Challenger Limited (CGF) Earnings Call Transcript & Summary

Good morning. Thank you for joining us today for our 2026 Annual General Meeting. On behalf of the Board, I would like to acknowledge the Gadigal of the Eora Nation, the traditional custodians of the land on which we are hosting this event today, and pay my respects to the elders, both past and present. As you have just seen, Challenger has been the title sponsor of the PGA Tour of Australasia since 2023. Earlier this year, we were delighted to extend our commitment for a further 5 years. Now, turning to the business of the meeting. My name is Duncan West. I am Chair of Challenger Limited and Chair of today's meeting. It is now 9:30 a.m. I've been advised by the company secretary that a quorum is present, and I declare the meeting open. The minutes of the previous meeting of the shareholders of Challenger Limited, being the Annual General Meeting held on the 30th of October 2025, were approved by the Board and signed by me as Chair. Those minutes are tabled today for the information of shareholders. Today's meeting will be recorded, and the recording will be available to view shortly after the AGM. For those attending in-person, please ensure your mobile phone is switched to silent as a courtesy to fellow attendees. Before we begin the formal business of the meeting, I would like to introduce your Board members. Starting on my immediate left, Managing Director and Chief Executive Officer, Nick Hamilton; Non-Executive Directors, Melanie Willis, John Green, Lisa Gray, John Somerville, Heather Smith, and Dave Whittle. We also have with us our -- Louise Burns, a partner at Ernst & Young, the company's auditor. Seated in the front row are members of Challenger's executive team. Anton Kapel, Chief Executive Insurance; Damian Graham, the Group's Chief Investment Officer; Susan Looi, Chief Risk Officer; Louise Roche, Chief People Officer. We are also joined by Challenger's Company Secretary, Linda Matthews; General Counsel, Aron Rattew; and General Manager of Investor Relations, Mark Chen. There are three main parts to today's meeting. Firstly, I will provide an update on your company and the performance over the last year. I will then hand over to Nick, who will discuss Challenger's achievements and progress in executing our growth strategy. We will then move to the formal business of the meeting. Voting on each resolution will be conducted by poll. For those attending in-person, voting may be completed using your smartphone or the voting card you received on arrival. For those attending online, voting will take place through the online meeting portal. I will now explain the procedures for asking questions and voting. We will be opening the floor to questions on our business and the resolutions to be considered later in today's meeting. For those attending in-person who wish to ask a question, please approach the microphone when invited to do so. Participating in the AGM, asking a question online, for those attending online, questions may be submitted at any time during the meeting. You do not need to wait until the relevant item of business is being considered, and we encourage you to submit your questions as early as possible. Shareholders and appointed proxies may submit questions either in writing or verbally. To submit a question, select the Q&A icon on your screen. And then, secondly, type your question into the chat box at the bottom of the screen and press send. To ask a verbal question, please follow the instructions on the meeting online platform. Please keep your questions relevant to the business of the meeting and the resolutions being considered today. Questions submitted through the online meeting platform will be moderated to avoid duplication and where necessary, may be summarized in the interest of time. For those attending in-person and entitled to vote, you can scan the QR code on your blue attendance card using your mobile device at any time. This will take you to a terms and conditions page, and once accepted, to the online voting page. For those participating online and entitled to vote, you can select the vote icon, and the voting options will appear on your screen. To cast your vote using either a mobile device or the online platform, simply select your preferred option for each item of business. There is no need to press submit as your vote is automatically recorded, and a vote confirmation notification will appear on your screen. If you change your mind, simply select another option. Your previous vote will be canceled and your latest selection will be counted. For those attending in-person who do not have a mobile device, you may complete the voting section on the reverse side of your blue attendance card. Members of the Computershare team will collect these before voting closes at the end of the meeting. I appreciate that some shareholders may not be able to stay for the entire meeting, so I now declare the poll open. This means you may vote on all items of business at any time until I declare the poll closed at the