By Rajasik Mukherjee

(Reuters) - Shares of Challenger Ltd rose to their highest levels in nearly 16 months on Tuesday after the Australian investment management firm beat estimates on annual earnings, while investors also cheered its fiscal 2025 earnings outlook.

The stock gained as much as 10% to hit its highest level since Feb. 20, 2023. Shares marked their biggest intraday jump since Oct. 20, 2022, and are poised for a fifth consecutive sessions of gains, if trend holds.

Challenger reported a fiscal 2024 normalised net profit before tax (NPBT) of A$608 million ($400.73 million), a 17% hike from 2023 levels, buoyed by a 110% growth in the Sydney-based firm's lifetime annuity sales of A$1.5 billion.

Annuity sales are income products, sold by insurance companies, which provide financial stability to the purchaser after retirement.

Challenger trounced both UBS and Citi's NPBT expectations of A$600 million and A$603 million, respectively.

The company, which increased its group assets under management to A$127 billion in fiscal 2024, forecast its 2025 NPBT to come between A$640 million and A$700 million.

Analysts at UBS were upbeat on the 2025 forecast, and said the midpoint of fiscal 2025 forecast was in line with their consensus.

"With Challenger on track to meet its RoE (target) in FY25 and with capital much better than expected due to permanent benefits, we expect the market to like this result," Citi analysts wrote in a note.

Challenger Life segment, which provides financial security post retirement, was capitalised with an ability to tackle different market cycles and support future growth, the company said.

Challenger attributed the jump in profit to lower costs and strong performance in Life segment, and also declared a final dividend of 13.5 Australian cents.

($1 = 1.5172 Australian dollars)

(Reporting by Rajasik Mukherjee in Bengaluru; Editing by Sherry Jacob-Phillips)