Calliden has reduced this year’s net profit target to $6-$7 million, before transaction costs relating to the proposed takeover by broker cluster group Steadfast.

Guidance given in February, and confirmed in August’s half-year result, forecast $7.5-$9.5 million.

Calliden says claims in the run-off builders’ warranty portfolio “continue to track at higher than expected levels”, which more than offsets benign weather conditions.

CEO Nick Kirk says this is disappointing, particularly after reserves were strengthened at the end of last year.

“Calliden’s agency businesses continue to perform strongly and in line with expectations,” he said.

The revision does not amount to a “target material adverse change”, so does not affect the proposed Steadfast deal, Calliden says.

Calliden’s shareholders will vote on the bid in Sydney next Monday at 10am. Its board unanimously recommends the proposal, in the absence of a superior offer.

Steadfast plans to on-sell part of the business to Munich Re’s Great Lakes Australia.