conclusion of the meeting. I will provide a reminder before voting closes. The results of all items of business will be announced to the Australian Securities Exchange as soon as possible following the meeting. Further details of each item of business are set out in the Notice of Meeting. The Board recommends that shareholders vote in favor of resolutions 2 to 4 and 6. The Board has not provided a recommendation on Resolution 5, given it involves remuneration of the non-executive directors. For those joining online, if you experience any technical difficulties, the helpline number is displayed on the log-in page of the online meeting platform. At the conclusion of the meeting, I invite those attending in-person to join the directors and executive team for refreshments. With that, administration out the way, let me turn now to my Chair's address. This morning, I want to reflect on Challenger's progress over the past year, the important transition that is taking place in Australia's retirement system and the priorities that continue to be the focus of your Board. This has been an important year for Challenger. After decades focused primarily on helping Australians accumulate superannuation, attention has rightly shifted to the next challenge, helping people convert those savings into reliable income to allow them to approach retirement with greater confidence. Policy and regulatory reform are beginning to reshape this landscape. The retirement needs of Australians have moved to center stage. Access to advice is positively evolving and the range of retirement income solutions available to customers is now expanding. Retirement has always been at the core of Challenger. That's clearly reflected in our purpose, to provide customers with financial security for a better retirement. The Board has confidence that Challenger is instrumental to this next phase of Australia's retirement system and will benefit from the long-term demand created by aging populations in Australia and across Asia. It's not a surprise, therefore, our business has attracted the interest of others. I will address the nonbinding indicative offer received by -- from TAL Dai-ichi Life Australia on the 16th of October in a moment. But suffice it to say, the interest in our business is a reflection of our unique strategic position, consistent performance and growth trajectory. Turning now to Challenger's financial performance in FY '26, which reflects the successful execution of the strategy. Normalized earnings per share increased 3% to $0.681 per share and normalized net profit after tax increased to $468 million, supported by higher earnings growth across the group and record annuity sales. Strength in Challenger's capital position was maintained with over $1.1 billion in excess capital, giving us the right capital flexibility and enabling us to support ongoing growth. Challenger's financial strength and the Board's confidence in the outlook enabled us to increase the ordinary dividend and provide additional returns to shareholders. For the 2026 financial year, the Board determined a fully franked ordinary dividend of $0.315 per share, up 7% on the previous year. We also determined a fully franked special dividend of $0.015 per share. Reflecting the strong performance, we have delivered total shareholder returns of 13.1% per annum over the past 5 years, and Challenger's 1-year share price growth in FY '26 was 28%. During the year, Challenger commenced a $150 million on-market share buyback. That program has now been completed with approximately 16 million shares purchased. On the 2nd of October, we commenced a further on-market share buyback of up to $300 million. We paused this buyback on the 19th of October following the nonbinding offer. We are committed to resuming this buyback if and when it is appropriate to do so. These actions reflect the Board's confidence in Challenger's position and outlook. They also demonstrate our commitment to delivering tangible returns to shareholders while continuing to invest for future growth. For Challenger, the results are the outcome of the disciplined delivery of our strategy. The business strengthened its position as Australia's retirement income leader, expanded the partnerships through which its capabilities can reach more Australians and continued investing in technology, people, and investment expertise that will support future growth. Nick will cover these partnerships in his speech. The Board also supported a number of strategic initiatives designed to create a more focused business and broaden Challenger's long-term opportunities. These included the proposed merger of Fidante with Channel Capital, the establishment of a new income and institutional funding solutions and the continued expansion of Challenger's offshore reinsurance capabilities that will capture the opportunity presented by aging populations across Asia. These initiatives are different in nature, but they share a common objective to position Challenger for sustainable long-term growth whilst maintaining the discipline, financial