The market may have rebounded higher on Friday, but the same cannot be said for the Challenger Ltd (ASX: CGF) share price.
In morning trade the annuities company's shares are down 2.5% to $10.50 on the day of its annual general meeting.
Why are Challenger's shares dropping lower?
Ahead of its annual general meeting Challenger announced the surprise retirement of its long-serving managing director and chief executive officer Brian Benari.
He has successfully led the company for seven years and oversaw a period of growth which was achieved through his clear and focused strategy and disciplined implementation.
According to the release, under his leadership Challenger's market capitalisation has more than tripled to nearly $7 billion with a total shareholder return of 209%. This compares to the ASX200 result of 95%.
In addition to this, over this period Challenger's assets under management have grown from $30 billion to over $80 billion.
The company intends to replace Mr Benari with its chief executive of distribution, product and marketing, Richard Howes.
The board believe he is the ideal internal successor and brings a wealth of knowledge, combined with the right capabilities and passion to take the business forward.
Mr Howes will take up the role at the start of 2019 and will be supported by the former CEO for six months to ensure a smooth transition.
What else was announced?
Considering Challenger has only just released its quarterly update, there were no other surprises to be found in the release.
Management once again reiterated that it is on track to achieve normalised net profit before tax growth of between 8% and 12% on FY 2018's result.
Furthermore, it remains committed to its 18% pre-tax normalised return on equity target, though this won't be achieved in FY 2019.
Should you invest?
As we saw with Class Ltd (ASX: CL1) and Super Retail Group Ltd (ASX: SUL) this week, the market doesn't react well to changes in the top job. Because of this, I can't say that I'm surprised to see its shares drift lower today.
This decline has left its shares trading at 16x estimated forward earnings, which I think is attractive for a buy and hold investment.
However, I may keep my powder dry for the meantime and see how Challenger deals with the transition to a new CEO at a reasonably challenging time.
