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Promina falls after results

Rob Hosking

Tuesday 30th August 2005

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Australasian financial services firm Promina took a dive in the markets following what was perceived as a disappointing result - but at least two major analysts are dismissing the reaction as misconceived.

In New Zealand Promina's subsidiaries include Asteron, Tyndall, NZ Guardian Trust and Vero.
The fall came as Promina announced a debt capital raising of A$250 million.

About $100 million of this raising will be used to fund an on-market ordinary share buy-back, with the balance to be used for further development.

Chief executive Michael Wilkins is talking of "bolt -on" acquisitions in New Zealand and Australia.

The market concerns relate to margins for Promina's insurance business - a margin of 11.4% (up on last year's 10%) was reported for the six months to June 30, when a figure of around 13% had been anticipated.

Some analysts have interpreted that as a sign the new business would be unprofitable - but both CSFB and Merrill Lynch are talking up the company, saying the fall in share price presents a buying opportunity and that Promina's capital situation is stronger than other insurers.

Citigroup analysts, however, say the result shows the insurance market in Australia and New Zealand getting even tougher.
Promina's financials services arm produced $60 million net profit, but new business is expected to be flat for the rest of year.

Overall, the company reported a 6% increase in net profit to $229 million for the half year.

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