• Proposed capital standards represent significant improvement to Australia's prudential framework
• Changes will reduce cyclical risks and lower required capital levels for life insurers
• Reforms are crucial step towards developing Australia's retirement income market

Challenger Limited (ASX:CGF) has welcomed APRA's announcement on its proposed capital settings for longevity products. The changes represent a significant improvement to Australia's current prudential framework, which will reduce cyclical risks to life insurers' capital position and lower the levels of required capital, provided certain risk controls are in place. The reforms are a crucial step towards developing Australia's retirement income market by promoting innovation, expanding options for retirees to manage longevity risk, and supporting greater take up of lifetime income products. Managing Director and Chief Executive Officer, Nick Hamilton, commented that the changes will have a number of benefits for Challenger, including lowering the levels of required capital and materially reducing the procyclicality of the capital position during times of market stress. He stated that Australia's retirement market is at a critical point and these changes will drive growth and innovation in the lifetime income market, which will be positive for retirees and the wider community. Challenger is working through the details of APRA's proposed capital standards and will provide an update to the market on Wednesday, 5 November 2025.

Challenger expects the proposed capital standards to lower the levels of required capital and materially reduce the procyclicality of its capital position during times of market stress. The changes are expected to be finalized in the first half of the 2026 calendar year.

The reforms are expected to drive growth and innovation in the lifetime income market in Australia, which will be positive for retirees and the wider community.