Diversified client base and product offering supporting ongoing growth Bank acquisition – Expanding customer reach to accelerate medium-term growth

Outlook – strong profit growth into FY22 Clear plan for long-term growth

FY21 – 30 June 2021

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31

Appendix

Additional background information

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Appendix

Providing our customers with financial security for a better retirement

Challenger business overview	34-36
Superannuation system	37-41
Retirement phase overview	42-45
Retirement income strategies	46-48
MS&AD and MS Primary (Japan) relationship	49-50
Life product overview	51
Challenger brand and adviser ratings	52-53

Life sales and AUM	54
Life asset allocation & portfolio overview	55-59
Life normalised profit framework	60
Life asset and liability matching	61
Funds Management sales and FUM	62-63
Funds Management brands and strategies	64
Fidante Partners model & performance	65-66
Fidante Partners manager capacity	67
CIP Asset Management	68

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FY21 – 30 June 2021

33

Challenger business overview

Corporate strategy

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FY21 – 30 June 2021

34

Challenger business overview

Challenger overview Providing customers with financial security for a better retirement

Challenger Limited (ASX:CGF)1 Life Funds Management Bank Australia’s leading provider of Australia’s 3[rd] largest3 and one of the Recent acquisition to drive annuities and clear retirement leader fastest growing active managers medium term growth #1 Australian fixed income manager Guaranteed retirement income products Fidante Partners Digital savings and loans bank Japanese reinsurance partner Boutique investment manager platform ADI4 to allow access to term deposit market CIP Asset Management Longevity risk transfer business Access pre-retirees 2 Originates and manages assets for APRA regulated Life and third party clients Accelerate access to direct customers

Centralised functions

Distribution, product and marketing teams dedicated to raising capital and supporting client needs

FY21 – 30 June 2021

1. Australian Securities Exchange (ASX) and trades under code CGF.

2. Australian Prudential Regulation Authority (APRA).

3. Consolidated FUM for Australian Fund Managers – Rainmaker Roundup, March 2021.

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1. Authorised Deposit taking Institution (ADI).

35

Challenger business overview

Provide customers with financial security for a better retirement Complementary businesses extending customer and product reach

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----- Start of picture text -----

FUNDS High alpha across all capabilities
MANAGEMENT Equities, alternatives, real assets, fixed income
----- End of picture text -----

BANK LIFE

Saving for Spending for retirement retirement

Starting out Working Paying off debt Accumulating Starting Travelling Downsizing Aged care wealth retirement

FY21 – 30 June 2021

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36

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Superannuation
system
----- End of picture text -----

Australian superannuation system

Attractive market with long-term structural drivers

Market growth supported by

• Mandatory and increasing contributions

• Earnings and contributions compounding

• Population growth and ageing demographics

Resulting in

• 1

• • 11% CAGR growth over last 20 years

• 1

• • 4[th] largest global pension market

• Assets expected to increase from $2.9 trillion to $6.6 trillion over next 15 years2

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----- Start of picture text -----

Australian superannuation growth 2 ($bn)
----- End of picture text -----

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----- Start of picture text -----

8,000
6,000
4,000
2,000
-
----- End of picture text -----

FY21 – 30 June 2021

1. Willis Towers Watson Global Pension Study 2020.

2. Based on Rice Warner Superannuation Market Projections Report 2020.

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37

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----- Start of picture text -----

Superannuation
system
----- End of picture text -----

Australian superannuation system

Attractive market with long-term structural drivers

Pre-retirement (super savings) phase

• Funds Management target market

• Supported by mandated and increasing contributions

Post-retirement (super spending) phase

• Life target market and supported by

• ageing demographics

• rising superannuation savings

• Government and industry enhancing retirement phase

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----- Start of picture text -----

Projected superannuation assets 2 ($bn)
7,500
5,000
2,500
-
----- End of picture text -----

Annual transfer from pre- to postretirement phase ~$70bn1 per year

Post-retirement assets - superannuation spending phase Pre-retirement assets - superannuation savings phase

FY21 – 30 June 2021

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1. Australian Taxation Office.

