In the third quarter, a total profit of NIS 416 million and a total return of 22.3% on capital (in annual terms) was recorded.
Ran Oz, CEO of Migdal Insurance: “We summarize the first nine months of 2021 with a record profit. The results for the quarter and the period are the result of the hard work of all employees, led by the company’s excellent management.
These achievements are reflected in both the high profitability and the return of Migdal to the top of the yield comparison tables. I am convinced that the tower has a solid infrastructure for continued growth in the future as well. “
Tower Holdings, The largest insurance and finance group in Israel, reports today (Thursday) its results for the third quarter of 2021.
In the first nine months of 2021 (the “reporting period”), a total profit of approximately NIS 983 million was recorded, compared with a total loss of NIS 13 million in the corresponding period last year. In the first nine months of 2021, there was a significant improvement in profit compared to the corresponding period last year due to a significant increase in investment profit and also due to an increase in underwriting profit.
In the third quarter of 2021 (the “reported quarter”), a total profit of NIS 416 million was recorded, compared with a total profit of NIS 47 million in the corresponding quarter last year.
Total profit in the reported period was affected by price increases in the capital markets, following which income from investments in the nostro portfolio was recorded in the amount of NIS 1,094 million before tax (excluding designated bonds), compared with the corresponding period last year in which income was recorded in the amount of NIS 173 million (excluding Designated bonds). In addition, the company recorded variable management fees amounting to approximately NIS 776 million, compared with non-collection of variable management fees in the corresponding period last year. In the reporting period, there was an increase in underwriting profit compared to the corresponding period last year.
The volume of assets under management was approximately NIS 350 billion, as of September 30, 2121, compared with approximately NIS 295 billion as of September 30, 2020, an increase of approximately 19%. As of the date close to the publication of the reports (15.11.21), the volume of Migdal’s assets amounts to approximately NIS 363 billion.
Gross premiums and benefits in the reported period amounted to NIS 17 billion, an increase of 3% compared to the corresponding period last year, which was mainly reflected in life insurance and long-term savings and health and was partially offset by a decrease in general insurance premiums, mainly in car insurance.
In the reported quarter, premiums amounted to NIS 6 billion, an increase of 5% compared with the corresponding quarter last year.
Ran Oz, CEO of Migdal Insurance, Referred to the results of the company’s activity in the third quarter of 2021 and said:
“We summarize the first nine months of 2021 with a cumulative profit that amounted to NIS 983 million and is a record.
We ended the third quarter of the year with a quarterly profit of approximately NIS 416 million, reflecting a return on equity in annual terms of 22.3%. In this quarter, the positive trends that characterized the previous quarters continued and are expected to accompany the company in the future.
The results for the quarter and the period are the result of the hard work of all the employees, led by the company’s excellent management. These achievements are reflected in both the high profitability and the returns we have achieved and the return of Migdal to the top of the comparison charts.
Oz, who is ending his position near the date of the reports, added that “I received a company with an average annual profitability of less than NIS 400 million a year and I part with it with a great sense of satisfaction with a profit of close to NIS 1 billion – in just nine months. Migdal Insurance is currently a leading company. Investment, innovation and digitization, which have come a long way, surpassed forecasts and reached record lows in a challenging period, and I am convinced that the tower has a solid infrastructure to continue the growth and improvement trend in all indices.
I would like to thank from the bottom of my heart all the employees of Migdal for the investment and support during a challenging period, the company’s management for leading during the change, the controlling shareholder, Mr. Shlomo Eliyahu and the company’s board for trusting me all the way. Yiftach Ron Tal, And successors in office, Sagi Yogev“.
Migdal Insurance Chairman, Yiftach Ron Tal, message: “I thank the CEO of the company, Ran Oz, who navigated it through a complex period of significant achievements and record profitability, in an era of increasing competition.
