02 February 2004

Challenger Financial Services Group Limited ACN 100 842 371

Sydney

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

felephone 02 9994 7000 facsimile 02 9994 7777

The Manager Company Announcement Platform Australian Stock Exchange Limited 29 Bridge St SYDNEY NSW 2000

Dear Sir/Madam,

Re: Interstar's European Debut

Attached is an announcement regarding Interstar Securities.

Yours faithfully

Stuart Nelson Company Secretary

Melbourne

Brisbane

Level 41, 101 Collins Street Melbourne VIC 3000 (elephone 03 8618 1000 facsimile 03 8616 1111

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

Perth

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

Adelaide

Level 9, T & G Building 82 King Street Adelaide SA 5000 telephone 08 8211 7777 facsimile 06 6212 1661

MARKET RELEASE

2 February 2004

INTERSTAR's EUROPEAN DEBUT: LARGEST RMBS ISSUE BY AUSTRALIAN ISSUER

2 February 2004, Sydney - Diversified financial services company Challenger Financial Services Group Limited (Challenger - ASX:CGF), today announced its wholly-owned wholesale mortgage finance business, Interstar Securities, had successfully launched the largest Euro denominated RMBS issue by an Australian issuer.

The \$E1.05bn 3 tranche mortgage backed FRN issue launched by Barclays Capital & JP Morgan on behalf of Interstar in London late last week, was a debut for Interstar Securities in the European market. The deal has eclipsed the previous largest RMBS issuance by more than \$E400 million.

The deal is substantially larger than recent RMBS issues by Interstar.

Brian Benari, Challenger's General Manager, Mortgage Financing said the Group was delighted with the level of take-up which resulted in the deal being heavily oversubscribed. "We are really pleased with the level of interest and enhanced pricing with this deal. It has also proved successful in the introduction of a wide array of new investors."

The issue is for senior class A2 notes rated AAA by Moody's and S&P and received has more than 2 billion subscriptions.

ENDS