2. Based on Rice Warner 2020 superannuation projections applied to 2018 APRA superannuation assets.

38

Superannuation system

2

Australian superannuation system Attractive market with long-term structural drivers

Mandatory and increasing contributions – increasing from 10% to 12.0%1

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----- Start of picture text -----

Superannuation Guarantee contribution rate 1
1992 1997 2002 2015 2021 2022 2023 2024 2025
3.0% 6.0% 9.0% 9.5% 10.0% 10.5% 11.0% 11.5% 12.0%
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Australians have one of world’s longest life expectancies

Demographics

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----- Start of picture text -----

Ageing population
Medical and mortality improvements increasing longevity
Number of Australians over 65 increasing3
+29% over next 10 years
+50% over next 20 years No data<20 years 30 years 40 years45 years50 years55 years60 years65 years70 years75 years80 years>85 years
----- End of picture text -----

• Ageing population

• Medical and mortality improvements increasing longevity

FY21 – 30 June 2021

1. Percentage of gross wages required to be contributed to superannuation. Contribution rate increased to 10% on 1 July 2021 and increases by 0.5% per annum until reaching 12% in 2025.

2. World Health Organisation.

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1. Australian Bureau of Statistics population projections (Cat No. 3222.0 Series B middle projections).

39

Superannuation system

Australian superannuation system

High allocation to equities and low allocation to fixed income

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----- Start of picture text -----

Australia has low fixed income and high equity allocations 1
27% 31%
15%
6%
44% 27% 42% 23%
26% 9% 33%
50% 53% 49% 51%
36% 38% 38%
28% 30% 27% 24%
Other Equities Fixed income (cash and deposits, bills and bonds)
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Fixed income allocation

• Australia 28%

• OECD average 45%

Equities allocation

• Australia 44%

• OECD average 24%

FY21 – 30 June 2021

1. OECD Pension Markets in Focus – 2020.

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40

Superannuation system

Australian superannuation system

World class accumulation system with significant retirement savings Not delivering retirees financial comfort

World class Significant Not delivering retirees accumulation system retirement savings financial comfort 7 National Seniors Australia survey (January 2020) Contribution rate 1 in 4 super dollars 84% say regular and increasing to 12%1 supporting retirement4 constant income is very important 4pension market[th] largest global 2 Average household wealth at retirement 53% worried about $680k5 outliving their savings Assets increasing ~$70bn transferring 2/3[rd] of retirees expect from $3.0tr to $6.6tr to retirement each to spend their savings over next 15 years3 year6 over next 20 years

FY21 – 30 June 2021

1. Increased to 10% on 1 July 2021 and increases by 0.5% p.a. until reaching 12% on 1 July 2025.

2. Willis Towers Watson Global Pension Study 2019.

3. Rice Warner 2020 superannuation projections applied to 2020 APRA superannuation assets. 4. Based on APRA and ATO data.

4. Australian Bureau of Statistics. Includes superannuation and nonsuperannuation assets and excludes the family home.

5. Australian Taxation Office.

6. https://nationalseniors.com.au/research/retirement/retirement-incomeworry-who-worries-and-why

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41

Retirement phase overview

Retirement phase of superannuation Combining products provides better outcomes for retirees

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----- Start of picture text -----

Discretionary
(wants) Funds Management
Account
Equities, fixed income
Based and alternative asset
Pension products
(ABP)
Life
Essential Guaranteed Annuity and
income stream guaranteed income
(needs)
products
1
Full age pension p.a.
Age
Single $24,552
pension Couple $37,014
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Time
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FY21 – 30 June 2021

1. Australian Government Department of Human Services and current as at 1 July 2020.

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42

Retirement phase overview

Retirement phase of superannuation Superannuation starting to reduce reliance on age pension

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----- Start of picture text -----

1
----- End of picture text -----

• Average household wealth at retirement $680,000 (excluding family home)

• Age pension subject to assets and income tests

• 2.6m Australians receiving some age pension support

• Portion of retirees on full age pension expected to reduce from 42% to 30% over next 5 years, however

• number of retirees receiving support increasing

• Government age pension cost increasing

• Super system increasingly supplementing or substituting age pension

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Portion of retirees reliant on age pension 2
30%
44% 44%
30%
22%
29%
Fully
Fully Fully self self
self sufficient sufficient
sufficient 34% 40%
27%
2010 2020 2025
Actual Actual Forecast
----- End of picture text -----

Full rate Government age pension Part rate Government age pension No Government age pension

FY21 – 30 June 2021

1. Australian Bureau of Statistics. Includes superannuation and non-superannuation assets.

2. Source – 2010 and 2020 Actual: Australian Government Department of Social Services and Department of Veteran Affairs; 2025 Forecast: The Association of Superannuation Funds of Australia (ASFA) projection.