Sagi Yogev gets a good and stable company, with a solid customer base and development potential in all the company’s business lines, and I am sure that he knew how to continue to lead the company to its natural and worthy place at the head of insurance companies. “
Long-term life insurance and savings:
In the reported period, there was an increase in underwriting profit compared to the corresponding period last year. In life insurance, the increase in underwriting profit compared to the corresponding period last year was mainly due to an increase in management fee income due to an increase in assets under management, a decrease in the reduction of deferred purchase expenses due to a decrease in policy cancellations and a decrease in incapacity claims. In pensions, the increase in underwriting profit was mainly affected by an increase in management fee income from managed assets and a decrease in the reduction of deferred acquisition expenses and was partially offset by an increase in marketing and acquisition expenses. In the third quarter, there was an increase in underwriting profit compared to the corresponding quarter last year, which concentrated on life insurance.
In the reported period, a gross profit before tax of NIS 1,245 million was recorded, compared with a total loss of NIS 305 million before tax in the corresponding period last year. The increase in comprehensive income was affected by an increase in investment profit, which was reflected in the variable management fees in the profit-sharing policies and in the increase in the financial margin from investments that stand in opposition to the policies that guarantee a return on life insurance. There has also been an increase in investment profit in Makfet’s nostro portfolio. In addition, the change in the interest rate curve and market variables, led to a decrease in reserves and an increase in the overall profit in life insurance. In the reported quarter, comprehensive income before tax was recorded in the amount of NIS 556 million, compared with comprehensive income in the amount of NIS 32 million before tax in the corresponding quarter last year.
New sales – During the reported period, there was a decrease in executive insurance products and risks, and on the other hand, a slight increase in pension sales compared with the corresponding period last year.
Premiums and remuneration:
In life insurance – In the reported period, current premiums (including current receipts in respect of investment contracts) amounted to NIS 5,669 million, compared with NIS 5,723 million in the corresponding period last year. The non-recurring premiums in respect of insurance contracts and the one-time receipts in respect of investment contracts amounted to approximately NIS 1,935 million, compared with approximately NIS 1,306 million in the corresponding period last year, an increase of approximately 48%. In the reported quarter, current premiums (including current receipts in respect of investment contracts) amounted to approximately NIS 1,912 million, compared with NIS 1,858 million in the corresponding quarter last year, an increase of approximately 3%.
In pension funds – The remuneration amounted to NIS 5,720 million, compared with NIS 5,557 million in the corresponding period last year, an increase of about 3%. In the third quarter, remuneration amounted to NIS 1,986 million, compared with NIS 1,919 million in the corresponding quarter last year, an increase of 3%.
In provident funds – Remuneration fees amounted to approximately NIS 1,396 million, compared with approximately NIS 1,330 million in the corresponding period last year, an increase of approximately 5%. In the third quarter, remuneration amounted to NIS 488 million, compared with NIS 449 million in the corresponding quarter last year, an increase of 9%.
Mobility – In the reported period and in the third quarter, the trend of a significant increase in net negative mobility in the life insurance industry continued and an increase in net negative mobility in the pension industry compared with the corresponding periods last year. On the other hand, in the camel industry, net negative mobility decreased compared to the corresponding periods last year.
health insurance:
In the reporting period, there was stability in the underwriting profit compared to the corresponding period last year, which was affected by an improvement in long-term care insurance, which was largely offset as a result of an increase in claims for medical expenses, including transplants. In the third quarter, there was a slight increase in underwriting profit compared to the corresponding quarter last year.
In the reported period, comprehensive income before tax was recorded in the amount of NIS 90 million, compared with comprehensive income before tax in the amount of NIS 208 million in the corresponding period last year. The decrease in profit was mainly due to a decrease in the liquidity premium and changes in the interest rate curve, which led to an increase in long-term care provisions in the amount of NIS 81 million, compared with a decrease in provisions of NIS 151 million in the corresponding period last year. On the other hand, in the reported period, there was an increase in investment profit compared to a loss in the corresponding period last year. In the third quarter, a gross profit before tax of NIS 54 million was recorded, compared with a total loss before tax of NIS 36 million in the corresponding quarter last year. The improvement in profit was mainly affected by an increase that occurred in the corresponding quarter last year in provisions for long-term care insurance in the amount of NIS 96 million.
New sales – In the reported period, there was an increase in new sales of medical expenses and serious illness policies compared to the corresponding period last year. On the other hand, new sales of personal accident policies decreased compared to the corresponding period last year following the cessation of product marketing from May 2021 and an update made by the company on how to market the product in accordance with the personal accident product circular from June 2020. In the reporting quarter The corresponding quarter last year, due in part to the timing of the holiday period.
