Challenger Ltd sold a record $509 million of retail annuities in the first quarter but will wait before updating its annuities sales and earnings guidance.

Retail annuity sales surged 48 per cent from a year earlier, keeping the company on track to meet its target of a 25 per cent increase in retail annuity sales for the year.

Challenger’s sales growth target in 2011/12 is half what the company achieved in 2010/11 and under a third of the sales generated the previous year.

Deutsche Bank analyst Kieren Chidgey previously suggested the company’s sales guidance given in August could be conservative because it implied a continuation of the June quarter sales run-rate.

But chief executive Dominic Stevens told AAP sales were typically volatile over the financial year, with sales dropping off from late December to February and quarterly sales stronger for the September and June quarters.

“We’re probably doing better than we thought we were but there’s still three quarters ahead and…the world is quite a volatile place recently.”

“You wouldn’t want to presuppose how the next nine months would go.”

Challenger will wait until February before updating its guidance for sales and cash operating earnings, he added.

“We look at that on a half yearly basis. We’ll…give the market another view when we come out (with results) in February and we’ll probably give the market another view on sales as well.”

Challenger generates 90 per cent of its earnings from its Life business thanks to the surge in annuity sales over the last two years, with the remaining 10 per cent from fund management.

Total annuity sales, including institutional products, came to $558 million in the three months to September, and by then the Life business held 73 per cent of its funds in fixed income and cash investments.

Cash and cash-equivalent investments were around 10 per cent of the portfolio at June 30 and Mr Stevens said this was unlikely to have changed significantly in the September quarter.

A flight to fixed income by investors had taken place across the Australian market, and Challenger has seen a rise in long-term annuity sales, Mr Stevens said.

He expects more competitors as Australians warm to fixed income retirement products.

“I have no doubt that others will come into the market. Being there as the first mover gives us an advantage, going forward.”

Assets and funds under management as of September 30 came to $27.6 billion, an eight per cent rise from a year earlier.

Assets under management declined one per cent from three months earlier because of declines in financial markets.

Challenger’s shares eased one cent to $4.45.