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43

Retirement phase overview

Overview of age pension system

Social safety net for those unable to support themselves

• Qualification age 66.5 (increasing to 671)

• Age pension based on lower outcome under assets and income tests

• Many retirees move from assets to income test through retirement

• Different age pension outcomes when products held in combination (e.g. Lifetime Annuity with an ABP2)

Maximum age pension rates 2	Per fortnight Per annum
	Single $952.70 $24,770
	Couple $1,436.20 $37,341
Assets test 4	Income test
Asset limits before pension starts to reduce	Income limits before pension starts to reduce (p.a.)
Homeowner Non-homeowner
Single $270,500 $487,000	Single $4,680
Couple $405,000 $621,500	Couple $8,320
Taper rate – age pension reduces by $78 (p.a.) per $1,000 of assets above these thresholds	Taper rate – age pension reduces by $500 (p.a.) per $1,000 of income above these thresholds
Asset limit where pension reduces to nil	Income limit where pension reduces to nil (p.a.)
Homeowner Non-homeowner
Single $588,250 $804,750	Single $54,220
Couple $884,000 $1,100,500	Couple $83,002

FY21 – 30 June 2021

1. Age Pension eligibility age increasing to age 67 on 1 July 2023.

2. Centrelink rates and thresholds current as at 1 July 2021.

3. Account Based Pension (ABP).

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1. Assets test excludes the family home.

44

Retirement income regulatory reforms

Government enhancing post-retirement phase New means test rules for lifetime income products commenced 1 July 2019

Pension assets test

Example - $100,000 lifetime income stream purchase price at age 65

Pension income test

Example - $100,000 lifetime income stream paying $7,000 per year

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----- Start of picture text -----

100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
656667686970717273747576777879808182838485868788899084 85
Age
Prior assets test Assets test (from 1 July 2019)
Asset amortises down Asset value fixed at 60% until age
evenly over life expectancy 84 then fixed at 30% for life
Purchase price
----- End of picture text -----

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----- Start of picture text -----

7,500
7,000 Annual payment
6,500 ($7,000)
6,000
5,500
Annual deduction
5,000
4,500 amount ($5,000)
4,000 Assessable
3,500 income $4,200
3,000 (60% of $7,000)
2,500
2,000 Assessable
1,500 income $2,000
1,000 ($7,000 - $5,000)
500
0
6566676869707172737475767778798081828384858687888990
Age
Prior income test Income test (from 1 July 2019)
Includes payment less Includes 60% of
annual deduction amount payment as income
Annual income
----- End of picture text -----

FY21 – 30 June 2021

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45

Retirement income strategies

Retirement income strategies – combined products Enhances income and provides longevity and inflation protection

Case study

Jenny and John

• Homeowning couple

• (in addition to family home)

• 66 years old

• Approaching retirement

• Target income $62,000 p.a.

• 1

• • Status quo 100% ABP

• Combined product

• 1

• • 70% ABP ; and

• 2

• • 30% Lifetime Annuity

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FY21 – 30 June 2021

1. Account Based Pension (ABP).

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1. Applying means test rules for lifetime income products that took effect from 1 July 2019.

46

Retirement income strategies

Retirement income strategies – combined products Enhances income and provides longevity and inflation protection

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----- Start of picture text -----

Case study – Jenny and John
Combined product
100% Account Based Pension (ABP)
(70% Account Based Pension; 30% Lifetime Annuity)
----- End of picture text -----

• Provides $62k p.a. until age 91 then $37k p.a. thereafter

• 50% chance one is alive at age 94

• Provides $62k p.a. until age 94 then $44k p.a. thereafter

• Income at least as good as 100% ABP – better the longer you live

FY21 – 30 June 2021

Assumptions – 1. Applying means test rules for lifetime income products that took effect from 1 July 2019; 2. 66 year old couple, homeowners, $300,000 each in super ($600,000 combined) drawing $62,000 per annum; 3. Account Based Pension assumptions – Growth 5.3%, Defensive 1.60% (net of fees); 4. Lifetime Annuity – Flexible income option, CPI indexation, monthly payments. Portfolio allocation of 50% growth / 50% defensive; 5. Challenger annuity pricing as at July 2021; 6. Centrelink rates and thresholds as at 1 July 2021.