Gross earned premiums – amounted to NIS 1,275 million in the reported period, compared with NIS 1,243 million in the corresponding period last year, an increase of about 3%. It should be noted that the said increase in premiums was affected by an increase in the individual products marketed by Migdal Insurance, and was partially offset by the cessation of marketing of nursing products starting in November 2019, an update made by the company marketing personal accident insurance products and a decrease in sales of travel products abroad. NIS 433 million, compared with NIS 412 million in the corresponding quarter last year, an increase of 5%.
General insurance:
In the reported period, there was a decrease in the underwriting profit compared to the corresponding period last year, mainly due to a shift to underwriting loss in the property vehicle industry due to a decrease in the average premium which led to an increase in the shortfall provision. On the other hand, in the compulsory vehicle industry, there was a reduction in the underwriting loss compared to the corresponding period last year, which was mainly affected by a positive development in the claims claims for previous underwriting years. In other property industries, there was an increase in the underwriting profit compared to the corresponding period last year, which was due in part to the effect of the winter storm damage in the corresponding period last year and as a result of the portfolio improvement and positive development in claims. In the liability industries, we recorded more than underwriting profit in the reporting period compared to underwriting loss in the corresponding period last year. In addition, there has been an improvement in the professional warranty and product warranty industries. In the third quarter, an underwriting loss was recorded compared to an underwriting profit in the corresponding quarter last year, mainly due to a shift to an underwriting loss in the property vehicle industry due to a decrease in the average premium, which led to an increase in the shortfall premium.
In the reported period, a total profit before tax of NIS 50 million was recorded, compared with a total profit of NIS 99 million in the corresponding period last year. In the reported period, there was a significant increase in investment profit compared to the corresponding period last year, following an increase in the returns achieved in the investment portfolio. On the other hand, a decrease in the short-term risk-free interest rate curve offsetting the effect of updating the attribution of part of the fair value of non-marketable assets beyond their book value has led to an increase in insurance liabilities in the liabilities industries by NIS 52 million. Liabilities (LAT). As a result, an increase in insurance liabilities of approximately NIS 25 million was recorded in the compulsory motor vehicle industry. In the reporting quarter, a total loss before tax of NIS 35 million was recorded, compared with a total profit of NIS 81 million in the corresponding quarter last year.
Gross premiums in general insurance amounted to NIS 1,452 million in the reported period, compared with NIS 1,840 million in the corresponding period last year, a decrease of about 21%. The decrease in premiums was mainly due to Migdal Insurance’s failure to win the tender for car insurance for civil servants for 2021 as well as the continued decrease in the average premium and the number of policies in the property vehicle industry and a decrease in the number of compulsory car insurance policies. In addition, there was a decrease in premiums in other property industries and liabilities, mainly due to a change in the renewal dates of policies in which the insurance coverage lasts longer than in a number of large businesses, as well as the improvement of the portfolio. In the third quarter, premiums amounted to NIS 456 million, compared with NIS 526 million in the corresponding quarter last year, a decrease of 13%.
Investments:
At the end of 2020, the company, the first of the institutional bodies, launched an investment policy with a commitment to ESG. Today after nine months of actual implementation we are proud to report compliance and beyond all the parameters we have committed to:
NET POSITIVE INVESTMENTS
Target: Aspiration to increase NET POSITIVE investments in the portfolio by 1.5% per year, taking into account return / risk considerations.
In practice: investments amounting to NIS 3 billion were made, of which NIS 2.4 billion was in portfolios
Colleagues, who make up 1.4% of the portfolio in the first nine months of the year. By the end of the year, additional investments amounting to about a quarter of a billion NIS are expected to be signed.
Among the notable investments – an investment of NIS 1.1 billion in Doral and an investment of NIS 805 million in Sondik.
Reducing investments that do not meet Migdal’s ESG cartridge
The goal: to reduce investments that do not meet Migdal’s ESG criterion by 10% per year.
Actual: A decrease of 18.5% in the volume of the members’ portfolio in the first nine months of the year.
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