Promina to shake up commissions

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Promina is planning to shake up its commission structures for life insurance products in New Zealand.

Thursday, February 26th 2004, 8:53AM

Chief executive Mike Wilkins says changes have been made to commissions in Australia and the same needs to be done here to make the business profitable.

Promina has revealed a maiden profit of A$298 million, more than A$100 million over the forecast in its prospectus when it split from Britain's Royal &SunAlliance to list in May last year.

The company reported a statutory net profit - which excludes New Zealand operations - for the full year of A$271.8 million.

Shareholders will get a final dividend of A9c, taking the total dividend to A12.5c.

Promina's net earned premium rose $35 million to A$441 million in 2003, on the back of a rise in premiums in Australia, following the collapse of HIH.

"When we cast the claims prospectus we did indicate an expectation of a return to more normal claims conditions, which did not occur during the course of the year," Wilkins says.

"We also saw better than expected growth in our general insurance businesses, and the third contributor was a better than benchmark investment performance."

Wilkins says Promina had recorded overall growth of 15%, of which 3-4% was price driven growth.

Promina expects to deliver a return on capital in the upper half of its long term target range of 12.5 -15% in 2004.

The group, which has no debt, will look to raise A$250 million to A$300 million in the first half of the year, to fund organic growth.

The company said the money would be used to expand its current businesses in existing and new markets, but would not rule out acquisitions.

"The first call for this capital is going to be to fund future profitable business and we do see there are further profitable opportunities around," Wilkins says.

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