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47

Retirement income strategies

Retirement income strategies – combined products Enhances income and provides longevity and inflation protection

Combined product Combined product (70% Account Based Pension; 30% Lifetime Annuity) (70% Account Based Pension; 30% Lifetime Annuity)

Income from combined product enhanced through

1. mortality credits

2. interaction with age pension

3. growth assets left to grow

4. likely annuity outperformance against defensive alternatives

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• Provides $62k p.a. until age 94 then $44k p.a. thereafter

• Income at least as good as 100% ABP – better the longer you live

FY21 – 30 June 2021

Assumptions – 1. Applying means test rules for lifetime income products that took effect from 1 July 2019; 2. 66 year old couple, homeowners, $300,000 each in super ($600,000 combined) drawing $62,000 per annum; 3. Account Based Pension assumptions – Growth 5.3%, Defensive 1.60% (net of fees); 4. Lifetime Annuity – Flexible income option, CPI indexation, monthly payments. Portfolio allocation of 50% growth / 50% defensive; 5. Challenger annuity pricing as at July 2021; 6. Centrelink rates and thresholds as at 1 July 2021.

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48

MS&AD MS Primary

MS&AD strategic relationship

Diversifying and increasing access to Japanese market

Strategic relationship with MS&AD Group

• Increases access to Japanese market through MS&AD

• Opportunities for both Challenger and MS&AD

• Broadens Challenger’s existing Japanese footprint

Equity placement to MS&AD

• $500m or 6.3% of issued capital (August 2017)

• 1

• • Shareholding subsequently increased to ~15% via market

• Representative joined Challenger Board

• MS&AD remain committed to its strategic relationship and being a major Challenger shareholder2

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----- Start of picture text -----

1 Japanese general insurer
#1 market share
2 Japanese life insurer
#9 market share
major foreign currency annuity provider
3 International operations
operations in 49 countries
#1 ASEAN general insurer
----- End of picture text -----

FY21 – 30 June 2021

1. Shareholding as at 30 June 2021.

2. MS&AD reserves the right to change its intentions and to acquire, dispose and vote Challenger shares as it sees fit.

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49

MS&AD MS Primary

MS Primary annuity relationship

Diversifying and increasing access to Japanese market

MS Primary

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• MS&AD subsidiary

• leading provider of foreign currency life products

• extensive distribution footprint via bancassurance channel

MS Primary annuity relationship

• Reinsurance agreements with MS Primary covering A$ and US$ 20 year term annuity, and A$ lifetime annuity

• A$ reinsurance commenced November 2016

1

• Expanded reinsurance to include US$ term annuity

• commenced 1 July 2019

• at least ¥50 billion (~A$600 million) in total A$ and US$ sales per year for minimum of five years2

• provides reliable and diversified sales contribution

Product overview

Term annuities – A$ and US$

• Australian and US dollar single premium product

• Whole-of-life product with annuity payment period of 3, 5, 7, 10, 15 or 20 years plus benefit payable on death

• Product provides insurance (whole-of-life) – provided by MS Primary at end of 20 year fixed annuity term

• Challenger providing fixed rate amortising annuity – MS Primary assumes residual policy value at end of 20 year period

Lifetime annuity

• Australian dollar single premium product

• An immediate lifetime annuity delivering fixed annuity payments for life

• A minimum guaranteed benefit of 80% or 100% of the single premium sum repayable via the annuity stream or as a death benefit upon early death

FY21 – 30 June 2021

1. Challenger Life has entered into an agreement with MS Primary to commence reinsuring the US dollar version of the 20-year term product. Challenger will provide a guaranteed interest rate and assume the investment risk in relation to those policies issued by MS Primary and reinsured by Challenger.

2. Subject to review in the event of a material adverse change for either MS Primary or Challenger Life. A$ amount based on 30 June 2021 exchange rate.

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50

Life product overview

Life product overview Providing customers with guaranteed income

Fixed term	Long term (including lifetime)	Other
36% of total book Provides regular guaranteed payments for a fixed rate, fixed term Average policy size 1~$200,000 Guaranteed Annuity • Guaranteed rate • Payment frequency options • Inflation protection options • Ability to draw capital as part of regular payment • Tax free income 3	43% of total book Provides guaranteed regular payments for life Average policy size 1,2~$120,000 Liquid Lifetime • Inflation protection options • Liquidity options • Tax free income 3 CarePlus • Designed for aged care • Up to 100% death benefit MS Primary(refer page 50)	21% of total book Institutional product providing guaranteed fixed income returns Challenger Index Plus Fund • Institutional product providing guaranteed excess return above a chosen index. Index Plus is available on traditional indices and customised indices

FY21 – 30 June 2021

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1. Average FY21 annuity policy size.