strength and risk management that underpins the promises we make to customers. The Board is pleased with strategic progress under Nick and his executive team, and we are confident that we can continue. The investments and decisions made over recent years have materially strengthened the company's position and growth trajectory. Nick will speak in more detail about the progress made during the year, but one development that particularly deserves recognition is the introduction of APRA's new capital standards for providers of longevity products. These are the most significant changes to the capital framework for longevity providers in a generation. They represent an important step in the development of Australia's retirement income system. From the Board's perspective, they mean Challenger is a significantly more resilient, sustainable and attractive business. The Board welcomes APRA's reform as an important turning point for the retirement income industry and for the role that longevity products can play in Australia's retirement system. I want to now turn to the nonbinding and conditional indicative offer we received from TAL Dai-ichi Life Australia on the 16th of October. The offer was to acquire the remaining 79.5% of ordinary shares in Challenger that TAL Dai-ichi Life does not already own by way of a scheme of arrangement at a price of $11.80 per share. The interest in Challenger reflects the strategic position we are in and the significant opportunities ahead. On Monday this week, we announced that having regard to Challenger's value and prospects, the Board has concluded the offer is not at a level we could recommend to shareholders. TAL Dai-ichi Life is Challenger's largest shareholder and an important commercial partner, and we value that relationship. Accordingly, the Board finds it appropriate to engage with TAL Dai-ichi Life to determine whether a proposal can be reached that we could recommend to shareholders. There is no certainty that a binding offer or any transaction will result, and shareholders do not need to take any action at this time. Throughout this process, the Board's responsibility is clear. We will act in the best interest of Challenger and its shareholders. As directors, we will assess the proposal against all relevant factors to ensure any decisions are based on careful, thorough and informed deliberations based on all material information, including advice from management, our legal advisers and our financial advisers. As I've noted, Challenger will keep the market informed regarding material information concerning the TAL Dai-ichi Life offer, in accordance with our continuous disclosure obligations. I also want to note that Item 3 in the business of the meeting relating to the renewal of the proportional takeover provisions is not related to the offer from TAL Dai-ichi Life. This item is an extension of an existing article in the constitution and was included in the Notice of Meeting before the offer was received. Turning now to the Board. As with any company, strong and appropriate governance is critical. A strong Board that exercises independent judgment is only more important as artificial intelligence disrupts financial services, cyber threats increase and financial markets trade unpredictably. I am standing for reelection today. If reelected, this is likely to be my final 3-year term as Chair of Challenger. That makes Board succession and renewal an important priority for me and my fellow directors. Succession planning is a fundamental responsibility of any Board. It requires the right balance between continuity and renewal, a clear understanding of the skills the company will need in the future and careful preparation for leadership transitions. We will maintain a strong focus on this work so that when the time comes, the transition is smooth, orderly and well managed. The Board and I approach that responsibility with considerable confidence. Challenger has a clear strategy, a unique strategic position, an experienced Board, a strong management team and talented people across the organization. The business is well positioned for its next phase. The work undertaken over many years has established a strong platform from which to pursue the opportunity ahead. Subject to your support, I look forward to continuing to serve Challenger shareholders during this next term and helping ensure the company is well positioned for the years beyond it. I thank my fellow directors for their judgment, commitment and contribution throughout the year. On behalf of the Board, I also thank Nick, the leadership team and all Challenger employees. This year's progress reflects the expertise, energy and commitment of Nick, the leadership team and all our people, including the work undertaken over many years to prepare Challenger for the opportunities now before us. I also thank our customers and business partners for the trust they place in Challenger. And finally, to you, our shareholders, thank you for your continued support. I will now invite Nick to address the meeting. Thank you.

