Challenger Financial Services Group Limited ABN 85 106 842 371

Sydney

Level 41, Aurora Place 88 Phillip Street Sydney NSW 2000 Australia www.challenger.com.au

telephone: 02 9994 7000 facsimile: 02 9994 7777

24 February 2004

The Manager Company Announcement Platform Australian Stock Exchange Limited 20 Bridge St SYDNEY NSW 2000

Dear Sir / Madam,

Please find attached Appendix 3B for the issue of ordinary shares to initial participants of the long term incentive plan (LTIP).

Challenger's Board established the LTIP to align the remuneration of executives to the long term performance of Challenger's shareholders as outlined to the market in November 2003 and approved by shareholders in December 2003.

Further details of the LTIP can be found in Disclosure Document and Notice of Meeting available on Challenger's website at www.challenger.com.au.

Yours faithfully

S J Nelson Company Secretary

attach

Melbourne

Brishane

Level 41, 101 Collins Street Melbourne VIC 3000 $b = 0386161000$ facsimile 03 8616 1111

Level 9, 175 Eagle Street Brisbane QLD 4000 felephone 07 3218 8000
facsimile 07 3220 3132

Perth

Level 2, 141 St Georges Terrace. Perth VVA 6000 telephone 08 9480 2800 facsimile 08 9322 9289

Adelaíde

Level 9, T & G Building 82 King Street Adelaide SA 5000 telephone 08 8211 7777 facsimile 08 8212 1661

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX's property and may be made public.

Introduced 1/7/96. Origin: Appendix 5. Amended 1/7/98, 1/9/99, 1/7/2000, 30/9/2001, 11/3/2002, 1/1/2003.

Name of entity

CHALLENGER FINANCIAL SERVICES GROUP LIMITED

ABN

85 106 842 371

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

$\mathbf{1}$ ⁺Class of ⁺securities issued or to be $\lceil$ issued

ORDINARY

• $\mathcal{D}$ Number of ⁺securities issued or to be issued (if known) or maximum number which may be issued
• $\overline{3}$ Principal terms of the ⁺securities (eg, if options, exercise price and date; if partly paid expiry *securities, the amount outstanding and due dates for payment; if securities, *convertible the conversion price and dates for conversion)

155,400,000

Fully paid ordinary shares

⁺ See chapter 19 for defined terms.

⁺ See chapter 19 for defined terms.

$\overline{Q}$ Number and *class of all *securities not quoted on ASX (including the securities in clause 2 if applicable)

$10₁₀$ Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)

Unaltered

Part 2 - Bonus issue or pro rata issue

$11$ $Is$ security holder approval required? $12¹²$ Is the issue renounceable or nonrenounceable? Ratio in which the "securities will 13 be offered $14$ *Class of *securities to which the offer relates $15$ *Record date determine to entitlements Will holdings on different registers 16 (or subregisters) be aggregated for calculating entitlements? $17$ Policy for deciding entitlements in relation to fractions 18 Names of countries in which the entity has *security holders who will not be sent new issue documents Note: Security holders must be told how their entitlements are to be dealt with. Cross reference: rule 7.7. 19 Closing date for receipt of

acceptances or renunciations

$+$ See chapter 19 for defined terms.

Appendix 3B New issue announcement

⁺ See chapter 19 for defined terms.

32 How do *security holders dispose of their entitlements (except by sale through a broker)?

33 ⁺Despatch date

Part 3 - Ouotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of securities (tick one)
• Securities described in Part 1 $(a)$
• $(b)$ All other securities Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

• If the *securities are *equity securities, the names of the 20 largest holders of the additional "securities, and the number and percentage of additional "securities held by those holders
• If the *securities are *equity securities, a distribution schedule of the additional 36 *securities setting out the number of holders in the categories $1 - 1.000$ $1,001 - 5,000$ 5,001 - 10,000 $10,001 - 100,000$ 100,001 and over
• 37

35

A copy of any trust deed for the additional *securities

⁺ See chapter 19 for defined terms.

Entities that have ticked box 34(b)

• Number of securities for which 38 *quotation is sought
• Class of "securities for which 39 quotation is sought
• 40 Do the *securities rank equally in all respects from the date of allotment with an existing "class of quoted *securities?

If the additional securities do not rank equally, please state:

• $\bullet$ the date from which they do
• the extent to which they participate for the next dividend. (in the case of a trust, distribution) or interest payment
• the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment
• 41 Reason for request for quotation now

Example: In the case of restricted securities, end of restriction period

(if issued upon conversion of another security, clearly identify that other security)

Number and *class of all *securities 42 quoted on ASX (including the securities in clause 38)

Ouotation agreement

• $\mathbf{1}$ *Quotation of our additional *securities is in ASX's absolute discretion. ASX may quote the *securities on any conditions it decides.
• $\overline{2}$ We warrant the following to ASX.
• The issue of the *securities to be quoted complies with the law and is not for $\bullet$ an illegal purpose.
• There is no reason why those *securities should not be granted *quotation.
• An offer of the "securities for sale within 12 months after their issue will not require disclosure under section $707(3)$ or section $1012C(6)$ of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any *securities to be quoted and that no-one has any right to return any *securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the *securities be quoted.
• We warrant that if confirmation is required under section 1017F of the Corporations Act in relation to the *securities to be quoted, it has been provided at the time that we request that the "securities be quoted.
• If we are a trust, we warrant that no person has the right to return the $\bullet$ *securities to be quoted under section 1019B of the Corporations Act at the time that we request that the *securities be quoted.
• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.
• We give ASX the information and documents required by this form. If any $\overline{4}$ information or document not available now, will give it to ASX before *quotation of the *securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

________

⁺ See chapter 19 for defined terms.