2. Average policy size for Liquid Lifetime and excludes CarePlus and MS Primary.

3. If bought with superannuation money and in retirement phase.

51

Challenger brand and adviser ratings

Clear leader in retirement incomes

Challenger rated #1 in overall adviser satisfaction Excellent customer experience driving advocacy and strong satisfaction

Brand strength: Leaders in Retirement Income 1

Customer experience 3

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----- Start of picture text -----

100%
95% 95%
93% 93% 92%
89% 90%
80% 85%
60%
2011 2013 2015 2017 2018 2019 2020 May
2021
----- End of picture text -----

35% Net Promoter Score (%)4 91% Overall satisfaction with Challenger

• 60% Better experience than other financial institutions

Challenger adviser satisfaction 2

Challenger ranked #12

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----- Start of picture text -----

10.0
8.0
6.0
4.0
2.0
0.0
BDM Support Technical IT / Web Adviser Image and Overall
Support Functionality Contact Reputation Adviser
Centre Satisfaction
2020 Survey average
----- End of picture text -----

• BDM Support (9[th] consecutive year)

• Technical Services (5[th] consecutive year)

• IT / Web Functionality (4[th] consecutive year)

• Adviser Contact Centre (5[th] consecutive year)

• Image and Reputation (5[th] consecutive year)

• Overall Adviser Satisfaction (5[th] consecutive year)

FY21 – 30 June 2021

1. Marketing Pulse Adviser Study May 2021 (2011 to May 2021).

2. 2020 Challenger annuities service level analysis conducted by Wealth Insights and compared to the broader Australian funds management market. 3. Fifth Quadrant, February 2021.

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1. Net Promotor Score (NPS) amongst current customers is calculated by subtracting the percentage of detractors from promoters.

52

Challenger brand and adviser ratings

Customer brand journey Evolution of brand and target audience

TOTAL BRAND AWARENESS

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----- Start of picture text -----

62% 66% 59% 61% 64%
55% 62%
53%
2019 campaign shifted focus
PRE-RETIREES RETIREES
13% to older audience (65-74)
(aged 55-64) (aged 65-74) with building brand familiarity
and education a priority
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----- Start of picture text -----

2011
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----- Start of picture text -----

2013 2016 2019
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Real Stories

Retirement on Paper

Lifestyle Expectancy

Look Forwardwith Confidence

Focus of 2011 campaign was to increase brand awareness amongst 55-64 year olds

Focus of 2013 campaign was to increase brand awareness amongst 55-64 & 65-74 year olds

Focus of 2016 campaign was to increase brand awareness & brand familiarity amongst 55-64 year olds (pre-retiree target)

Focus of 2019/20/21 campaign was to increase brand awareness, brand familiarity and education amongst 65-74 year olds (retiree target)

FY21 – 30 June 2021

Source: Customer – Newspoll Consumer Study (2011) – different question & methodology used prior to 2013. Customer – Hall & Partners Consumer Study (2013 to 2021) – people aged 55 to 64 years old and 65 to 74 years old.

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53

Life sales and AUM

Life

Diversified distribution driving sales and AUM growth

Total Life sales ($m) 10% 5-year CAGR

Life AUM ($m) 9% CAGR

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----- Start of picture text -----

6,928
5,556
5,151
4,952
4,550
4,350
FY16 FY17 FY18 FY19 FY20 FY21
Annuity sales Other Life sales
----- End of picture text -----

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----- Start of picture text -----

21,563
19,010
18,085 18,303
15,677
14,112
FY16 FY17 FY18 FY19 FY20 FY21
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FY21 – 30 June 2021

54

Life asset allocation and portfolio overview

Asset allocation framework

Consistently applied with strong risk management

Risk management

• Fundamental principle – assets and liabilities cash flow matched

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----- Start of picture text -----

and liabilities cash flow matched Asset and •
Strong governance framework
• liability
Managed by dedicated team •
Risk management entrenched
matching
•
Liability maturity profile drives in corporate culture
(ALM)
asset tenor •
Minimise unwanted risks such
as interest rate, currency and
Risk inflation risks
management
• Investment returns Capital •
Relative Manage asset allocation to
considered relative to &
value capital and ROE targets
base swap rates ROE
•
Investment decisions based
•
Illiquidity premium
on risk-adjusted returns
----- End of picture text -----

• Illiquidity premium contributes to relative value

FY21 – 30 June 2021

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55

Life asset allocation and portfolio overview

Life investment portfolio

High quality portfolio providing reliable income

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----- Start of picture text -----