Thank you, Duncan, and good morning to everyone. It's a pleasure to speak with you today to both recap the year we've had, share some of our recent key achievements and some perspectives on how I'm seeing the future for Challenger. 2026 has been a year of real momentum across our business, with strong earnings, record annuity sales and the announcement of strategic partnerships that will establish the future of how retirement income solutions are delivered for Australians. To understand where Challenger is today, it's worth looking at the work that has brought us to this point. The successes we are seeing in the business are the result of strategic investment, choices and capabilities we have built that are starting to be realized. Challenger in 2026 has started to grow into its ambition of many decades. Whilst our purpose remains core to our mission, how we achieve that is clearer and the opportunity more significant than ever before. We set a deliberate strategy in 2022 to prepare for growth in retirement. We simplified the business, strengthened the balance sheet, invested into technology, expanded our investment capabilities and built new partnerships, guided by a clear view of where we believed Australia's retirement system was heading. Pleasingly, during 2026, a lot of that work began to come together. APRA announced a new capital framework for longevity products, while new retirement and advice technology partnerships have significantly expanded our potential customer reach. We also opened new institutional funding and international reinsurance channels and continue to strengthen our asset origination capabilities. The proposed merger of Fidante with Channel Capital due to complete in the coming months was another important step that will sharpen Challenger's focus on retirement while giving Fidante the scale and opportunity to continue growing as part of a larger funds management platform. These developments have come at an important time. Australia is entering a significant demographic shift with a record number of Australians retiring and people living longer lives in retirement. The government's latest intergenerational report brings the scale of that change into focus, projecting that the number of Australians above age pension age will almost double to around 9 million during the next 40 years. As millions more Australians enter retirement, the challenge is shifting from building savings to generating reliable income with them. This is the market Challenger has been preparing for. So let me expand on some of the key points. Firstly, retirement. A significant focus for us has been making our retirement capabilities available wherever Australians seek retirement advice and guidance. During the year, we entered strategic retirement partnerships with Insignia, BT and Colonial First State. These partnerships reflect our focus on product and technology innovation as well as the work of our teams to understand what each partner needs to deliver better retirement outcomes for their customers. Through our integration with financial adviser planning tools, Iress Xplan and Informed Financial Future, advisers can, for the first time, model guaranteed lifetime income within the systems they already use. This makes it easier to incorporate lifetime income into a broader retirement strategy and helps our partners deliver retirement advice at scale. Supporting this is the work underway on our own digital transformation. In FY '26, we completed the first phase of the program, migrating the first of our products onto the new core registry, and we are now pivoting that program to deliver for our strategic retirement partnerships. Secondly, our partnership with Mitsui Sumitomo Primary Life. This year marks 10 years of our partnership. Over that time, what began as a reinsurance agreement has become a strategic relationship and generated nearly $8 billion in business for Challenger. It's a powerful example of our ability to grow our annuity reinsurance business beyond Australia. Thirdly, new capital standards, which have improved the stability of our capital as well as our ability to innovate and to grow. One of the most significant developments for Challenger during the year was APRA's new capital standards for providers of longevity products, which came into effect on 1 July. For the industry, the changes will deliver innovation and greater take-up of lifetime income products. For retirees, the changes will support a broader range of options to manage longevity risk and achieve more reliable income throughout retirement. Challenger engaged very closely in this reform over a number of years. The outcome reflects the importance of industry, government and regulators working together to address barriers that have constrained the development of Australia's retirement income market. We've also continued to broaden the ways we can fund the growth of our business with an ambition to grow assets 60% to $50 billion by 2030. Our Challenger annuity-backed notes program, also known as CABN, creates a new institutional funding channel. This program was very well received with the inaugural $750 million issuance in July of this year, well oversubscribed. We've issued a second CABN this week, which has been really positively received by investors. The CABN gives us access to a market segment we have not historically reached and provides a significant avenue to support future annuity growth. In September 2025, we also launched the first in a series of listed unsecured investment notes called LiFTS, expanding our listed products for wealth with an institutional-grade income solution. Our offshore reinsurance platform expanded through the establishment of Calix Re. With regulatory approvals now achieved in Bermuda, and AM Best financial strength rating and our experience in working with MS Primary, we now have the skills and capability to participate in selected international retirement markets over time. These initiatives broaden the markets in which we can apply the retirement, investment and risk management expertise we have built over many years. Fourthly, strengthening our investment management business. Our investment capabilities remain central to Challenger and to the long-term promises we make to our customers. During the year, we appointed a Group Chief Investment Officer and brought our investment capabilities together into one team with a continued focus on asset origination across public and private market strategies. As our retirement business grows, our ability to originate high-quality assets domestically and internationally becomes increasingly important. We have invested in these capabilities over many years, and we'll continue to look for opportunities that meet our disciplined investment approach and support long-term growth of our business. Duncan talked to our financial performance for FY '27. I'm pleased to share that we've also started FY '27 with strong momentum. I think I might have said FY '27 there -- FY '26 strong performance. FY '27, we've started very well. We realized our first -- we released our first quarter assets under management and sales update last week. Compared to the same period last year, our annuity sales increased 72% to $2.8 billion, contributing to overall sales growth of 52% to $4.4 billion. The result reflects the growing demand for our income solutions and the progress we are making in broadening the channels through which we reach customers and investors. As we look to FY '27 and beyond, our focus is on building on our growth momentum while remaining disciplined with our execution. We will deliver our retirement partnerships, technology uplift, broaden our retirement and income solutions, invest in our people and maintain the financial strength that underpins our business. We enter FY '27 as a focused business and the retirement income leader. The structural opportunity in retirement continues to grow, and I'm confident in Challenger's ability to be a leader in that growth and to deliver sustainable long-term outcomes for our customers and shareholders. Duncan has addressed the NBIO received from TAL Dai-ichi Life Australia. I won't add to his comments aside from saying that the approach is a validation of our strategy and outlook. The Board will work through the process, as Duncan has said, but I'm also determined for it not to distract the momentum across our business. I want to thank the Challenger team for their incredible commitment throughout the year. Our people have continued to deliver for our customers while also navigating significant changes across our industry and our business. And I'm grateful for the energy and focus they continue to bring to Challenger. I also thank our customers for the trust they place in us, our partners for their ongoing support and our shareholders for their continued confidence in Challenger. Finally, thank you to Duncan and the Board for their continued guidance and support. And so thank you very much. I'll now hand back to Duncan.

