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MMI’s Profit Drops 25% in First Half on ‘Challenging’ Merger

March 6 (Bloomberg) -- MMI Holdings Ltd., which was born out of the combination of two South African insurance companies in 2010, said profit fell 25 percent after the merger proved to be “ very challenging and complex.”

Net income for the six months ended Dec. 31 declined to 805 million rand ($106 million) from 1.1 billion rand a year earlier, the Cape Town-based insurance company said in a statement today. MMI, South Africa’s third-largest insurer, increased its first-half dividend 5 percent to 44 cents while so-called diluted core earnings per share excluding one-time items, a measure that MMI uses to exclude “volatile items,” rose 5 percent to 81 cents.

MMI Holdings, which has operations in 12 countries outside of South Africa, was created out of a merger of FirstRand Ltd.’s Momentum Group Ltd. and Metropolitan Holdings Ltd. Like other local insurance companies, including Sanlam Ltd. and Liberty Holdings Ltd., MMI invests some of the insurance premiums it receives in equities. In the six months ended December the FTSE/JSE All Share Index was little changed, gaining 0.4 percent during MMI’s reporting period.

“Ongoing uncertainties from the eurozone crisis could continue to have a negative impact on business confidence in the markets where we operate,” MMI said in the statement. Growth in new business volumes will remain dependent on the economic environment, including a recovery in employment and stronger disposable income levels, the company said.

To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net

To contact the editors responsible for this story: Edward Evans at eevans3@bloomberg.net

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