Libra in decline: the net profit is significantly smaller in the third quarter

I am Elishkov

Libra, the digital insurance company, founded and managed by Etti Elishkov, published its financial statements for the third quarter of 2022. Gross premiums in the third quarter amounted to approximately NIS 112.4 million compared to approximately NIS 74.7 million in the corresponding quarter in 2021, an increase of approximately 51%. The gross premiums in the first nine months of 2022 amounted to approximately NIS 325.5 million compared to approximately NIS 225.1 million in the corresponding period last year, an increase of approximately 45%.

In the third quarter and the first nine months of 2022, the company continued to show significant growth rates in gross premium and gross earned premium in all the industries in which it operates, as a result of an increase in the number of insureds and the increase in the average premium and high customer loyalty reflected in a high rate of renewals.

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Libra continues to show an improvement in operational efficiency in the third quarter thanks to technology and an increase in the scope of the portfolio: the rate of total premium expenses in the first nine months of 2022 amounted to approximately 14.9% compared to approximately 18.6% in the corresponding period last year. The rate of total premium expenses in the third quarter amounted to about 14.5% compared to about 16.8% in the corresponding quarter last year and compared to about 16.2% in the second quarter of this year.

The gross earned premiums in the third quarter of 2022 jumped by about 51% and amounted to about NIS 98.4 million compared to about NIS 65.2 million in the corresponding quarter last year. The gross earned premiums in the first nine months of 2022 jumped by about 52% and amounted to about NIS 267.8 million compared to about NIS 176.3 million in the corresponding period last year and compared to about NIS 250 million in all of 2021.

The company does not have any customers that are fleets and collectives and all customers are private customers, and this is in accordance with the company’s policy. The company currently has approximately 140,000 policyholders (approximately 260,000 policies), with the vast majority of the company’s automobile policyholders purchasing compulsory vehicle and property vehicle policies together.

The company presented a total pre-tax profit in the third quarter of 2022 that amounted to approximately NIS 150 thousand compared to approximately NIS 3.1 million in the corresponding quarter last year. The decrease in profit was influenced by two opposing factors: the positive factor stems from an increase in the scope of the company’s activities, which led to an increase in revenues The company, this alongside an operational efficiency in the company’s expenses as well as an increase in the risk-free real interest rate which resulted in a reduction in insurance liabilities mainly in the mandatory vehicle sector, which was partially offset by the increase in the consumer price index during the report period.

On the other hand, there is a decrease in underwriting profitability in the property vehicle industry that characterizes the entire industry, among other things, due to an increase in the frequency and severity of claims and their cost in this industry, an increase in the cost of spare parts and an increase in the frequency and cost of thefts and losses from investments. Following these trends, the company acted to raise rates from the beginning of the year, which increased the average premium for a property vehicle and a vehicle for use and will be reflected in the increase in premiums in the following quarters even more strongly. Accordingly, there was an improvement in the gross loss ratio. Despite the decrease in profit, there was an increase in the company’s revenues alongside operational efficiency in expenses.

In the first nine months of 2022, the total profit before tax amounted to approximately NIS 0.7 million compared to approximately NIS 11.8 million in the corresponding period last year. The loss from investments in the first nine months amounted to approximately 1.4 million shekels compared to a profit from investments amounting to approximately 355 thousand shekels in the corresponding period last year. In the third quarter of 2022, the total profit after tax amounted to about NIS 98 thousand compared to about NIS 2 million in the third quarter of 2021. In the first nine months of 2022, the total profit after tax amounted to about NIS 442 thousand compared to about NIS 7.7 million in the corresponding period last year.

The gross premiums in property vehicle insurance in the third quarter of 2022 amounted to approximately NIS 68 million compared to approximately NIS 44.8 million in the third quarter of 2021, an increase of approximately 52%. The increase is due to continued accelerated growth in the scope of the company’s activity in the industry, an increase in the average premium, as well as high customer loyalty reflected in a high rate of renewals. It should be emphasized that the company does not have any customers who are car fleets and collectives, and all its customers are private customers, and this is in accordance with the company’s policy.

The gross premiums in property vehicle insurance in the first nine months of 2022 are approximately NIS 194.8 million compared to approximately NIS 134.4 million in the corresponding period last year, an increase of approximately 45%. The total loss before tax in the property vehicle industry in the first nine months of 2022 amounted to approximately NIS 3.3 million compared to a total profit before tax of approximately NIS 9.3 million in the corresponding period last year.

The total loss before tax in the property vehicle industry in the third quarter amounted to approximately NIS 570 thousand compared to a total profit before tax of approximately NIS 2.6 million in the corresponding quarter last year. The transition from profit to loss compared to the corresponding period last year, was influenced by two opposing factors: the positive factor stems from an increase in the company’s activity volumes, which led to an increase in the company’s revenues, alongside operational efficiency in the company’s expenses. On the other hand, there is a decrease in underwriting profitability, among other things, due to an increase in the frequency and cost of claims in this industry mainly due to an increase in the frequency of accidents, the cost of spare parts and an increase in the frequency and cost of theft.

Eti Elishkov, founder and CEO of Libra, said: “Libra concludes another quarter of growth with a significant increase in the number of insureds and premiums, which reflects a growth rate beyond the company’s forecasts. This, while continuing to improve operational parameters, among other things, thanks to advanced technology. Despite the negative trend that characterizes the entire automotive industry, we were able to present a balance in the profit line in the third quarter while increasing the average premium. The new products we launched this year – pet insurance and travel insurance abroad continue to gain momentum and after we received a life insurance license, while approving risk products, Libra began marketing mortgage risk insurance in the fourth quarter as part of a quiet launch. The expansion of the product portfolio is an anchor and another pillar for the expected growth in the coming years and to bring profitability in the medium and long term.”

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