Thank you, Nick. I'm going to do this next section from sitting down here. So hopefully, everyone can see me. We will now move to the items of business to be considered at today's meeting. As each item is presented, shareholders will have an opportunity to ask questions. If you're attending in-person and wish to ask a question, please approach the microphone in the center of the room there when the relevant item of business is introduced. The Notice of Meeting and accompanying explanatory notes have been circulated to shareholders, and I propose to take them as read. As each item is considered, it will be displayed on the screen together with the proxy results for that item. Where undirected proxies have been given to me as Chair, I will vote those proxies in favor of each resolution as stated in the Notice of Meeting. The first item of business relates to Challenger's financial reports. No resolution is required for this item. As mentioned earlier, Louise Burns from our external auditor, Ernst & Young, is attending today's meeting. Louise is available to answer questions relating to the conduct of the audit, the preparation and content of the auditor's report and the accounting policies adopted by the company in preparing the financial statements. Ernst & Young did not receive any written questions from shareholders before the meeting.

So I will now open up to questions in the room. Does anyone have a question? If you do, please head to the microphone. You're not going to get killed in the rush, I don't think. Okay. If there are no questions in the room, Mark, are there any questions online?

Thank you, Chair. Thank you, Chair. The first question is from Mr. Stephen Mayne. Ernst & Young has been the auditor of Challenger since 2004. Over that period, how many competitive tenders were run? If the answer is 0, please say that. We all understand the 5-year partner rotation laws. When is the next competitive tender likely to occur? And do you agree it's time for a change in the current takeover proposal -- sorry, do you believe there is a need for a time to change if the current takeover proposal does not complete?

