Insurance companies (Photo Wikipedia)
January was a good month for insurance stocks. At the beginning of the month these stocks went on a rally mainly thanks to the improvement in the state of the capital market and of course the optimism that accompanied the macro picture of the local economy. In the second half of the month the picture was already reversed and here the increases moderated when precisely the companies that are more inclined to the core business in the insurance sector produced the best returns.
Last month in the insurance world was a sign of the future of these companies when Kalel Insurance marked the direction already last year with the interesting deal to purchase the MAX credit card company. Homenix joined this game with a cooperative agreement with Isracard, but this agreement came to an end when Harel submitted an offer to purchase the shares of the credit card company.
More in-
In the second half of the year, details were published about the meeting of the Governor of the Bank of Israel, Amir Yaron, with the Prime Minister, Benjamin Netanyahu, when it became clear that the governor’s impressions of the visit to Davos were very complex and reflected the fear of foreign investors from the legal revolution. A few days later, the economists’ letter was published, which already indicated the direction for the markets, and hence the trading trend in the stock exchange changed.
Insurance companies profit from capital market activity. In principle, all institutional investors absorb quite a bit of money every month, and that’s as long as the labor market remains tight. The same money from the public depositor is supposed to generate returns and the income of the insurance companies from this segment is skewed by management fees which are a percentage of the portfolio and this means that as the public deposits money and this money generates returns, then the system’s revenues increase from this segment.
It is understood that the more the capital market goes down, the more the investors fear about the rate of income of the insurance companies from this segment, and to this we have to add the fact that the foreign investors are fond of the shares of the insurance companies, which are largely a reflection of the macro state of the local economy.
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