The declines in the capital markets during the first quarter of the year reached the financial statements of the insurance companies and hurt their profits. Harel’s total profit in the first quarter of 2022 amounted to NIS 327 million, compared with a total profit of NIS 255 million in the corresponding quarter last year, an increase of 28%. Menora Mivtachim, on the other hand, recorded a profit of NIS 91 million, compared with a total profit of NIS 200 million in the first quarter of 2021. They join Clal Insurance, which reported its results earlier, and recorded a total profit (after tax) of NIS 221 million. A decrease of about 45% compared to a total profit of about NIS 402 million in the corresponding period last year.
Nir Cohen, CEO of Harel Insurance / Photo: Vardi Kahana
Harel’s total profit reflects a return on equity of approximately 15% (in annual terms). The results of the first quarter of 2022 were affected, among other things, by an increase in the interest rate curve which led to a decrease in insurance liabilities. Harel has benefited greatly from this as the rise in interest rates has a greater impact on companies with large long-term portfolios, and Harel is the largest company in the field of health and nursing insurance. Menora Mivtachim holds a relatively small health insurance portfolio but a large general insurance portfolio, where the policies are shorter and the interest rate effect is smaller. In addition to the rise in interest rates, the insurance companies’ reports were also affected by declines in the capital markets, and non-collection of management fees varies due to negative real returns on assets that stand against yield-dependent liabilities.
Harel reported that the total gross earned premiums, remuneration fees and receipts for investment contracts in the first quarter of 2022 amounted to NIS 9.8 billion, compared with NIS 7.4 billion in the corresponding quarter last year, an increase of 32%.
As stated, Harel benefited from the fact that its health insurance portfolio is large, and the total profit before tax in the health insurance segment in the first quarter of 2022 amounted to NIS 592 million, compared with a total loss before tax of NIS 99 million in the corresponding quarter in 2021. The increase is mainly due to In the interest rate curve that led to a decrease in insurance liabilities in the nursing industry.
On the other hand, in the area of long-term savings, the total loss before tax in activities that include life insurance, pensions, provident and continuing education amounted to NIS 193 million, compared with a total profit before tax of NIS 222 million in the corresponding quarter in 2021. Of this, in life insurance alone The total loss before tax amounted to NIS 218 million, compared with a total profit before tax of NIS 189 million in the corresponding quarter in 2021. The loss is mainly due to capital market returns that were lower than in the corresponding quarter in 2021, as well as non-variable management fees due to real returns Negativity of assets that stand against yield-dependent liabilities.
The total profit before tax in general insurance in the first quarter of 2022 amounted to NIS 54 million, compared with the total profit before tax of NIS 42 million in the corresponding quarter in 2021, an increase of 29%.
Menora Mivtachim: 11% increase in premiums
Menora Mivtachim recorded a total profit of NIS 91 million in the first quarter. The group’s underwriting profit (from insurance operations) was NIS 119 million, compared with underwriting profit of NIS 201 million in the corresponding period last year.
The reporting period was characterized by declines in the capital market and a negative real return on yield-dependent policies, which led to the non-collection of variable management fees, while in the corresponding period last year there were significant increases in the capital market. Accordingly, losses from investments in the reporting period amounted to NIS 316 million, compared with income of NIS 179 million in the corresponding period last year.
The total premiums and remuneration collected by the Group in the first quarter of 2022 amounted to NIS 6.7 billion, compared to premiums and remuneration of NIS 6 billion in the corresponding period last year, an increase of 11.1%. NIS 1.8 billion compared to insurance premiums earned of NIS 1.7 billion in the corresponding period last year, an increase of about 6.6%.
In the field of life insurance and long-term savings, the total profit, before tax, in the first quarter of 2022 amounted to NIS 57 million, compared with the total profit, before tax in the amount of NIS 153 million in the corresponding period last year.
The pre-tax total profit from life insurance in the first quarter of 2022 amounted to NIS 20 million, compared with a pre-tax total profit of NIS 97 million in the corresponding period last year.
The total loss before tax in the first quarter of 2022 in the field of general insurance amounted to NIS 14 million, compared with a total profit before tax of NIS 68 million in the corresponding period last year. The decrease in profit is due to an increase in the frequency of accidents, an increase in the price of spare parts and an increase in vehicle thefts. Thus, a comprehensive loss before tax was recorded in the first quarter of 2022 from property insurance of NIS 53 million against a comprehensive profit before tax in the amount of NIS 49 million in the corresponding period last year.
The total loss before tax in the first quarter of 2022 from compulsory car insurance amounted to NIS 15 million against comprehensive income before tax in the amount of NIS 17 million in the corresponding period last year. The decrease in underwriting profit in the reporting period compared to the corresponding period last year is mainly due to an increase in the cost of claims due to an increase in severity.
In the health sector, the total profit before tax amounted to NIS 134 million, compared with a profit of NIS 22 million in the corresponding period last year. The improvement in profit is due to the decrease in the risk-free interest rate curve, which was partially offset by a decrease in investment income and underwriting margin.
The return on capital in annual terms amounted to about 6.5% and the total financial assets managed by the group amounted to about NIS 276 billion. .
The value of the pension and provident company is 54% of the holding company
Shortly before the publication of the reports, Menora Mivtachim announced that Allied Holdings had exercised the option to increase its holdings in the shares of its subsidiary, Menora Mivtachim Pension and Provident. The investment amount for 4.9% of the shares is NIS 150 million and reflects Menora Mivtachim Pension and Provident Value of NIS 2.65 billion, with the company listed in the Group’s books at a value of NIS 828 million. The value of the transaction is more than half the value of the parent company, Menora Mivtachim Holdings, which is traded on the Tel Aviv Stock Exchange at a value of NIS 4.9 billion.
Following the exercise of the option and the purchase of additional shares, Allied will hold approximately 9.99% of the company’s shares and it has received the approval of the Capital Market Authority to increase its holding. Menora Mivtachim Pension and Provident Fund manages the largest pension fund in Israel and the volume of assets under its management stands at NIS 223 billion as of the end of the first quarter, of which NIS 188 billion is pension assets.
The chairman of the company’s board of directors is Eran Grifel, in addition to his tenure as chairman of the Menora Mivtachim group. The company’s CEO is Guy Krieger.