Thank you for that question. You're correct in saying Ernst & Young have been the auditor since 2003, I think it is. And we last did a tender in 2014, I think, is the right time. Obviously, we have -- that means we haven't done one for a number of years. Since the time I've been on the Board, if you think of what's happened in that time for the organization, firstly, we had COVID. That would certainly not have been an ideal time to do a tender. We then went into a change of accounting standards with AASB 17. Again, that would not be an ideal time to do -- to change your auditor. Then we go to a change of capital standards that we've just had, which would not be an ideal time to change your auditor. And now we are dealing with an NBIO, which would not be an ideal time to change your auditor. So clearly, we will need to do a tender. Clearly, there will be an appropriate time. And when that time is appropriate, we will do that, but we will do it when it's -- when things are more stable than when they're not. In terms of the wider question that you raised in terms of my own personal view of what sits in the debate that's happening around both frequency of tenders and also whether there should be a limit on times of how long an auditor can be an auditor of a firm. My own view is, yes, there should be a frequency of tender, although you still need some flexibility to deal with the circumstances that I've just outlined when it wouldn't be ideal to do that. In terms of a hard 20 years often talked about, I think given the importance of audit function for boards in this country and the relative shallowness of the depth given the size of the Australian economy, I would personally be nervous about putting a hard stop on things. I think it's the Board's responsibility to make sure we are getting the best advice and the best insight from our audit firm who work for the Board. And Ernst & Young have done a great job for us over many years. And so that -- but if that wasn't the case, I would expect the Board to act, whether it's this Board or any other board, whether it's 5 years, 10 years or 20 years in. That's a very long answer to the short question. I think we've now got a question in the room, if I'm --

Yes. My name is Lindsay Somerville. I'm afraid I'm no relation to John Somerville, I'd point out.

Glad to hear it.

But we do spell our name the same way, which is rather unusual -- well, it's very usual, but most people spell it with two Ms. So -- my question is about the audit. EY have been here for a long time. The Star Entertainment Group, the other day, I was speaking to their people after it. And they had taken quite substantial savings from EY that saved over $1 million of their $4 million audit. Are we interrogating EY? And are we going to look at them and compare the prices and compare the quotes and the work that they've done for us over the years and not just accept possibly what they have done? I mean, there was a lot of money that Star saved. And surely, they need it more than we do. But I'd just like to be reassured by the Board that we are spending our money with the audit in a timely and effective manner.

Thank you. We do look at the audit fee every year. And I think if I ask Louise, which I won't, whether she thinks we're a soft touch or not, I don't think she would think that we are in any way, shape or form. We're also encouraging our -- the audit firm to -- EY in this case, to look at how we can be more efficient in the way that we do the audit, particularly using data and the way that you can actually extract the data and use tools to actually look at the audit more efficiently. So that's something we continue to work with EY on. And as I say, whilst now may not be the time for a tender, at some point, there will be the time, and that will also go to both efficiency and effectiveness of the audit at that time. Mark, back to you on the online.

Thanks, Chair. The next question comes from Mr. Stephen O'Reilly. It is a question for the auditor. In auditing the 2026 accounts, what was the main issue that arose that required any further investigation?

Do you want to go to the microphone there? Yes. Thanks, Louise.

Thank you for the question, Stephen. This year, across the audit for 30 June 2026, we look at a number of areas of risk focus for Challenger Limited. The main areas that we look at that we would put a higher rating for our work that we conduct are the insurance contract liabilities, which are disclosed in the financial statements as well as the investments that underpin those liabilities and in generating the returns that sit behind the company. So they are the two main areas that we put the most focus and attention during our audit.

Thank you, Louise. Mark, are there any more questions?

The next question again comes from Mr. Stephen O'Reilly. There are a number of questions here. The first question is, what are the biggest issues and risks facing the company at present? And is there an opportunity for Challenger to compete more strongly with banks for 1-year term deposits? In addition, is there any scope to offer enhanced deposits -- deposit rates for Challenger shareholders?