Life investment portfolio1 Life investment portfolio – asset allocation
Asset classes revised to reflect
Absolute Return General Insurance repositioned portfolio2
Life Insurance 100%
Infrastructure
80%
Low beta
Equity beta
60%
Offshore & other 3% [5%]
property
16%
40%
Australian
property $21.6bn
20%
76% Investment
grade
fixed income
Non-investment FY16 FY17 FY18 FY19 FY20 FY21
grade
fixed income Fixed income (investment grade)
Fixed income (sub investment grade)
Fixed income and cash
Property
Property Equity & infrastructure
Equity & infrastructure Alternatives
Alternatives Equity & other (pre-1 July 2020)
Infrastructure (pre-1 July 2020)
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FY21 – 30 June 2021

1. As at 30 June 2021.

2. In FY21 (from 1 July 2020), Life's investment portfolio categories were amended to more accurately reflect changes in portfolio composition. The equities and infrastructure categories were combined (~3% of Life's investment assets), and absolute return funds and insurance related investments were reclassified from equities to alternatives (~5% of Life's investment assets) as both are relatively uncorrelated to equity market returns. FY20/FY19 have been restated based on this reclassification for comparability.

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56

Life asset allocation and portfolio overview

Fixed income portfolio 1 Represents 76% of portfolio with 79% investment grade

Fixed income portfolio by asset class[1]

Fixed income portfolio by sector[1]

Fixed income portfolio by geography[1]

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Non-IG
Corporate Credit Infrastructure Other New Rest of
14% Liquids and utilities 1% Europe Zealand World
8% 10% 6% 3% 1%
Industrials
Non-IG Asset Commercial and United Kingdom
SecuritiesBacked 21% property6% consumers40% 5%
7%
Government
$16.4bn 3% $16.4bn $16.4bn
United
States
IG Corporate Credit 79% IG Asset Backed financials & Banks, 18% Australia67%
Securities
27% insurance
44%
14% Residential
property
26%
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Investment grade Sub investment grade

FY21 – 30 June 2021

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1. As at 30 June 2021.

57

Life asset allocation and portfolio overview

Property portfolio

Represents 16% of portfolio All direct properties independently valued in June 2021

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Property portfolio 1
Japanese retail
10%
Other
3%
10%
Australian $3.5bn
retail
21% Cap rate 5.5%
WALE 5.7y [2]
Australian
office
90% 60%
Australian
industrial
6%
Australian property
Offshore property
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Australian office 60%; industrial 6%

• 11 office assets; 3 industrial assets

• Average cap rate 5.3% (office) & 5.4% (industrial);

• • WALE2 5.4 years

• 50% of office rent from Government

Australian retail 21%

• 8 grocery anchored convenience based shopping centres

• Average cap rate 6.5%; WALE2 4.6 years

• ~50% of rental income from supermarkets, major banks, discount department stores and essential services

Japan retail & retail logistics 10%

• 19 predominantly grocery anchored neighbourhood centres

• 1 retail logistics facility

• Average cap rate 5.0%; WALE2 9.4 years

• 50% of rental income from supermarkets and pharmacies

FY21 – 30 June 2021

1. Property portfolio as at 30 June 2021. Cap rates based on independent valuations undertaken in June 2021 (excluding County Court with its carrying value determined by references to the proposed sale agreement rather than the capitalisation of net market income).

2. Weighted Average Lease Expiry as at 30 June 2021. Assume tenants do not terminate leases prior to expiry of specified lease terms.

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58

Life asset allocation and portfolio overview

Life investment portfolio

Equity and infrastructure 3% of portfolio; Alternatives 5% of portfolio

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Equity and infrastructure portfolio 1 Alternatives portfolio 1
Other United Kingdom
6% 10%
Europe
13%
Australia 9%
27% 22% 36%
Europe 15%
22%
United Kingdom
9% $0.6bn $1.1bn
76% United States
68%
51%
United States
36%
Absolute return funds
Equity beta
General insurance
Low Beta
Life insurance
Infrastructure
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FY21 – 30 June 2021

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1. As at 30 June 2021.

