About a year after first buying into Challenger, TAL now wants to own all of it.
TAL is the Australian life insurer owned by Japan’s Dai-ichi Life Group. It has offered $11.80 a share for the roughly 79.5% of Challenger it doesn’t already hold. The proposal is non-binding and conditional. Challenger told the Australian Securities Exchange about it on Monday, when it also released its first-quarter results.
The share price jumped. Challenger rose to $11.41 during Monday’s trading, its highest level in eight years and almost 16% above Friday’s close of $9.85. That still left the stock below the offer price, so the market is not treating the deal as certain.
The offer is 19.8% above Friday’s close and 17.7% above the one-month volume-weighted average price of $10.03. It values Challenger at a little under $8bn. Buying the shares TAL doesn’t already own would cost it about $6.3bn.
Before the offer can go ahead, TAL wants to complete due diligence. It also needs to agree a scheme implementation agreement, obtain regulatory approvals and win the board’s recommendation. The deal would be done as a scheme of arrangement. If the board backs it, the remaining shareholders would vote on it and a court would also have to approve it. Approval from the Foreign Investment Review Board and APRA is also likely to be needed. Both approved TAL’s original stake. For now, Challenger says its board is considering the offer, that shareholders don’t need to do anything, and that a binding deal may not follow.
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TAL built its stake in two purchases during 2025. It first bought MS&AD’s 15.1% holding for about $8.46 a share, which was 53% above Challenger’s share price at the time. It then paid roughly $247m for a further 4.8% from a fund managed by Apollo. That took its holding to 19.9%. When the first purchase was announced, TAL chief executive Fiona Macgregor described the investment as “an extension of our commitment to supporting Australians’ financial needs during retirement”.
Challenger has been growing quickly since then. Its FY26 results showed annuity sales up 19% to $6.2bn and the annuity book up 10.7%. The first quarter of FY27 was stronger still:
Chief executive Nick Hamilton said “sales momentum was strong across both domestic and offshore annuities”. He put this down to demand for guaranteed income in Australia and Japan.
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Recent regulatory changes help the case for the deal. APRA’s revised capital rules for longevity products took effect on 1 July. Under them, annuity providers that closely match their assets to their long-term liabilities can hold less capital. More Australians are retiring, and super funds want products that turn members’ balances into a steady income. Together, those changes make the biggest annuity provider a more attractive business to own.
TAL has grown mainly by buying other businesses. In 2022 it took over Westpac’s life insurance business. Before that, it paid $725m for Suncorp’s Australian life arm. Those deals were mostly in risk cover. Buying Challenger would give TAL a large retirement income business as well.
The bid is also part of a broader pattern of Japanese insurers buying into Australian life insurance. Nippon Life has merged MLC Life and Resolution Life Australasia into the Acenda Group. If this deal goes ahead, Dai-ichi would own both Australia’s largest protection insurer and its largest annuity provider.
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One question the bid raises is Challenger’s relationship with MS&AD. Offshore reinsurance sales rose 30% to $320m in the quarter, helped by demand for yen-denominated annuities in Japan. Much of that business comes through Challenger’s partnership with MS Primary, part of the MS&AD group. The partnership has been running since 2016. When MS&AD sold its Challenger shares, Challenger said the partnership would not be affected. But that was when TAL was only a minority shareholder. It is not clear whether MS&AD would keep sending business to a company wholly owned by a Japanese competitor.
Challenger is also part way through merging its Fidante funds management business with Channel Capital, and it expects to keep 45% of the combined company.
The board now has to decide whether a 17.7% premium on the average price is enough, given that sales grew by half in the latest quarter.