Okay. There's a few questions in there. Maybe I'll go to major risks from our point of view. So if you think about the business that we're in, we have a range of risks. We have strategic risks and we have market risks, I would put them into, and then we have operational risk. And within each of those buckets, I -- and I could talk at length. And if you came to our Risk Committee, you would know that we go on for quite a few hours talking about the risks that we have. Strategically, it's about realizing the opportunity that we have and making sure we do that. From a financial point of view, we carry a reasonable amount of market risk. And even though the capital standards have changed, still markets are uncertain, and we spend a lot of time looking at what our financial risk is and modeling what that might be in certain circumstances. So we spend an enormous time on that, and that is a core part of what we do. And then on the operational risk side, unexpectedly, we spend a lot of time on the resilience of the organization. So APRA have a standard CPS 230 that enables -- enforces and make sure that we become more and more resilient as an organization. So we spend a lot of time on that. We also spend a lot of time on cyber, as you would expect, which is a significant risk for the organization. So those -- that's just a few of them. There are more, but those are probably the top of mind ones. In terms of term deposits -- and I might get Nick to say a couple of remarks on this. But primarily, our focus is on longer duration as opposed to 1-year term deposit. That's not where -- we do offer a 1-year product. But our primary focus is on longer term, and that's where we find we are both more competitive, and we can also apply our investment expertise more effectively to those long-term products. And so, we don't see the 1-year term deposit as the primary -- from banks as the primary source of competition. But maybe, Nick, do you want to add something to that?

Yes. I mean, maybe just as a general comment for all of our term annuities, we price them to meet our return on equity target for -- which is in the interest of shareholders, clearly. We tend to be very competitive against 1-year rate for banks. The bank have -- banks have their own funding requirements and some of them compete quite hard at certain periods. So we don't try to chase that. As Duncan noted, our preference is for longer dated. And indeed, if you look at the first quarter sales result that we put out beginning of last week, one of the trends that you're seeing in there is an acceleration of that greater than 1 year, so -- where we're trying to target the 2- to 5-year particularly term annuity business. And I guess on the question to shareholders, we'll take that on notice. I think it's a very valid ask. And certainly in time, I'm sure it's something when we get our -- some of our technology in place may be possible. So we'll take that on notice.

Thanks, Nick. Mark?

The next question is from Mr. Stephen Mayne. When Japanese company, MS&AD was our largest shareholder, it was represented on the Board by Mr. Masahiko Kobayashi-san, who resigned when it -- when circa 15% stake was sold to TAL Dai-ichi last year. Why wasn't TAL given a Board seat, particularly when its stake reached 20.5%? Was it because of the prospect that TAL takeover bid was always on the cards and having a Board seat would have created conflict of interest? Did TAL ever ask for a Board seat? And if not, what would we have said if they did?

The Board during that period was focused on building a long-term strategic relationship as we had with MS&AD and continue to have with MS&AD through MSP. And we're focused on that with TAL Dai-ichi. I'm not going to go into each conversation that we had with them through that process, but it was very cooperative and very -- we work very closely together. And it didn't transpire in a Board seat being announced. And so that's where we sit today. In terms of TAL Dai-ichi's thinking behind that, you would need to direct that question to them. Thanks, Mark.

The next question again comes from Mr. Stephen Mayne. Australia is currently in the midst of an unprecedented deluge of takeovers that has contributed to listed entities on the ASX dropping by 11% since January 2023 to 2,044 on September 30, 2026. There were a record 27 major takeovers above $100 million completed in 2024-'25, and this rose to 30 in 2025 and 2026. Why do the Chair and the CEO believe this is happening? There is a clear mispricing between public markets and private markets, but is there also a problem, sorry, with the scrutiny and extra regulation of ASX-listed companies, which don't benefit from index investing? Does the Chair agree this is a problem for the nation, particularly with so few new floats replenishing the ASX ranks?

Thank you, Stephen. Fascinating question and one we could debate at length, but not really one for this AGM or this Board. Obviously, we are dealing with our own situation, and we'll deal with that appropriately. But I'm not going to get into a wider discussion on those points. Thanks, Mark. Next question?

The next question comes from Mr. Stephen O'Reilly, and it is in relation to the TAL Dai-ichi nonbinding indicative offer. What share price would you consider to be fair value for Challenger?