59

Life normalised profit framework

Normalised profit framework Reflects underlying performance of Life business

Investment Experience

Asset and policyholder liability valuation movements plus net new business strain

Asset and policy liability experience Difference between expected capital growth1 for each asset class compared to actual investment returns

Includes impact of changes in macroeconomic variables2 on the valuation of Life’s liabilities

New business strain

New business strain is a non-cash accounting adjustment recognised when annuity rates on new business are higher than the discount rate (risk free rate plus an illiquidity premium3) used to fair value annuities. New business strain unwinds over the annuity contract

Cumulative Investment Experience (pre-tax) ($m)

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200
-
(200)
(400)
(600)
(800)
(1,000)
(1,200)
(1,400)
(1,600)
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Asset and policy liability experience
New business strain
Cumulative total Investment Experience
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	FY20 normalised assumptions p.a. 1	FY20	FY21
	Fixed income (allowance for credit default)	-35 bps	-35 bps
	Property	2.0%	2.0%
	Infrastructure	4.0%	n/a
	Equities and other	3.5%	n/a
	Equity and infrastructure (from 1 July 2020)	n/a	4.0%
	Alternatives (from 1 July 2020)	n/a	0.0%

FY21 – 30 June 2021

1. Based on normalised assumptions. Normalised profit framework and a reconciliation to statutory net profit after tax is disclosed in the 2021 Annual Report - Operating and Financial Review section 8. Normalised growth assumptions have been updated in FY21 for category changes and to ensure they reflect both the nature of the investments and long-term expected investment returns.

2. Macroeconomic variables include changes to bond yields, inflation factors, expense assumptions and other factors.

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1. Annuities are fair valued using a risk-free discount rate, based on the Australian Commonwealth Government bond curve plus an illiquidity premium.

60

Life asset and liability matching

Asset and liability matching Unwanted risks mitigated with assets and liabilities cash flow matched

• Assets deliver contracted cash flows to match liability flows

• Risk appetite seeks to minimise duration mismatch

• Asset and liability matching impacts asset allocation

Minimise exposure to

• •

• Foreign exchange risk Liquidity risk

• • Interest rate risk • Licence risk • Inflation risk • Operational risk

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Asset and liability cash flow matching ($m)1
10,000
8,000
6,000
4,000
2,000
0
<= 1year 1-3 years 3-5 years 5-15 years +15 years
Liability flows Asset Flows Non-debt realisations
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FY21 – 30 June 2021

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1. As at 30 June 2021.

61

Funds Management sales and FUM

Funds Management

Strong FUM growth track record

• Fidante Partners

• growing multiple boutique platform

• located in Australia, UK, Japan and Singapore

• asset class diversification

• CIP Asset Management

• proven track record in asset origination

• strong investment performance

• growing 3[rd] party credit and property offerings

Funds Under Management (FUM) ($bn) 13 % CAGR

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105.8
20.9
81.4
78.0 79.0
66.9
19.0
18.4 20.1
56.7
15.9
13.7
84.9
59.6 58.9 62.4
51.0
43.0
FY16 FY17 FY18 FY19 FY20 FY21
Fidante Partners CIP Asset Management
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FY21 – 30 June 2021

62

$106bn FUM

$5bn Property $7bn Alternatives

$37bn Equities

Fixed Income

$57bn

Funds Management Laying foundations to support future growth

Markets contribution FUM CAGR growth rates Fixed Income: +20% Equities +20% Alternatives (incl. Property) +6% Net flows contribution Pre FY09 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 Credit Income Fund Multi-Sector Private Private Lending Lending Fund Opportunities Fund

BUILD high active boutique managers

PARTNER with best-inclass capability

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FY21 – 30 June 2021

1. In July 2015 Kapstream was sold and $5.4bn of institutional FUM was derecognised. Fidante Partners continues to distribute Kapstream products to retail clients.

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6363

Funds Management managers

Funds Management – multiple brands and strategies Scalable and diversified ~$106bn of FUM

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Equities $37.4bn1
Multiple brands &
strategies
Alternatives $11.5bn1 Fixed Income $56.9bn1
FY21 – 30 June 2021
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1. Funds Under Management (FUM) as at 30 June 2021.

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64

Fidante Partners model & performance

Fidante Partners

Contemporary model with strong alignment of interests

Administration services

• Investment operations

• Client operations

• Risk and compliance

• IT infrastructure

• Finance

• Human Resources

• Company Secretarial

• Facilities

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Investment
Management
$85bn1
Co –
investment
with Life
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Distribution services

• Asset consultant & research

• Strategic positioning

• Product development

• Brand & marketing

• Sales planning & execution

• Investor relationships

• Client services

• Responsible Entity (RE)

Partnership

• Equity participation and revenue share (Fidante non-controlling interest)

• Business planning, budgeting, strategic development, succession planning

FY21 – 30 June 2021

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1. As at 30 June 2021.

