SUMMARY OF FINANCIAL RESULTS
For the Period 9M.23 | November 28, 2023
This document has been prepared by Harel Insurance Investments and Financial Services Ltd. (hereinafter: the Company) solely for the purpose of presenting the Company's business.
The information contained in this document has not been independently verified. No representation or warranty has been expressed or implied and there should be no reliance on the fairness, accuracy, completeness or correctness of the information or opinions contained herein. Neither the Company nor any of its employees or representatives shall bear any liability whatsoever (whether due to negligence or otherwise) for any loss howsoever resulting from using this document or its content or otherwise arising in connection with this document.
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Statements concerning the Company's future business, financial position and results of operations are subject to risks and uncertainties, which may cause actual results to differ materially from those forecasted. Such forward-looking information includes, but is not limited to, product demand, pricing, changing economic conditions, product and technology development risks, the effect of the Company's accounting policies as well as certain other risk factors which are specified from time to time in the Company's reports to the Securities Authority.
2
IRON SWORDS Message from the Chairman
Israel is currently facing one of the most difficult, if not the most difficult, periods in the nation's history The horrific terror attack launched on October 7, the festival of Simchat Torah, shocked the entire country and Israeli society, and the aftereffects of this day will remain with us for many years to come.
Since that day, Harel Group has been busy working on behalf of Israel's civilian population, with particular emphasis on the Gaza Envelope communities, as well as the defense forces and the IDF. The Group's actions involve money as well as volunteer assistance for any and every need emerging in the field - education, the economy, agriculture, security, employment, etc.
We are looking forward.
Despite the immense pain and distress, we are looking forward to a better future. The State of Israel is a miracle that was established here 75 years ago and it is the life mission of all of us to ensure the continuity of this miracle in the best possible way. To continue to foster a strong, united Israeli society that will ensure a country that is even better than it was preceding the events of October 7.
Now more than ever, we firmly believe in the strength and future of Israel's economy and we are certain that our country's economic strength, thanks to its human capital, will prevail in the face of this difficult period as well. We are extremely proud of our forthcoming investment in Isracard (assuming that it is approved by the regulatory authorities), which is an expression of trust in the State of Israel and its future.
We mourn the victims murdered on that wretched day, our heart goes out to the families whose sons and daughters have fallen in battle, we pray for the return of the hostages and speedy recovery of all those injured.
Now more than ever, we are certain that Israel's spirit is our insurance here in the State of Israel.
Yair Hamburger
Chairman, Harel Insurance
Investments & Financial Services
3
THE BIG PICTURE
Data at September 30, 2023
29.1NIS bn, 9M.23 | 412 NIS bn | 167%At June 30, 2023 | Aa2.il | ||
GROSS PREMIUMS | ASSETS UNDER | SOLVENCY RATIO | HAREL INVESTMENTS | ||
EARNED, | MANAGEMENT | Including the tr ansitional | Midroog | ||
Benefit Contributions and | provisions Aa2 RATING | Over | |||
amounts received for | HAREL INVESTMENTS | 4 MILLION | ilAA+ | ||
Investment Contracts | AA+ RATING | customers | |||
397 NIS m, 9M.23 | 271 NIS m, Q3.23 | HAREL INSURANCE | |||
8.7NIS bn | HAREL INSURANCE | ||||
S&P Maalot | |||||
COMPREHENSIVE | COMPREHENSIVE | SHAREHOLDERS | |||
INCOME AFTER TAX | INCOME AFTER TAX | EQUITY | PLATINA PLUS | ||
Attributed to the | Attributed to the | ||||
shareholders | shareholders | ||||
claims in the life assurance sectors is estimated at NIS 50 million before tax. At this stage, it is impossible to assess the full | Rating by MAALA CSR | ||||
9 years in a row | |||||
From the outbreak of the Iron Swords War and up to publication of the financial statements, the increase in the cost of | |||||
extent of the impact of the War on the Company and its results. |
4
KEY HIGHLIGHTS FOR THE PERIOD
CONTINUOUS PROFITABILITY GROWTH
INTEREST RATE
INCREASE
OVERALL
UNDERWRITING IMPROVEMENT
PREMIUMS AND
AUM GROWTH
UNDERWRITING IMPROVEMENT IN MOTOR
UNDERWRITING IMPROVEMENT IN HEALTH
In Q3.23 shareholders' comprehensive income was NIS 271 million, reflecting ROE of 13%, compared with a loss of NIS 249 million in Q3.22. In 9M.23 shareholders' comprehensive income was NIS 397 million compared with a loss of NIS 359 million in 9M.22
In Q3.23 interest rate increase led to decrease of NIS 312 million in the insurance liabilities in life assurance, health and non-lifeinsurance