Thank you, Stephen. Good try. And I understand the interest and there's an enormous interest around this. And -- but we made an announcement on Monday. I referred to that in my speech. It does summarize where we're at, and there's no new update today. What we have said, and I'll repeat it, is the Board considered the nonbinding offer at $11.80 per share, and we concluded it's not at a level that we can recommend. Thank you. Next question?

The next question comes from Mr. Bradley Stanford, who has multiple concerns regarding the offer for the privatization and sale of the company to a foreign holder. Despite Challenger having a business interest in Japan, it is clearly fundamentally an Australian company, predominantly serving Australian retirees for the benefit of Australian shareholders on the Australian Stock Exchange. It is clear from your presentation material that this company is in an extremely strong strategic position within the Australian retirement financial market. My concern as a shareholder and future participant in the annuity market are generally for the long-term interest of the Australian retirement market, not for the short-term gains that might be achieved by an increased sale offer. I would like the profits from this company to continue to benefit me, my children and my grandchildren into the future. Australians should continue to benefit from the significant future growth presented in your presentation and in the intergenerational report. My question is, what value would the sale of the company to Dai-ichi Life bring beyond an immediate capital premium to shareholders? What stake in Australia's compounding retirement future are we permanently forfeiting if we vote to agree to this privatization?

Thank you, Bradley. It's nice to have someone not called Stephen asking a question. So thank you. A few things. And we complete -- the Board completely agrees with you around the strategic position that this company finds itself in and support that position. Obviously, any proposal put forward is considered at length by the Board using an appropriate process, part of our consideration. There are many considerations, but part of the recognition is that any transaction would require regulatory approval and the regulators would consider many of the issues that you have raised in their consideration of any -- if we were to reach a position where we reached agreement. So we're recommending to shareholders. It would still be subject to regulatory approval where those factors would be taken into account. In terms of the benefits from a takeover by TAL Dai-ichi, that really is an issue for TAL Dai-ichi to respond to rather than us. Thank you, Mark. Any further questions?

There are no further questions on this item, Chair.

We have another one on the floor. So we'll go back to the floor. Thank you.

Good morning to the Board. As always, thank you for your time today and throughout the year. You've alluded to the changes in the APRA capital framework, which came into effect, I think, the 1st of July this year. So can you give some detail about what they are or are intended to be, and how those changes are looking to impact the business of Challenger going forward?

I'll start this and then I might pass to Nick. So there are quite a few impacts -- I'll go to impact. The main impact is that in a sell-off environment or in a market environment, our capital responds very differently to the way it operated -- it responded under the previous standards. So those who have been shareholders a long time might remember that in March 2020, through COVID, as a response to market stress event, we ended up having to sell off a lot of our assets. Without getting into the technical details of why the capital standards are different, though I'm sure there are plenty in the room who are able to talk to those things, but without -- I won't bore you with them. But the way the new capital standards respond means that it is way less responsive and the liabilities and assets react much closer together. And so therefore, the company is more resilient in market sell-off situations, and also, therefore, needs less capital in total to achieve the same resilience for policyholders. So those are the two main changes. Nick, is there anything you wanted to --

Probably just a step back and why APRA changed it. So there's been a lot of consideration in the last 4, 5 years as to how we create a retirement income market. And the acknowledgment simply is that guarantees matter. But the only way you can provide guarantees with longevity protection is to deliver products like what Challenger does. And Challenger finds itself as more or less one of one in the market. The old capital standards discouraged the formation of capital to support the growth of this industry, and it made it hard for Challenger. As Duncan has noted, we were -- and you can see it in the share price, we were in the past very procyclical. And that's not really for a company that has long-dated liabilities and is backing them with high-quality assets. It was creating a risk in the business that was very different to the actual real economic risk. So the changes that came in 1 July provide a far more responsive basis for valuing our liabilities that are responsive to how we fair value our assets every single day. So they more or less travel together through market cycle.