65

Fidante Partners model & performance

Fidante Partners investment performance Strong performance underpinning FUM growth

Fidante Partners percentage of funds 1[st] or 2[nd] quartile 1

Fidante Partners performance relative to benchmark2

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21%
25%
25% 21%
13%
20% 63%
50%
42% 42% 44%
20%
1 Year 3 Years 5 Years 7 years 10 Years Since
inception
1st quartile 2nd quartile
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Since
91%
inception
5 Year 96%
3 years 92%
0% 20% 40% 60% 80% 100%
% of FUM outperforming benchmark
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FY21 – 30 June 2021

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1. Source: Mercer as at 30 June 2021.

2. Fidante Partners Australian boutiques as at 30 June 2021.

66

Fidante Partners manager capacity

Funds Management

Growth supported by available capacity

Manager capacity ($bn)

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40
35
30
25
20
15
10
5
0
Fixed
Equity Income Alternatives
Managers Managers
Managers
Available capacity
FUM
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6.0
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
-2.0
-3.0
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Quarterly net flows vs peers 1 ($bn)

• ~$140bn of available capacity

• Capacity provides platform for growth

Fidante Partners Peer average

FY21 – 30 June 2021

1. Quarterly net flows for peers, including AMP Capital Investors, Magellan, Pendal, Pacific Current Group, Perpetual, Platinum and Pinnacle. June 2021 peer net flows includes only those that have reported June 2021 data by 3 August 2021.

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67

CIP Asset Management

CIP Asset Management

Proven long-term investment track record and capability

• 1

• • $21 billion of FUM

• Investment manager for Challenger Life and third party institutions

• Clients benefit from experience and market insights through breadth and scale of mandates

• Trusted partner Asset specialisation Institutional clients

• • Local relationships • Sovereign wealth funds • Asset origination capability Property 22% • Government bodies • Proven track record • Australian superannuation funds Fixed

• • Strong execution income • International funds • Risk management expertise 78% • International insurance companies • Excellent client service • Pension funds • • Strong compliance culture Large family offices • Manage ~78% of Life’s portfolio

FY21 – 30 June 2021

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1. As at 30 June 2021.

68

Important note

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The material in this presentation is general background information about Challenger Limited group’s activities and is This document may contain certain ‘forward-looking statements’. The words ‘forecast’, ‘expect’, ‘guidance’, ‘intend’,
current at the date of this presentation. It is information given in summary form and does not purport to be complete. It ‘will’ and other similar expressions are intended to identify forward-looking statements. Forecasts or indications of,
is not intended to be relied upon as advice to investors or potential investors and does not take into account the and guidance on, future earnings and financial position and performance are also forward-looking statements. You
investment objectives, financial situation or needs of any particular investor. These should be considered with are cautioned not to place undue reliance on forward looking statements. While due care and attention has been
professional advice when deciding if an investment is appropriate. used in the preparation of forward-looking statements, forward-looking statements, opinions and estimates provided
in this announcement are based on assumptions and contingencies which are subject to change without notice, as
Challenger also provides statutory reporting as prescribed under the Corporations Act 2001. The 2021 Annual are statements about market and industry trends, which are based on interpretations of current market conditions.
Report is available from Challenger’s website at www.challenger.com.au. This presentation is not audited. The Forward-looking statements including projections, guidance on future earnings and estimates are provided as a
statutory net profit after tax is audited has been prepared in accordance with Australian Accounting Standards and general guide only and should not be relied upon as an indication or guarantee of future performance and may
the Corporations Act 2001. Challenger’s external auditors, Ernst & Young, have reviewed the statutory net profit after involve known and unknown risks, uncertainties and other factors, many of which are outside the control of
tax. Normalised net profit after tax has been prepared in accordance with a normalised profit framework. The Challenger. Actual results, performance or achievements may vary materially from any forward-looking statements
normalised profit framework has been disclosed in the Operating and Financial Review section of the Directors’ and the assumptions on which statements are based. Challenger disclaims any intent or obligation to update publicly
Report in the Challenger Limited 2021 Annual Report. The normalised profit after tax has been subject to a review any forward-looking statements, whether as a result of new information, future events or results or otherwise.
performed by Ernst & Young. Any additional financial information in this presentation which is not included in
Challenger Limited 2021 Annual Report was not subject to independent review by Ernst & Young. Past performance is not an indication of future performance.
While Challenger has sought to ensure that information is accurate by undertaking a review process, it makes no
representation or warranty as to the accuracy or completeness of any information or statement in this document.
Unless otherwise indicated, all numerical comparisons are to the prior corresponding period.
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FY21 – 30 June 2021