The cost of NZF's finance company failure

However the loss from continuing operations was just $400,000 compared with an $0.5 million profit in the same six months of 2010.

"Market conditions have continued to remain extremely difficult and challenging," the company said.

NZF's home loans division, of which it plans to sell 80% to Australia-based non-bank lender Resimac, made a $0.2 million loss in the latest six months compared with a $1.7 million profit in the previous first-half, mostly because of $0.8 million in charges against profit for bad loans, such as for leaky buildings, which weren't covered under reinsurance contracts.

NZF also wrote off $0.9 million from an IT project during the six months.