Given zero Nostro yields, the improvement in profitability was mostly attributed to improved underwriting in the operating segments, as part of the implementation of the Company's strategy to improve core profitability, as well as to interest rate effects
Premiums, benefit contributions and amounts received for investment contracts increased by 7% in
Q3.23 and by 3.3% in 9M.23. AUM increased by 13.3% from YE2022 to NIS 412 billion
Continuous decline in the average cost of claim and further portfolio optimization in compulsory motor, offset by previous years claims development. Increase in average premium and decrease in provision for premiums deficiency in motor property
Mainly in group policies and cover for medications, that was offset by increase in ambulatory cover claims
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PROFIT ALSO GIVEN ZERO REAL YIELD
Total Profit (Loss) Excluding Special Items* (NIS m) | Nostro Yields For The Periods |
274 | 406 | 197 | ||
77 | ||||
(247) | (355) | |||
(425) | ||||
(1,246) | ||||
Q3.22 | Q3.23 | 9M.22 | 9M.23 |
Profit (loss) excluding special items | Profit (loss) for the period | |
Q3.22 | Q3.23 | 9M.22 | 9M.23 | 5-Y | |
Average | |||||
2018-2022 | |||||
Nominal Nostro Yield | (0.1%) | 0.8% | (0.1%) | 3.2% | 4.7% |
Real Nostro Yield | (1.4%) | 0.0% | (4.5%) | 0.0% | 3.0% |
Given real zero Nostro yield and excluding special items, the profit is stemming from
improvement in underwriting profitability, as part of implementation of the
Company's strategy to improve core profitability
*Special items refer to profit or loss that is not part of the normal course of the Company's business, including actuarial changes resulting from studies and changes in the actuarial
6models, as well as impact of the interest rate and extraordinary effects resulting from the amortization of surplus costs created in the process of business combinations and extraordinary expenses due to implementation of the "Harel 2030" multi-year strategic plan
CONTINIUOUS ACTIVITY GROWTH
Gross Premiums Earned, Benefit Contributions And Amounts Received For Investment Contracts (NIS bn)
+14%
33 | 37.5 |
3.9 | |
3.9 | 4.7 |
3.8 |
11.8
10 | |
4 | 4.7 |
5.45.9
5.96.5
+3%
28.2 29.1
2.2
3.3 | 3.5 |
3.4 | |
8.6 | 10.0 |
3.4 | 3.7 |
4.4 | 4.8 |
5.1 | 4.9 |
+7%
9.4 | 10.1 |
1.0 | 0.8 |
1.2 | |
1.1 | 3.6 |
3.1 | |
1.2 | 1.3 |
1.5 | 1.7 |
1.5 | 1.5 |
9M.23 vs. 9M.22:
Pension and | +13% |
Provident Deposits | |
Health Insurance | +9% |
Non Life Insurance | +7% |
Life Assurance | (3%) |
2021 | 2022 | 9M.22 | 9M.23 | Q3.22 | Q3.23 |
YTD9.22 | YTD9.23 | ||||
LIFE ASSURANCE | HEALTH INSURANCE | ||||
NON-LIFE INSURANCE* | PENSION FUNDS CONTRIBUTIONS | ||||
PROVIDENT FUND CONTRIBUTIONS | AMOUNTS RECEIVED FOR INVESTMENT CONTRACTS |
7
*Including results of overseas insurance segment
NIS 412 BILLION AUM
412
362 | 363 | 15 | |||
63 | |||||
16 | 15 | ||||
283 | 291 | 43 | 43 | 62 | |
235 | 15 | 13 | 53 | 56 | |
39 | |||||
44 | |||||
13 | |||||
44 | |||||
34 | 45 | 144 | |||
126 | 128 | ||||
39 | |||||
87 | |||||
76 | |||||
62 | |||||
87 | 103 | 108 | 124 | 121 | 128 |
2018 | 20199 | 2020 | 2021 | 2022 | YTD930.9.23.23 |
INSURANCE | PENSION FUNDS | ||||
PROVIDENT FUNDS | MUTUAL FUNDS | ||||
PORTFOLIO MANAGEMENT AND OTHER* |
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*Including financial assets issued by the group and managed in portfolios
Continuous Growth in AUM
75%
since 2018
ANOTHER QUARTER OF PROFITABILITY GROWTH
Comprehensive Income (Loss) After Tax Attributed To The Shareholders (NIS m)
282 | 271 | |
33 | 93 | |
(249) | ||||
Q3.22 | Q4.22 | Q1.23 | Q2.23 | Q3.23 |
Return on Equity (In Annual Terms)
14% | 13% | |
2% | 4% | |
(12%) | ||||
Q3.22 | Q4.22 | Q1.23 | Q2.23 | Q3.23 |
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KEY DRIVERS OF Q3.23 PROFIT
Composition Of Comprehensive Income Before Tax (NIS m)
Improved real yields in Nostro portfolio compared with corresponding period in 2022: zero yield in Q3.23 compared with negative yield in Q3.22
Underwriting improvement in the following: Compulsory motor and motor property, group health policies and medications cover in the health segment
Increase of the interest rate curve applied in calculation of the insurance liabilities in non-life and health insurance** led to
reduction of NIS 94 million in the insurance liabilities
Update of the interest rate used in calculation of insurance reserves in life assurance and long-term care insurance*** led to reduction of NIS 218 million in the
insurance liabilities
* Including results of overseas insurance segment | |
10 | ** Increase of the risk free interest rate curve, decline of the illiquidity premium and changes in the difference between the fair value and book value of the non-marketable assets in |
non-life insurance |
*** Annuity and work disability reserves in payment in life assurance and reserves for claims in payment in long-term care insurance
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Harel Insurance Investments & Financial Services Ltd. published this content on 28 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 November 2023 18:40:59 UTC.